Mr. President, I ask unanimous consent to speak as in morning business. Mr. President, I first would like to say a thing or two about the bonuses that have been paid to the AIG employees, those…
Mr. President, I ask unanimous consent to speak as in morning business.
Mr. President, I first would like to say a thing or two about the bonuses that have been paid to the AIG employees, those persons who are in the specific division whose actions led to the demise of what was once considered a great insurance company.
No doubt about it, that was a very serious error, and now as a result of agreements made, apparently sometime ago, they are going to receive bonuses. Everybody has been upset about it. So have I.
I said Monday on this floor the only thing I felt like giving them for free would be a free lunch and a free bed somewhere in a penitentiary. I know the Presiding Officer is a former prosecutor and has sent some people to the penitentiary. I hope they are not guilty of criminal activities, but that is how I feel about it.
But the reason we are in this is because of an unwise act. That act was--beginning with Secretary Paulson, President Bush's Secretary of the Treasury, continued now under Secretary Geithner, President Obama's Secretary of the Treasury--taking over AIG.
We own 80 percent of AIG's stock. Secretary Paulson picked Mr. Liddy, who had a good record in the past and was off somewhere with his grandchildren, and asked him to come back and try to take over this company and start pumping billions of dollars into it. It now has totaled $170 billion.
It is unbelievable how much that is, $170 billion. I would repeat, that is, compared to the Alabama budget, including schools and teachers' pay, $7 billion a year. We gave one private company, competing with a lot of other private insurance companies in America today that did not get themselves in trouble--we are bailing them out. So we should not have done that.
Now, when Mr. Paulson came before this body and asked for this power to get $700 billion to spend as he wished, I objected. As just a Senator, I was flabbergasted that he would ask for such unlimited power. Not one time did he hint that he was going to buy stock in an insurance company. It was to buy the toxic assets from banks. Do you remember that?
So Secretary Paulson, within a few days, a week I believe, had gotten his authority. But it did not say: Mr. Secretary, you get to buy toxic assets in banks--which I did not think was very good anyway and voted against it--it gave him power to do virtually anything. That is another reason I voted against the legislation.
By the way, under oath in a House committee, Secretary Paulson said he had no intention of buying stock. Somebody asked him: What about buying stock in these banks?
He said, no, he did not want to buy stock; that we were just going to buy these toxic assets.
A week later he was buying stock in an insurance company and stock in banks. And to this day, we have not yet bought any of these toxic assets, these bad mortgages that are really the problem that have destabilized our financial situation and have not dealt with yet. That is why there is still instability out there.
OK. So here we are now; we own this corporation. So I asked the question about the bonuses at AIG. Apparently, they got a contract. By the way, when we passed legislation here, it was with a Democratic majority. Somewhere in conference they put in language in the legislation that basically said bonuses would be honored if they were entered into before a certain date. These bonus contracts were entered into before that date.
So now we have all of these protestations and all this angst and all this outrage about bonuses, and we have to do something about it. I am outraged, too, really but have a little perspective. The amount of the bonuses are one-thousandth, less than one-thousandth of the amount of money we put in this corporation that is at great risk today. And that is a galling issue for all of us, to have this division, the bad division in the whole fine insurance company, taking this company down, and they get the bonuses. It is outrageous. It really is. But the truth is, it appears there is some contractual right for them to have it.
So I would ask, what about the folks in these companies who are paid too much? Maybe we ought to have debate on the Senate floor about how much every employee of AIG should be paid or how their bathrooms should be configured or whether they should even have a private bathroom or how many businesses they ought to have or what kind of cars they should drive, whether they should have jet airplanes, whether they ought to be on Manhattan or some cheaper place in Brooklyn.
I mean, what we are going to enter into is these have become political decisions because politicians own the company. This is a warning for us. We have to be careful about buying stock in corporations. I am telling you, it is not a good policy. I do not believe it was justified in this circumstance. I think history is demonstrating that.
I am worried about it. We need to get out of AIG. How are we going to do it? I think the way you do it, and the way it should have been done from the beginning, is the company should have gone into chapter 11 under the Bankruptcy Code. You would have had a Federal bankruptcy judge bring all of them in, raise their hands under oath, testify to the financial condition, how this all happened, what parts of the company are good, valuable, prosperous, what parts are sick and in danger.
Then we could have figured out as a government how we could help with the sick and toxic parts, get rid of the others and let all of that go, and we would not have been running this company.
So now we are going to tax them. I am not sure how this has been written, but we are somehow going to identify the several hundred people who got bonuses, and we are going to tax them. We might as well put their names in the Record. I do not know; it is probably unconstitutional. It really is. It is a real constitutional question, certainly a policy question, that the Congress is going to abrogate a contract whether we like it or not. But a bankruptcy judge can. A bankruptcy judge has constitutional power to abrogate a contract. I am certain a bankruptcy judge would have invalidated the contract for bonuses for the people in this division. They do not have the money.
The only reason they are afloat today is because we bailed them out. They would not have jobs if we had not bailed them out. This whole thing would have been done differently. So I am worried about what we are doing.
The Budget
Mr. President, I am also worried about the budget. The President has submitted a budget. It has come over to us now. It is in a bound book, slick cover. It sets out his agenda for the future. It is an important document, and it sets out his priorities and his direction he wants the country to go.
I am a member of the Budget Committee, and we will be marking that up and offering amendments to it next week. But the American people need to know that the financial condition of our country will be altered to a historic degree if this budget is passed. I am not just saying that. I am saying, read the budget. That is what it says.
I will share some thoughts about it. I think there is a growing bipartisan consensus, and certainly at least a concern on both sides of the aisle, that the budget deficits and spending levels are unsustainable; that is, continuing these levels of spending will destabilize this country, weaken the value of our dollar, perhaps kick off inflation, and in many other ways erode confidence in the United States as a government of integrity and financial wisdom and management that can be relied on.
So while American families are out there right now saving a good bit more than they have in years past, watching their pennies, while American cities and towns who have been in my office this week and are telling me they are seeing a 6 or 7 or so percent reduction in sales tax revenues and revenues for their towns, they are managing well, and they are getting by. They are postponing some things they would like to have done this year until they get a little more money in, and they are not going out of business. They heard there was some free money in the stimulus package. They wanted as much of it as they can get. Fair enough. But, you know, they are getting by.
Our Government is increasing spending to a degree to which we have never seen before. This budget calls for $3.6 billion in spending, which is, in effect, a 20-percent growth in nondefense programs. I am talking about the discretionary programs under our control that we deal with from 2008 levels to 2010 levels, 20 percent.
At that rate, of course, that is 10 percent a year, and with a 7- percent growth rate per year your money will double in 10 years. This is the track we are on. It is a huge baseline budget increase to pay for this expansion of Government.
The budget imposes or presumes $1.4 trillion in new taxes. That includes a national energy tax similar to the one the MIT experts predict would cost working families $3,100 per year. That is almost $300 a month for the average family for this tax. So despite these taxes, the budget will require even more borrowing. We will go even further in debt despite the tax increase.
We would double the debt held by the public in 5 years. I mean, the total American debt we have today would double in 5 years and triple in 10 years. Our budget is a 10-year budget. It projects what this administration believes should happen over the next 10 years. That is what they project will happen.
Under this plan, starting in 2012, the United States will pay $1 billion a day in interest to our creditors, the largest of which are China and Japan outside of our country. That is $1 billion a day in interest on this surging debt we have.
So, in summary, I believe it is fair and honest to say this budget spends too much, it taxes too much, and it borrows too much. The administration has promised the budget would be free of accounting tricks and gimmicks, but they have not met that standard either. On the one hand, we have been told repeatedly by the administration that we face the gravest economic crisis since the Great Depression.
On the other hand, his budget assumes that unemployment will not rise beyond today's level and economic growth will not substantially fall. I cannot accept and I do not buy the rhetoric of imminent economic disaster. I have not believed that is likely. I still don't believe it is likely. I know we are in a difficult time, but few, if any, economists would agree with the budget's prediction and assumption that unemployment will stay at today's rate of 8.1 percent or that the gross domestic product this year will only decrease by 1.2 percent. The administration's rosy economic picture permits them to assume, therefore, greater revenue. If you assume you have a higher growth rate, a lower unemployment rate, more people are making money, more people are working and getting paid, less people are on unemployment compensation, you assume you have billions more dollars to spend on whatever you would like to spend it on.
An independent blue chip group that predicts unemployment and predicts GDP is predicting GDP will decline more than twice 1.2 percent, and they are also predicting the unemployment rate will hit 8.9. I believe our Congressional Budget Office is predicting unemployment will cap out at 9.1 percent. I have seen some figures of 9.4 percent. I am hopeful we will come in under 10 percent. I believe we will.
To build on good feelings here, I will note that under President Reagan, when Mr. Volcker was Secretary of the Treasury, they realized they had to confront and break the back of surging inflation. Unemployment hit 10.9 in the early 1980s. It kicked off, though, a sound economy, and for 20 years we have had steady growth after collapsing the unacceptable inflation rate.
The best estimates I am seeing do not predict economic disaster, but they
certainly don't predict the kind of minimum economic slowdown these numbers are assuming. When those numbers prove to be off the mark, the result will be deficits higher than the administration is predicting in their own budget. That is what I am saying. If you look at the budget over the next 10 years, that is what really worries me.
In 2004, President Bush, after 9/11 and after the recession that occurred there, his deficit hit $412 billion. That was the biggest deficit we had since World War II. He was roundly criticized for that. I wasn't very happy with it either. I liked President Bush, but I thought that was too big a deficit. It dropped until 2007, when it hit $161 billion.
Last year, President Bush sent out the $300 checks and the $150 billion in deficit spending on top of our other deficit to try to stimulate the economy. It didn't work. He sent out that money. Everybody got the little check. Whatever they did with it, it didn't do much good. The debt jumped to $455 billion. So last year, September 30, the deficit was $455 billion, the largest we have ever had, perhaps including World War II. This year, there is uniform agreement.
The Congressional Budget Office is scoring that at September 30, our deficit--the amount of money we spent, less the amount of money we have taken in in taxes--will be $1.8 trillion, one thousand eight hundred billion, four times the highest deficit we ever had last year. That is a serious matter, not a little bitty matter. The budget the President sent us projects that next year--and he does this over 10 years--it will be $1.1 trillion. It begins to drop down to that and hits $533 billion in the fourth year. That is the year he said he cuts the budget deficit in half.
The reason the deficit was particularly high this year is the money we spent for the financial bailout of Wall Street that they bought AIG with and other bank stock. The Congressional Budget Office said we are going to lose about $250 billion in that deal. We will get some of it back. They scored in this year's budget $250 billion for that. We have bought Freddie and Fannie, taken over and guaranteed all those loans at those two huge financing institutions, which were quasi-private, basically private, we have taken those over now, and CBO has scored about another $250 billion. They are putting all of that in this year. And then we passed, a few weeks ago, $800 billion--pure stimulus spending to send out over the country. You heard it was for roads and bridges. Only 3 or 4 percent went for roads and bridges. The rest of it went for all kinds of nice ideas, not very stimulative in the minds of experts. So you add that over the next 2 years of spending, split that out. That is how we get such a high year this year.
One reason we are at a trillion dollars next year is because they are scoring some of that $800 billion in next year's deficit. At any rate, it drops down, OK? So the fourth year, we are hitting $533 billion. That is still the highest deficit in the history of our Republic. Then it starts going up. And the budget President Obama gives us projects that in the 10th year, the deficit will be over $700 billion.
That is why we need the American people to be engaged. Members of Congress are going to have to study the numbers. They are going to have to study the immensity of the requirements of this budget. We are going to have to reject it. We cannot pass such an automatic guaranteed surge in debt. It would triple our total national public debt in 10 years.
This is the beginning. The budget will begin to be marked up next week in committee. It is going to take more than just the committee members to decide what we do. I believe the American people and the Members of this Congress are going to have to get our heads together and figure out some ways to do like our cities and counties. Instead of having baseline spending increase at 7, 8, 10 percent a year, we might go for a year or two where we don't increase at all. Just a little bit of that would have a dramatic impact on the deficit. It is the increases that are killing us. They are projecting increased revenues in the years to come, but they are projecting substantially greater increases in spending.
That is not who we are as a people. We are a people of limited government. We are people of low taxes. We are people of individual responsibility. That is a fundamental American ethic, individual responsibility. The Europeans are more into this Socialist mentality, but we were faced with the spectacle over the weekend of our own Secretary of the Treasury going to Europe meeting with Europeans and upbraiding them because they aren't borrowing enough or spending enough, in his mind, going far enough into debt to stimulate the economy as much as he would like to see it done. They are being more conservative and responsible than we are. It is a matter of real concern.
These are important issues. I hope the debate will continue and all of us will look at the long-term interests of this great Nation and take the steps today that will protect our future.
I yield the floor.
