Concurrent Resolution on the Budget for Fiscal Year 2005

CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2005 -- (House of Representatives - March 24, 2004)

The SPEAKER pro tempore (Mr. Gilchrest). Pursuant to the order of the House of Tuesday, March 23, 2004, and rule XVIII, the Chair declares the House in the Committee of the Whole House on the State of the Union for the further consideration of the concurrent resolution, H. Con. Res. 393.

BREAK IN TRANSCRIPT

Mr. PEARCE. Mr. Chairman, I appreciate the gentleman yielding me time.

When I go to the district, I get the very reasoned question, why would we give tax cuts in a time of deficit? I think there are important reasons to understand.

First of all, the governor of New Mexico said it best, tax cuts create jobs. He said that to the Democrat legislature last year just before they passed the tax cuts in New Mexico that had been sought for over 8 years under the Republican governor. They passed those tax cuts. We passed the tax cuts here nationally and jobs began to create. In July, New Mexico was number two in the Nation in job growth because tax cuts do create jobs.

One of the ways they do it is small business. The tax cuts we gave, the small business expensing created tremendous jobs in our local district.

Good friends of mine at Watson Truck & Supply reported to me just before we gave the tax cuts that they were out of back orders. There were no more units to be built. They have a manufacturing facility that builds equipment for the oil fields. They were out of back orders, no more orders for their equipment.

The day after we passed the tax cuts, they got more orders than they had had in their entire history. They have 2 years of back orders now. People were hired, jobs were created, and for each new piece of equipment they put out, four to five new jobs were created additionally.

The accelerated depreciation as one of the most dramatic things that we did for small business in the tax cuts last year. Small businesses began to buy equipment.

My wife is the chairman of our board. She called me the day we passed the tax cuts, especially the one with accelerated depreciation and said, we should buy new equipment. So we ordered a large new pump that we had been waiting on to order. That is the way that tax cuts create jobs.

If we want to stop the outflow of jobs in America, we will continue to cut the taxes for American business, but also, Mr. Chairman, we will have a continued action on the part of the other house to pass the tort reform that we passed out of this House.

Frivolous lawsuits will drive all major corporations out of America if we do not do something about them.

We have heard a lot about what we should do as far as the deficits. My friend from New Jersey (Mr. Garrett) said it best, we do not have a problem with the amount of money that Washington collects from its people. We tax enough.
The problem that we have is that we spend too much.

Much has been made out of the deficits that we are facing right now, but very little response is made that actually tells the beginning of those deficits. If we think back to the end of 1999 and 2000, in the last years of President Clinton's term, we remember that the dot-com industry collapsed. We were seeing tremendous capital gains from that industry where stocks escalated to a tremendous height without any product, without any revenue, without any net profit. Those stocks were emotionally driven to a high rate. They were not driven by practicality.

It was a necessity that the dot-com boom would collapse to a certain extent, and when it did, it took all of the capital gains and thrust that surplus that extended as far as the eye could see into a nonsurplus. It was an imaginary ramp up in the economy that could not and would not be sustained.

That was the beginning of a recession that was followed on by 9/11, shocking the economy into a deeper recession and followed still by Global Crossing, Enron, WorldCom and others who drove investor confidence to new lows.

Our economy has had several deep shocks to it. We felt that the tax cuts would create a rate of growth that should create new tax revenues from a higher economy. Those expectations were met in the third quarter of last year with an 8.2 percent rate of growth and 4 percent in the fourth quarter. That is exactly what the tax cuts were intended to do, and I thank the gentleman for yielding me the time.