Medicare and Medicaid Extenders Act of 2010

A fairly short period of time.

Mr. President, I call up amendment No. 4331 to the Baucus substitute.

Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. President, at this time, I ask that the amendment be divided in the form I now send to the desk.

Mr. President, this is an amendment that will actually pay for everything we are doing. It does several things that the American people are demanding that we do.

It discloses the true cost of borrowing and spending that we actually do in this body.

It reduces the budgets of the Members of Congress. We had a 4.8- percent increase in our budgets. This is going to decrease that by less than a third, making us suffer with the rest of the country in terms of trying to get control of our massive debt and deficit spending.

It enacts what President Obama has been asking his own agencies to do: it takes 5 percent from all the agencies, except Defense and Veterans Affairs, and says: Cut that amount. The size of the agencies has doubled since 1999. We are asking the agencies to find 5 percent of efficiency within their agency to help us not continue to add trillions of dollars of debt to our children.

It eliminates nonessential government travel. It will save us $10 billion over 10 years. It doesn't eliminate essential; it just says that when you can do a teleconference, you do that. You don't necessarily fly and take a hotel room when you can accomplish it another way.

It reduces unnecessary printing and publishing costs of government documents. That saves us $4 billion over 10 years. Nobody reads these. They are all available online. If we get rid of the ones that don't have to be printed, we save hundreds of thousands of trees every year-- which absorb CO2, by the way--but it also saves us $4.4 billion by not printing stuff we all have on our computers already.

In working with the OMB, they are behind what we are trying to do in terms of unused and unneeded government property and government buildings. So what it does is it gives us $15 billion in direct savings in revenue by getting rid of things that we are spending $8 billion a year on maintaining that we are not using. So we save $15 billion over 10 years, plus we get the savings of not having to maintain what we own but are not using.

We will sell unused and unneeded equipment. We have $\1/4\ billion worth just sitting there in warehouses. We are never going to use it, but it is sitting there. We can get good prices from the private sector that can go out and utilize this and put it to work.

It caps the total number of Federal employees. Why is that important? I am a supporter of our Federal employees. We had a speech on the floor today accusing those of us who want to limit the growth of the Federal Government in terms of employees and the size, saying we were against our Federal employees. We are not. What we are saying is that in a time when we are running a $1.6 trillion deficit--that is what it will be this year; we said 1.4, but we have already borrowed $200 billion more than that on this floor since February 12--we ought to be getting more productivity out of what we have, not because it is not the right thing to do--it is the right thing--but because we cannot afford to be lax in anything we are doing today. Every time we don't save a dollar, we are now charging that dollar to our children and grandchildren.

It puts a cap on the total number of Federal employees. There is plenty of flexibility within the Federal Government. The Federal Government has added 160,000 employees in the last 16 months. There are 441,000 for the census, but that doesn't count them. This is 160,000 full-time Federal employees in the last 16 months. How many more employees do we need? Can we afford more Federal employees at this time or should we get more with what we have?

We also put a temporary 1-year freeze on total salary. That doesn't mean people who work for the Federal Government cannot get a raise. They can. But they need to be more productive and recognized for it. But there should be no more automatic pay increases this next year because we are running a $1.6 trillion deficit and also because the average Federal employee makes $78,000 a year and has benefits worth $40,000. The average private sector employee makes $42,000 a year and has benefits worth $20,000. Freezing that for 1 year will have a minimal long-term effect, especially when we saw today that we are actually in a deflationary period where the Consumer Price Index went down one-tenth of 1 percent. We had a nine-tenths of 1 percent decrease this year. So the cost of living is not going up; it is going down. All we are saying is, let's do this for 1 year and demonstrate that we understand the tough choices the public is making and that we are willing to make tough choices.

I agree, it is a tough choice. It is hard. But it does not mean that stellar employees cannot get raises. They can. That saves $2.6 billion this year, for 1 year.

It collects unpaid taxes from employees of the Federal Government. We have employees of the Federal Government who owe $3 billion. It directs a garnishee of those payments from the Federal employees. These are not disputed. These are not still under negotiation. These are things that have already been agreed to that are owed by Federal employees to the Federal Government. That gets us $3 billion that we do not have.

We also have a section that excessive duplication and overhead within the Federal Government should be eliminated. Two easy examples: Across 60

different agencies, we have 70 different programs to feed people who are hungry. Why do we have 70? Why don't we have 7 or one? Not one of those 70 programs has a metric on it to see if it is effective in what it does.

We have 105 programs across seven different agencies that incentivize at the cost of billions of dollars a year people to go into math, science, engineering, and technology. Why do we have 105 programs? Why not one run by one set of overhead and one agency and measure the results? There are 640 other examples of duplication just like that in the Federal Government.

What this amendment says is we ought to be about eliminating that duplication. We ought to be able to increase productivity and also increase the results of the very programs for the people we are trying to help.

The other thing we do is we eliminate bonuses for contractors to the Federal Government who are not meeting performance requirements. That is $800 million a year that your government is paying out to people who do work for the Federal Government who do not meet the minimum requirements for their contract, and yet we are paying them $800 million in bonuses as if they were meeting the requirements of their contract. That saves $8 billion over 10 years. None of us would do that with anybody who worked for us. Why do we allow the Federal Government to do that?

This government gives the United Nations 25 percent of its entire budget. But we also give voluntary payments to the United Nations. I just talked with Peter Orszag from OMB, and I am getting that report as we speak. It was due January 1. It is now mid to late June.

What we do is eliminate no more than $1 billion more than what our obligations are in terms of peacekeeping or our dues to the United Nations. There are good reasons to do that. There was, with the last foreign appropriations, a requirement that the United Nations show us where our money is going. That got thrown out in conference. But we do not even know where the $6 billion a year that we give to the United Nations is spent because they will not show us where it is spent. We would never tolerate that from any agency we fund. And yet we don't. We are saying do not give more than a billion more than that to the United Nations. We limit that. That is a $10 billion a year savings.

Here is what we do know about the United Nations. In the peacekeeping money that we give, 45 percent of it is lost to fraud. Think about that. Forty-five percent of the $3 billion that we give to peacekeeping operations is lost to fraud, documented. We found that one out by accident. They did not want us to find that out.

We ought to be good stewards with the money of the American people when it comes to contributing their money to the United Nations.

Returning excessive funds from an unnecessary, unneeded, unrequested, duplicative reserve fund that will never be spent: That is $362 million. It is a one-time savings. It will never be spent. It is sitting there. We ought to take it back.

Rescinding unspent Federal funds: There is $1.7 trillion sitting in accounts right now. Of that, $690 billion has not been obligated for the future expenditure. We are saying move $50 billion of that back into this year and use it to pay for things that are important, such as unemployment insurance, rather than borrow from our children.

Why is that important? If you have three bank accounts and each one had $100 in it and you had to write a $200 check, you would go to the accounts you had and write the check from the two accounts so you could pay the check. This money is rolling out there to the tune of $600 billion every year that is not obligated.

Common sense would say we would be more efficient with our money rather than paying interest on that money. We would use it in a more timely fashion. Everybody does that except the Federal Government. We ought to be doing it as well.

Reducing wasteful costs at the Department of Energy. The Department of Energy is supposed to be setting the example for this country on energy efficiency. They are the worst agency as far as energy costs and efficiency in energy. All we are doing is you follow the rules you have set for everybody else. It saves $13.8 million per year. That is just one agency following the rules they have told every other agency to follow.

Finally, we strike the new taxes that are in this bill because we do not need to pay for them because we can cut spending somewhere else. The last thing we need to be doing, as we have the threat of a double- dip recession, is taking more private capital out of the economy and putting it into government because the multiplier effect of government spending is very low. Private spending multiplier effect is about 1.5. That means for every dollar you spend, you end up generating about $1.5 in economic activity. For every government dollar that is spent, you generate $1.1 in economic activity. The last thing we ought to be doing is raising taxes. I don't care where it is in this economy. It is so precarious that we need private capital being invested to create jobs and opportunities for jobs in this country.

I have listed the vast majority of provisions that are in the bill. I will be back to discuss each one individually.

I thank the Chair, and I yield the floor.

Madam President, I offered a rather lengthy amendment to this bill, not because I was trying to be cute, but I think the American people have got to hear from us on whether we are going to make some of the commonsense changes they would expect us to make.

There are a lot of easy votes in this amendment. I mean, to not pay contractors when they do not deserve to be paid, whether to continue to do it, we did it to the tune of $6 billion at the Pentagon in the last 6 years. That is not hard.

To quit printing and wasting money on printing things we should not be printing, that is not hard. But the debate is.

It is just as important as taking care of those people who are unemployed. If we don't cycle through to a good recovery, we are going to have less opportunity to borrow money to help those people who are unemployed. We now stand at a crossroads we have never been at before. Our gross debt is in excess of $17 trillion. Our net debt is at $13.2 trillion. The difference between that is the money the Congress has stolen from Social Security and myriad other trust funds that are much smaller. But we have borrowed it and put a piece of paper in that says: We will pay you back.

The fact is, we have to pay interest. It is compounded. We will eventually have to pay it back. Only in Washington would we talk about net debt when, in fact, we are paying interest on the gross debt.

We had testimony before the debt commission 2 weeks ago by Dr. Reinhart, one of the leading economists in the country, who said we are in excess of 90 percent of our GDP, our debt. What did they tell us? We are struggling with a recession. We are trying to come out of a recession. They told us with that much debt, it is suppressing the growth of our economy by 1 percent a year. One percent a year is $170 billion in productivity and economic activity that didn't happen. If we calculate that in terms of jobs, that is about 3 million jobs that are not going to be created next year because Congresses before us and this one as well have refused to live within their means.

We have, in terms of Washington, a relatively small bill now, $100 billion plus. It was pulled from the floor to make it smaller--not to pay for a significant amount more, just to make it smaller--when, in fact, what the American people want us to do is find something within the Federal Government that doesn't make sense, don't borrow it from our children, do the hard work of finding what is not working here.

We are going to have a cloture vote on this legislation. My hope is, unless we change this bill, that this bill does not proceed until we accede to the demands of the American public. It is simple: Congress, start living like we are living. Start making the hard choices. When you have a limited budget, do what is most important first. Do what is least important last. Get rid of waste, get rid of things that should have been gotten rid of a long time ago and do what is best for the future.

We are not doing that with this bill, and we can't get anybody to debate on the other side. They will not defend it. You cannot defend borrowing $50 billion more against our children and grandchildren when we have $300 billion of waste, fraud, abuse, and duplication in the government right now that we have rejected every time when those amendments come to the floor. You can't do it.

So we play the political game in Washington. We had it in February, when our colleagues passed pay-go. It is really to pay-go or not to pay-go. What pay-go means is, you American taxpayers, you pay, and we will go spend your money.

The statute said we would no longer spend new money on anything unless we paid for it. Since February 12 when this bill was signed into law, on February 24 we borrowed $46 billion. We waived pay-go. We said the rule doesn't apply now. This is more important. It was the highway trust fund. Rather than cut some of the waste, fraud, and abuse, rather than cut out some of the things that are duplications, we borrowed that from our grandchildren. We did it twice in March, $99 billion out of the Senate and $10 billion. One was for an extension; one was for the overall tax extenders. We didn't quit there. April came, $18 billion more. May came, May 20, we did $20 billion more. Pay-go didn't apply. We waived it. We said it doesn't count. The rule doesn't count.

What good is it to have a rule or a statute that says we are not going to steal from our children anymore, and every time something comes up we steal from our children? It is a farce. It is meaningless. That is why we didn't vote for it, because it was just a charade to tell the American people somebody was doing something they actually weren't.

The proof is in the pudding. Then we borrowed $59 billion on May 27. Now we have a bill out here on June 17 that is going to borrow another $50 billion. How valuable are the lives of our children that we would steal opportunity? That sounds like a fallacious claim. It is not.

I want you to meet Madeline. Madeline is a little girl. I saw this on the Internet. I actually got to meet her. Her sign actually said $37,000 6 months ago. In the last 6 months, she has gone from owing $37,000, every individual, man, woman and child in this country, to owing $42,000. What is her life worth? What is the opportunity for her worth? Are children just a toy, or do we owe it to them, based on what has been given to us, to create opportunity and a chance for a better life for the Madelines of this country?

The problem is, as we are set up right now, 9 years from now, that number is going to be $187,000 per man, woman, and child. In 25 years, if we don't change what we are doing--and we will change because the world financial community will quit loaning us money--it will be over $1 million.

Put your calculator on for a minute and calculate 6 percent of 1 million. That is the interest cost for what we will have spent in money that we didn't have per person in this country. That is $60,000 25 years from now that every one of us who is still alive will be paying each year just in additional interest before we do anything with the Federal Government.

This government is so far out of control. It is not President Obama's fault, it is the Congress's fault. Presidents can't do things without us. We allow it or don't allow it. We have been rebellious against the principles and values that made this country great. There has never been a country that has achieved--economically, culturally, and scientifically--anything close to what we have created. Congresses are destroying it. This bill is another drop that will eventually turn the statute over that says the future is not here.

This isn't a partisan debate, this is a generational debate. We are thieving. Generational theft is what we are about because we lack the courage to confront the real problems we have and embrace, though it may cost us politically, doing the right things to ensure an American dream for the Madelines of this world. We are failing to do that. What an abandonment of our oath, what a rejection of what was given to us. Yet we have the gall to come out here week after week and spend money we don't have on some things that are necessary, some that are not, but that allow us to continue to spend billions of dollars on things that we should not be spending it on because, basically, we lack courage. It is cowardice.

I am committed not just to Madeline. This doesn't have anything to do with the Republican or Democratic Party. It has to do with the survival of our country as we know it.

Yet we continuously hear: No, we can't. We can't do this. We can't do this. We can't get rid of the easy things to get rid of because somebody well heeled or somebody well connected somewhere doesn't want us to. So who runs the country? Do the people of this country control us or is it the well heeled or the well connected or those who will be advantaged by us continuing to waste money?

Is it a fact that we spent $6 billion over the last 5 years paying performance bonuses to companies that contract with the Federal Government on performance they didn't earn, and we will not pass a law in a bill that says they can't do that anymore? Who is getting that money? Whose palms are we greasing? The fact is, we will not vote that out of here and say it isn't going to happen anymore. You are either going to perform under your contract or you are going to lose the contract, and we are not going to give you bonuses for not performing. Yet three times the Senate has voted that down.

Who benefits? It certainly isn't the average American. It is some corporate client somewhere who has too good of a sweetheart deal contracting with the Federal Government and has allies

within the Congress who say: We will protect you on the basis of having helped them in a campaign before. Do we want a future or do we want well-heeled buddies for the short term when it all collapses around us?

What we are is addicted to bad behavior. We are addicted to spending money that we don't have on things we don't need. We are addicted to not confronting the very real problems in the government. Again, it is not President Obama or President Bush's fault. Congress has that responsibility. We reject our responsibility. We have abandoned our responsibility and, with that, our integrity by not doing what we should do.

As a physician, I know what addictive behaviors are all about. What do we need to do? One of the things President Obama wants us to do that we refuse to do is to end no-bid contracts. Let's end the sweetheart deals. Let's get rid of the no-bid contracts that the well connected, well heeled get to have at a higher price than what we would pay if we competitively bid it. Why don't we do that? That has been voted down by this body as well twice; we can't do that; we have to protect our friends; we are more interested in protecting our friends than we are in saving the country. Eliminate bonuses to contractors, I talked about that. Determine the total number, cost, and purpose of every Federal program. The Government Accountability Office can't give us that number. It is too big. The Congressional Research Service can't tell us all the government programs, what their cost and what their purpose is.

We did get through, late last year, an amendment that is going to force the Government Accountability Office to tell us. Do you know how long it will take them to tell us? Three years. That is how big the problem is. With all their resources, it is still going to take them 3 years to tell us all the government programs.

What do we know that I found out and my staff has found out in researching this over the last 5\1/2\ years? We have identified at least 640 different areas where there are more than five programs that have the same goal run by different agencies in the Federal Government.

We know, for example, right now some American people are struggling and a lot of people are actually having trouble getting enough food. So we have to guess how many programs to help feed those people who are needing food? Across six different Departments, we have 70 government programs. Not one of them has a metric on it to say: Are you effective? How do you measure your effectiveness? But we have 70 sets of overhead in the Federal Government to do exactly the same thing.

You may say, How in the world did that happen? I will tell you how it happens. Some constituent comes up here and says: Here is a problem. Oh, yes, it is a problem. We do not research it to see what the Federal Government is already doing, so we author a bill. Because nobody wants to keep food away from the hungry, we pass a bill, not knowing that we already have 69 other programs. That happens time after time after time, still today, because we do not know what we have.

In math, engineering, science, and technology, which is where we would like for lots of our young people to go, we have documented 105 different programs that are funded by the Federal Government to incentivize our young people to go into those areas in eight different government agencies, eight different government Departments. Not the Department of Education--some of them are in there--but in every area. Why? Yet we do not want to do the hard work of eliminating those.

Let's identify the 105, and let's cut it to one. Let's put metrics on it. Let's have just one set of overhead. Let's accomplish that.

We have added 160,000 Federal employees in the last 16 months. Every business I know out there is doing more with less. That is not a denigration to our Federal employees. It is embracing reality that we cannot continue to add Federal employees. We cannot afford the government we have. Forty-three cents out of every dollar the Federal Government spends today is borrowed from China or Russia or countries with sovereign bank accounts, many of which would like to see us end. Can we continue to do that? Can we continue to have 40 percent of everything we are spending borrowed?

What we do know is, necessity becomes the mother of invention, and if we put the clamps and the brakes on both the growth and the size and the total amount the government spends, we will get more for the same amount--but not until we try, not until we mandate it has to happen.

Limit the overhead costs of the Federal programs. The overhead and the layers of duplication are unbelievable. A tremendous amount of savings can be done. I just visited with a three-star general who is working inside the Pentagon. One of the areas where I want to see us eliminate $50 billion a year in spending is inside the Pentagon because they have that much waste. They are going through a process now to look at where they have redundancy. Do you know what. They are finding it everywhere. But the Pentagon is so big, unless you look for it you are never going to see it.

So we now have the military starting to do what they finally need to do. They have never done it before--starting to look at redundancy, starting to look at good management, best practices, to create efficiencies so more dollars can defend us and less dollars will be spent on overhead. We need to do that government-wide, but especially in the Pentagon because it is our greatest discretionary cost with the exception of interest.

Disclose the cost, purpose, and text of legislation that is considered by Congress. There should not be a bill that comes before Congress that we do not adequately and accurately know what it is designed to do. Have a measurement on it so we know it did what we designed it to do, know what it is going to cost, and then force ourselves to evaluate it.

This is the 111th Congress. In the 109th Congress, I held 47 oversight hearings. That was more oversight hearings than the entire rest of the Senate combined. You see, we do not want to do the oversight because it is hard work and you do not get great press clippings. It does not help your campaign, your political career. But we were not sent up here for a political career. We were sent here to do the best, right thing for the country as a whole.

Most of the problems we are seeing are parochial in nature, where we have concentrated on what is best for our State at the expense of what is best for our country. I would posit that my State, Oklahoma, and the Presiding Officer's State cannot be healthy if the country is not healthy. They cannot be. Yet when our focus becomes more parochial than national, we actually undermine our future as a country.

No. 8, require the Congress to justify the creation of new government programs that duplicate existing ones. I am notorious for not letting bills get to the floor because they duplicate something that has already been done. We have created a new program, but we did not eliminate the old one, so now we have both of them running. I usually get beat. I usually get rolled with 60 votes and we create the new program. But we never eliminated the one that was not working, and we never changed the one that was not working. So we just create another program.

Mandate that Congress has to do oversight--has to do it. It must do oversight. We can do that by changing our rules. But we do not have any interest in changing our rules. It is easier to coast and not do the hard job of oversight.

I will just finish up.

One of the things I have thought about--I am not sure it will be helpful, but right now in the trouble we are in, everybody who walks through this Capitol ought to be informed of how much debt we owe and what it is per person. We ought to have that. It is in my office. If you walk by--the Rules Committee will not let me put it in the hall; they say it does not look professional--I have a computer screen where, if you walk by my office, you can see the national debt clock ticking. Your eyes will roll as fast as it is coming up. Remember, we are borrowing about $4 million a second. That is how fast it is going up.

So, anyhow, there are a lot of things we can do to stop the addiction.

I see the Senator from Georgia.

I ask the Senator, did you want to have some time? I will be happy to yield to you if you would yield back to me.

Madam President, I thank the Senator from Georgia. It does not matter if you are a Democrat or Republican, liberal or conservative or Independent, what your faith is, what your sexual orientation is: Out of many one. But if we are not careful, that one is going to fall based on what we do, and the debt affects a liberal as much as it affects a conservative. It steals opportunity from liberal children as much as it does conservative children. We have to come to a point where we say: Enough is enough.

I was just thinking, as the Senator talked, the $50 billion we are going to borrow from our kids with this bill, it would run the government of the entire State of Oklahoma for 8 years--every branch, every employee, pay all the costs, build all the highways, do everything we do for 8 years, just on what we are going to borrow.

When you start putting it down into, how much is $50 billion?--we throw away billions like they were pennies here.

And how many years for a trillion seconds?

That is 31,709 years. So we are going to have a $1.6 trillion deficit this year. Well, that is 50,000 years of seconds. Just this year, it is 50,000 years of seconds.

Let me go into the amendment a little bit and talk about it. The first section of this amendment would require public disclosure of the amount of any new borrowing or spending approved by the Senate. In other words, it is about transparency. It is about letting the American people hold us accountable. It means that on the Senate Web site, after we make new spending decisions and borrowing decisions, we have to publicize it so the American people can see it, rather than hide behind it. It is simple. There is no score for it on savings. I guarantee it will save money, because if we know the American people are going to know what the financial consequences are of what we do with every vote, it is going to change some votes around here.

The other question we ought to be asking is why shouldn't they know what we are doing and the ramifications of it. It is pretty simple. It is pretty straightforward. I have told the Rules Committee that I would pay out of my personal office budget the cost of that program. In other words, I would turn back over $500,000 every year. I will pay for it out of my budget and make sure that is available, so there is no cost to it whatsoever. I will pay for it out of my budget, out of my office, so it doesn't cost us anything. But it gives the transparency the President and I worked on in this body, and he wants to see from this body, and it makes it available to the American people. So we are going to get a vote on that.

It is important to know that with this bill, if it passes, we will have borrowed 59 plus 20, that is 79; 89, 97, 143, 513, 252, plus 50-- $302 billion since February 14, outside of the budget. That is outside of the budget. Now, $300 billion will run Oklahoma for 40 years. We could run the whole State of Oklahoma for 40 years on what we have spent in 6 months. So why shouldn't we let the American people see what we are doing, since it is going to cost nothing, and it is transparency, so they can hold us accountable? Why should we not do that?

The second thing that is important is in the last year, we have markedly increased--not counting the stimulus bill--the discretionary spending of the Federal Government. We didn't leave ourselves out on that. Inflation was nothing, but we increased our own budget by 4.8 percent. So the other component of one of these amendments is that 4.8 percent, I say we give $100 million of it back, which would be a third of that. That means we still get three times what the rest of the country got in terms of an increase, but it shows at least we are willing to let--and if anybody ran their office with any appropriateness, they would have a surplus as well every year. So it is not a hard cut, but it is important, since we gave ourselves a budget increase, that we demonstrate to the American people we are serious about doing it. Vote against it and say you don't think so or vote for it and let's put it in this bill. Let's start showing the American

people we get it. We will do the right, best thing for the country in the long term.

I have occasional conversations with the President, and one of the things he has told his administration to do, and we heard it flatly rejected--not just rejected but flatly rejected on the basis of a lack of knowledge by the chairman of the Finance Committee. He has told every agency to find 5 percent in cuts. Those are the instructions he has sent out to the head of every agency. Why has he done that? Because he knows we have to. This portion of the amendment says that is exactly what we are going to do. We are going to cut 5 percent of the discretionary spending of every branch of government save Defense and Veterans. Some would say, Well, that is \1/20\th of the budget. Yes, it is. But when you look at it in light of the size of the agencies today, in the last 10 years they are twice as big as they were 10 years ago. They have grown by an average of 10 percent per year and we can't find 5 percent or one-fifth of the growth they have had over the last 10 years that can be done more efficiently or as a lower priority or not as important? We can't find that? Yet, as the Senator from Georgia said, almost every family in this country is having to do that. We refuse to mandate that the Federal Government get on a diet, do things more efficiently, more effectively; take another look to see if it can be done a different way. It is called productivity increases. We can get that.

We won't ever get it if we don't ask for it. It is not a hard concept. We can do that. We allow the agencies to make those recommendations, and that is one of the things President Obama has already asked all of his agencies to do, to go find that 5 percent. That sends a wonderful signal to the American people that we get it.

It does something else that is important, and so will the defeat of this bill, and if we pass it with it being paid for. Right now in this country the value of our dollar is pretty good. The reason it is good is because people are worried about Japan and the value of the yen, and they are significantly worried about the Euro because of what is happening to Greece and now what is getting ready to happen to Spain. So money is rushing in. Smart money around the world in these other economies is rushing to hide in dollars. In about 2 years from now, that money is going to be sucked back out of here, because those economies will have made the hard choices of austerity with which to restabilize the Euro or their currencies. They will have done it.

What we need to send to the international finance market is a signal that says we too are way overextended and we are going to start making the appropriate choices to secure our financial future.

It was 2 months ago that Moody's put a notice out that said if things don't happen and start to change with U.S. Government bonds, they are going to be downgraded from AAA to AA. That is a big downgrade. We have never had an AA rating. So all of a sudden, the world rating system is going to say that maybe an investment in our product, our dollars, is not what it should be.

We need to make sure that doesn't happen. We need to make sure we have sent a signal to the world. When we start doing things where we are paying for new things by cutting lower priority items, we send that signal. We build that confidence back. When we start paying for new bills and the extensions of benefits, we extend that back up.

We are going to hear--actually, we won't hear, because we won't hear anybody come out and debate against these things. What they will choose to do is to ignore them and then vote against them. So the American people won't hear a legitimate debate on why we shouldn't cut 5 percent across the board, letting them decide what areas are most important and recommending them to us; we won't have a debate. We won't debate, and then we will kill it, thinking it will go away. Well, the American people have gotten that already. That is not acceptable to the American people. If you think we shouldn't cut spending in the Federal Government, come out here and defend it. Come out here and give us a philosophical, logical reason why we ought to continue to steal from our children and grandchildren. We won't see that. We won't see a strong debate against each of the points I am going to make associated with this amendment. The real question ought to be: Why? Because it is indefensible to vote against it. That is why. You cannot see the waste, fraud, abuse, and duplication in this government and not say we can do better.

Section 4 of the amendment eliminates nonessential government travel. Do my colleagues realize that almost every government office now has audio-visual equipment for the ability to carry on a teleconference anywhere in this country and overseas? Yet, last year, we spent--no, 2 years ago we spent--the data is behind--we spent $13.8 billion on airline tickets and hotels for Federal Government employees of which over half was nonessential. In 2006, $3.3 billion was spent on airfare. In 2007, $3.5 billion was spent on airfare. In 2008, $4 billion was spent on airfare. We can't get the numbers for 2009 yet. Hotel rooms, $2.3 billion, up to $2.5 billion. Car rentals, from $423 million to $437 million. Most of this can be done by teleconferencing. Why wouldn't we say at a time when we are borrowing $1.6 trillion from our kids that maybe we ought to teleconference rather than get on an airplane? I can tell you it is a whole lot easier than traveling 1,600 miles twice a week. So what does this do? It saves us money.

One of my favorite ways of saving money is to cap the printing costs in the Federal Government. We have examples of it right here. Every day, we put a Calendar of Business out, we put an Executive Calendar out, and we publish the Congressional Record, and we print hundreds of thousands of copies. You know what. It is all on line. We can save $4 billion over the next 10 years by printing limited amounts of things we need and not printing some things everybody else has access to on a computer. Why would we not do that? Why would we not cap our printing costs? Think of the thousands of acres of trees we can save every year. What we know is every year, Federal employees, through our direction, spend $1.3 billion on printing. The analysis by GAO says $440 million of that is unnecessary. So over 10 years, that is $4.4 billion. That is $4.4 billion that we won't take from Madeline. Madeline and her other 3- and 4-year-olds won't have to pay it back. Remember, they won't be paying $4.4 billion back; they will be paying the compounded interest that will double that debt in 10, 12 years. In 20 years, it will triple it. In 30, it will quadruple it. So they won't be paying $4.4 billion back, they will be paying $20 billion back. Why would we not do that? Why would we not make this decision to do that? It has been rejected by this body in the past.

Before the Bush administration left, I was working with them on unused Federal real property. We have billions, if not hundreds of billions, in underutilized Federal property owned by the taxpayers.

We spend $8 billion a year maintaining buildings we are not using. Think about that. We are spending $8 billion a year maintaining buildings we are not using. But we can't sell them because there is a little bill called the McKinney-Vento Act that says every used building in the Federal Government has to be offered as a homeless shelter first--even if it is an airplane hangar on a closed military base.

We created a bureaucracy nightmare that doesn't allow us to do that. Consequently, we could take a tenth of the $8 billion we are spending and appropriate that directly to the homeless and save $7.2 billion a year. But this body has rejected that as well. They voted it down. They didn't give a reason, they just voted it down. We have 46,745 underutilized properties, 18,849 properties we are not using at all, and a total of 65,000 properties we are not utilizing with an estimated value of $83 billion. That's $83 billion of property you are paying the maintenance on that we are not using, that we could sell and pay for almost all of this bill. But we won't do it.

Of course, we don't buy many properties anymore. The reason for that is because of the way our budget scoring is, even though it would be smarter to buy it because the total cost of the building is charged to the agency in the year in which the building is completed. None of the agencies are buying buildings anymore, they are renting

them. We should not be renting the first building. We should be getting rid of the $85 billion worth of buildings we don't need and buying a building, because you can own a building a lot cheaper than renting one--maybe not last year, but commercial rates are coming back up. Yet we don't do it.

Since 2005, out of this $85 billion, because of the bureaucratic nightmare of steps you have to go through, we have only sold $2.5 billion worth of an $85 billion portfolio. None of you would do that with your own property. If you had property out there that you owned, and you were spending 10 percent of the value of that property every year maintaining it, and you weren't utilizing it, and you had an opportunity to sell it, you would sell it. Not the Federal Government. We ought to be asking why. Who took a stupid pill to say not to do that?

Some of the properties are not of any value, so we ought to demolish them, because it costs less to do that than to maintain them. I will give you a rundown on some of them. On the buildings we now have, which we are utilizing, we have a maintenance backlog of $35.5 billion. We are spending money on buildings we don't want, maintaining them, but we can't take care of the buildings we have because we don't have enough money because we are spending it on buildings we don't use.

Section 7 provides that the Department of Defense would auction new, unused, or excellent condition excess inventory to the highest bidder, rather than transferring it at no cost to State agencies and others. You buy tons of stuff every year through the Defense Department that they don't need. As a matter of fact, they don't even know what they have. It is sitting in warehouses around the country. And what do we do when we figure out we don't need it? We give it away. When we are $13.2 trillion in debt, it is time to stop giving it away. It is time to get some value for the American taxpayers who paid retail price for that and turn around and sell it. It has been voted on before and rejected.

I mentioned in my opening words about capping the total number of Federal employees this year. That is called a hiring freeze. But it is not a hiring freeze because if you have retirements, you can replace them. We added 160,000 Federal employees in the last 16 months. We have only have an increase in net new jobs of about 450,000. Almost 50 percent of the net new jobs have been Federal jobs--at a time when our deficit is going to be one of the highest on record.

I say time out. I say do it with whom you have. If you have retirements, or people who leave, replace them, but don't increase the numbers anymore. Those numbers don't include the census of 441,000 temporary workers we have hired and will go away. How else are we going to get our budget under control if we don't do it in terms of personnel?

The other thing is, if you look at the process over the last few years on Federal employees--and I will say it again--I will discuss the fact that those of us who think we are in a crisis moment in our country and feel we ought to be making tough choices would say we ought to freeze total salary costs. That is not a salary freeze per individual. That is just saying that in this department, this agency, here is how much you are going to spend on salaries, and we are not going to go up this year. We are not going to raise the total amount we spend on salaries this year. That still allows every manager great flexibility. You can promote and give raises to people who are performing. But you can't increase the total amount of money.

Why is that important? There is an article in today's paper that OPM is starting to look at it. We looked at it, and here is what we know: In 1999, the average Federal salary was $49,536. It is now $78,806. Inflation during that period of time averaged 2.4 percent. Salary increases during that period of time averaged 4 percent--1\1/2\ times the rate of private pay increases in this country.

What happened to benefits? Average personnel benefit per Federal employee is nearing $40,000 per year. Depending on how much you make, that may seem like a lot, or not, but when you look at the average private sector pay, it is $42,000. It is $36,000 less than the average Federal employee is paid. I don't want Federal employees to get a cut. I just don't think we ought to increase them at a time when most people aren't getting pay increases. I don't think we ought to increase Federal pay.

The benefit differential is even more stark. The average for benefits for the average person in this country, who doesn't work for the Federal Government, is $20,000 per year. So we have almost twice as rich a benefit, or 1\1/2\ to 2 times as rich a benefit for Federal employees as everybody else in the country who is employed. I am not saying cut them. I am saying for 1 year let's not let it increase. Let's do right by the American people, who are struggling, and let's do right by the grandchildren and young children in our country by putting some common sense into what is allowable, given that we are in a time of crisis. We voted on that before. It failed.

Federal employees also have, unpaid to the Federal Government, $3 billion in back taxes, and that is not under dispute. Federal employees, who average $78,000 a year, owe the Federal Government $3 billion. I say they ought to be paying that. I say it ought to be coming out of their wages. It is time to not allow that as a condition of your employment anymore. It seems unconscionable to me that you cannot pay your taxes, when you make $78,000 a year, and we are not going to force you to pay them. So it is a $3 billion savings, but it is an important signal to send to people: We are all paying taxes, and you ought to, too, since you make 1\1/2\ times what the average person in this country makes.

We talked earlier about section 11. It eliminates the awarding of bonuses to government contractors when they have unsatisfactory performance. That is a no-brainer. Nobody in the private sector is going to give a bonus to somebody who isn't performing. But the Federal Government does it all the time. We need to statutorily say you cannot do that anymore.

We now know that we spent $6.2 billion at the United Nations last year. We have no transparency from them on how our money was spent. We know we account for 25 percent of their regular budget and 26 percent of the peacekeeping budget. We did get a little piece that leaked data on an audit. We know that nearly 40 percent of the money spent on peacekeeping is defrauded. Our voluntary additional contributions to the U.N. were $1.3 billion last year.

All this amendment says is, don't give more than a billion to an incompetent organization where we cannot find out where they are spending our taxpayer money. It is a ridiculous commitment. Why would we even let them have a billion? At least save $3 billion a year over the next 10 years, but by not allowing that to go forward.

I want to talk about one other thing I think is important that most of this body has voted against several times. We have $1.7 trillion sitting in the bank--money that the Congress has appropriated to be spent in outyears. Almost $700 billion of that has not been obligated for anything. Yet we have T-bonds and T-bills we are paying interest on while that sits over there.

Prudent management would say that rather than borrow more money, you would use money from the bank account you already have. So this portion of the amendment takes $50 billion out of that $700 billion. We ought to eliminate it all, if it is unobligated. I recognize they have to have some movement back and forth, but they will never notice that $50 billion that isn't in the unobligated balances, and when that expenditure comes, we can appropriate money for it. We are letting money sit idle while we borrow additional money to do additional things. This simply says that we move $50 billion out of that.

Section 18 is about getting energy efficiency at the Department of Energy.

Section 19--I talked to one of the Senators from California on this amendment. I am not opposed to fixing the problems with Medicare, the statistical inaccuracies in their payments, but I am opposed to not fixing it for the five other States that have it as well.

It is unfair to take the State of California when the States of Georgia, Minnesota, Ohio, and Virginia all have exactly the same problem. Yet in this bill, as we heard Senator Grassley say

earlier, we only fixed one of the States. That is called an earmark. There is nothing wrong with fixing it for California, but there is plenty wrong with fixing it for California but not fixing it for these other four States. If it is something that needs to be fixed, why would we advantage California over these other States? It is called favoritism. It is called exceptionalism. It says that the citizens of California are worth more in this country than the citizens in Ohio and Georgia and Virginia and Michigan. They are not. If it is a problem that needs to be addressed, let's address the whole problem.

Why did they not address the whole problem? Because it would have cost more money. We are going to borrow $400 million per year to fix it in California, and that is OK but it is not OK to fix it in the other States. That is inherently unfair, it borders on the unethical, and it is exactly the type of thing the American people reject. If there is a problem, fix it for everybody. Do not single out one group of people at the expense of the rest of Americans.

Finally, this amendment eliminates all tax increases in this bill. The last thing we need to be doing right now is decreasing capital formation in this country, decreasing the ability to invest in new ideas, decreasing the capability of small businesses, which this bill goes after in terms of their subchapter S status, and making it more expensive to start a new business or keep one running when 70 percent of the jobs that are created in this country--and we are hurting for jobs--are created by small businesses.

This amendment has 20 segments, and we are going to have 20 votes. We are going to see where this body lines up on these issues. Vote against common sense at your peril. Vote against the future of our country. Vote against Madeline and everybody else like her. Vote to increase the debt even higher. Vote to increase the size of the Federal Government. Vote to undo pay-go again. Continue doing what we are doing, and what we will see is the American people are going to reject that. They are rejecting it now. It is high time we started listening to the American people.

I yield the floor and suggest the absence of a quorum.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I want to address my colleagues on a couple of different issues. One would be to speak in support of part of the Coburn amendment, and the second one would be to speak on the issue of taxes.

I want to speak in favor of Senator Coburn's amendment that would repeal a special deal for California. As I have said before, Medicare's payment system for physicians is flawed in many ways. One of those flaws has resulted in unfairly low payments to physicians in my own State of Iowa and many other rural States over the course of many years.

Medicare payments vary from one area to another based upon geographic adjustments made by the Centers for Medicare and Medicaid Services. These adjustments are supposed to reflect the differences in the cost of providing care in different areas and equalizing physician payment. But the geographic adjustors have been a dismal failure. They do not accurately represent the costs in rural States. Instead, they have created unfairly low Medicare rates and have, in fact, even discouraged physicians from practicing in rural areas such as Arkansas, New Mexico, Missouri, Iowa, North Dakota, and maybe, you could say, a lot of rural States.

Last fall, I offered an amendment to reform the unfair formula that has caused these unduly low rural payments during the Finance Committee markup of the health care reform bill. My amendment requires CMS to use accurate data rather than inaccurate proxies to calculate the geographic adjustors for physician practice costs. My amendment was accepted unanimously by the entire Senate Finance Committee, and it was included in the Patient Protection and Affordable Care Act that was signed into law by the President in March. It is a national solution to this problem that has plagued so many rural States.

Unfortunately, the rural equity that my amendment would finally achieve has been endangered by the Democratic majority's sweetheart deals. One of these sweetheart deals was added to the Senate health care reform bill that is now law. This special deal was added behind the closed doors of the Senate majority leader, and it addressed the unfairly low payments in rural States. It was included in the Senate health reform bill for two of my Democratic colleagues from so-called frontier States. It is what I call the frontier freeloader provision. And it can be called that because it just helped five States at the expense of 45 others.

The frontier freeloader deal gives higher Medicaid payments to just five States--North Dakota, South Dakota, Montana, Wyoming, and Utah-- and it is at the expense of every other State. Even though Iowa, New Mexico, Arkansas, Missouri, and other rural States do not benefit from this deal, they have to pay for it. Here we are. Taxpayers in your State and mine--all the other 45 States--have to kick in to pay the $2 billion for higher Medicare payments for these 5 so-called frontier States. This is another example of how the secret deals made by the Democratic majority leader to get votes during health care reform led to bad policies such as the ``Cornhusker kickback,'' the ``Louisiana purchase,'' and the Florida ``Gator aid.'' I introduced legislation in April to repeal this sweetheart deal for frontier states. My bill, the Medicare Rural Health Care Equity Act, would eliminate this special deal for these five States. We should improve physician payments for all rural States, not just a select few.

The Coburn amendment would address a similar concern--yet another special deal for just one State has been included in the Democrat's tax extender bill. Section 522 of the Democratic substitute would provide $400 million over 10 years to create yet a new system for calculating payments for physicians in rural areas, but you know what, only in one State--California. This is just one more example of the sweetheart deals that have permeated the Democratic leadership's efforts during these times. Will these special deals ever stop? I strongly oppose these sweetheart deals, and I will continue to speak out against them, and I will continue to work to pass legislation to repeal these special deals, such as the Medicare Rural Health Care Equity Act, that I introduced this year.

That is why I strongly support the amendment by my colleague from Oklahoma to strike this $400 million sweetheart deal for California from the bill, and I urge my colleagues, especially those from other rural States, to do the same. You see, what happens here when you start doing something for 1 State here and 5 States over here--there are about 30 States, maybe 35 States that have similar problems. We ought to attack these similar problems with the same principle, as I see it.

As I said, I wish to continue to address my colleagues on the subject of time-sensitive tax legislative business. I have already spoken on other items. I have a chart here that says what the four items are that are time sensitive that we ought to be working on and how far we have gotten on some of them. Obviously, as you can see from the Xs there, we have not gotten very far on most of them.

Last week, I discussed the unfinished tax legislative business. This chart gives you an update of the legislation before the Senate. It deals with only one small, however important, part of unfinished tax legislative business.

These tax extenders are on their second Senate stop. This is the bill now before the Senate. As this chart shows, the tax extenders which are overdue by almost half a year are not alone. There are three other major areas of unfinished business.

One area is the one I discussed a couple of days ago--the alternative minimum tax, the AMT patch. That issue, if you do not deal with it, is going to raise the taxes of 24 million Americans, middle-class Americans who, frankly, were never intended to pay the alternative minimum tax. If we do not fix it, 24 million people are going to see their taxes go up.

Yesterday, I addressed the issue of the death tax. That is an area which is very important. I took a lot of time of my colleagues last night to explain the issue and particularly the impact on small, family-owned businesses that may be sold off because we do not have a good estate tax policy.

The third area and the one I am going to address now is the 2001 and 2003 tax rate cuts and family tax relief package. That is the one that, if Congress does nothing between now and December 31, starting January 1, 2011, the American people are going to have the biggest tax increase in the history of the country and without even a vote of Congress. Existing law, with the tax reductions of 2001 and 2003, sunsets. ``Sunset'' simply means that if Congress does nothing, the biggest tax increase in the history of the country happens without us even casting a vote here in the Senate.

As important as the AMT patch and the death tax are, these two I just mentioned are dwarfed by the impact of this third package of expiring tax provisions. I am referring to the marginal rate cuts and the family tax relief of the bipartisan tax relief that was enacted in 2001 and 2003. Efforts to make these tax relief packages permanent were rebuffed. The resistance was the result of a hard and determined minority back then, marshaled by the Senate Democratic leadership. It was reflected in the budget resolutions offered in filibusters.

Even more inexplicable than the Democratic leadership's failure to extend popular and bipartisan tax relief enacted in 2001 and 2003 were some of the reasons given. It was basically said that since Republicans wrote the law, it is our--meaning Republicans--problem. The left wing of the blogosphere echoed the Democratic leadership's position.

Some of those reflections in the blogosphere even alleged that the sunset was a Republican conspiracy. I

came across a 2007 posting on Daily KOS blog. The posting referred to the provisions of the Tax Increase Prevention and Reconciliation Act of 2005, which was enacted in May 2006. That legislation contained two basic pieces. One was an extension of lower rates for capital gains and dividends. Another was the extension of the alternative minimum tax patch. The poster's analysis concluded that the bill was a ``poison pill'' designed--can you believe it--to sabotage the economy, which supposedly would increase the prospects of Republican candidates in 2012. I know that sounds a little far-fetched, but that is what the KOS posting on their blog said. The argument seems to be that having popular and bipartisan tax relief from 2001 and 2003 all sunset at the end of 2010 would cause such an economic mess that the Democrats, assumed by the posters to be in power at the time, will take the blame and suffer at the polls.

In the posting titled ``The Monster Republican Tax Hike,'' the poster stated that:

Republican Congresses chose not to make their tax cuts . .

. permanent.

The argument seems to be that Republicans put sunset clauses in the bill solely to improve long-term budget projections and that responsibility for the expiration of tax relief rests completely with Republicans. The implication is that by lowering taxes, Republicans are responsible for a tax increase that would occur when the Democratic majorities control both Houses of Congress. That is a little far- fetched because it is just some sort of conspiracy that you can control the electorate and these things are going to exactly work out this way. That is obviously stupid, but that doesn't keep bloggers from talking-- whatever they want to believe.

The commentaries I just referred to are available to anyone in the April 12, 2007, edition of the Congressional Record.

I have heard some Members on the other side as well as key staff have made similar assertions. As one who was involved in the writing of these tax relief plans of 2001 and 2003, I want to tell my fellow Senators without reservation that these assertions are absolutely untrue, besides being ridiculous. To begin with, it is completely ridiculous to suggest that President Bush and Republicans in general did not intend or desire the permanence of tax relief. President Bush and Republicans in general have favored tax relief permanence. You need to look no further than the budgets to which I referred. The administration and Republican Congress budgeted for extension of the bipartisan tax relief provisions. That action affected the bottom lines of those budgets.

We heard over and over the criticism of those budgets. We heard it from the Democratic leadership, liberal think tanks, and some sympathetic east coast media. As a matter of fact, after 3\1/2\ years of congressional control, we still hear the Democratic leadership's criticism every day. Just recently, the Speaker of the House was asked when the Democratic leadership would cease laying the blame for all fiscal problems on Republican budgets of the years 2001 to 2006. MSNBC's Chuck Todd recently interviewed the highest ranking Democrat in the House. Mr. Todd asked if there was a statute of limitations on placing responsibility on the Presidency of Mr. Bush.

At what point do you think the public says something [like

this]? ``You know what, yes, we were unhappy with the Bush

administration . . . [but] stop blaming the Bush

administration.

Mr. Todd went on to say:

When does that run out?

But then the Speaker specifically replied:

Well, it runs out when the problems go away.

The blame game is no substitute for doing the job you have been hired to do. People elect folks to public office to do--what? To govern; govern at the will of the people. Governing is not just about enjoying the benefits of public office. This is a public trust we hold. We work for the American people; they don't work for us. Part of governing is also about making choices. Some of those choices are tough, as we know, and those of us in public life need to be accountable for those choices.

The Democratic leadership cannot have it both ways. They cannot continue the bipartisan tax relief and not be responsible for the deficit impact those policies carry. No family can make decisions about its budget and evade the consequences by blaming their next-door neighbors. No business can make decisions about its budget and evade the consequences by blaming a competing business. The fiscal consequences are an important part of that decision.

The statutory pay-go or pay-as-you-go regime was enacted as part of the last debt limit increase. It covers only part of the revenue loss of making permanent the bipartisan tax relief plans of 2001 and 2003. For instance, the alternative minimum tax patch is extended for only 2 years. Death tax policy is extended at 2009 levels only through 2011. How do you plan estates when you only have a tax law in place for 2 years?

Even with those limitations, the Joint Committee on Taxation states: Complying with the pay-go rule means a revenue loss of over $1.5 trillion over 10 years.

I ask unanimous consent to have printed in the Record a copy of the Joint Committee on Taxation's estimate of the tax relief covered by statutory pay-go. And this is a summation of that.

The expiring tax relief I am talking about today includes the marginal rate cuts and family tax relief. Under the statutory pay as you go, the amount permitted in this area is about $1.4 trillion as you can see at the top of the chart on the right. It covers about 80 percent of extending all of the marginal rate cuts and family tax relief from the 2001 and 2003 bipartisan plan.

That number makes sense because the bipartisan tax relief plans cut taxes for virtually every American family who pays income tax. How significant and how widespread is this tax relief? This chart here, drawn by the Congressional Budget Office--and I want to remind people throughout the Nation that CBO is a professional group of people who see numbers as what they are, void of politics, and make predictions. So I hope this may shed some light on the question of how significant and widespread is the tax relief.

The line measures the effective tax rate paid by the top 5 percent of the taxpayers. That is at the top, the top line. This group roughly represents those taxpaying families with incomes over $250,000. Under the Democratic leadership's budget, this line will go back up to where it was in the year 2000. That is also where the President's budget, meaning President Obama's budget, and the statutory pay-as-you-go regime would take the rates.

The Republicans believe this significant tax increase will be a mistake. We hope we will be able to debate this policy in the House and Senate, in committee and on the floor. That was, after all, the process that was followed when the bipartisan tax relief plans were passed in years 2001, 2003, and 2005.

We will point out that about half of the heavy tax increases will fall on small business owners. The top marginal rate on small business owners will rise by 17 percent. Democrats and Republicans agree, small businesses are a key job creator of the future and for a long period of time in our country. President Obama correctly points out that small business creates 70 percent of new jobs. I do not argue with his percentage.

The rest will also hit investment hard. The top capital gains rate will rise by 33 percent. The top dividend rate could rise by almost 275 percent. All of this is set to occur not at some far distant future point, it occurs a little over a half a year from right now.

We all hope the economy is on a path to recovery. But does this heavy tax increase on small business owners and investments ever make sense? Because even the most liberal Members on the other side might wonder whether it makes sense right now to increase taxes at this time. Is the recession ending? There is good news some days, bad news some days. But the uncertainty is a factor that people do not want to move forward with investment and creating jobs.

Do we think then that the private sector will grow if we hit small businesses and investors this hard 6 months from now? They are not going to wait 6 months from now to make some decisions. They are making those decisions right now. If we can give them some certainty, I think it would be a big boost for our economy.

You can see that the broad bipartisan tax relief brought the effective rate down with respect to the bottom 95 percent of taxpayers. This is the red line. Some of my colleagues on the other side of the aisle may be thinking to themselves, sure, this is true for income taxes. But what about other Federal taxes such as Social Security, which make up a large percentage of the taxes paid by middle and low- income individuals?

Well, this chart is not just a depiction of Federal income taxes, it includes all Federal taxes. This includes Social Security, other payroll taxes, excise taxes, frequently referred to by my colleagues on the other side of the aisle as regressive taxes, everything, including all Federal taxes over the last 30 years.

The top 5 percent has paid a lot higher effective tax rate than the bottom 95 percent. It has been that way no matter which party has controlled the White House or controlled Congress or controlled both. It shows something you would never know if you listened to the rhetoric from the other side or even the punditry of the media and the left.

Here is what it shows: A progressive income tax system is very deeply embedded into our culture. The bipartisan tax relief plans of 2001 and 2003 made the system yet more progressive. Those plans brought the rates down for the bottom 95 percent of taxpayers. The 2001 and 2003 tax relief plans dropped the effective tax rate for taxpaying families under $250,000 to their lowest levels in a whole generation.

This is the current law level of taxation. In a little over half a year, these rates will pop back up for all of these taxpayers. I have a couple of charts that illustrate how significant the tax hit will be. Middle-income families will run right through these tax walls. I have used these charts several times in the last few months.

For a family of four with an income of $50,000, that is a tax wall of a $2,300 tax increase. For a single mom with two kids earning $30,000, that tax wall will be $1,100. The President, as powerful as he is, cannot unilaterally hike or cut taxes. He needs a bill from Congress to do that. On our side, we want all of the tax relief made permanent. We want the opportunity to debate and to amend a bill that deals with this basic level of taxation.

As has been made clear for the last 3\1/2\ years, Republicans do not control this Congress. We cannot decide the fate of the marginal rate cuts and family tax relief. This is unfinished business. It is unfinished tax legislative business that affects every American taxpayer. It will have fiscal consequences. They are pretty significant fiscal consequences, as you can see by the figures on this chart. That is going to raise taxes an awful lot. If the Democratic leadership wants to keep these levels of taxation low, then they have to deal with the fiscal consequences. Alternately, the Democratic leadership can raise taxes and claim the revenue.

Not changing the law by failing to act is the same as raising rates on virtually every American taxpayer. But they will have to explain to the taxpayers why they raised taxes by almost 10 percent, on average. In the 2006 election, almost 4 years ago, the American people provided the Democratic leadership with control of the Congress. In the 2008 election, over 18 months ago, the American people provided the Democratic leadership with yet the largest majority in more than a generation. They also provided the Democratic leadership with a President of their party.

The Democratic leadership spent the periods of 2001 to 2006 thwarting our efforts to make bipartisan tax relief of 2001 and 2003 permanent. It would seem okay to keep Republican bills from 2001 through 2006 from being made permanent, but the 2001 tax bill was very bipartisan.

Upon assuming control, they have spent 3\1/2\ years with no legislation to make permanent or even extend marginal tax rates and family tax relief packages. My friends in the Democratic leadership need to step to the plate. We have had budgets and statutory pay-as- you-go. We have debated this and voted on the breadth and composition of marginal rate cuts and family tax relief in those contexts, yet no legislative action; no House committee and floor action; no Senate committee and floor action. And that would be the bottom line there. The Xs show nothing happening on something to give permanence to tax law, to give predictability to the future of those people who have to put up money to create jobs that expand our economy.

Without it, the biggest tax increase in the history of the country could be a fact. So I say once again, step to the plate. Blaming former President George W. Bush and Republican Congresses of many sessions ago is no substitute for running this time-sensitive tax legislative business through the process. Put forward proposals. Let us debate those proposals. Let's allow for amendments. Allow votes on amendments. Do the people's business. It is time to check every one of these boxes.

Mr. President, at around lunchtime, the Senate voted on Senator Thune's alternative to the Democratic leadership's extender bill. Senator Thune's amendment took the exact opposite approach to the Democratic leadership's substitute. It cuts taxes by $26 billion by extending current law. It cut spending by over $100 billion, and reduced the deficit by $68 billion. Those are Congressional Budget Office, CBO, and Joint Committee on Taxation estimates.

According to the Congressional Budget Office, CBO, the current version of the Democratic leadership's extenders substitute would increase direct spending by about $105 billion through 2020 and raise revenues by about $50 billion over that period, resulting in a net deficit increase of about $55 billion for the 2010-2020 period.

The contrast couldn't be clearer. The Republican Conference, along with one member of the Senate Democratic Caucus, voted to change the bottom-line fiscal effects of the Democratic leadership's extender substitute. The Thune amendment would reduce the deficit by $13 billion more than the amount the Democratic leadership's extender substitute would add to the deficit. Senator Thune's amendment reached this better fiscal result by restraining Federal spending.

All but one of the Democratic Caucus who were present, 57 Senators, voted against Senator Thune's amendment.

The junior Senator from Florida, one of the 41 Senators who voted for Senator Thune's amendment, came to the Senate floor to highlight the differences between the Democratic Caucus and the Republican Conference in the approach to this extender bill.

The junior Senator from Michigan also made some comments on the current fiscal problems. She made her arguments in response to comments from the junior Senator from Florida. Last year, at about this time, there was a lot of revision or perhaps editing of recent budget history. I expect more of it from some on the other side.

The President signaled as much in an interview with George Stephanopoulos a few months ago. I agree with the President that there's a lot of revisionism in the debate.

The revisionist history basically boils down to two conclusions:

1. That all of the ``good'' fiscal history of the 1990s was derived from a partisan tax increase bill of 1993; and

2. That all of the ``bad'' fiscal history of this decade to date is attributable to the bipartisan tax relief plans.

Not surprisingly, nearly all of the revisionists who spoke generally oppose tax relief and support tax increases. The same crew generally support spending increases and oppose spending cuts.

In the debate so far, many on this side have pointed out some key, undeniable facts. The stimulus bill passed by the Senate, with interest included, increases the deficit by over $1 trillion. The stimulus bill was a heavy stew of spending increases and refundable tax credits, seasoned with small pieces of tax relief. The bill passed by the Senate had new temporary spending, that,

if made permanent, will burden future budget deficits by over $3 trillion. That is not Chuck Grassley speaking. It is the official Congressional scorekeeper, the Congressional Budget Office, CBO.

All of this occurred in an environment where the automatic economic stabilizers thankfully kicked in to help the most unfortunate in America with unemployment insurance, food stamps and other benefits.

That antirecessionary spending, together with lower tax receipts, and the TARP activities has set a fiscal table of a deficit of $1.4 trillion for the fiscal year that ended several months ago. That is the highest deficit, as a percentage of the economy, in post-World War II history.

Not a pretty fiscal picture. And it is going to get a lot uglier with the budget put forward by the President this year. It's the same result under the budget crafted last year by the Democratic leadership. So, for the folks who see this bill as an opportunity to ``recover'' America with government taking a larger share of the economy over the long-term, I say congratulations. You have recovered America with a vast expansion of government and the American people have a lot of red ink to look forward to.

Members who voted for the budget and the fiscal policy envisioned in it put us on the path to a bigger role for the government. But supporters of that fiscal policy need to own up to the fiscal course they are charting.

That's where the revisionist history comes from. From the perspective of those on our side, it's seems to be a strategy to divert, through a twisted blame game, from the facts before us. How is the history revisionist? Let's take each conclusion one-by-one.

The first conclusion is that all of the ``good'' fiscal history was derived from the 1993 tax increase. To test that assertion, all you have to do is take a look at data from the Clinton administration.

The much-ballyhooed partisan tax increase of 1993 accounts for 13 percent of the deficit reduction in the 1990s. Thirteen percent. That 13 percent figure was calculated by the Clinton administration's Office of Management and Budget, OMB.

The biggest source of deficit reduction, 35 percent, came from a reduction in defense spending. Of course, that fiscal benefit originated from President Reagan's stare-down of the communist regime in Russia. The same folks on that side who opposed President Reagan's defense build-up take credit for the fiscal benefit of the ``peace dividend.''

The next biggest source of deficit reduction, 32 percent, came from other revenue. Basically, this was the fiscal benefit from pro-growth policies, like the bipartisan capital gains tax cut in 1997, and the free-trade agreements President Clinton, with Republican votes, established.

The savings from the policies I have pointed out translated to interest savings. Interest savings accounts for 15 percent of the deficit reduction.

Now, for all the chest-thumping about the 1990s, the chest thumpers, who push for big social spending, didn't bring much to the deficit reduction table in the 1990s. Their contribution was 5 percent.

What's more the fiscal revisionist historians in this body tend to forget who the players were. They are correct that there was a Democratic President in the White House. But they conveniently forget that Republicans controlled the Congress for the period where the deficit came down and turned to surplus. They tend to forget they fought the principle of a balanced budget that was the centerpiece of Republican fiscal policy.

Do my friends on the Democratic side remember the government shutdown of late 1995? Remember what that was about? It was about a plan to balance the budget. Republicans paid a political price for forcing the issue, but, in 1997, President Clinton agreed. Recall as well all through the 1990s what the year-end battles were about.

On one side, congressional Democrats and the Clinton administration pushed for more spending. On the other side, congressional Republicans were pushing for tax relief. In the end, both sides compromised. That is the real fiscal history of the 1990s.

Let's turn to the other conclusion of the revisionist fiscal historians. That conclusion is that, in this decade, all fiscal problems are attributable to the widespread tax relief enacted in 2001, 2003, 2004, and 2006.

In 2001, President Bush came into office. He inherited an economy that was careening downhill. Investment started to go flat in 2000. The tech-fueled stock market bubble was bursting. Then came the economic shocks of the 9-11 terrorist attacks.

Add in the corporate scandals to that economic environment.

And it is true, as fiscal year 2001 came to a close, the projected surplus turned to a deficit.

In just the right time, the 2001 tax relief plan started to kick in. As the tax relief hit full force in 2003, the deficits grew smaller. This pattern continued up through 2007.

If my comments were meant to be partisan shots, I could say this favorable fiscal path from 2003 to 2007 was the only period, aside from 6 months in 2001, where Republicans controlled the White House and the Congress. But, unlike the fiscal history revisionists, I am not trying to make any partisan points, I am just trying to get to the fiscal facts.

There is also data that compares the tax receipts for 4 years after the much-ballyhooed 1993 tax increase and the 4-year period after the 2003 tax cuts.

In 1993, the Clinton tax increase brought in more revenue as compared to the 2003 tax cut. That trend reversed as both policies moved along. Over the first few years, the extra revenue went up over time relative to the flat line of the 1993 tax increase.

So, let's get the fiscal history right.

The progrowth tax and trade policies of the 1990's along with the ``peace dividend'' had a lot more to do with the deficit reduction in the 1990s than the 1993 tax increase. In this decade, deficits went down after the tax relief plans were put in full effect.

No economist I am aware of would link the bursting of the housing bubble with the bipartisan tax relief plans of 2001 and 2003. Likewise, I know of no economic research that concludes that the bipartisan tax relief of 2001 and 2003 caused the financial meltdown of September and October 2008.

As I said, from the period of 2003 through 2007, after the bipartisan tax relief program was in full effect, the general pattern was this: revenues went up and deficits went down.

That is the past. We need to make sure we understand it. But what is most important is the future. People in our States send us here to deal with future policy.

They don't send us here to flog one another, like partisan cartoon cut-out characters, over past policies. They don't send us here to endlessly point fingers of blame. The substitute before us takes us in the direction of more deficits and debt. The Thune amendment, which was rejected by most of the Democratic Caucus, would have put us on a path in the opposite fiscal direction. My friends on the other side fool no one if they pretend that the fiscal choices made by the Democratic Leadership and the President over the last year have nothing to do with this rapidly rising debt.

President Obama rightly focused us on the future with his eloquence during the campaign. I would like to paraphrase a quote from the President's nomination acceptance speech:

We need a President who can face the threats of the future,

not grasping at the ideas of the past.

President Obama was right.

We need a President, and I would add Congressmen and Senators, who can face the threats of the future. Grasping at ideas of the past or playing the partisan blame game will not deal with the threats to our fiscal future.

It is not too late to correct the excesses of the stimulus bill or the bloated appropriations bills that will come. The Senate missed an opportunity, with a partisan rejection of Senator Thune's alternative.

Senator McCaskill's and Sessions' amendment, which calls for a time out on the exponentially rising levels of appropriations spending, is a good start. The President called on the Democratic leadership to do something similar. That is what the American people want and need. There is a way to reach a real bipartisan compromise, not just picking off a few Senators that frequently vote with the Democrats.

Mr. President, I believe by consent I am to be recognized for 30 minutes.

Mr. President, we have heard a couple of very spirited defenses this afternoon on behalf of jobs in China, which I pose is a wonderful thing if you live in China and have a job in China. The issue here is what about jobs in our country. What about the people who woke up this morning unemployed in America looking for work who could not find it? Who is standing on this floor speaking for those folks?

I have heard a lot of discussion about support for jobs in China, Mexico, or elsewhere. But who is standing up talking about the jobs at home?

Let me describe what this issue is about, if I may.

I think this issue is something most Americans understand because they have heard it over and over. In recent years, we have seen millions and millions of manufacturing jobs gone from America because the very manufacturing plants that were open in this country to manufacture goods that had a label on it that said made in America are gone from America. They are now in China, they are in Mexico, they are in Thailand, they are in South Korea, and elsewhere. Let me talk about those jobs and why they have left this country.

Listening to my colleagues--and, of course, the Chamber of Commerce, the National Association of Manufacturers, all of the usual suspects who get in the same tub and make the same thumping sounds--one would believe that what has happened is that we have actually increased manufacturing jobs in this country and that moving American jobs overseas does not hurt anybody; it helps our country. Of course, that is just patently untrue.

My colleagues were talking about something called deferral. That is not something people sit around a coffee shop talking about--deferral. It means, in certain cases under this bill, those companies that shut their American manufacturing plant, get rid of all

their workers, and move the manufacturing to China or Mexico, for example--let's take China--actually get a tax break from our country that says if they are on one side of the street and their competitor is on the other side of the street, and they close their plant, fire their workers, scat out of town, go to China, hire people there, manufacture the same product, ship it back here, their country will be generous enough to say: Good for you, we will give you a tax break for doing it. That is what is called a deferral.

In the narrow scope of what is in this amendment they object to, deferral says if they leave this country with their jobs, shut them down here, move over there, manufacture there with foreign workers, and then ship the product back into this country to compete against the business men and women who stayed here, who manufacture here, who employ people here, they are not going to get a tax cut anymore. It is just not going to happen.

My colleagues say we have to have this principle called deferral. What about having every American have the opportunity for deferral? How about every American having the opportunity to defer their income taxes until it is more convenient for them? No, not everybody gets these things. Just the interests at the very top.

Then when we tried to narrow it a little bit because it gives a pernicious incentive to move jobs overseas, we have people standing up saying: We support those companies that are moving American jobs overseas. We support those jobs in China. God forbid you want to interrupt this process.

My colleague says: In 1962, there was this carefully crafted tax agreement on deferral--48 years ago. Do not interrupt that after 48 years. We made this careful agreement 48 years ago.

Let me tell my colleagues what has happened since then. I have shown this on the Senate floor before. In the last 48 years, the tax system has changed a little bit. This is a five-story white house on Church Street in the Cayman Islands called the Ugland House. The first time I showed this chart--by the way, this is enterprising reporting by David Evans from Bloomberg--there were 12,748 companies in this building. It is only a five-story small white building on Church Street in the Cayman Islands. It was inhabited by 12,748 corporations. A little crowded, I would say. Were they there? No, they just got their mail there. Why did they get their mail there? So they could slip under the American Tax Code and not pay taxes to the U.S. Government.

When I first showed this chart some years ago, it was 12,748 corporations. But there was room for more. Now there are 18,857 entities that call this building home. Is that unbelievable? They must enjoy each other's company, or at least their mail must fraternize.

Mr. President, more than 18,000 companies claim that little building. We made this careful agreement in 1962 on deferral? How dare you deal with the Tax Code in a way that you would upend that 1962 agreement. Everything has changed. There is not a ghost of a chance in 1962 that American companies would have even thought of trying something that audacious--just gather together in a mailbox in a white building someplace to avoid paying your obligation to this country.

I have shown this as well. Wachovia Bank (formerly First Union Bank) bought a sewage system in Bochum, Germany. Why? Did they have sewage specialists on their staff? I don't think so. Did they put out television advertisements: Come do business with Wachovia Bank because we know about sewers or we want to buy sewers in foreign cities? No, they did this to avoid paying U.S. taxes. This is Wachovia Bank. They did not pay $175 million in U.S. taxes because they bought a sewage system from a German city.

Did they move the sewage pipes? No. Do they know anything about sewers? No. They bought it from the German city and leased it back so they could depreciate it and not have to pay U.S. taxes. Unbelievable.

The Tax Code has changed, I say to my friends. It is a punch board of gimmicks allowing people to do things they could not previously have done before, and the most significant enterprise is to move American manufacturing jobs overseas and get a tax break for doing it.

This amendment is very misunderstood based on the discussions by the two previous speakers. There is discussion on the floor of the Senate about what is the motivation for moving jobs overseas--to serve, for example, a foreign constituency; want to move jobs to China to be able to sell into Thailand or Korea. The tax deferral piece of this amendment does not affect you. You can win that argument we are not having, if you wish, but you are misstating what the amendment suggests. The deferral part of this amendment does not do anything of the kind.

This amendment is narrow--narrower than I would have it, as a matter of fact. But it says if you are going to get rid of your American workers, close your plant, move those jobs elsewhere, and then ship back into this country to compete with the American businesses that stayed here, you do not get the advantage of deferring the payment of U.S. taxes. It is just very simple.

The question today is not just who is going to stand up for American jobs on this floor, who is going to stand up for American businesses that stayed here, manufactured here, hired workers here, paid the rent here, who is going to stand here and support that? I have not heard it yet.

Let me go through some points. Before I do, let me mention one other thing. One of my colleagues just said: There are some things you cannot make here. So if you make them abroad, we do not want to punish you in our Tax Code from selling them in this country.

They previously used bananas. I want my colleagues to understand, we actually have a banana exemption. We do not actually spell out bananas, but because the specter of fruit was raised the last time this was discussed, we included a banana exemption.

Of course, we do not grow bananas in the United States. If somebody ships them back here, they will not be affected by this amendment either.

There are a lot of points raised that have nothing at all to do with what we are describing in terms of public policy.

Let me go through a few items. Some people may not know this. I described previously in unsuccessful attempts to try to do what we are doing that in New Jersey, there are a lot of folks who loved their jobs and they worked for a company call Fig Newton. Some actually shoveled fig paste. By the way, the company's name was Nabisco, which stands for National Biscuit Company. But it was not quite so national because Nabisco, the National Biscuit Company, decided the pay they had to provide for people to shovel fig paste in New Jersey was way out of line, so they just took Fig Newtons right off to Mexico. If you want Mexican food, buy some Fig Newtons. It goes on and on. The list is so long.

I want to mention, as I have mentioned before, some of these same stories because it is important to understand what motivates people who want to stand up for American jobs.

Pennsylvania House Furniture--I was in Pennsylvania this weekend--was made in this country for over 100 years with fine Pennsylvania wood. It was a wonderful company making high-end furniture. One day it was sold to La-Z-Boy. La-Z-Boy decided: We are going to move Pennsylvania House Furniture to China, and we are going to ship Pennsylvania wood to China and have Chinese workers put the wood together and ship it back to be sold in the United States. It had nothing to do with whether the folks at Pennsylvania House Furniture were slothful, indolent workers not doing their job. It had nothing to do with that.

What it had to do with is La-Z-Boy did not want to manufacture Pennsylvania House Furniture in the United States. They wanted to acquire 50-cent an hour labor, 12 hours a day, 7 days a week in China.

On the last day at work at the Pennsylvania House Furniture manufacturing company, these craftsmen--nearly 500 craftsmen--as the last piece of furniture came off the line, they turned the cabinet over, and then they all gathered round to sign their name on the bottom of the cabinet. These wonderful American craftsmen signed that cabinet. Somebody has a piece of furniture they are probably not aware has all the names of those workers who were fired as those jobs went to China.

Why did they do that? Because they cared about their jobs and were proud

of their work, but they could not compete with 50-cent-an-hour labor.

Stanley Furniture in Virginia is a furniture company that was started by Tom Stanley, a young dairy farmer in Virginia. He started it in a city that now is named Stanleytown. A couple of months ago, it was decided that Stanleytown was going to have some pretty bad news. Stanleytown was going to find out that these jobs were no longer going to be in Stanleytown. Stanley Furniture, another fine furniture manufacturer, was going to China.

Let me read from the Journal of Commerce of this year:

Stanley Furniture's decision to close its plant in the

small town that bears its name fell like a hammer blow on

southern Virginia and resounded across an industry,

increasingly now moving overseas. More than 500 workers will

lose their jobs this year as the manufacturer shuts down

its Stanleytown, VA, plant, where the company has made

furniture since 1924.

So it goes--moving jobs overseas. Let me, if I might, go through a couple of others.

I notice the Hershey company--speaking of Pennsylvania--Hershey company's York Peppermint Pattie is that silver pattie with the ``York'' in the middle and the advertisement that says: ``The cool, refreshing taste of mint dipped in dark chocolate will take you miles away''--in this case, of course, to Mexico because Hershey decided it is time to move. So York Peppermint Pattie moves 260 jobs to Monterey, Mexico--part of a longer term job strategy by Hershey, they said. Well, that is a peppermint pattie. America's manufacturing strategy probably doesn't depend on peppermint patties--who knows.

I have previously mentioned a series of American manufacturers, and I have used this one often because they announced with great fanfare some years ago that they were going to leave America altogether. Not another piece of underwear was going to be made by Fruit of the Loom in the United States. The dancing grapes, for all their advertisements, must have been unhappy. Their advertisements were always happy and upbeat, with guys dressed as grapes and such marching in the meadow. They can't have been very happy when Fruit of the Loom said: We are not going to make underwear in America anymore.

Radio Flyer's little red wagon. This was a 100-year-old company in Chicago. All gone. Now made in Mexico.

Here is another company. I have been talking about this one for a long time. Last week, my colleague from Ohio talked about this company--Huffy Bicycles. You can buy them at Walmart and Kmart and Sears. They were made in Ohio--except, no more. No more. All those workers lost their jobs. All those jobs are in China. All those jobs are done by people who make 50 cents an hour, working 7 days a week, 12 to 14 hours a day. Huffy said to the workers in Ohio: You know what, you can't compete, so you are done. On the last day at work, where they parked their cars in the parking lot, those workers who were fired that day left a pair of empty shoes in the places where their cars were parked. It was the only thing they could do to say: You can move our jobs to China, but you can never replace American workers.

So I could go on and on, but I want to describe what so many here in this Chamber wish to ignore. This is a quote from Mr. Paul Craig Roberts, one of the top Treasury officials in the Reagan administration. Here is what he said this year:

Outsourcing is rapidly eroding America's superpower status.

Only fools will continue clinging to the premise that

outsourcing is good for America.

Only fools will cling to that premise. And I agree with him.

Again, another quote from Mr. Paul Craig Roberts:

In order to penetrate and to serve foreign markets, U.S.

corporations need overseas operations. However, many U.S.

companies use foreign labor to manufacturer abroad the

products that they sell in American markets. If Henry Ford

had used Indian, Chinese, and Mexican workers to manufacturer

his cars, Indians, Chinese and Mexicans could possibly have

purchased Fords but not Americans.

Again, he is absolutely right. It seems to me the question is, Will America remain a world-class economic power without a world-class manufacturing capability? Does anybody really believe that could be the case? You are going to decimate and erode a manufacturing base in this country and then say: Things will be just fine; don't worry about it. We can all sell hamburgers to each other and things will be just great? We know better than that. What is happening before our eyes is a hollowing out of America's manufacturing capability.

There is a lot of discussion about what do we do about jobs, what do we do about trying to create new jobs in the country, and that has to do with what is called the faucet. If we are trying to put new jobs in the tub, they say, turn on the faucet. That is fine, and I support a range of policies that try to turn on the faucet to create more jobs in this country. But what about the open drain? As we work on the faucet, what about the drain, when Stanley Furniture says: Well, I know you are trying to create jobs, but we are out of here; or Etch A Sketch in Bryan, OH, says: Yeah, we know every kid plays with Etch A Sketch. We know we have always made it in America. But we were told by Walmart that if we couldn't produce it for $9.99 or less, they wouldn't sell it. If they don't sell it, we are out of business, so we are closing down our plant and moving to China.

The list goes on and on. The question is, What do we do about all of this? My colleagues--too many of them--say: Let's do nothing. Let's act as if nothing is really going on. In fact, let's come in here and say: You know, we made an agreement in 1962 on some deferral tax issue, and let's stick with it.

One of my colleagues earlier today said: You know, we have to worry about American corporations because they pay some of the highest tax rates in the industrial world. Well, that is a little like Penn and Teller talking about fiscal policy, and only one speaks and the other is silent. It is true that our corporate tax rates, I believe second from the top of the OECD countries. But there is another truth. The other truth is that our corporations in America pay an effective tax rate that is right near the bottom. What is the difference? One is a statutory rate--that is what the law says you should pay--and the other is how much you pay, which is right near the bottom. Why? Because we have a punchboard of gimmicks to allow that to happen. I have described a couple: American banks and other companies buying German sewer systems, buying German railcar systems, streetcars, buying German city halls for the purpose of sale-leasebacks so they can avoid paying taxes to the United States. It is pretty unbelievable, when you think about it.

The only reason I have mentioned some of the companies over the years when I have talked about this is to give them full credit for what they are trying to do. They and all their neighbors should understand that they want all the benefits America has to offer, but they don't want to sign up for the responsibilities that exist for Americans, including an American company.

I want our corporations to do well. I want American corporations to be profitable. But I will tell you this: If you have two kinds of corporations, and one decides to stay here and manufacture in our country and the other decides to take the jobs and move to a low-wage, lower tax alternative, I want to be helpful to that corporation that stays here, that hires workers here, that keeps the plant open here and is proud to put a made-in-America label on their product.

There is a company called HMC in this country that makes very substantial industrial products. You can see that this is a company everyone admires. Let me tell you what this corporate CEO has said. The CEO of HMC corporation, Robert Smith, said this:

Offshoring in search of higher profits is a mistake because

it ignores manufacturing's larger purpose in U.S. society.

Here is something else Mr. Robert Smith said, and I compliment him because you will find precious few who will say it.

It is my belief that every American citizen, not only me,

should feel strongly about maintaining one of the most

important cultures we have, and that is manufacturing. Now,

why is it important? Does anybody think we would have

prevailed in the Second World War without the prodigious

manufacturing capability of our country? If anybody is

interested in that, go read Manchester's ``The Glory and the

Dream'' and understand what we did and how we did it in

manufacturing war planes and ships and tanks and

trucks. We had the most unbelievable manufacturing capability

in the history of humankind.

Some say that none of this matters--why should we pick winners and losers? If the marketplace says we manufacture products in China or Mexico, if, in fact, we actually import more cars from Mexico than we export to the entire rest of the world, so what? Don't worry, be happy. That is the way the U.S. Chamber of Commerce wants it, and it is what the National Association of Manufacturers wants to have happen, apparently--except I know of companies that belong to both those organizations that have called me and written to me and said that they are dead wrong. How about having a chamber in the U.S. Senate stand up for American manufacturing?

I know that when I talk this way and when I say these things, there are people in this room--and the Washington Post would be a good example--who will instantly say: Aha, I hear all that nonsense. This is about protectionism. It is about America becoming protectionist and building walls around its country to keep goods out.

Are you kidding me? Are they nuts when they talk that way? Last month, we had a $50 billion trade deficit in 1 single month. In a recent year, we had a $750 billion trade deficit. You can make a plausible case that our fiscal policy budget deficit is what we owe to ourselves. You can make that case, and we will pay it back to ourselves. You can't make that case with a trade deficit. The trade deficit is what we owe others in the world, and we will repay that with a lower standard of living in this country inevitably.

The question is, When will we start to decide that this trade strategy is not working? We are dealing with other countries that are engaged in managed trade, and yet we are saying it doesn't matter what happens to us. It just doesn't matter.

We, by the way, spent a century doing what other countries wouldn't or couldn't--in most cases, couldn't--and we lifted up this country. We had unbelievable battles.

The other day, I described the battle on workers' rights. In the first book I wrote, I described James Fyler. James Fyler was shot 54 times. I said--and I shouldn't have--that he died of lead poisoning. He died because he was shot 54 times in 1917 in Ludlow, CO. He was shot because he believed that people who worked underground digging for coal ought to work in a safe workplace and ought to be paid a fair wage. And for that, he gave his life.

There are many things we have done over the past century that people have died for to lift up standards in America, and now they are routine--decent wages, fair labor standards, and safe workplaces. We did all that. Other countries, in many cases, have not. So now the question is, Is it important for us to lift up others around the world or to allow ourselves to be pushed down in terms of the standards we have created and fought for over a long, long time? To me, the answer is self-evident: Let's stand up for what this country has done.

I am all for helping others. I want to lift them up, create standards that hopefully can mirror ours. I am not interested at all in having a Huffy Bicycle management team say to the Huffy workers in Ohio: If you can't compete with China's wages and China's workers, you are out of work, and we don't care what you think.

Well, the workers of Ohio said: You know what, we just can't live on 50 cents an hour, and we can't work 7 days a week, 12 to 14 hours a day.

The law won't allow U.S. companies to hire kids, so the company said: That is tough luck. You need to understand that it is a new world out there. If you can't compete, you lose.

Well, this is a race to the bottom in terms of standards.

Some say: Well, we can innovate. We are the innovators, yes, that is true. I chair the Congressional-Executive Commission on China, and so I held a hearing last week on counterfeiting and piracy. Do you know what? We innovate, and then we see it stolen. Intellectual property is stolen and produced elsewhere. It is always produced elsewhere. We invented the television set--gone, produced elsewhere; computers-- largely produced elsewhere. I could go through a whole list.

The question is, What kind of a country do we want to have? For example, we have done a lot of free-trade agreements. In fact, let me do this. I want to just mention a free-trade agreement with South Korea, and I could go through all of the free-trade agreements and show how unbelievably ignorant our country has been with respect to its own economic self-interest. But let me give one example.

This chart shows the number of cars in South Korea. In South Korea, 98 percent of the cars driven on the streets and roads are made in South Korea. Now, you might think that is really interesting, that they have an appetite for buying those South Korean-made cars. It is not an appetite, it is what that country decides it wants. They do not want South Koreans to buy foreign cars, so 98 percent of the cars on their streets are South Korean cars.

So let's talk about our relationship with South Korea, and it is this: Last year, because we had a recession, we didn't sell as many South Korean cars in our country. At one point, it was close to 800,000 a year. Last year, the South Koreans put 467,000 cars on ships and shipped them to America to be sold here in our country. That is 467,000. Does anybody want to guess how many cars we could sell in Korea last year? Six thousand. So 467,000 to 6,000. Why? Because South Korea doesn't want us to sell American cars in South Korea, and they have dozens of clever devices to stop it.

Our country negotiates a trade agreement with South Korea--guess what, they don't even mention the bilateral automobile problem, not even a word.

Our country did a bilateral agreement with China, a country with which we had a $200 billion trade deficit. We had a huge deficit with China, biggest in the world. Here is what our country said. We said, on bilateral automobile trade we will do this: When you ship a Chinese car to the United States we will only impose a 2.5 percent tariff on your car, but if we ship an American car to be sold in China, you may impose a tariff of 25 percent. You may impose a tariff that is 10 times higher than we would impose in bilateral relationship with a country with which we had a $200 billion trade deficit. If that is not defined as ignorance, then I have missed the definition of ignorance.

Why wouldn't we step up for our economic interest? China, by the way, right now is ratcheting up a very aggressive automobile industry. You are going to see a lot of Chinese cars on the streets in this country in the years ahead.

But I rest my case. I mentioned automobiles. I could mention lots of other issues. I have written books about this. But the fact is, the issue before us today is not somebody coming here and saying, in the 1962 agreement on deferral--or another speaker talking about how if you let people go overseas there will be more jobs here at home.

Let me finally say, this issue of deferral is that in some cases these companies know they never have to pay taxes. The reason? Because they defer and defer on foreign profits. This amendment is only about if you have profits in a foreign subsidiary, from selling back into America, into this marketplace. Some of them can leave to go overseas knowing they will get the advantage of deferral and pay lower taxes than the company that stayed here, but they will get an even better deal. If they hang, we will have somebody in one of these Chambers thumbing their suspenders and shuffling around and harrumphing about maybe what we should do is say all of those people who have money overseas, let's let them bring it back here and pay a 5.25 percent tax rate. You say: Oh, they would never do that. Oh, they sure did. It is the rest of the people who do not get to pay the 5.25 interest. It is just the biggest interests who closed their American companies and moved their companies overseas and produced overseas after they got rid of their American workers. They were told in addition to getting a tax break for doing it, we want to give you something on top of that, the cherry on top of the sundae: If ever you do bring it back, you get to pay a tax rate that is one-half of the lowest tax rate that the lowest income American has to pay. What an unbelievable deal.

Let me say, as I started, if ever someone wishes to hear the strongest defense possible of sending American jobs to China, listen up because in the next few hours we will hear some more of it. We have already heard some.

They don't say it quite this way: We think it is nice that if China is not competitive, and their government decided they don't need to do certain things that we have done to increase standards and lift the American standards, we think it is OK if American jobs migrate elsewhere because we do not believe we have to long remain a world economic power in manufacturing to really be a world economic power.

They could not be more wrong. This is not a big step. This is the smallest of steps that you would take in the direction of saying: You know something, we are going to do something about a very serious problem. We are trying to work the faucet to put more jobs into this country, into this economy, at a tough time. We are also trying to shut the drain in circumstances where our Tax Code rewards those who now leave our country and move their jobs overseas.

If we cannot do that now, then, in my judgment, we can perhaps never do good public policy that lifts this country's economy, stands up for American businesses and American workers.

I yield the floor.

Mr. President, before I start to speak, it is my understanding I have 30 minutes for our side and I ask unanimous consent that Senator Dorgan be recognized immediately after my time.

Mr. President, I wish to tell my colleagues why I think the bill before us, S. 3816, is not a good approach. This bill is being sold as somehow having the potential to create American jobs, but it would likely have the exact opposite effect. It would lead to a net decrease in American jobs. For that reason, I encourage my colleagues to vote against this bill.

The bill has three key aspects: a payroll tax holiday for employers hiring U.S. workers to replace foreign workers; a denial of business deduction for any costs associated with moving operations offshore; and lastly, ending deferral for income of foreign subsidiaries for importing goods into the United States. This last provision, according to my colleagues on the other side of the aisle, is the principal issue of the three, and from that standpoint, in my opposition, I agree. It certainly is the most dangerous, so that is the one I wish to address in detail.

To understand this partial repeal of deferral, it is best to consider the topic of deferral more generally and then we can consider this particular idea in context.

The term ``deferral'' refers to how U.S. corporations pay U.S. income taxes on foreign earnings of its foreign subsidiaries, only when those earnings are repatriated to the United States. That is, the U.S. tax is deferred until the earnings are paid by means of dividend back to the U.S. parent corporation. Deferral is not a new policy.

Rather, it has been a feature of the tax law since 1918.

President Kennedy proposed outright repeal of deferral, but the then- Democratic Congress did not agree with him. Instead, the Congress and the President compromised. The compromise was this: For the passive kinds of income such as interest, dividends, royalties, and the like earned by a foreign subsidiary, the U.S. parent company would pay immediate U.S. tax whether or not the foreign subsidiary sent the earnings back to the parent. However, for active business income of the foreign subsidiary, there would be no U.S. tax until the foreign subsidiary sent such money to the parent corporation.

In short, the compromise during the Kennedy era was this: For passive income, deferral was repealed. For active income, deferral was still allowed. That compromise is embodied in subpart (f) of the Internal Revenue Code. That compromise was hammered out in 1962 and, with slight tweaks at the margin, that compromise has stayed in place for the last 48 years.

The compromise struck in the John F. Kennedy administration was the right one. Passive income is easy to move from one jurisdiction to another. If a U.S. corporation had a lot of interest income, it was very easy to instead have the foreign subsidiary earn such interest income in a low tax jurisdiction. So when interest income was earned by a foreign subsidiary of a U.S. parent corporation, there was a high likelihood that it was earned in the foreign jurisdiction out of motivation for the sole purpose of avoiding the U.S. tax. But with active business income, there are usually legitimate nontax business reasons for the income to be earned overseas. The reason a U.S. car company sells cars in Hong Kong is not out of some desire to avoid U.S. tax but, rather, out of a desire to sell cars to customers that live in Hong Kong.

So the underlying rationale to the subpart (f) compromise is this: If there is a high likelihood that a particular type of income is earned overseas out of a desire to avoid U.S. tax, then deferral will not be allowed. If there is not a significant likelihood of that, then deferral will still be allowed.

This is a very sensible rationale that was agreed to during President Kennedy's administration in the 1960s, because one of the most fundamental tax principles of all this is transactions should not be tax motivated but should be motivated by business or other nontax reasons. Tax motivated transactions should not be allowed the benefits of the favorable tax treatment sought. This fundamental tax principle prevents the tax laws from distorting decisionmaking and from distorting the economy. And the bill that is now before the Senate called the ``runaway plant'' bill cannot be justified by any similar rationale. They say they want to repeal deferral for foreign subsidiaries having income from importing goods back into the United States. But are they claiming that when a foreign subsidiary of a U.S. company imports back into the United States, there is a high likelihood that the production of the good would have been in the United States but for the motivation to avoid U.S. tax? They would have to be claiming that, if they wanted to be consistent with a half century of reasons why certain specific limitations on deferral have been justified.

But that simply can't be. There are numerous nontax reasons for having a foreign subsidiary of a U.S. parent company import goods into the United States, and I will mention a few. One reason could be that there is only small demand for the product back in the United States as compared to the overseas markets. For example, diesel engine cars are very popular in Europe, comprising 50 percent of all car sales. Here in the United States, diesel engine cars are well less than 10 percent of all car sales. So there is a very good reason for having diesel engine cars made in Europe and not here. Nonetheless, the bill before the Senate acts as if the reason these cars are not made here is because of our tax laws.

It may be that some items simply aren't found in appreciable quantities in the United States. For example, there is no diamond mining or chromium mining to speak of in the United States. A U.S. parent mining corporation with a foreign subsidiary engaged in diamond mining or chromium mining where such diamonds or chrome are imported into the United States may find deferral repealed. This could be true to the extent that the parent had any domestic restructuring at the same time it started up any foreign operations. But obviously the reason for the diamond and chrome mining outside the United States is not tax avoidance. The reason is those minerals are not found here within the United States. So I wish the sponsors of this bill to make clear whether minerals not found in the United States and imported into the United States would be included in this proposal.

I wish also to know whether this proposal would have applied to the Ford Motor Company's ownership of Volvo. Ford owned Volvo cars from 1999 to 2008. During that time, many Volvos were made in Sweden and imported into the United States for sale. If the acquisition had happened after the date of enactment, deferral would be denied in this situation, at least to the extent that Ford may have been shutting down any plants in the United States. However, no one can seriously claim that the reason the cars were made in Sweden rather than in the United States was from the desire to avoid U.S. taxes.

Keep in mind that another foreign car company--let's say Volkswagen-- would not be treated the same way Ford's Volvo car income would be treated. Volkswagen would be better off taxwise on competing auto sales into the United States market over Ford's Volvo, thanks to this bill, if it were to pass.

There are lots of nontax reasons for having foreign subsidiaries of U.S. companies import into the United States. But it seems that the bill before the Senate does not recognize that fact, or maybe it doesn't care. Perhaps the bill is motivated not by a desire to curb tax-motivated transactions but by something else. Perhaps the bill has an anti-free trade motivation. Perhaps the bill is attempting to make it more difficult for American companies to conduct business outside of our country. Whatever the case, the bill's sponsors should make the rationale clear--is it to curb tax avoidance or something else?

Perhaps the bill's sponsors will admit that the bill has nothing to do with curbing U.S. tax avoidance. Perhaps they will say that it instead has to do with preserving and creating U.S. jobs. But if that is their position, that cannot be right. In some limited circumstances, perhaps it would increase employment in the United States, although probably mostly for tax lawyers than anybody else. But whatever the case, the net effect would be to decrease employment in the United States.

Allow me to explain why the net effect of the bill would be to decrease U.S. employment.

First of all, if a U.S. parent company has a foreign subsidiary, then this creates managerial headquarters jobs in the United States that would otherwise not be here. The bill before us might encourage American companies to simply sell off their foreign subsidiaries. This would, in turn, mean laying off employees in management positions at the American headquarters.

A bigger way this bill would hurt employment in the United States would be to discourage assembly jobs in the United States. A U.S. parent company could have foreign subsidiaries engage in manufacturing parts that are shipped back to the U.S. parent. The U.S. parent, in turn, might assemble those parts here in the United States into a finished product. So, yes, maybe this bill would encourage the company to repatriate the parts production, but it is just as easy to imagine that this bill would encourage the company to expatriate the assembly jobs. So this bill is an unacceptable gamble with American jobs.

In the words of the late Senator Moynihan, who preceded me and Senator Baucus as chairman of the Senate Finance Committee--he spoke in opposition to this proposal 14 years ago, so this issue has been around this body for a period of time. He said this: ``Investment abroad that is not tax driven is good for the United States.''

Senator Baucus's concern that this would put the United States at a competitive disadvantage is exactly right. I don't have the exact quote of Senator Baucus, but it was in Congress Daily

recently. I am sorry I don't have that quote for my colleagues.

Senator Baucus very rightly states it. Phil Morrison, the Treasury Department's international tax counsel, criticized this proposal in congressional testimony 19 years ago. Mr. Morrison noted that the bill would be very hard to administer and that it departed from the traditional focus of the limited areas where deferral is denied.

As President Clinton's international tax counsel, Joe Guttentag, explained in 1995, during the Clinton administration:

Current U.S. tax policy generally strikes a reasonable

balance between deferral and current taxation in order to

ensure that our tax laws do not interfere with the ability of

our companies to be competitive with their foreign-based

counterparts.

This proposal has been made year after year for 20 years. I ask that my colleagues again reject it, in an effort to keep American companies globally competitive, to protect American jobs, and to preserve the underlying rationale of why deferral should only be denied in limited circumstances.

Finally, I wish to briefly comment on one other aspect of the bill-- the payroll tax holiday. This, too, has provisions that will be difficult to administer. For example, do foreign workers actually have to be fired to have their employer get the payroll tax holiday in the United States or do they need only to be reassigned job roles?

This provision only scores, according to the Joint Committee on Taxation, as costing $1 billion. Let's make sure we are clear on this point. The other side is seriously considering raising taxes on small businesses--the lead creator of jobs--by tens of billions of dollars by letting top individual tax rates go back up in the year 2011. But in an effort to support job creation, they offer this $1 billion payroll tax holiday.

According to the Joint Committee on Taxation, 50 percent of small business flowthrough income will be hit by a marginal tax hike of somewhere between 17 percent, on the low end, and 24 percent, on the high end. That tax increase is scheduled to hit these job-creating small businesses in just a little over 3 months. Finance Committee Republican tax staff calculates the effect of that tax hike to be 50 times the benefit provided by this bill. On our side, we don't see the logic of raising $50 in taxes and providing a complicated tax benefit of just $1.

Why aren't we dealing with the real problem for the folks responsible for creating 70 percent of American jobs? Of course, that is small business. We ought to take time out on the tax hit that is coming to small business this December. That is what we ought to be debating on the Senate floor.

But the Democratic leadership would rather spend valuable time talking about a bill that is artfully politically labeled a jobs bill. Given that the bill will lead to a net loss in American jobs, it seems there might be a truth-in-labeling claim against the Democratic leadership.

Let's have votes on real job creation incentives and get out of this gamesmanship. Let's do the people's business and forestall the big tax hike coming at American small business.

I also wish to take some time to address the issue of the estate tax, which is going to expire at the end of this year, at the very same time.

The majority party has had control of the Senate since January 3, 2007. That is 3 years, 8 months, and 24 days ago.

During the 3\1/2\ years of Democratic control, my colleagues have had an opportunity to address the death tax.

More pointedly, the Democratic leadership had a duty to provide certainty in the law as it relates to the estate tax.

My colleagues have had the duty to address the fact that this ill- conceived tax will snap back to pre-2001 law on January 1, 2011.

That is only a little over 3 months away. To be exact, it is 3 months and 5 days from now.

Unfortunately, as this chart shows, the estate tax is not the only piece of long overdue tax legislation.

Mr. President, the practice of ``good government'' is providing certainty in the law.

What I mean is, our country is made up of law-abiding citizens. As legislators, we were hired by these law-abiding citizens to make the law.

When we fail to provide certainty in the law, we fail to do our jobs.

But despite the fact that the Democratic leadership has not acted in over 3\1/2\ years we still have 3 months before the estate tax reverts back to a 55-percent tax rate and a $1 million exemption amount. So Congress still has time to act.

But I am skeptical that the Democratic leadership will indeed act.

Why? Because when my friends on the other side of the aisle were in the minority earlier in this decade, they blocked--let me repeat blocked--Republican efforts to make permanent an estate tax law that law-abiding citizens all across America could rely on.

The first effort was made in 2002. Specifically, on June 12, 2002, the Democratic leadership blocked legislation that would have permanently repealed the estate tax.

In 2004, Republicans in the House of Representatives approved a bill that would have permanently repealed the estate tax. But due to maneuvering by the Democratic leadership, a vote in the Senate was never allowed to occur.

Finally, in 2006, Republicans offered a compromise proposal on the estate tax. Under that compromise, the estate tax unified credit exemption would have gradually been increased to $5 million. The rate would have also been phased in to a 30-percent tax rate.

But again, the Democratic leadership filibustered the proposal to its death.

Mr. President, I believe on our side were practicing good government as it relates to the estate tax.

We were doing our jobs, and providing certainty in the law.

Yet the Democratic leadership stymied the practice of good government.

To this day, the Democratic leadership continues to stymie efforts to provide certainty in the law.

So why is the estate tax being held hostage?

Because a number of liberal leaning Senators would be satisfied if the estate tax reverted back to pre-2001 law--that is, a 55-percent tax rate and a $1 million unified credit exemption amount.

And why wouldn't they? There is $233 billion in extra revenue to spend.

Also, in this hyperpartisan environment that is plaguing the Senate, many policymakers are politicizing the estate tax issue.

What do I mean?

A number of Senators have taken to the Senate floor and characterized a reasonable estate tax rate as a ``give-away'' to the rich.

These Senators also argue that if the estate tax is ratcheted up to a 55-percent tax rate, we could use that revenue to reduce the deficit.

I respect every Senator's opinion, but I question whether these members are actually going to use this revenue to reduce the deficit.

Unfortunately, we have seen my friends' desire to spend, spend, spend. Increasing the deficit one dollar at a time. Not the other way around.

I will acknowledge that due to the budget rules that we must live by here in the Senate, making permanent an estate tax regime at a tax rate lower than a 55 percent will result in revenue loss to the government.

For example, my friend Congressman Pomeroy--a Democratic Congressman from North Dakota--sponsored a bill to make permanent the estate tax at a 45-percent tax rate and a $3.5 million unified credit exemption amount.

When you compare this proposal against what the estate tax would revert to in 2011--a 55 percent tax rate and $1 million exemption--you find that this change in the law would cost around $233 billion over 10 years.

Now, when you compare $233 billion to the $2.5 trillion health care reform bill that was recently signed into law, it is a drop in the bucket.

Also, compare this to our $13 trillion national debt.

But $233 billion is nothing to sneeze at.

While it could be used to reduce the deficit, my colleagues on the other side of the aisle have made every indication that they will simply spend this money.

My colleagues on the other side will gloss over their plans to spend, and instead attack any proposal that includes a tax rate lower than 55- percent as a ``give-away'' to the rich.

I have some news for my colleagues. A large number of Americans who

would be impacted by a 55-percent tax rate and a $1 million unified credit exemption are not ``rich.''

Let me repeat that. Those taxpayers that would be impacted by the estate tax if it reverted back to pre-2001 levels are not wealthy people.

I would like to take a moment and provide my colleagues with a real world example of an Iowan who would not consider herself ``rich.''

Recently, I received an email from Landi McFarland, who is a sixth generation Iowa farmer.

This is what Landi had to say about the impact of the estate tax and her ability to continue the family farm:

. . . As a 6th generation Iowa farmer whose family

homesteaded land in Union county 154 years ago, I have

concerns about current estate tax law. I am 26 years old and

have a dream of pursuing a future in agriculture, the same as

the generations that have come before me.

I currently raise Angus cattle with my parents and

grandparents, where we are tax-paying citizens and supporters

of our local economy and schools. My grandparents are both 84

years old, and own about 90 percent of the land, cattle, and

equipment on our farm. Their combined estates will total

approximately $7 million (the vast majority of this being

farm assets like land and cattle). Recent land values have

escalated the values of my grandparents' estate.

This rise in land values, however, does not increase the

value of what the land produces (Angus cattle sell for the

same price no matter if the land is valued at $1000 or $4000

per acre).

If my grandparents pass away AFTER 2010, and current estate

tax laws are not fixed, my family will not be able to afford

to pay the estate taxes without liquidating the herd and

selling a large portion of the farm ground. This will put an

end to our business that we love, and hence and end to our

support of local businesses through daily business

operations.

In the last four years, my family has worked on estate

planning to try to help ease the burden of estate tax. This

includes taking advantage of the $12,000 tax-free gifting

each grandparent can do per person per year.

However, this only amounts to a total gifting of $48,000

per year, a drop in the bucket for a combined $7 million

estate.

We are one of the oldest Angus operations in the country,

and is all we wish to do is continue our family business that

has been built with our own blood, sweat and tears over the

past years. If current estate tax laws are not fixed, there

will be thousands of small family businesses like ours put

out of business. We need a SENSIBLE and PERMANENT fix.

Thanks for your help,

--Landi

Mr. President, Landi's story is not unique to her. There are more farmers like her in Iowa and around the country.

I want to talk more broadly now about how failing to address the estate tax sunset will affect Iowa farmers.

Over the past few years, farm prices have been escalating dramatically. According to the U.S. Department of Agriculture, U.S. farm prices have nearly doubled in the last decade.

While recent economic troubles have led to home prices dropping, this has not been the case for farmland. In fact, as reported in a recent LA Times article, Wall Street investors have actually turned to purchasing farmland in hopes of finding refuge from an unstable stock market. This in turn has pushed farm prices higher. Based on a recent survey by the Federal Reserve Bank of Chicago, Iowa farm prices are up 8 percent in the past year alone.

Why is this discussion of escalating farm prices significant?

Because this means that should the estate tax law revert to 2001 law, many farmers are going to be surprised to discover they will be considered ``rich.''

Now, I am not talking about wealthy corporate farmers, I am talking about many family farmers, just like Landi, who are taking over a farm that has been passed down for generations.

Mr. President, let me walk my friends through some data.

In 2007, the U.S. Department of Agriculture reported that there were 92,800 farms in Iowa.

In 2007, the average Iowa farm was 331 acres.

According to a survey conducted by Iowa State University, in 2009 the average acre was worth $4,371.

Let's do some simple math. If we multiplied the average acreage of an Iowa farm--which was 331 acres as reported in 2007--by the average cost per acre in 2009--which was $4,371 in 2009--we find that the average Iowa farm is worth $1.4 million.

Mr. President, $1.4 million exceeds the $1 million unified credit exemption amount that would be in place on January 1, 2011, if Congress does not act.

Admittedly, the value of a farmer's farmland does not tell us conclusively whether or not the farmer will be subject to the estate tax. Farmers sometimes carry debt. That would reduce the value of the farm. But they also have assets, including equipment and bank accounts, that would increase the value of the estate.

Let me shift gears and provide my friends with some national statistics.

The Joint Committee on Taxation has told us out of 92,700 estates of people dying in 2011, 49,000 of these estates would be taxable under the 55-percent rate and $1 million exemption. If the law were changed to a 35-percent tax rate and $5 million exemption amount, for example, 3,900 estates would be taxable. That is a ratio of 13 to 1.

For every one estate that would be taxable under a 35-percent and $5 million estate tax regime, a whopping 13 estates would be taxable if the law reverted to a 55-percent rate and $1 million exemption.

Even if the rate were set at 45 percent and an exemption amount of $3.5 million, this ratio is 8 to 1. That is, for every one estate that would be taxed under the 45-percent rate, with the $3.5 million exemption, eight estates would be taxable under the 55-percent rate and $1 million exemption if we do not change the law.

I will conclude this way. Let's now look at farmers who would be affected. Based on the Joint Committee on Taxation in 2011, 3,200 farms would be taxed if the law included a $1 million exemption amount. Compare that to 300 farms that would be taxable if the exemption was $3.5 million.

That means the result of no action will be that 10 times as many family farms will be hit by the death tax. The time for action on the estate tax is now, not a month from now or 3 months from now. We owe it to the farmers and small business owners and their young heirs to give them certainty. We need to give to the tax lawyers and consultants who advise people on their estate planning some certainty.

I yield the floor.

Mr. President, let me thank the Senator from North Dakota. He is retiring. We are going to miss him. He has been a powerful voice in the Senate and no more powerful on any issue than on this one, talking about American jobs and how we are giving them away, literally giving them away.

Time and time again Senator Byron Dorgan has come to the floor to explain that our Tax Code rewards American companies that want to ship production overseas. Is that upside down? As Senator Dorgan has said on the floor, and I completely agree with him, we should reward American companies that keep good-paying jobs in America. That is what our Tax Code should reward. If they will pay a living wage and good benefits to a worker, and stay in the United States of America, we ought to give them every tax break we can give them--help them in every way we can. Instead, it is upside down. We create incentives for them to move jobs overseas.

We are a few weeks away from an election. I wish this election would be a simple referendum on the debate we are having on the floor of the Senate right now. The Senate Republican leader has come to the floor and said we should not be talking about this issue. He wants to talk about something else. Others, representing the largest corporations and businesses in America, say that the position being taken by the Democrats to stop the tax breaks for American companies that ship jobs overseas should be defeated. I wish to take that question to the American voters. You pick the State, you pick the city, you pick the neighborhood. I want to be there. I will take our position and I invite the Republican Senators and the Chamber of Commerce and whatever other groups happen to believe the other point of view for an active debate. Who in the world believes we should be rewarding corporations in our country for shipping jobs overseas?

We know what we are going through here. This recession has cost us millions of American jobs. Under President William Jefferson Clinton, we created 22 million new jobs in America. We had the growth of small business at a pace we had never seen. We had minority ownership, woman ownership of business at a pace we had never seen. We saw the growth of new home construction and new home ownership at a record pace. During the course of that 8-year period of time, we generated a surplus in the Federal Treasury--a surplus. We had not done that for a decade or more.

So came the time when President Clinton was leaving office, handing it over to President George W. Bush. This is what he gave him: a growing economy creating jobs, home ownership and business ownership. He said to President George W. Bush: Here is the state of our economy. We are reducing our national debt because we are generating a surplus, and the entire national debt of America, given from President Clinton to President Bush, was $5 trillion.

President Clinton said to President Bush: In addition to a strong economy that is growing, I also want to tell you I am leaving you a surplus in the Treasury--$120 billion in the next year, more than you need for the expenses of our government. President Clinton said: We have been taking the surplus, incidentally, putting it back into the Social Security trust fund, and that fund will now guarantee every payment with a cost-of-living adjustment through the year 2032. Not a bad gift from President Clinton to President Bush. That was when President George W. Bush took office.

What was the state of America 8 years later, when President Bush left office, when he said to President Obama: Now it is your turn. It was a much different picture. The national debt in America was no longer $5 trillion. Eight years later, after President Bush, it was $12 trillion. In 8 years, only 8 years, President Bush and the Republicans who supported him more than doubled the national debt. How do you do that? How can you take a debt accumulated from George Washington through President Clinton of $5 trillion and make it $12 trillion in 8 years? You had to work at it.

First, you had to engage in two wars we didn't pay for and then you did something--President Bush did something no President had ever done in the history of the United States. In the midst of a war he declared tax cuts. Remember that Republican theory: If we give tax cuts, this economy is going to mushroom and grow with jobs? It did not work. In fact, it failed miserably. It added to our national debt, more than doubled our national debt during the Bush Presidency, so that when President Bush left office he handed to President Obama a $12 trillion debt--not $5 trillion, $12 trillion. Instead of handing him a surplus in the budget of $120 billion for the next year, as he had been given when he came to office, he announced it would be a $1.2 trillion deficit in the next year. That is what President Obama inherited. And of course jobs were melting away--8 million jobs.

The month President Obama was sworn in as President and took his hand off the Bible, we lost 750,000 jobs, a leftover from the Bush economic policies.

Now come the Republicans. They have announced if they are given control of Congress in the next election, they have an idea of where we should go as a Nation. We should go back to the Bush economic policies. That is what the Republican plan for America is, go back to the Bush economic policies of declaring tax breaks for the wealthiest people in America. Senator McConnell stated proudly on the Sunday talk shows yesterday that he has had the courage to step up and put a bill before Congress of what he thinks we should do as a Nation when it comes to economic policy. He did. It was historic. It was so historic that Senator McConnell suggested a tax program that would nearly double the national debt--nearly double it--during the same period of time: $4 trillion of new debt for America. How does he do it? On the Republican side, by suggesting we continue to give tax breaks to those in the highest income categories in America.

I for one think that is totally irresponsible. In the midst of a recession, let us help working families, middle-income families struggling to pay their bills, struggling to deal with a home mortgage payment where the value of the home may be going down instead of up. Help those families. But for those who are making $1 million a year or more, why in the world would we add to the national debt to give them a $100,000 tax cut a year? Why? It only adds to the national debt.

The Republican theory is, if you give tax cuts to the wealthiest people in America, this economy is going to flourish. I say to the Senators on the other side, it is a theory we tested and it failed. It is the same theory we tested over the last 10 years of Bush tax cuts. If tax cuts for the wealthiest people in America is what we need for our economy, I have one basic question after 10 years: Where are the jobs? Where are the jobs to show for it?

Our approach I think is more reasonable, reasonable in that we would give tax breaks and tax cuts to those working- and middle-income families below $250,000 of income so they can get through this tough economy. I don't care if the economists tell us the

recession is over. As far as I am concerned, to use the vernacular: It ain't over until it's over, and it ain't over until we start creating jobs again.

That is what this debate on the floor of the Senate is about, not just tax policy but basically what is our policy when it comes to shipping jobs overseas.

I think American workers are the hardest working, most productive workers in the world. Put them up against anybody. Will they work for the lowest wages in the world? No. And they should not. We should have a standard of living in this country that we are proud of. But our workers have shown that when paid a living wage, they are productive workers and can compete with anyone.

Yet American companies have decided they want to ship their jobs overseas and see if they can make more money. As far as I am concerned, that is their choice. I think it is a wrong one. That is their choice. But the last thing in the world we ought to do is give them a tax incentive to ship those jobs overseas. We know what has happened to American families here over the last 10 years and longer in America. They have been falling a little bit behind each and every year, in terms of their earning power.

As the Wall Street Journal, which I do not quote very often, put it recently, it was the ``Lost Decade for Family Income.'' The median income in America fell almost 5 percent between 2000 and 2009.

Meanwhile, Merrill Lynch reported earlier this summer the number of financial millionaires in America rose by 16 percent. Solid middle- class manufacturing jobs have been disappearing across the country. The AFL-CIO estimates that from 2000 to 2007--that was the period of time during the Bush Presidency--the United States lost 5.5 million manufacturing jobs.

In the 8 years before, under President Clinton, we had created 22 million jobs. Under President Bush, we lost 5.5 million manufacturing jobs. By the end of 2009, the fewest number of Americans were working in manufacturing since before World War II. But it is not just the jobs on the shop floor that disappeared during the Bush administration.

Goldman Sachs estimates between 400,000 and 600,000 professional services and information sector jobs have moved overseas in the past few years. That was during a time when these businesses were raking in record profits and jobs were leaving America. Then, when the boom turned into a bust, those wizards of Wall Street, those captains of capitalism, those kings of commerce, those malefactors of great wealth experienced a temporary setback. Profits were down, stocks were down, and so compensation was down on Wall Street, for about 15 minutes.

Corporate profits are now surging, the stock market is roaring back, and endless bonuses are raining down on the chosen few, just like the good old days on Wall Street. But what about the rest of hard-working families across America? What about the families who never have made a million bucks? That is the vast majority of them. What about the families who earned the median wage in this country, about $50,000 a year? Those jobs are not coming back fast enough.

The Recovery Act that we passed last year, with the support of three Republican Senators--only three who would join us in this effort--has at least slowed down the recession and the loss of jobs. It has not produced the turnaround we all want to see. It will take some time. But at least it stopped the recession from becoming even worse.

This recession would not be over yet by anyone's measure had President Obama taken the advice from the other side of the aisle. They believed we should do nothing--nothing--in the midst of a recession. I have heard Senate Republicans come to the floor and criticize President Obama for loaning money to General Motors and Chrysler. I will tell you, in my home State of Illinois, those automobile manufacturing jobs, at General Motors and Chrysler, are good-paying jobs. We have lost a lot of them. But the good news is, those companies are back. They are profitable. They are selling fewer cars and trucks now, but they are selling and they are competitive.

That would never have happened had the Republicans had their way and stopped the President from giving loans necessary to these automobile manufacturers. We would have seen maybe one company, Ford, that might have survived. The other two probably would not be here today in any form, and all the jobs, the tens of thousands of jobs they provide in America, would have been lost.

The Recovery Act saved another 2.7 million Americans from the unemployment roles, according to economists Alan Blinder and Mark Zandi. In case you think: Well, Durbin, that must be your favorite Democratic economist, Mark Zandi happened to be John McCain's economist when John McCain ran for President, and he credits the Recovery Act with saving 2.7 million jobs.

But even with all these efforts, there is still a lot to do. It is not enough to help the private sector create more jobs. We need for them to be created right here in America. There is one line I can use anywhere in the State of Illinois, and I will bet across this Nation, which I think typifies what most people think about when they think about our economy.

I will bet you I could use this line in the State of Delaware. The line is this: I would like to go into the store tomorrow and find more products stamped ``made in the USA.'' People start applauding. They are sick and tired of all the imports coming in and all the jobs going away.

I know global competition is a fact of life. America could never be a wealthy nation if we just did one another's laundry. We need to produce goods and services that are competitive on a global basis, and we can do it. We have done it in the past and we can do it again. American workers can compete with the best in the world.

But our laws do not give many of our workers a fighting chance. Why should companies be rewarded for shipping good American jobs overseas? China, Germany and Japan and our other competitors do everything they can to generate more work in their home countries so they can sell products from China and Germany and Japan all around the world.

Meanwhile, our conglomerates and many corporations and their friends in Congress defend offshoring tax loopholes that other countries would never allow to stand. That is why I introduced the bill that is going to be voted on tomorrow, with the help of my colleagues and friends, Senator Harry Reid, the majority leader; Senator Byron Dorgan, who has been our leader for years on this issue; Senator Chuck Schumer of New York, and many others.

It is a bill that has three provisions in it. I think they make sense. First, we will make two changes to discourage U.S. companies from giving out pink slips to Americans while they open the doors at their new factories overseas.

We will say to firms: If you want to shut down operations in the United States and move somewhere else--I hope you do not make that decision, but if you make it, we are not going to give you a tax break to make it easier.

We will also say to the firms, if you want to sell your products in this country that you made overseas, we are not going to let you start making those goods overseas, ship them back to this country, and avoid paying your taxes on your profits, something called deferral.

Second, we will make it more attractive for companies to bring good jobs back home. This is a provision from Senator Schumer of New York, which says to firms: If you bring jobs back from another country, you do not have to pay your share of the payroll taxes on those U.S. workers for 3 years. It is an incentive to bring these jobs back home.

There is nothing radical in this proposal. You would think it would pass by a voice vote. Who in the world would object to ending tax loopholes to send jobs overseas? Who would object to creating tax incentives for bringing jobs from overseas back home?

But that is what this debate is all about. The defenders of these tax loopholes have wasted no time in launching an aggressive lobbying campaign against the bill: The Chamber of Commerce, the National Association of Manufacturers have written in opposition to the bill, and the Republican

leader has already spoken on the floor against even debating this bill. He does not want us to bring it up.

The message they send is clear: Corporate profits are more important than American jobs. I could not disagree more. I have watched too many hard-working, middle-class families lose their livelihoods as companies fire American workers and then use the Tax Code to make shifting jobs overseas more profitable.

In August, I was in Rock Falls and Sterling, IL. A woman named Julie came. She had worked at the local national manufacturing company there for 34 years. She was a grandmother, raised her family, and was trying to help with her grandkids. She had just been notified that company was moving overseas.

I said to her: As painful as it is for you to get that pink slip after 34 years of service to that company, I am sorry to tell you that our Tax Code made it easier for that company to leave town, made it easier for them to do away with your job.

I ran into other workers around Illinois as well. To add insult to injury, after a lifetime of working for these businesses, some of these businesses actually bring in the workers from China and Mexico and ask the American workers, in their last week or two of employment, to train the foreign workers to do their jobs. Can you imagine how hard that must be--to realize that tomorrow you are out of work, and the person sitting across the table, whom you are training, is going to have your job?

Then, how about this? How about the fact that the cost of bringing that foreign worker over here to be trained is now tax deductible under our Tax Code? What is wrong with this picture? A good example of a company moving good American jobs overseas happened in Hennepin, IL. The local steel mill there was built in 1966. I remember it. I was a college student out here at the time, and we were so exited. It was Jones Laughlin, if I am not mistaken, when it first started. It changed ownership over the years. It was a big employer in the region around Hennepin.

They employed 600 people at their peak in a steel mill. Imagine that. As of last year, they still had 300 people on the payroll. Arcelor- Mittal, the huge steel conglomerate, bought the plant in 2005. Many in the community said: This is a break, a godsend. That huge company is going to invest in this plant and we are going to keep our jobs.

It did not happen. Arcelor-Mittal decided last year that the profitable plant in Hennepin--they were making money--the profitable plant, was no longer worth keeping open. Just like that, 300 solid, middle-class jobs disappeared.

I received a lot of letters from members of the community. A 10-year- old girl wrote to me:

My dad . . . got laid off by Lakshmi Mittal, at Mittal

Steel. You see, instead of selling the plant, Lakshmi decided

to ship all of the parts over the oceans . . .--

This 10-year-old wrote to me and said--

I think the plant should not be closed because if he

shipped the parts all over, then hundreds of peoples' jobs

will be lost. Please Help Us!

The heartbreaking news for that young girl is that our Tax Code rewarded the plant for shipping the equipment overseas. This 10-year- old girl, wise beyond her years, heartbroken that her dad had lost his job, may not understand the global implications of plant closings, but she sure knows what it means to her family.

Here is what a 30-year veteran of that plant wrote:

The plant was shut down in the spring even though it made a

profit. . . . Being the father of two college freshman, I

have to wonder what the future will hold for my children . .

. American industry, the backbone of our country, cannot

exist in this environment.

Well, I agree. That is why I am on the floor. That is why this bill is on the floor. We have to do something about it. Here is another one. This is a company that once operated in my home State of Illinois, Honeywell International. They closed their plants in Freeport, Rock Island, Spring Valley, and Springfield and then sent the jobs to India, China, and Mexico.

The Department of Labor certified these workers lost their jobs because the jobs were actually sent overseas. In my hometown of Springfield, the plant closing cost us 120 jobs in the capital city. This was a plant that had been in production since 1938, long before I was born, when it produced the world's first electric clock for automobiles. The plant also supplied electrical products to support our troops during World war II. In an instant, this piece of American history vanished to Juarez, Mexico.

I received a letter from a victim of this particular example of offshoring good American jobs. Here is what he wrote to me:

. . . stop rewarding Honeywell and other corporations that

ship jobs out of the country . . . They don't deserve tax

money for making the US unemployment rate go up further.

Well, that is exactly what this bill before us wants to stop. Let me show you one other illustration. U.S. multinationals are increasing hiring abroad and decreasing hiring at home. In total, between 1999, at this end of the chart, and 2008, multinational corporations in the United States added 2.4 million jobs overseas, a 30-percent increase.

Well, there is nothing wrong with companies growing. But look what happened here at home. Here is the problem. During the same period, these American companies cut 1.9 million jobs in America, an 8-percent decrease. It is obvious. The jobs are being shipped overseas and killed at home. This notion by some companies that if you let us produce overseas it will help our jobs back home, it is not happening. Exactly the opposite is happening--jobs overseas, loss of jobs in the United States.

Well, enough is enough. We need to stop rewarding companies, through our Tax Code, for killing American jobs, and we need to create incentives to bring those jobs back home. This bill is very straightforward. It is a clear choice. Senators can decide. Do they want to stand with American workers? Do they want to stand with those corporate interests that want to ship jobs overseas? Do they believe our Tax Code should reward good American companies that pay good wages and good benefits to American workers and stay here or do they want to create an incentive to ship those jobs overseas?

That is what this bill is all about. I hope there will be at least one Republican Senator who will join us in this effort. It would be a breakthrough. I hope it is more than one. But I hope they are hearing the same thing back home. I would just ask those who oppose it to go to your home State, pick the community, pick the town, and invite me to come and debate you, if you are on the other side of the this issue.

You pick it. I want to be in on that debate.

I believe the bottom line is this: The American Tax Code should be designed to help American companies create good-paying jobs right here in the United States. Our focus ought to be to make sure when people walk in stores across America, they can flip that product over and see made in the USA again. With this vote, Senators will be given a choice where they want the next round of job creation to be. Do they want it in the United States or in China? Middle-class families in this country have been struggling for a long time. They are upset. They want more jobs. They want a Congress that will stand up and fight for them. With this vote, they will find out who is going to be on their side.

I yield the floor.

I announce that the Senator from Indiana (Mr. Bayh), the Senator from Delaware (Mr. Carper), the Senator from North Dakota (Mr. Conrad), the Senator from Connecticut (Mr. Dodd), the Senator from North Dakota (Mr. Dorgan), the Senator from North Carolina (Mrs. Hagan), the Senator from Massachusetts (Mr. Kerry), the Senator from Arkansas (Mrs. Lincoln), the Senator from Maryland (Ms. Mikulski), the Senator from Washington (Mrs. Murray), the Senator from Florida (Mr. Nelson), and the Senator from New Hampshire (Mrs. Shaheen) are necessarily absent.

Mr. President, reserving the right to object, I say to my colleague from Missouri, clean energy jobs are the jobs of the future. As we create more clean energy jobs, we will find a way to compete with China and other nations that are trying to take over this whole area. They know the whole world is moving toward more sensitivity to emissions and the environmental damage they cause. As a result of that, I object.