Thank you, Mr. Speaker. I appreciate the opportunity to address the body tonight.
I was not able to hear the President's speech today, but I was able to then get a transcript and read it. I note in the opening of that speech that he says, on page 1, that the debate that we're having here in Washington is about the kind of future that we want. It's about the kind of country we believe in, and then he describes that's what his speech will be about today.
As I read the context of the speech, I realize that the President and many Americans believe in very dramatically different models of country, and the kind of future that we believe in is dramatically different. I find in the President's speech that he centers many of his comments around taxing. Maybe it's taxing the millionaires and the billionaires. So I think that if we're going to talk about the kind of country that we live in, the kind of future that we want for the country, for our children and grandchildren, it is imperative that we begin to discuss this policy of taxation, this idea that we should and can tax the rich greater proportionate shares. It is that which I would like to address tonight.
Now as we talk about the future we believe in, understand that economic growth and vitality are critical concepts. And so one must then ask, How does the country achieve economic growth? How does it fail to achieve economic growth? That would be a key question. One of the core economic truths of economic growth is that when we tax the citizens more than approximately 23 percent, that we find an economy that will be stuck in stagnation. When we lower the taxation rate, then we find an economic vitality, creation of jobs. And so somewhere in that threshold of about 23 percent, we understand that every time we raise taxes, we kill jobs; and every time that we lower taxes, we create jobs. That was the essence of the argument that President Kennedy levied when he said we need to lower the tax rate in order to create more government revenues.
I often talk about the economic chaos that we're facing in our world right now, in our country; and it begins at this point. We begin with looking at the chart; we have basically an imbalance. We are spending $3.5 trillion every year, and we're bringing in $2.2 trillion every year. Our economy is stuck in stagnation. We don't have the ability to create jobs. And the President is talking about raising taxes in order to create revenue. President Kennedy would understand that when we raise taxes, we actually diminish the 2.2 figure, we actually lower the 2.2, because jobs are lost, productivity is lost; and, therefore, those jobs don't pay taxes to the government and the government's revenues begin to decrease.
I hear my friends on the other side of the aisle often describe the necessity to tax away Exxon's profits, that we should take every single dollar they make. In fact, we had one Presidential contender in the last race on the Democrat side saying we should tax Exxon's profits and spend them. We heard the Speaker of the House at that point using that same language, that we should tax the profits of Exxon and spend them.
Now let's take a closer look at that. Exxon makes good profits. They have a good business. They have good investments. But almost every year, Exxon spends the majority of its profits reinvesting them in new drilling. As they drill wells, people are hired to work on the drilling rigs. They're hired to work on the logging rigs, on the cementing rigs. They're hired to do the tasks of finishing the well, putting it into productivity before Exxon can ever make a profit. So as we take away that profit from them, we take away the future drilling. We take away, then, the jobs from the economy, and that is the reason that higher taxes penalize and kill jobs.
Another example that I have about job creation was from Bill Sweat in Artesia. I asked at one of my town halls, What does it take to create jobs? He held up his hand and said, It takes me $340,000 to create one job. That's because we drive bulldozers in our work. And actually they won't let me drive the bulldozer down through the main streets of Artesia, so I have to buy a pickup truck, too. So he said basically for $400,000 that he can create one job.
When the government, when Washington taxes away those obscene profits--those obscene profits in the eyes of some--then what happens is Mr. Sweat takes longer and maybe even never gets to the point of having the $340,000 in the bank in order to pay for that new bulldozer and hire one more person.
So as the President begins to tell us that his view of this country is one where we're going to tax the people who are producing, then we have to wonder what we're going to get. Often a truism is that what you tax, you get less of; so if he's going to tax the producers, the millionaires and the billionaires, you're going to get less of them. I think that's a question we should ask: Is that a course that we want to chart for our future?
My friend from Michigan (Mr. McCotter) is here tonight, and maybe he has some insights; but I would like to suspend my conversation on the idea that we can tax the rich and find prosperity for our Nation. I think the rich should pay taxes the same as everyone else, but when we raise the tax level beyond that 22, 23, 24 percent threshold, then we need to understand the result is going to be economic stagnation. That's what we're finding right now.
So when Mr. Obama concentrates his speech today on taxing, taxing the wealthy, that they would pay their fair share in the society, understand he is talking about a future that looks somewhat like Cuba's. Cuba taxes wealthy people, and they haven't had job creation for decades. The Soviet Union taxed wealthy people. They didn't have jobs. Europeans even tax at a greater rate than we do, and they've had economic stagnation up until recent times when they began to cut the cost of government, cut the size of government and lower taxes and found themselves creating jobs.
I would like to yield to the gentleman from Michigan at this point for comments that he might have.
Mr. McCOTTER. I thank the gentleman for yielding.
We've seen throughout our lifetimes the argument put forward that the way out of a fiscal mess is to raise taxes. And we've learned one thing: if they tax it and take it, they spend it. Over and over and over again the same siren song: government must increase revenues, that revenues are the problem. In short, the hardworking American people are the problem because they don't pay through the nose for the Federal Government's overspending.
I think the American people understand that we have not a revenue problem but a spending problem. So as we go forward, I think it is wise to remind many of our colleagues that if taxation is the road to prosperity, why do they not have 100 percent taxation? Because they know that it does not work. They know that it is a short-term expedient that has long-term damaging consequences to the economy. And as you go forward and you try to punish productivity, you produce unemployment, you produce poverty. In short, the cycle continues anew. As productivity drops, revenues drop. Then the calls for more revenue come in because the spending never stops, because the spending as we saw with the stimulus and other legislation of the past Democratic majority is that they will then spend even more money to try to get their way out of a crisis.
It was disappointing to see the President buy into the logic that your prosperity comes from the government rather than from the fruits of your own hard work, and that somehow the government is entitled to whatever of your money it deems necessary to continue its wasteful spending habits. Again, this is rejected.
As the gentleman from New Mexico understands, we live in a very difficult period of time. We are making the transition from an industrialized society to a globalized, consumer-driven economy. We have seen families across America and businesses across America make the difficult decision to survive, to compete. They have not only had to discard things that they wanted, but things that at times they felt they needed. And yet one entity, one entity above all has failed to emulate the difficult decisions made by men and women across America, and that entity is Big Government. And the reason is very simple: You can only spend what you make, but Big Government can spend what it takes from you.
And so today, we saw the President again make the argument that if we just took more from the American people or a certain segment of the American people--disregarding his rhetoric that we were all in this together. Evidently that is now as pass as some of his other pronunciations. The reality remains that we have to grow our way out of this. We have to adapt to a consumer-driven economy. We have to have a citizen-driven government, one that understands that the founding principles of this country are there for a reason; that now that we have reached the height of the zenith of the industrial welfare state that fosters dependence of individuals upon it rather than fostering and facilitating self-government and liberty and prosperity, that the day will come when this government and its fiscal recklessness proves unsustainable.
The question before us now is a very simple one: Will we responsibly and constructively address this crisis by performing our constitutional responsibilities and fulfilling the promises we made to our constituents, or will we go on with the same tired tax-and-spend policies that didn't work in the seventies, which in many cases were known quite simply as ``soak the rich; spend the bread''? Bad idea.
So to the gentleman from New Mexico, I thank him for his time and point out that the fiscal debate which will continue here tomorrow is a very simple one: You can protect the Big Government policies of the past or you can look forward to a self-government, a citizen-driven government, a consumer-driven economy that unleashes the entrepreneurial genius of America and the diligence of workers and allows families to move into a future of liberty and prosperity. Or, in short, you can support the President and the politics of the past, or bankruptcy; or we can look forward and let the American people lead us into a new era of liberty and prosperity.
Mr. PEARCE. I thank the gentleman for his comments. And he pointed out that we cannot sustain this course, that actually this course is doomed to fail. I draw attention to my chart again, the far right-hand corner of the chart in which we show here exactly what the Office of Management and Budget says.
This is the President's own economic arm of the White House that says that our prosperity through time has been increasing--that's the upward sloping line--but now it's flattening out to the red zone in the chart. But then we see the chart absolutely stops at some point in time, that's about 2038. That is the point that Mr. McCotter refers to that we are on the path to stopping our economy. Our economy will actually fail because of the policies that we have now. And this is the future that is being demonstrated by our President today in his speech.
Now, as he talks about taxing, understand that we have lost jobs because of our tax policy and we've lost jobs because of our regulatory policy. Now, in the speech today, he talks about tax policy, but it's going in the wrong direction. In previous speeches, he has talked about the need to reform corporate taxes. In his State of the Union speech, he acknowledged that we are taxed too high, that we can't create the economic growth that we need because we are taxing corporations in a fashion that exceeds other nations in the world. So he acknowledges it there.
I was hoping today in his speech that he would clarify, that he would begin to set a target, that he would set a timetable where we can start pulling back those manufacturing jobs because of a reform in tax policy. But curiously, in defining our future and in defining the way that we are looking at the values of the country--that's his declaration for what he wants to do in his speech today--he omits the job creation piece of taxation policy toward our corporations. He acknowledges that in his State of the Union speech. In his State of the Union speech he said that we are taxed at too high a rate, that he wants to cure that. He said that we must have reform. He said we need to use our savings to lower the corporate tax rate for the first time in 25 years, and that was what I think Americans were looking for.
Americans maybe can't express the companies that have left this Nation to find lower tax rates and better economic regulations in other countries, they might not be able to name them, but they implicitly know that they exist. I will look at, again, my chart.
The revenues in this Nation are $2.2 trillion. That's the accumulated taxes that we've paid to our government. The expenses are 3.5. Yes, we can cut our expenses, but we should be concentrating and growing the jobs and having people go back to work. As they go back to work, they begin to pay taxes, and our $2.2 trillion begins to increase. But as every single individual is hired, they come off welfare, unemployment and food stamps, and then they go down into the productive part of society, so we find our economic imbalance collapsing toward itself. The costs collapse as we are hiring people and putting them back to work. And that should have been the concentration of President Obama's speech today.
In the past, because of our policies, we have lost the producers in this country, a list of them: Fender Guitars, Converse, Etch A Sketch, Radio Flyer, Levi's, Craftsman tools, Stanley tools, USA flags, Rawlings baseballs, Brach's candy, IBM computer, NBA uniforms. These are just a partial list of companies that have decided that it is cheaper to manufacture somewhere else because our policies make it too difficult. If we're going to rebuild our economy, we need to rebuild that manufacturing base, and we do that through tax policy. That should be the concentration of both parties at this time in our Nation's history.
The President also mentions, on page 2, that we're amassing alarming debt levels back in the 1980s. If I look at my chart--again, I show our deficits. This year our deficit is $1.3 trillion; that is, our spending exceeds the revenues by $1.3 trillion. That deficit runs over and I show it going into our debt barrel, that accumulated debt for generations past. And Mr. Obama mentions adequately that that debt in the eighties started reaching alarming levels. But from the time of George Washington until the first President Bush--that's after 1980--we had an accumulation of about $5 trillion worth of debt. If you look at the chart, you can see that we have an accumulation today of almost $15 trillion. So we had $5 trillion back in the mid-eighties, and now we're at $15 trillion.
I would point out to the President, when he says we were amassing debt at alarming levels in the 1980s, that the debt he has accumulated in his Presidency is almost equivalent to what we accumulated from the time of George Washington to the first President Bush. That is alarming.
It's an alarming statistic that we have a deficit today in this budget of $1.3 trillion, but in 2007--the last budget written under a Republican Congress and with President Bush as President--the last deficit was under $200 billion. That would be the equivalent to 0.2. Today we are over $1.1 trillion, and even up into when the President came into office, our annual deficit was less than half a trillion. We now have over $1.5 trillion that the President is suggesting our debt levels should be next year. So in his time alone we have increased deficits from the billion dollar category, increased them to the trillion dollar category, and that is alarming debt.
That is what has got other nations pointing to us and saying that is not sustainable. They're afraid when they loan us money, that it is not going to be paid back. So nations are increasingly reticent to lend us money.
That then results in the Federal Reserve buying most of our debt. This year, our Federal Reserve is on track--now keep in mind they get much of their money from the government and then they're loaning us money from the other hand--our Federal Reserve this year is on track to lend us about 60 to 70 percent of the money that we borrow.
Now, Mr. Bernanke expresses deep belief that there are buyers for those Treasury bills out there. There are people who are going to lend our Nation money. But as they look at the economic instability that we're facing, they understand the need that we have to, number one, correct spending but, number two, to grow the economy and create jobs.
Now, there are those skeptics who do not believe that tax cuts will create jobs. Again, I follow the example of Exxon. When you take their profits away, you tax them more, then you actually decrease the amount that they're spending with drilling companies, offshore platforms that they're spending in different communities to get services done to their wells as they drill them.
Also, I would remind the listeners today of Mr. Sweat and that $340,000 for the bulldozer. Those are the evidences that we get that tax cuts will create jobs.
But if we want to look at the other model, tax increases killing jobs, we can look no further than our own country at a time of the tax cuts of 2003. Over the next 4 to 5 years, our economy created over 5 million jobs. As the threat of taxes loomed, as the economic slowdown came in, as the uncertainty of the current administration began to take hold, then we have lost almost 3 million jobs.
So just the talk of taxes, the talk of the cap-and-trade tax permeated the discussions in 2009, it began to cause people to shy away and say we better not invest because we're afraid we're going to be taxed.
The discussions of the health care bill also related the belief that the people had that Washington was going to raise taxes in the health care field. And so again, consumers began not to purchase as much, investors began not to buy new equipment, people everywhere were becoming more cautious, and we slipped into stagnation. Our economy began to stagnate and lose jobs and has not yet been creating those jobs at any significant rate. We're still above 8 percent unemployment, and that was to be the floor we would find if we spent the money on the stimulus in a previous vision that the Obama administration gave to us.
As we think about other examples, I always like to use the example of Ireland. Fifteen or 20 years ago, Ireland began to lower its corporate tax rates. They believed, as I'm saying tonight, that if they would lower tax rates to corporations, that the companies would actually come flooding into the country. They would come there to produce. And it created the Irish miracle, the economic miracle of growth that was caused by Ireland cutting its corporate tax rate from about 36 percent down to around 12 percent. A significant decrease.
Companies began to flood into Ireland. The contrast is also given by Ireland. As they began to find prosperity, they began to spend more than they bring in, this same model that we're looking at here. They began to raise taxes. And now corporations are flooding away.
Just today I was visiting with the managers of a cheese plant that is on the east side of New Mexico. They're an Irish company. They've come here to produce because it is just too difficult, too high, the taxes are too great in Ireland. My brother-in-law works for Hughes Tool. He was at Hughes Tool back when they moved factories, production facilities back into Ireland. This year, my brother-in-law went to disassemble the last plant in Ireland because they've gone up on their tax rates and no longer was it a good place to operate.
If we're interested in solving the economic chaos that we're facing, we can't get there simply by spending cuts; we can't get there by taxing the rich. In other words, taxing the rich is going to drive us further away from the goal, further into stagnation, further into job losses. If we're going to rebuild our economy, we must concentrate on economic growth.
And the nice thing is that the actuarial tables tell us that if we will grow jobs at about 3 1/2 percent, that this imbalance begins to disappear, that the worry of the future begins to dissipate simply because we grow the economy, we create jobs, we take people off of unemployment, we take people off of welfare, off of food stamps. Our 3.5 cost to the government begins to diminish, the 2.2 begins to grow, we find ourselves reaching balance, and over the long term, we find ourselves beginning to reduce this $15 trillion debt. We find ourselves able to sustain the $202 trillion worth of unplanned expenses--excuse me, they're not unplanned, they're simply unpaid for--the expenses of Medicare, Medicaid, and Social Security. That's where the real threat lies.
And nowhere in Mr. Obama's plan did I see a dealing with those significant drains on our economy. His only plan is to tax the rich, the millionaires and the billionaires, by making them pay their fair share. And that, he says, is going to fix the economy.
That, my friends, is going to wreck the economy.
When we choose that course of making the rich pay more than their fair share, they owe it to us. It's only fair, he says in his speech, that they would pay a little more. When we do that, we're going to choke jobs off even more. Other nations, our 2.2 is going to be less. We're going to put those people out of work, just like we did offshore in Louisiana. We put about 100,000 people out of work there. We're on the way to putting them out of work.
Those people, instead of paying taxes, are going to pay no taxes, but they're now going to cost us unemployment benefits; they're going to cost us in Medicare, Medicaid. They're going to cost us in food stamps, welfare. And they're not going to be producing.
So with this vision of taxing the rich, we're going to move more to an unproductive society because you cannot create more productivity by taxing it. If that were the case, every nation would be productive. Every nation can always go up on taxes. But not every nation can create the environment to where innovators are allowed to produce.
The innovations in the oil and gas industry have been dramatic, and yet that's the single area it appears that President Obama is going to kill first, that whole specter he refers to as ``yesterday's fuel,'' ``yesterday's energy.''
If it is yesterday's energy, let the President take the lead and cease using it. Use the energies of tomorrow. Stop using that energy of the past. Let him fly an airplane on something besides jet fuel. Please. Give us that bold vision and courage and leadership. Let him show us the way if fossil fuels are a thing of the past.
But I suspect, like you and me, that the President is going to continue to drive his limousine on petroleum-based products. He's going to continue to fly Air Force 1 not on solar power, but on jet fuel. I suspect that all of Americans are going to do it. The only thing that we're going to have as an outcome is less plentiful energy, fewer jobs, a greater imbalance in our government and our government spending, greater uncertainty for the future.
That's a shame that that's the leadership that we're getting. Because at this point in our world's history, it would be possible, if we are literally looking to recreate our economy, to draw back the manufacturing jobs of the past, to put them back to work here, to rekindle the industries that are gone so that we do have a bright future, so that people have not just jobs, but careers to face; that they are able to plan for their future; that they are able to save for a house, save for the kids' education; that they are able, truly, to live the American Dream.
That's what has made this country great in the past, and I think that Americans at this point in time will find that leadership for the future.