BREAK IN TRANSCRIPT
Mr. WEBB. Mr. President, I would like to take some time at this point to talk about some events in Asia. I think we all need to be paying very close attention to them. Before I do that, I would like to clarify my position on the vote we are going to be taking this afternoon.
First, I wish to emphasize that I agree with all those comments that have been made by my Democratic colleagues about needing to keep these tax cuts in place for our lower income workers, our middle class; I just happen to believe we need to keep them in place for everyone who is making their income through what we call ordinary earned income.
Earned income, ordinary earned income, is the strongest indicator that a person in this country is actually accumulating wealth, which is the American dream, and it is not necessarily that you have wealth--whatever the amount may happen to be. Passive income, which is income from capital gains, such as investment in stocks or dividends, is one of the best indicators that you actually have accumulated a certain amount of wealth--you have enough money to set aside and invest it.
So my long belief has been that if we are going to raise taxes on income, in addition to these other things we have been talking about with respect to tax loopholes and subsidies and those sorts of things, we really ought to be doing so in the fairest place, and the fairest place is from passive income, not ordinary earned income. I have said since the day I announced for the U.S. Senate years ago that I will not vote to raise taxes on ordinary income of any amount. I gave a rather detailed set of floor remarks several months ago about this issue.
I would like to share this particular chart with my colleagues today before I begin speaking on the situation in the South China Sea. This shows sources of income for the top 0.1 percent. We keep talking about these people at the top who are not paying their fair share. Well, two-thirds of the money that is being made by the top 0.1 percent in this country--that is 140,000 taxpayers--is being made from passive income. It is being made from capital gains and dividends, which are taxed at a much lower rate than ordinary income--right now, 15 percent.
So in addition to fixing the larger Tax Code, I would like to say again to my colleagues that this is the area where we really should have the courage to make some decisions.
I was reading an article in the Economist--this week's edition--pointing out that American profits, corporate profits as a percentage of GDP, are actually higher now than they were at the high point before our economic crisis. In other words, corporate profits have gone up to a point where they are now about 15 percent of our GDP at the same time our wages have stagnated and gone down. They made one point in here where they said there is an irony that a high share of GDP for profits automatically results in a low share for wages. Why? Because the people who are making the money by running these companies--the executives--are selling their stocks, their stock options, taking the lower percentage on capital gains in order to make their money.
So I am not going to vote for raising taxes on ordinary earned income. But, again, I will renew my suggestion to this body that we take a good, hard look at this because this situation is creating the greatest disparity among our people.
SOUTH CHINA SEA
Mr. President, for many years, since well before I came to the Senate, I have had the pleasure to work and travel inside East Asia in many different capacities--as a marine in Okinawa and Vietnam, as a journalist, as a government official, as a guest of different governments, as a filmmaker, as a business consultant.
What we have been able to do, I think, in the last 5 or 6 years in order to refocus our country's interest on this vital part of the world is one of the great success stories of our foreign policy. But at the same time, we have to always be mindful that the presence of the United States in Southeast Asia is the guarantor of stability in this region.
If you look up here at the Korean Peninsula, you will see that for centuries there has been a cycle where the power centers have shifted among Japan, Russia, and China. This is the only place in the world where the geographical and power interests of those three countries intersect, and they intersect, with the Korean Peninsula being right in the middle of it.
We saw earlier, actually in the middle of last century, what happened when Japan became too aggressive in this part of the world. The Japanese fought Russia in the early 1900s. They defeated them. This is when they moved into Korea, occupied Korea, moved into China.
This resulted in our involvement in the Second World War. And since the Second World War, our presence has been the guarantor of stability. We have seen blowups, the Korean war when we fought China in addition to North Korea, the Vietnam war, in which I fought. But generally the long-term observers of this region, people such as Minister Mentor Lee Kuan Yew of Singapore, will say that the presence of the United States in this region has allowed economic systems to grow and governmental systems to modernize. We have been the great guarantor of stability.
The difficulty we have been facing in the past 10 to 12 years has been how to deal with the economic and international growth of China in this region. Before China's expansion, when I was in the Pentagon in the 1980s, we had seen the reemergence of the Soviet Union. When I was in the Pentagon at that time, on any given day Russia's dream of having warm-water ports in the Pacific had been realized, to where they would have about 20 to 25 ships in Cam Ranh Bay, Vietnam, at the end of the Vietnam war. But for the past 10 to 12 years, the challenge has been for us to develop the right sort of relationship with China so we can acknowledge their growth as a nation but maintain the stability that is so vital in this part of the world.
The last few years have been very troublesome. There have been a number of issues out here in the South China Sea that for a long time our military leaders assumed were simply tactical engagements where Chinese naval vessels and fishing vessels would be involved in spats with the Philippines off the coast of Vietnam. But it became very clear--and also in the Senkaku Islands near Japan.
It became very clear after a while, though, that what we are seeing are sovereignty issues. People were talking for many years about solving the situation in Taiwan, the sovereignty issue in Taiwan. It was clear--I was speaking about this for many years--that there are many other sovereignty issues once Taiwan is resolved: the Senkaku Islands, which Japan and China both claim, the Paracels, which China and Vietnam both claim, the Spratlys, which are claimed by five different countries, including China, Vietnam, and the Philippines.
So we started seeing a resurgence of incidents that became military confrontations over the past couple of years. Our Secretary of State and this administration were very clear 2 years ago, almost to the day, that these situations were not simply Asian situations, that they were in the vital interests of the United States to be resolved peacefully and multilaterally.
We have been struggling on the Foreign Relations Committee to try to pass the Law of the Sea Treaty where these sorts of incidents--which, by the way, are more than security incidents, they involve potentially an enormous amount of wealth in this part of the world. We have had a very difficult time getting a Law of the Sea Treaty passed where most of the countries around the world recognize the basic principles of how to resolve these international issues through multilateral involvement.
In the absence of a Law of the Sea Treaty, and, I think, with the resurgence of the Chinese--a certain faction of the Chinese tied to their military, China has become more and more aggressive. This past month has been very troublesome. On June 21, China's State Council approved the establishment of what they call the Sansha City Prefectural Zone. This is literally the creation from nowhere of a governmental body in an area that is claimed also by Vietnam.
Unilaterally on Friday, July 13, because of disagreements over how to characterize the South China Sea situation, ASEAN--the Association of East Asian Nations, a 10-nation body, which has been very forthcoming in trying to solve these problems--failed to issue a communique about the South China Sea issues, a multilateral solution of the South China Sea issues.
On July 22, the Central Military Commission of China announced the deployment of a garrison of soldiers to the islands in this area. The garrison will likely be placed in the Paracel Islands right here, as I said, claimed by Vietnam, within the exclusive economic zone of Vietnam.
July 23, China officially began implementing this decision. It announced that 45 legislators are now to govern the approximately 1,000 people who are occupying these islands. They have elected a mayor and a vice mayor. They have announced that a 15-member standing committee will be running the prefecture. They have announced that this city they are creating will administer more than 200 islands, sandbanks, reefs, covering 2 million square kilometers of water.
In other words, they have created a governmental system out of nothing. They have populated with a garrison an island that is in contest in terms of sovereignty, and they have announced that this governing body will administer this entire area in the South China Sea.
China has refused to resolve these issues in a multilateral forum. They claim these issues will only be resolved bilaterally, one nation to another. Why? Because they can dominate any nation in this region. This is a violation, quite arguably, of international law. It is contrary to China's own statements about their willingness to work with ASEAN, to try to develop some sort of code of conduct. This is very troubling. I would urge the State Department to clarify this situation with China and also with our body immediately.
I yield the floor.
BREAK IN TRANSCRIPT