Mr. SOUDER. Mr. Speaker, I'm going to make a number of comments here that will be in the Record tomorrow. We'll also have the things I refer to--because I'm going to make a number of points--on our Web site in the next hour.
President Obama made his first visit after the stimulus package passed to Elkhart, Indiana, to Concord High School for a town hall meeting that straddles Congressman Donnelly's and my district. Unemployment was 15.3 percent when he visited. It went higher, up to close to 20 percent. It's now at 16.5, I believe. In other words, we've gone backwards.
What he said that day--referring to a previous campaign visit there--``I promised you back then that, if elected, I'd do everything I could to help this community recover and that's why I come back today because I intend to keep my promise.''
Now, some interesting things have been happening. We've heard about blaming the banks. You know, business, to invest, has to have an idea that a recovery is coming. It has to request the money. And part of the challenge here if they're uncertain whether they're going to get taxed in a small business tax, if they're uncertain whether they are going to be taxed in health care, if they're uncertain of what the energy costs are going to be in Indiana--because ours are projected to get hit harder than any other congressional district in America, and I have the number one manufacturing district--they aren't asking to borrow and the banks don't know how to value the assets.
We have to have a recovery, not taxes and pressures on industry. There's a classic book, ``Competitive Advantage of Nations'' by Michael Porter. He's written a lot of books since then, including one on health care I don't particularly agree with. But he's a very reflective man, and these are the basic principles of how you develop clusters.
He says, ``Creating competitive advantage in sophisticated industries demands improvement and innovation--finding better ways to complete and exploiting them globally, and relentlessly upgrading the firm's products and processes.''
In another section of the book he says, We ``must create new advantages at least as fast as competitors can replicate old ones.''
He also points out the United Kingdom, in their R&D, is among the highest compared to GDP of any nations, but top heavy government R&D. They don't have the private sector R&D, so they don't have the growth, and the growth they have is in the wrong areas.
Now, why do I bring this up? In a newsletter of ``ORTHOKNOW, Strategic Insights Into the Orthopedic Industry,'' John Engelhardt reports the 10 to 30 percent tax in the Senate Finance Committee's bill that was passed yesterday would lead to roughly a tax of 50 percent of the R&D that the orthopedics industry does. For example, Zimmer--based in my district--in the orthopedics cluster, Zimmer would be taxed $94.7 million and their R&D is $194 million. They're the biggest orthopedic company.
Biomet--which I believe is the fourth or fifth biggest orthopedic company--would be taxed $60.9 million. R&D estimate for 2008 was 82.2, and they had a loss.
Now, Michael Porter points out when you lose one or two, you lose that competitive pressure, that you cannot sustain R&D with the new taxes, especially if at the margins the cost of the tax is greater than the profits of the firm, let alone the R&D.
I also refer to a USA Today article of this morning that says, ``Orthopedic Industry Has Enjoyed Fine Health.'' And it goes to Warsaw, Indiana in my district where three of the five biggest of the orthopedic companies, plus Medtronic, plus Orthopediatric, plus 6,000 direct feeding, plus as you move to South Bend and over to Fort Wayne and down to Indianapolis--and in fact throughout the Midwest--and then if you look at the whole industry of the United States, it's a cluster.
We had this theory in America that we were going to move up the ladder. And as other countries beat us on labor, we would do things like pharmaceuticals, like orthopedics, like biotechnology. We'd be the cutting edge, except now we're going to tax them to death.
So guess what this article says? They're looking at going overseas. I've already heard this. Why won't they go offshore if they can get cheaper labor? They can get engineering research, they can get government subsidies to some degree, but most importantly, they're going to go where they can do R&D and the combination cheaper than they can do it in the United States. A tax won't bring in revenue, a tax will drive our clusters away. To put the taxes on the most innovative clusters is unbelievable. I just don't understand, particularly in a State where the President said not 30 miles away from the center of the orthopedic industry where many of these parts people are, ``I promise you it will improve.''
The maverick CEO, Dane Miller, and the story of Biomet illustrates another myth that these are some sort of rich billionaires. It talks how he put a titanium hip in his own body because initially they wouldn't believe it, then it worked, and that's partly how we got the innovation today.
I encourage people to read this bio of Dane Miller.
