Mr. Speaker, I am here to talk about a roadmap for prosperity of this country. I think the elections last week, in large part, didn't deal as much with Republicans and Democrats as it dealt with a frustration over the lagging lack of…
Mr. Speaker, I am here to talk about a roadmap for prosperity of this country.
I think the elections last week, in large part, didn't deal as much with Republicans and Democrats as it dealt with a frustration over the lagging lack of prosperity this country has experienced for the last 7 years. I think that there are ways to solve that, that are complicated, but there is a pathway that we can pursue that involves a lot of common sense.
If you will look at these charts that I have here, Mr. Speaker, what I have here with this blue line that goes up until 2007 and trends down thereafter is median household income. You can see, Mr. Speaker, it drops from a peak of $56,000 annually in 2007 down to just over $51,000 today, a drop of over 10 percent for the median American family.
Mr. Speaker, at the same time, this red line represents the cost that these families incur. The red line actually is food cost. You can see that they have risen from an inflation-adjusted basis of 190 to 240, almost 20 percent, Mr. Speaker. At the same time their incomes have declined over 10 percent, their costs for food have gone up over 20 percent.
Then the bottom graph here represents their cost for fuel and utilities, and you can see here that they have risen almost 20 percent as well.
My belief, Mr. Speaker, is that the cause of the decline in the income, as well as the cause of the rise in the cost in fuels and food, is largely from policies that come out of Washington. These are not things that are beyond repair. These are things that we can fix, so what we have to do is lay out a roadmap, a plan, to restore the prosperity that we have enjoyed for over 200 years.
Mr. Speaker, before I forget, I want to credit my good friend, Professor Michael Porter from Harvard, with a lot of these slides that I am using because I am stealing a lot of those from him, but this chart here, Mr. Speaker, is a breakdown of jobs in the American economy.
The red at the bottom is jobs that we have to compete with, with the rest of the world, manufacturing jobs, for example, that can be done anywhere in the world. The top part is jobs that serve local markets, things like health care that have to be delivered here, things like services, like, for example, real estate or tourism services, things that have to be delivered here.
This chart begins at 1998, but you can actually go back even further, and what you would see is in the area of service jobs, things that have to be handled locally, the number of jobs has risen. It certainly dipped around 2007, but it is coming back up.
But in the areas of what we call tradeable jobs, jobs that can be done anywhere in the world, the number of Americans working in those jobs has declined in this chart over the last 16 years, but you could go back even further, a very disturbing trend.
Now, why is that occurring? Why is it that tradeable jobs have left our shores and continue to leave our shores? Mr. Speaker, why is it that we continue to read in the newspapers every month about another American iconic company like Pfizer or like Burger King moving their headquarters out of our country?
Well, there are a number of reasons for that, and the most obvious reason is because we have the highest corporate tax rate in the world. If they want to be an American company, they have to pay extra for that.
This chart at the top represents the corporate tax rates of the OECD countries, and you can see the red line at the end represents America. The average rate is 25\1/2\ percent, and we are at 39 percent.
When the President says things, Mr. Speaker, like, ``Our American companies should be willing to pay the highest tax rate in the world to be patriotic,'' he is missing some real important points.
One is that any company, American or otherwise, doing business in America will pay American tax rates on the profits they earn in our country, but these iconic American companies that are leaving our shores have to compete worldwide, and competition is tooth and nail, and only the strongest competitor will survive.
Mr. Speaker, if you have an iconic American company that has to pay taxes at 39 percent here in this country competing on the same product line with a company that has to pay 15 percent in Ireland or in Canada, in the end, which company will survive? You see, Mr. Speaker, it is not about patriotism. That is nonsense. It is about survival.
Mr. Speaker, how do we end this cycle? How do we convince our iconic American companies, our large employers, to stay in this country and to convince those that have left our country to come back?
Before I came here, I had one other elected office. I was a tax attorney and a CPA for 25 years, and I helped companies structure their business in the smartest way for taxes, for regulatory purposes, and to make a profit.
Once I retired from that, I ran for one other office, and that was as the chairman of Horry County Council in Horry County, South Carolina, where Myrtle Beach is.
Horry County had a problem because most all of its job creation was in the tourism industry, and the tourism industry is great, but it produces an inordinate amount of seasonal jobs and jobs with relatively low pay. They needed to diversify their industry, and many other counties in the State were doing a better job of it.
Once I became chairman of the county council, I started to look at why that was and what we needed to do, and it was obvious that we had many, many assets. The problem was we weren't even in the game. We weren't even trying to compete.
Once we laid out a roadmap to enter the competition to attract industry and jobs, it didn't take very long. Companies responded quickly. Thousands of jobs had been created. All we had to do was enter the competition.
Counties across this country compete with other counties for jobs. States across this country compete with other States for jobs, States like Texas, which has done a fantastic job. South Carolina has done a fantastic job of creating a favorable business tax environment, favorable regulatory environment, and has done tort reform, and lo and behold, companies come.
Company after company after company leave States like California or Washington State and come to States like Texas or South Carolina, and you can see the result in South Carolina with BMW, Amazon, Boeing, Michelin, Continental, and on and on and on. All they had to do was decide to compete, and industry responded.
You see, before I became chairman of the county council in Horry County, the attitude there was that we were the leader in tourism, and they are great at tourism. We are big, and we have a lot of advantages, and we really don't need to compete for business. But guess what, it wasn't working.
Once we changed our attitude, people responded quickly, and I believe the attitude here in Washington is the same. Look, we are big. We don't have the biggest economy in the world anymore. China overtook us. We have one of the biggest economies in the world. We have great capital markets. We have great consumer markets.
We don't have to try to compete. Business is going to come anyway. But guess what, just like in Horry County, it is not working in the country either, and if we simply decide to compete for industry, with all of the advantages that we have, I believe no one can stop us.
My friend Michael Porter is, as I said, an economics professor at Harvard Business School. He has been there for decades. He has written multiple books on competitive theory. He has come here to Congress with me, and we scheduled seminars with Congressmen from both sides of the aisle to talk about what this country needs to do to be competitive. We have been in front of over 100 Congressmen, and this is the roadmap that he lays out. I am not going to claim authorship. This is the roadmap that he lays out.
His book is, ``On Competition,'' by Michael Porter. It is one of many. Michael Porter sits on the board of public companies. He represents countries around the world. He has written this roadmap for the United States. If we will adopt the attitude that we are going to be competitive in the world, we can expect to see American companies coming back, more foreign investment in the United States, and millions and millions of American jobs created and our economy lifted from its meager growth to above trend and restore our American prosperity.
Mr. Speaker, let's look at these things one by one. One of them is lowering the corporate tax rate, and as I pointed out earlier, this one is common sense. We have the highest corporate tax rate in the world. Does that mean that we have to collect less revenue? No.
Our corporate Tax Code is incredibly complex. It is filled with deductions and credits, many of which make sense but others that don't. It needs to be cleaned up. Dave Camp and the House Ways and Means Committee put out a proposal to do it last year.
I agree with, by far, the bulk of it. The House needs to take it up-- or something like it--and we need to get it over to the Senate, and we need to get corporate tax reform. The President agrees we need corporate tax reform, but the President thinks we need to raise revenue.
The goal here, Mr. Speaker, is not to increase taxes. The goal here is to make our country more competitive. Why? Because then we will have more business and we will have more jobs and we will raise revenue that way, rather than by raising taxes. If we boost our economy, the revenue will come.
The second item on this menu, Mr. Speaker, is taxing overseas profits earned by American companies only where they are earned. We are the only remaining OECD country with a global tax system. Everywhere else, they pay taxes where they earned the money, and they can bring the money home without paying taxes.
But here in America, our multinational companies--companies like GE, GM, and every alphabet soup company that you can name--if they earn profits overseas and they pay taxes at the lower rate over there, they know if they ever bring that money back to the United States, they have to pay it at 39 percent.
So what do they do? They park that money overseas. It is only common sense. They are competing tooth and nail worldwide. To make any other choice puts them at a huge disadvantage.
So let's say we have an American company that has a billion dollars in profits in India and they need to build a factory and are looking for where to build that billion dollar factory. Do you think they are going to bring that money back and pay 40 percent taxes in the United States to build that factory? No.
What they are going to do is build that factory in India and employ a thousand people there instead of employing a thousand Americans, so we need to change our global tax system.
We need to ease the immigration of highly-skilled immigrants. Mr. Speaker, I am for comprehensive immigration reform, but I am not for the kind of immigration reform the President is talking about.
Mr. Speaker, we have the most liberal legal immigration system in the world. We allow 1.2 million legal immigrants every year. The problem with our system is that most every OECD country that has looked at this has decided they are going to use immigration as a mechanism to be more competitive. Other countries are already working on this.
So what they do is they say, ``Okay. You can immigrate into our country if you have a skill that we need. They allow people with high skill sets and high education to come to the front of the line to immigrate.''
Our immigration system is exactly the reverse. It is completely counterintuitive. Sixty-five percent of the immigration that we allow is not based on skill set but based on family relationship.
Only 12 percent of our immigration is based on skill set, and what is the result? The result of that, as I have read, is that as many as 42 percent of the new applications for Medicaid come from immigrants. At a disproportionately large amount, legal immigrants rely on our social safety net, and that makes us less rather than more competitive.
We need comprehensive immigration reform, but what that means to me is that we need to base our immigration largely on skill set. I am not saying eliminate immigration based on family relationship, but I am saying make that a much smaller piece of the pie.
Another problem with our immigration system is with our student visa program. We have the best universities in the world. People come from all over. In fact, I think I read yesterday that there were a record number of foreign students in American universities.
So the problem is when they get their degree and after their student visa expires, under our immigration system, we require that they go back to their home country. We prevent them from staying here.
They have to go back to their home country for a period of years before they can even apply to come back to the United States. We have given them the best education in the world, and we force them out of this country.
So what does that mean, practically? Let's say we have a gentleman from China who gets an engineering degree from MIT and has the best idea in the world to manufacture whatever it might be, but he can't stay here and do that. He can't even apply.
He has to go back home and do his initial public offering and build his plant there and employ thousands of people there, rather than using the education that our American universities gave him to create thousands of jobs here in this country.
There are so many things about our immigration system and there are so many things about so many areas of Federal law that are clearly counterintuitive. They are exactly the opposite of what they need to be to make this country competitive.
Next, we have addressing distortions and abuses in our trading system. I am not going to spend a whole lot of time on this, but let me just say that, at one time, we were so advanced, we were so competitive, we were so much far ahead of the rest of the world, that we could adopt trading plans that weren't necessarily to our benefit.
We can't afford to do that anymore. We need to have free trade. We need to have fair trade.
Improving American logistics, communications and energy infrastructure. Everybody knows we need infrastructure to be competitive. We do so many things to hold ourselves up: roads, bridges, pipelines, and everything else. Federal regulation drags out projects for not just years--decades--and drives up cost.
When the Port of Miami has been working on trying to get their environmental permit to deepen their port to 50 feet for post-Panamax ships for over a decade; when the Port of Charleston, in my home State of South Carolina, has been under study for 4 years to determine whether they can go from 46 feet to 52 feet so that they can take these post-Panama Canal ships, and they are hoping that they get that port deepened by the year 2020, in the end everybody knows that port is going to get done. In the end, there will be little or no environmental damage, and what there is will be mitigated, but it is going to take a decade of wrangling to get to where we can deepen our port.
Let me tell you how important that is. Right now, I think one in five families' incomes in South Carolina are related to the use of that port. Companies in South Carolina, shipping or importing or exporting, it takes $3,000 to ship a container from the Port of Charleston to Shanghai on ships as they exist today. When the Panama Canal opens and the new ships come through, that will drop the cost of transportation by 20 to 30 percent. So instead of it costing $3,000 to ship a container from Charleston to Shanghai, it will cost $2,200.
If an importer or exporter in South Carolina or in the Southeast doesn't have access to one of those ports, they start out $800 per container behind the rest of the world. So there are only two of those ports that can take these ships right now on the east coast: Norfolk and Baltimore. If a manufacturer or an importer or an exporter is looking to where they are going to locate their business, do you think they are going to locate in a place that they are going to start out $800 per container behind the rest of the world?
And it is going to take us till 2020 to get approvals to get this port deepened?
So many of these environmental rules are just mechanisms to delay progress. In the end, we know this port is going to get done. Let's get busy and dig this port, and then we can talk about what we need to do to mitigate. But why are we going to hold it up for a decade and put my home State and this country at another competitive disadvantage?
We need to work on infrastructure. We need to find a way to get the highway trust fund funded. We need to eliminate a lot of the uncertainty. So many of these problems that are listed here, because they haven't been solved, they create so much uncertainty in the economy. It makes it very difficult for businesses to invest.
The Federal Government is an incredibly complex organization, yet it hasn't had a budget in 5 years until last year--not even a budget, not even for a year. Any complex organization, to make rational decisions, has to have long-term planning, and we can't even do a budget for a year.
We continually kick the can down the road, things likes the highway trust fund, things like the SGR, the doc fix. The Federal Government has got to resolve these things, remove these uncertainties so that people know how to plan and invest.
I skipped over one here: responsible development of our oil and gas reserves. The administration has thrown up every roadblock that you could throw up to development of our reserves. We have had the largest oil and gas boom in history in the last 6 years.
Eight years ago, when President Bush was in, they were talking about something called peak oil theory, where they said we had already discovered all of the recoverable oil and it was going to get lower and lower, and it was going to be harder and harder to recover and that we were at our finite limits.
That shows you how wrong science can be, because in the last 5 years we have had the largest oil boom in history right here in the United States. Yet, at the same time, the day that President Obama was sworn in, gas was $1.80 a gallon. Google it. It went up as high as $3.75 a gallon just a few months ago, and it has been gradually backing down because, despite all of the roadblocks and all of the burdens that we have placed on developing this oil, private industry is figuring out how to get it done. We won't let them build pipelines, so they put it on rail. We try to regulate them out of the rail business, and they figure out a way around that.
The administration is using executive orders to broaden the clean air rules and the Clean Water Act to do everything they can to prevent the development of these oil and gas reserves, and the result of that is that the price of fuel is artificially high because they want us off of these fossil fuels and they want us on alternative energy.
You know what? So do I. But I want it when the technology can deliver it at a competitive price. I don't want to artificially inflate the cost of fossil fuels simply to force us on to alternative energy, because, you see, cheap, reliable energy is another factor that makes us competitive.
How does it make us competitive? Well, number one, it lowers the cost of a company doing business in the United States if they have cheap, reliable energy. That is obvious.
But another problem is we do have the largest consumer market in the world. Two-thirds of our economy is based on consumer spending. And when you have declining income, what does that do to consumer spending? Obviously, it goes down. When you have increasing expenses for fuel and home utilities, with the war on coal, that affects the cost of food, so all these things rise. That takes money out of the consumers' pockets when they already have declining income.
What do you think that does to our economy? What do you think that does to our competitiveness?
So we need low-cost energy because, A, it makes it cheaper for companies to do business here and will bring jobs here, but it also puts more money in consumers' pockets.
When the President was first elected, he said we need a stimulus program, and he put in something called a payroll tax holiday that gave everybody, the average working man, $90 a month more in his pocket. But at the same time, with his policies for energy, with the war on coal taking our coal plants offline, that increases the cost to the average consumer by about $40 per household a month.
If putting $90 a month in his pocket is stimulus, what does taking $40 a month out of his pocket do? That is ``de-stimulus.''
Then when his policies forced up the price of gasoline from a $1.80 a gallon--it was $3.80 a gallon; now it is $2.80 or $3--every dollar a gallon costs the average consumer another $90 a month. Now the payroll tax holiday is gone. Instead of putting $90 a month in the consumers' pocket to stimulate the economy, we are taking $200 a month out of their pocket. What does that do to the economy?
This one is a no-brainer. We need to do everything we can to responsibly develop our fuel reserves; and we need low-cost, reliable energy in this country to, A, encourage companies to come here for the low energy cost and, B, to put more money in consumers' pockets to stimulate our economy.
The last thing on this list is create a sustainable Federal budget, including entitlement reform. I will run through this, but I am about out of time.
Entitlements are on a collision course with bankruptcy. Nobody who understands it will argue that point. These things have got to be done. They create so much uncertainty. They create instability in our economy, and they are nothing but future taxes.
The House Budget Committee, of which I am a member, has put out a budget that would balance in 10 years. For the last 2 years in a row that I have been in the Congress, and I believe 2 years before that, they have not even been taken up by the Senate. We need to put our budget on a path to balancing. The nonpartisan Congressional Budget Office agrees and says that where we are is unsustainable.
Mr. Speaker, thank you for your patience with me. Thank you for allowing me to lay out my road map. I hope that the Republicans and the Democrats and everybody will consider this as a pathway to a prosperous future.
Mr. Speaker, I yield back the balance of my time.