Congressman Gil Gutknecht spoke about the loss of manufacturing jobs to overseas companies at the Develop-ment Corporation of Austin's (DCA) annual meeting Monday night.

"We are losing the manufacturing base here in the U.S., and all of the sudden, we're not talking about low-tech jobs, we're talking about high-tech jobs," Gutknecht said, citing figures from Rochester that claim 550 high-tech jobs will be lost to China this year. "That is a very serious thing."

He said that there were three areas that needed to be changed in order to insure a strong manufacturing base in the U.S. -- health care, tort law and taxes.

It is difficult for businesses to compete with overseas companies because of the drastic difference in cost of health care, Gutknecht said.

"We're spending 14.8 percent of our gross domestic product on health care," he said. "It's getting more difficult for manufacturers and small businesses to remain in competition in a market where we spend 14.8 percent and other places, like Taiwan, spend 5 percent."

Gutknecht also called for tort liability reform.

"If we want to compete in the world marketplace, I don't think we can keep shoveling hundreds of millions of dollars into the pockets of trial lawyers," he said.

According to Gutknecht, liability insurance takes more money away from business, giving overseas competitors even more of an advantage.

Income tax, he said, is the third area that needs reform.

"Right now the tax on dividends for investors is over 65 percent," Gutknecht said. "We have got to get rid of this income tax system."

"(Income tax) is embedded in the cost of everything we buy," he said. "And everything we try to export is 25 to 35 percent taxes," he said.

Gutknecht also said that the stimulus is in place for a national economic recovery. In particular, if the United States goes to war with Iraq and everything goes well, a drop in oil prices will help the economy to improve.

"The truth is if oil prices drop as low as we think they will, that will be more of an economic stimulus than anything we do in Washington," he said.

In other business at the meeting, the DCA recapped its year. Two loans were made in 2002 -- one to the Cooperative Response Center for technology equipment and furnishings and another for Austin Packaging Company for resource development. George Brophy, President and CEO of DCA, also mentioned the success of the DCA in closing a deal with McNeilus Truck and Manufacturing Inc. of Dodge Center to build a facility in Dexter.

Matt Merritt can be reached at 434-2214 or by email at matt.merritt@austindailyherald.com