The Growing Economy
Mr. Speaker, I thank the gentleman from Maine for giving us that wonderful quote about all of the benefits that have been provided to us by veterans. But when it comes to concurrent receipts, it has been the Republicans that have done the…
Mr. Speaker, I thank the gentleman from Maine for giving us that wonderful quote about all of the benefits that have been provided to us by veterans. But when it comes to concurrent receipts, it has been the Republicans that have done the most to provide for concurrent receipts for veterans by making a progressive step in the right direction.
I will be glad to yield to the gentleman from New York (Mr. McHugh) to explain what has happened when it comes to benefits for the veterans.
Mr. Speaker, I thank the gentleman from New York (Mr. McHugh), the chairman of the subcommittee that has jurisdiction on this area for all the progress that he has made for veterans in a long time. As it was stated here earlier by the Chairman, 140 years has gone by that this has been an issue, but it took a Republican Congress to act on it. And we have done more for veterans in the last 10 years since we have taken over the House of Representatives as the majority party than happened in the previous generation. So I thank him for his leadership and appreciate his time on the floor tonight.
Mr. Speaker, tonight I want to speak about three things. First, I want to talk a little bit about our economy and how it is growing, why it is growing, why the tax relief that we have passed has been so beneficial.
Second, I want to talk about what is going to be proposed tomorrow by the gentleman from Wisconsin (Mr. Obey), the ranking member on the Committee on Appropriations. He is calling it ``America's Top Ten Obligations.'' That is the title for a tax increase on what he claims are the top 1 percent of taxpayers in America. We will tell you who those people are.
The third thing I want to talk about is how we are going to bring jobs back into America. It is an agenda we call ``Careers for the 21st Century.'' It is an eight-point plan to make America more competitive.
But first, Mr. Speaker, let me return to our economy. Our economy is robust. I have a chart here that shows how our economy is growing. It starts in the fourth quarter of 2002. As you recall, in the recent history of our economy, in 1999 we had a tech bust. It resulted in a dramatic drop in the NASDAQ because a lot of the tech industries lost value and many people were laid off.
Following that in about November of 2000, prior to George Bush being sworn in for office in January of 2001, the recession started. We saw other job losses. Then on September 11, 2001, terrorists attacked our country using our own technology against us and dealt a severe blow to our economy.
In my home area in south central Kansas, our community had a greater percentage loss of jobs compared to the total number of jobs in the community than any other community in the United States. We were hit very hard. So the terrorist attack had a dramatic impact.
What happened in Congress then is that we passed the President's plan for tax relief. It was an across-the-board tax relief plan in addition to some targeted tax relief. That across-the-board plan affected every individual that pays Federal income taxes in America. Every individual. All of us got a tax break if we paid Federal income taxes. It was a very fair and reasonable thing to do. The percentage was equal for every American.
So that tax increase did one of three things for people who got money back
from the government, their money returned to them by the Federal Government. They either saved it, which was good, because that provided money for mortgages. As we have known, if one has been paying attention to new home starts in America, it has been dramatically growing. It has been the largest surge that we have seen in recent history. Two reasons: One, low interest rates; the second is there was money available because people took some of this money available from the tax relief and they saved it.
The second thing was invest it. By investing it it made money available to corporations to expand their companies and hire more people. And the charts will support that.
The third thing is that what Americans did with the tax relief is they spent the money. They went out there and they demanded goods and services. Those goods and services in turn created more jobs.
So the tax relief did those three things. All of it was good for our economy. The results are clear. The growth in our economy going back to the fourth quarter of 2002 they had a 1.3 percent growth. We were just seeing the effect of the tax relief. The next quarter, the first quarter of 2003, 2.0 percent growth. Then it started to climb, 3.1 in the second quarter. Third quarter spiked at 8.2 percent. It was really taking off. Then it leveled off to now 4.1 and then 4.4 for the first quarter of 2004.
The projection is the last half of the chart there looks like it is going to go to about 4.4. We are anticipating some increases in the interest rates from the Federal Reserve. So there may be a slight drop back. But this is the fastest growth that our economy has seen in the last 20 years, a tremendous advantage, and it was based on tax relief.
This surge has also created jobs. This is a by-month comparison of the jobs, the base level of jobs and then the month's increase of jobs. One can see the total number of jobs has grown dramatically in the last 3 months. We have seen in March of 2004, 353,000 jobs were created. In April of 2004 an additional 346,000 jobs were created. In May of 2004, this past May, 248,000 jobs were created. Since August of last year this economy has created 1.4 million jobs because we have had some tax relief and people have done one of those three things that I explained earlier.
Now, what does that mean when jobs increase? It means unemployment goes down. Unemployment now is down to where the average in 2004 is lower than the average of the 1970s, the 1980s and the 1990s. In Kansas where we have had 13,000 aerospace workers laid off, they are coming back to work. Our unemployment has just dropped three-tenths of a point in just the last couple months. So we have seen a real reduction in unemployment, which has been good for our economy. Not only are there more jobs out there, but the people with those jobs are earning more money.
Now, we have heard complaints from the other side of the aisle that, oh, sure, there are some more jobs out there but they are minimum wage jobs. These are jobs that only poor people can have. It is not a living wage. The truth is the average wage is going up. The people with these jobs are getting high-quality, high-paying jobs.
Now, I know we can do better, but the fact is people are making more money and we have more people working. Exports are also picking up, a good indication that our economy is doing very well. Also our investments are very strong. This goes back to what I was saying about those three points.
The President's tax cut has reduced the marginal effective tax rate for new investments and that has caused a growth of investments in America. Very important fact. Housing starts remain strong. We talked a little bit about that. That is one of the second points I made when people save money. I guess it is the first point I made, that when people save money it makes money available for home mortgages. And then home ownership starts, people buy houses and they build new homes. And those homes that are vacated are then sold on the market.
We have more people owning homes today than ever before in America's history. Minority ownership is at an all time high, at 50.8 percent of families owning houses.
Other indicators in the housing markets are also strong. So this is good news for our economy. And it goes back to tax relief. Tax relief is very important to keep our economy strong.
Now, tomorrow the gentleman from Wisconsin is going to take a tip off the sheet of Mr. Kerry, the gentleman running for president, and that is going to be called America's Top Ten Obligations. Now, this plan, the intent of this plan is to scale back the tax cuts, the tax cuts that have been propping up this economy, as these charts have shown, propping up this economy during the terrorist attacks, the war against terrorism, it is a worldwide war, and the recession that we are coming out of.
But the problem is that Mr. Kerry and the gentleman from Wisconsin (Mr. Obey) wanting to raise the tax burden, which they say is the top 1 percent of America, is actually raising taxes on the people that are creating the jobs.
Now, the Tax Foundation is drafting a report on the demographics of the top 1 percent of taxpayers in America. These are the so-called, quote unquote, ``millionaires.'' And they are millionaires. For example, 83 percent of taxpayers with an income above $1 million have it from business income. Well, what does that mean? It means that they are the people that are out there creating jobs. Many of these jobs that we have seen on the charts here tonight are created by small business. 83 percent of these people are small business owners, pure and simple.
If you look at the statistics, 13.2 percent of them are in finance, real estate, or insurance. 8.1 percent of them are in manufacturing of durable goods. 6.9 percent of them are in educational services. 6.8 percent of them are in medical, except hospitals.
We have 6.0 percent of them that are business and repairs, including computer processing and business services, and 4.9 of them are in construction/manufacturing.
These other categories include agricultural, farming in other words, mining, utilities, wholesale trade, retail trade. These are small business owners, and in Kansas, it is four out of five jobs.
Now, if you look at Kansas, you will find that in Wichita, for example, it has the largest facility owned by Boeing outside the State of Washington. We also have Raytheon which owns Beech aircraft where they make Beech jets, many different models, and also, their single engine aircraft. We also have Cessna, which is owned by Textron. All their aircraft are made in south central Kansas, either in Independence, Kansas, and a majority of them remain right there in Wichita.
We also have Lear jet which is owned by Bombardier where they make the Lear 35, the Lear 45, the Lear 60 and they are looking at some other Bombardier models that are moving in there.
We also have a design shop for Airbus, designing the wing for the A- 380, their new huge airplane that is going to be sold to airlines for passenger use. Plus, we have about 150 shops that supply the aircraft industry.
Well, a majority of those shops are just nothing more than small businesses. People look at, well, we have got 12,000 people at Boeing, 12,000 people at Cessna, 8,000 people at Raytheon, 4,000 people at Lear jet, 120 at Airbus, but then you look at all these small shops, and there are more people working in aerospace for small businessmen than there are for all the big corporations.
Well, those are the 83 percent of taxpayers in the top one percent that own those shops and hire those people.
Well, the plan that Mr. Kerry and the gentleman from Wisconsin (Mr. Obey) have is to raise taxes on those people. What impact will it have when they have less money available to hire people to run their business? It will result in layoffs.
Now, if you have listened to the rhetoric during the presidential campaign, you will find out that the gloom and doom perspective are coming from Mr. Kerry and from the Democrats here in the House, and they have sort of this dark, stormy night view of America. I have sort of the sunshiny day, the optimistic side, where if we can allow people to have a little more in their pocket, where we can allow small businessmen to go out there and invest in their companies, they will do well, they will hire people that will do well, and our
economy will do well, but instead, we have got to go down the path that they want to take us which is to raise taxes, take away jobs.
I found it interesting tonight that the gentleman from Maine created this scenario where rich people, it sounded like they were sitting on a beach somewhere in the Caribbean, sipping their Margaritas or whatever, Margaritaville maybe, and that they were just living a life of leisure and they just had money stuck in their pockets everywhere, and we should take that money away from them and give it to the veterans which are having trouble getting health services. Well, in the last 10 years since I have been here we have doubled the amount of money that veterans are getting for health care, doubled it, more than they did in the previous generation.
But we also realize that these people that they are talking about, the top 1 percent, are not sitting on the beach somewhere drinking a Margarita, they are out there working 60, 70, 80 hours a week. They are creating jobs. They are trying to keep their businesses together. They are giving people opportunities by hiring them, letting them get skills, letting them work, letting them buy clothes for their kids, buy cars for themselves, putting their kids through college. They are letting their employees live the American dream, but that is going to change if Mr. Kerry or the gentleman from Wisconsin (Mr. Obey) have their way. They are going to take away the money that they have in order to make their businesses healthy and grow.
So, the proposal the Democrats have is to kill the jobs. The tax breaks we have obviously have created jobs by just the charts I showed you earlier. It seems the House Democrats want to bring up a page out of the Kerry economic playbook to raise taxes on job creators and grow the size of government, and Mr. Speaker, Republicans welcome this chance to debate and defeat this job-killing bill tomorrow, along with the spending proposals.
The third thing I wanted to talk to you tonight is something that is very exciting because I showed you how well the economy is doing, but we know we can do better. When things got tough in America, I started talking to the CEOs back in my area, and I met with them several times. I listened to their concerns, their problems, and I realized that they basically control only a couple of different variables in their businesses.
Number one is wages, and that is the thing that we seem to always talk about, and I think the reason we do is probably because unions feel that that is their prime objective in life today. It is not about whether the lights are on or off or how warm it is in the workplace anymore. It is about wages, and they feel like they are unjustified unless they get a good wage package for their workers. That is what they are there for, and what I found is that the employers basically do not mind paying a good wage. They want high quality workers. They are willing to pay for them, but that is one of the few variables they have that they can control. So there is a lot of pressure on employers to try to keep wages down. It is very unfortunate, but I will tell you why later on.
The second thing, though, is overhead. Overhead is a variable. That is how many square feet they have in a building. That is how new of machines they have. That is basically keeping the lights on and having the equipment for their employees to work on. They can control how big the building is. In fact, they can sell it off if they have to. Right now, the Boeing company is looking at selling off a large part of the facility they have in Wichita. They have about 12.5 million square feet under roof in Wichita. They could spin off as much as half of that and have another company buy that, and that would reduce their overhead burden. That is one of the two variables that they have to look at.
The other variables are things that they do not get a vote on. They cannot really have much control over, for example, the health care plan. Right now, employers must have a health care plan to be competitive, but they do not get to vote on how much it grows each year. In fact, some of them have told me in Wichita that the growth in their health care costs for their employees have gone up by 30 percent in the last year, 30 percent. Now, they are looking at ways that they have to increase deductibles, trying to put more of the burden back on the employees. Well, that is a very unfortunate thing, but it is something that they have very little control over.
So what do they do? They look at wages and overhead. The result of that has been a job loss. They have been looking at going overseas because it is more difficult. Well, health care is just one issue.
We have divided the issues up into eight categories. Now, these issues have really been a problem created by Congress over the last generation. They have created costs and expenses that businesses have to put up with just by the sheer structure of the system, and it has limited their ability to do business in America, and it has caused job loss, jobs going overseas.
The eight categories are health care security. We have talked about health care a little bit. The other one is bureaucratic red tape. Educational policy, we call it lifelong learning. Energy self- sufficiency, research and development/innovation. Trade fairness is the sixth one. The seventh one is tax relief and simplification. The last one is ending lawsuit abuse and litigation management.
We have a scorecard on what we have done to change the business environment in America and make it more competitive. We have taken on the first four of these eight issues.
The first one was health care security. With health care security, we passed three pieces of legislation. Let me say up front that we have not solved the problems in health care all together, but we have put policies in place that will help lower the costs. We will not see the same dramatic growth we have seen in the past.
The three pieces of legislation we passed were flexible spending accounts that allowed employees to control part of this money. The employer would set aside an amount of money like $1,000. If the employees did not use that money, they could carry it over to the next year, and by doing that, then eventually, as we worked with this policy, it could be a system where an employee, if they stay healthy their whole lives, they could use that money for long-term health care in their elder years. That is always a worry that people have.
My parents are having that same concern. They have gone out and bought long-term care insurance. It costs them a lot of money a month, and it grieves me because they have to cut back on their lifestyle. It costs them almost $400 a month. My father is 85. My mother is 77. So it is a little difficult for them to fit that in their budget, but they are so worried about being a burden on their children that they have gone out and purchased this insurance.
Well, if an employee working chose a healthy lifestyle, was allowed to put this money away through their working career, it would go into an annuity that could pay for long-term health care insurance through flexible spending accounts.
We also passed medical malpractice liability limits, and that was a very good thing because it limited the amount of liability, and it allowed lower costs for insurance, for physicians and hospitals, and those who provide health care services, and that, in turn, helps keep costs down.
Now, you can look on a State-by-State basis where people have not limited medical malpractice, and we have had some outrageous settlements that have gone way beyond what any medical costs were associated for the loss or the injury and basically made a lot of lawyers rich. Well, this is a reasonable way that we have capped liability costs, and we followed some of the States.
And in those States where this has occurred, they have seen dramatic lower costs in their medical malpractice insurance, and the cost of health care has gone down. It has been a good example. So we adopted here in the Congress and passed medical malpractice liability limits.
We also passed the Small Business Health Fairness Act, or AHPs, associated health plans. These are plans that allow associations to go out and procure, especially small businesses,
through their associations. They can go out and buy health care plans as a group rather than as an individuals.
If you take a small shop, like a small machine shop that is supplying the aircraft industry in Wichita, Kansas, they may have 10 employees. Well, those 10 employees have to buy their own package. The insurance company would come in and assess the risk for those ten employees. But through the associated health plans all the machine shops in Wichita, Kansas, some 40,000 employees, if they bought one package through the AHP it would not just be ten employees they would be looking at, it would be 40,000 employees. That would mean lower rates for all of them.
Because all that has that has to happen in a small shop of, say ten employees, is one of the spouses of one of the employees to contract cancer and go through a long severe medical treatment, and that would drive up the cost for the entire group. It may even make it so expensive they could not afford health the care costs. So by having AHPs, or associated health plans, its allows them to mitigate their costs over a larger group and lower the whole cost.
The next week we addressed the issue of bureaucratic red tape termination, and we focused on OSHA, or the Occupational Safety and Health Administration. We started out with the OSHA Small Business Day in Court, we went to OSHA Review Commission Efficiency Act, then we passed the OSHA Independent Review and OSHA Citations Act, and then we passed the OSHA Small Employer Access to Justice Act, and then we completed the week by passing the Paperwork and Regulatory Improvement Act.
All of this effort was designed to do two things: Number one is to remove the bureaucratic red tape; to limit it. What we found by talking to groups like the National Association of Manufacturers and employers themselves was that these costs are getting buried into our products and they are making us less competitive.
The National Association of Manufacturers says that 14 percent of the cost of any item manufactured in America is regulatory compliance. Well, just imagine if we could just cut that in half. We would be 6 percent more competitive worldwide. And I think that was the goal here.
The second part of what we were trying to do is to look at government agencies and realize that they do not have to work against our employers, against our small business owners, against our employees. They can work with them to achieve a common goal.
We still have legislation pending that will continue this process, but basically it will say to OSHA, let us go out to a facility and work with them to make it safer without any fines. Right now the way the system works is OSHA comes in and they do not leave until they have found something wrong. And it seems like they have to write a fine all of the time. Sometimes they stand off from the work site, through pictures or some kind of a judgment call, and they will decide that they need to assess some fine and they will send it to the employer in the mail. Sometimes they will go to a job site which has a contractor, a general contractor and ten or twelve subcontractors, and they will fine everybody there, even if there is just one of the subcontractors at fault.
Well, the new system we need to put in place would have OSHA go in and say, we have a ladder being improperly used and it is a danger to this work site, so we will educate your workers as to how to place it properly. They can come back in 6 months and see how people are handling ladders. That way both the employer and OSHA achieves the goal of safety on the workplace without assessing fines.
So that is a good place to work through bureaucratic red tape, reducing the amount of red tape and achieving the goals that are necessary.
The next week we went into life-long learning. In order to be competitive around the globe, we have to have people who are preparing themselves for the technical future we have coming up. We need people to be fluent in math and science and in engineering capabilities. They will have to have high-tech degrees. They will also have to be fluent in languages, as we are finding out today.
But we need to have a plan to create an environment so that people can get the skills they need in order to become ready for tomorrow, for the future, because it is going to be more and more technical, not less. So we passed the Teacher Training Enhancement Act, we passed the Priorities for Graduate Studies Act, the Back to Work Incentive Act, and the Workforce Research Investment and Adult Education Act. We had conferees appointed for that legislation.
The next week we went on to energy self-sufficiency. We passed the Energy Policy Act of 2004, the Renewable Energy Project Siting Improvement Act, and the U.S. Refinery Revitalization Act.
It is funny, because we have tried to pass energy policy several times. In fact, I have a chart that shows the activity of the House Republicans and what they have done to pass an energy bill. Back in January 1, 2001, shortly before George Bush took office, gas prices were about $1.32 in America. President Bush sent his energy plan to Congress and it was passed for the first time by the House on August 2, 2002. It then failed across the Capitol. We passed it again on April 11, 2003. We passed it a third time, after it failed again on the other side of the Capitol. We passed it a third time on November 18, 2003, and then we just passed it on June 15, 2004 for a fourth time.
Why is an energy bill so important? It is important because you can see, without it, gas prices are continuing to climb. We are now over $2. We must have a comprehensive plan where we can open up more energy reserves, where we can capitalize on renewable energy, and where we can open up new sites for refineries. We have not built a new refinery since 1976 in America. Even if we could produce more oil right now, we probably could not process it because we need more refineries to do that. So we are going to go into old sites, where old refineries are, and allow them to be opened up.
In the following month of July we are going to take on the last four issues that we have on this package of careers for the 21st century. We are going to take on tax relief and simplification. We are going to try to set up a system that is not so volatile in the way that it approaches businesses.
There is one success story I want to briefly mention before I run out of time, and it is called accelerated depreciation. In the aircraft industry, when you sell a business jet, it can cost $6 million. Well, through accelerated depreciation they can write off two-thirds of that aircraft in the very first year. Now, I have heard people on the other side of the aisle talk about what a great tax break for rich individuals and corporations that is. What they do not talk about, though, is all the jobs that are created in America.
Cessna Aircraft, which has seen the greatest benefit from accelerated depreciation, has sold every aircraft they had in the backlog, they are now building jets that are already sold, and it has put all their laid- off workers back to work, plus they have hired an additional 400 people. It is a jobs act. We need to get some more tax relief that will create more jobs in America, because we can do better.
Then we are going to move on to trade fairness and opportunity so that we can have a fair and equal trade policy and an enforceable trade policy. Then we are going to look at research and development and how we can spur innovation, and we are going to complete this with ending lawsuit abuse.
One of the beautiful things about trying to limit litigation is that, again, it will create jobs. And a good example back in the Fourth District of Kansas, back in 1994, Congress passed the statute of limitations which said basically that you cannot sue an airplane manufacturer for the design of the airplane after it has been flying for 23 years, if it is a heavy jet, or 18 years if it is a smaller aircraft. Now, think about that. If an airplane has been flying for 18 years, there is nothing wrong with the design. Yet every time a plane went down, these aircraft manufacturers always had to have some kind of defense system.
In fact, Raytheon told me that at Beech it cost them $300,000 for every crash, whether they were sued or not. So limiting liability is a very important part because, again, it will create jobs in America.
Well, these barriers, these eight barriers have been put in place by Congress. We can change the environment. The results of changing this environment will mean more jobs here in America, and it means we will have greater exports, we will be more competitive worldwide, and we will have a brighter future for ourselves and our children.
So, Mr. Speaker, I thank the staff tonight and the Speaker for hanging around. I think this is a very important issue, and I think it is the right debate to be having today.