February 26, 2004
Rep. Don Manzullo speaks about taxes, steel tariffs, health care, and manufacturing's future.
Rep. Don Manzullo, R-Ill., has emerged on Capital Hill as the mouth for manufacturers.
As a congressional representative for a district in which many manufacturers have closed their doors in recent years, he says he can't help but accept that role. His public statements, sponsorship of legislation, and organization of public hearings related to protecting the U.S. manufacturing base have earned him the title "manufacturing champion," bestowed upon him by a manufacturing industry periodical.
His commitment to his beliefs rankles some within his own party at times. In November Manzullo rallied 24 colleagues to stand up against a corporate tax bill that passed the House Ways and Means Committee along a party-line vote. The bill drops the top corporate tax rate to 32 percent from 35 percent. It also narrows deductions for interest payments made by U.S. subsidiary companies on loans from overseas parent companies, which Manzullo contends prevents foreign direct investment and eliminates a crucial generator of jobs.
Manzullo also says the bill (H.R. 2896) targets tax relief for U.S. companies operating overseas and encourages companies to move production overseas; his own bill (H.R. 1769) looks to reward manufacturers for keeping production in the U.S.
A resolution to the issue was expected to occur before Congress adjourned for 2003. If Congress does not pass a bill and fix its current export tax program, which the World Trade Organization ruled was in violation of international law two years ago, it faces the threat of up to $4 billion in tariffs on U.S.-manufactured goods shipped to Europe.
As can be seen, some of these battles are tedious and difficult to simplify. Nonetheless, Manzullo, who grew up in an apartment above the grocery store his father owned, says he remains committed to the fight. The FABRICATOR®sat down with Manzullo in an exclusive interview to find out where this fight is headed and get his views on other areas that concern metal fabricators.
Why is the protection of the U.S. manufacturing base so important to you?
Don Manzullo: We have 11-1/2 percent unemployment [in Rockford, Ill.]. If we grew avocados there or I represented a wealthy suburb in New York, this issue may not be as important.
How are things going in terms of more attention being paid to the loss of U.S. manufacturing jobs?
DM:Just look at the number of hearings we've had on manufacturing [over the last three years]. There have been more than 40 hearings on manufacturing—everything from access to health care to finance to procurement to technical assistance.
But only about 40 to 45 congressional districts out of 435 have significant manufacturing bases. That's why it has taken so much time to call the nation's attention to the fact that we are losing our manufacturing base.
We've also had some success with our manufacturing caucus. It started with 29 members and since then it has [grown to] 62 members of the House in the caucus. That includes people such as Jerry Nadler [D-N.Y.], who represents downtown Manhattan, the people from the financial districts. [He's there] because those jobs are going.
Of all the proposals that are out there that could help fabricators, some of the tax proposals arguably could make a difference right away. Do you agree?
DM:Have you been following the war going on between me and the chairman of the House Ways and Means Committee [Bill Thomas, R-Calif.]?
We submitted a bill at the end of April, and the Ways and Means Committee worked on theirs for months. Then they finally said, "Well, [domestic manufacturing] is a problem. We can use [language from the Manzullo-sponsored bill] to address domestic manufacturing."
But they added this international tax component which would penalize foreign direct investment. Look who we have here in Rockford. The Israelis, the Italians, the Japanese, and even the Chinese—in a nonsensitive industry. With America banks loath to invest in domestic manufacturing because of underwriting requirements and the soundness and safety, were it not for foreign direct investment, you can write off 6.5 million jobs in this country. It's huge.
And the other part of the fight with the Thomas bill is the portion that decreases taxes on American manufacturers that manufacture overseas and then bring their stuff back over here. So the manufacturer lifts up stakes here in the U.S., manufactures in China, and ships the stuff back here. They get a tax decrease. I'm sorry, that's not the way it should be."
So we are engaged in this war to get these changes made.
The government buys more than $200 billion worth of goods and services. This includes many imported goods. How successful do you think you'll be in trying to encourage governmental departments, particularly the Department of Defense (DOD), to support the "buy American" provisions?
DM:DOD has been stuffing us because they can't buy stuff offshore fast enough.
I introduced an amendment [the DOD budget bill], but it got shot down.
I still believe that people that order stuff should realize that we need to maintain a strategic base.
But we did get some traction with the Coast Guard bill. The Coast Guard said the buy America provisions did not apply to them. Meanwhile, the Coast Guard is building bridges in the U.S. with foreign steel.
That has since stopped. They now have to follow the buy American provisions.
Steel prices obviously are a hot-button issue with fabricators. The World Trade Organization (WTO) has ruled against the 201 steel tariffs, and the President Bush's adminstration has withdrawn his support of the tariffs. What do you think of this situation?
DM:It's a very technical issue, but the bottom line is that it goes to show the folly of tariffs. They never seem to work.
I mean, sometimes they work if they're very targeted. But this was a political issue from the start.
Health care is another issue that is at the forefront of many fabricators' minds. In fact, some fabricating business owners have made statements that they might be forced to eliminate contributions to any type of health care coverage. In your mind, what needs to happen to straighten out the existing health care crisis?
DM:The scenario you describe may be the way, and that may be what it takes to bring down the cost. You notice that some things are not covered by health care, such as LASIK surgery. Notice how the price of that has fallen. It has gone from $5,000 to $800.
At one time, [health care coverage] was called major medical. Today people want coverage for everything. And you're torn, because I really believe in preventive medicine. The old saying is an ounce of prevention is worth a pound of cure. I believe that. My wife has mammograms; she would have a mammogram whether it was covered or not. I don't want her to have breast cancer.
Look at the colon-rectal screening. And now they have a noninvasive screening. And colon rectal cancer is one of the biggest killers in America. Then you spend this money on technology, pay for it with increased premiums, and people live longer. It puts more of a burden on Social Security and more of a burden on health care. There is no easy way around this.
But people are getting killed. I met this one guy whose premiums went up by 57 percent and then he shopped somewhere else and he got a bargain. It went up by 48 percent. How long can you provide health care at a rate like that?
Of all the things that can be done to assist manufacturers, what is the one area that needs to be addressed immediately?
DM:The first thing we have to do is we have this stupid visa problem, because we have stuff that people want to buy and we can't sell them because we treat every potential customer like a terrroist. That's stupid. These items are made efficiently, they are the best in the world, and we are ready to sell them. But we can't bring the buyer here.
That's something we could change overnight. But it's so politically charged. I'm sorry, I haven't seen any Chinese or Indians that have been charged as terrorists.
And we are trying to work on a multivisit visa that's good for a year. At least put businesspeople in a business-visa class. Make it separate. So you can sell the stuff you want.
So here you are. You don't need tort reform, health care reform, tax reform, no need to bother with unions, no need to bother with management. [Fixing the visa problem] is something we can do overnight. But we don't do it. That's stupid.
We do some of the dumbest things in the government itself to discourage manufacturing. And the reason for it is that the policymakers don't understand manufacturing. They have no clue. They don't know what it is about. They don't know what a pink shop rag is. They don't know the sweet smell of machine oil. They don't know the difference between a brake press and a bench press.
Are you optimistic about the future?
DM:You have to be optimistic. But it doesn't mean I'm going to win.
In Washington, you have to raise hell first and then you hold a hearing. Then you force the bureaucrats to come to the hearing under threat of federal subpoena and then you get something done. Because people are so entrenched in their ways.