An original concurrent resolution setting forth the congressional budget for the United States Government for fiscal year 2010, revising the appropriate budgetary levels for fiscal year 2009, and setting forth the appropriate budgetary levels for fiscal years 2011 through 2014.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent that the use of calculators be permitted on the floor during consideration of the budget resolution.

Mr. President, I know my colleague, Senator Gregg, the ranking member, has a statement he would like to make, and so I will withhold for his statement.

Mr. President, I speak to the matter now before us on the floor of the Senate, the budget.

I would like to start by pointing out what this President has inherited because this President, who has only been in office a few months, has inherited a series of crises almost unparalleled in our country's history. You think about it. Not only does he have a fiscal crisis, he has a housing crisis, he has a financial crisis, he has two wars, and he has a legacy of debt that is truly stunning.

The debt more than doubled in the previous 8 years, the foreign holdings of U.S. debt tripled in the previous 8 years, and the President inherited an economy in recession for more than a year, an economy which contracted by more than 6 percent in the last quarter of last year. Of course, when that happens, deficit and debt soar. That is precisely what has happened. In the last years, the deficit and debt have skyrocketed. So this President walks into a very challenging situation.

This shows what happened to just the Federal debt in the past years. It went from $5.8 trillion to over $12 trillion. The way we do it, we don't hold Presidents responsible for their first year because they are inheriting a situation. We don't hold George Bush responsible for the first year he was in office. He was working off the previous President's budget. And we do not hold this President responsible for the first year because he inherits the previous President's budget. But this is what happened in the previous 8 years: more than doubling of the debt. Perhaps even more alarming, there was a tripling of foreign- held debt.

President Bush, as we can see by this chart--it took 42 Presidents 224 years to build up $1 trillion of foreign-held debt. President Bush, during his period, ran up more than $2 trillion of foreign holdings of U.S. debt. Last year alone when we went to finance our debt, 68 percent of the funding came from foreign entities.

Some say that is a sign of strength. I don't share that view. To have the Chinese be our biggest financier, to have Japan be No. 2, to have them financing 68 percent of our newly issued debt--I don't think that is a sign of strength. I think it is a sign of vulnerability.

Not only did President Obama inherit those very tough fiscal situations, he also inherited a country facing very dire economic conditions, with over 3.3 million private sector jobs lost in the last 6 months alone.

You can see, going back to September, 300,000 jobs were lost. That jumped up to almost 400,000 in October of 2008; in November of 2008, over 600,000 jobs lost. Then it approached almost 700,000 in December of 2008. In January of 2009 there were nearly 700,000 jobs lost; in February of 2009, another almost 700,000 jobs lost.

We see the unemployment rate rose very dramatically, starting back in March of 2007, when it was just at about 4.4 percent. Then it started skyrocketing back in March of 2008. You can see it took off at a very rapid rate to a level of 8.1 percent in February of 2009.

This is much more than numbers on a poster. These are real people losing their jobs--meaning their ability to hold on to their homes was threatened, meaning their ability to provide for their families was diminished. These people are wondering what comes next for them; what are we going to do that is going to make a difference in their lives.

We also see economic growth contracted very dramatically from the third quarter of 2008, when there was a negative one-half of 1 percent of growth, to the fourth quarter of 2008 where the economy contracted at a rate of over 6 percent. That is the worst economic performance in decades.

That is the situation this President inherited. But it is more than that. He is inheriting record deficits; a doubling of the national debt; the worst recession since the Great Depression; financial market and housing crises, as I indicated; 3.3 million jobs lost in the last 6 months; and on top of that, ongoing wars in Iraq and Afghanistan.

I have often thought of the crushing responsibility on the shoulders of this President, but he is equal to it. I can say, in meeting after meeting I have had with him, one of the things that has always appealed to me about Barack Obama, now President Obama--not only is he a very smart person, but he is remarkably calm.

Even in the face of great crisis, this President maintains a coolness under fire. I find it very appealing and very reassuring that with all of these crises he is absolutely calm and he is very clear thinking. That is what we need at this time.

So when the President came with major priorities in his budget, I think many across America thought, those are exactly the right priorities. He is talking about reducing our dependence on foreign energy, one of his three key priorities; excellence in education. If we do not have the best education in the world, we are not going to be the strongest country in the world; for very large major health care reform, because I think everyone understands that is the 800-pound gorilla. That is the thing that could swamp the boat, because we are spending $1 of every $6 in this economy on health care, and we are headed for more than $1 of every $3 in this economy going to health care if we stay on the current trend line. Clearly that is unsustainable and the President has called for major health care reform.

A continuation of middle-class tax cuts, the 2001 and 2003 tax cuts. The President added additional middle-class tax cuts in his budget. All the while the President called for these major initiatives, but to do it and cut the deficit in half over the 5 years. We have tried our level best to meet the President's major priorities, understanding that we were going to have to make some changes, because the Congressional Budget Office, who did their forecast of revenue available, had done their forecast several months after the President's forecast was done. In the meantime, the situation, as I have already shown, had deteriorated. So we were left with a circumstance in which we had $2.3 trillion less to write a budget than did the President when he wrote his.

When I say $2.3 trillion, I want to emphasize that. I am not talking about ``million,'' I am not talking about ``billion,'' I am talking about ``trillions'' of dollars. Trillions of dollars. A trillion dollars is 1,000 billion dollars; 1,000 billion dollars.

So when we say $2.3 trillion was lost in the forecast of revenue available, that is a big deal. I was given the responsibility of telling the President that we were faced with that very changed circumstance, because the Congressional Budget Office does not report to the President, it reports to the Congress. So when we learned of this very significant change, I and Chairman Spratt, the chairman of the Budget Committee in the House, were given the responsibility to meet with the President and to inform him of these very significant changes.

As you can imagine, the President was not very happy. But I can tell you he is a realist, and he understood immediately the implications. He understood immediately that we would have to make some changes in his budget. But he asked us to preserve his key priorities, and that is what we have attempted to do.

Again, we need to reduce our dependence on foreign energy. I think everyone knows, or nearly everyone, that this is one of the major fundamental threats to the United States. Our dependence on foreign energy, back in 1985, we imported 27 percent of the oil we use. By 2008, that had increased to 57 percent of the oil we are using being imported from abroad, much of it from unstable parts of the world, some of them not very friendly to the United States.

So this poses a fundamental long-term economic and security threat to our country. The President has rightly identified, even though the pressure is off right now because oil prices are way down, that this is something we have got to face up to if we are going to have a strong America in the future.

So in this budget we have responded with a reserve fund that reduces dependence on foreign energy, creates green jobs, helps preserve the environment, and helps with high home energy costs. We do it through a reserve fund to accommodate legislation, to invest in clean energy, and address global climate change.

We also provide the President's level of discretionary funding for the Department of Energy for the year. We

build on the economic recovery package investments in renewable energy, efficiency, and conservation, low-carbon coal technology, and modernizing the electric grid. That process had been started in the economic recovery package. It is in the budget; critically important to the economic future of the country.

In terms of a focus on excellence in education, there are lots of warning signs out there that we are starting to lose the battle to be the best educated people in the world. But what are the indications? Here is just one. We are now dramatically lagging China in producing engineers. You can see, in 1985, each of our countries produced about the same number of engineers. We produced, each of us, about 75,000 engineers.

But look at what has happened since in the United States. The number of engineers we are producing has declined to about 65,000. Look at what has happened in China. They have increased from about 75,000 to more than 440,000 engineers. Now, why is that important? I think we know it is important because you have got to have engineers if you are going to be building a strong infrastructure. If you do not have a strong infrastructure, you do not have a strong base for competition in this globalized world economy.

We have done everything we can to capture the President's priority of emphasizing excellence in education. We generate economic growth and jobs, prepare the workforce to meet the global economy, make college more affordable, and improve student achievement. We do it with a higher education reserve fund.

To facilitate the President's student aid increases, we extend the simplified college tax credit providing up to $2,500 a year, and we also focus on the President's requested level of $5,550 for Pell grants and fully fund his education priorities, such as early education.

Now, I was raised by my grandparents. My grandmother was a schoolteacher. She was five feet tall. We called her Little Chief. We called her Little Chief because she commanded respect. And in our family, she would tell us there are three priorities: Education is No. 1. Education is No. 2. And education is No. 3.

I tell you, we got the message, my generation. I have 13 cousins. Every one got advanced degrees. We were not a family of any special means, a middle-class family. But we understood that education was the way to secure a better future. She made it very clear to us that was the expectation. We need to reemphasize excellence in education in this country.

But we also face an enormous challenge in health care. As I indicated in my opening remarks, $1 in every $6 in this economy is going for health care. This chart shows 16 percent of our GDP, and we have just gotten updated numbers that show now we are over 17 percent of our gross domestic product going to health care. If we stay on the current trend line, by 2050, 37 percent of our gross domestic product will be going for health care. That is utterly unsustainable. It is the biggest threat to our long-term deficits and debt. It is the biggest threat to our economic competitive position. It is the biggest threat to the economic viabilities of families and companies and communities. So this is something that must be addressed.

President Obama has called for major health care reform, and we have sought to preserve that priority in the budget resolution. We invest in health care in an attempt to bend the health care cost curve to save money, reduce long-term costs, reduce the buildup of deficits and debt, also to improve health, to expand coverage, to increase research, and promote food and drug safety.

We do it in three fundamental ways. First, a reserve fund to accommodate the President's initiative to reform the health care system. What does a reserve fund mean? It means simply this: The committees of jurisdiction are given full flexibility to write legislation to accomplish the President's goals. But they have certain requirements, and the requirement is that they pay for what they produce, that it be deficit neutral.

The administration has said all along, that is their intention, and we try to match that intention in this budget. The reserve fund also addresses Medicare physician payments. It is already scheduled in law that doctors will take very significant reductions. We do not want to see that happen. So, again, we are saying to the committees of jurisdiction: Fix it and pay for it. Fix it and pay for it, because we cannot add to the deficit and debt to do it.

Finally, we continue to invest in key health care programs such as the National Institutes of Health and the Food and Drug Administration.

On defense, which is always of great interest in terms of a budget resolution, we actually provided $45 billion more in funding for defense than President Bush's final defense plan. You can see the final defense plan of President Bush is this red block. The hatch lines here are the additional funding we have provided over the years 2010 to 2013, because that is as far as the Bush defense plan goes. We provided $45 billion more. Frankly, President Obama came forward and said: Look, let us more honestly account for war costs than has previously been done. In the previous administration, all too often they did not put in the budget funding for war. This President did, and we do in the budget resolution.

Now, the President also gave us a charge to cut the deficit by more than half over the 5 years of the budget resolution. You can see that we have done, that this year we project the deficit at $1.7 trillion under this budget resolution, and we step it down every year. We will reduce it by $500 billion the first year, by $300 billion the second year, by another $300 billion the third year, by a little bit the fourth year, and by another about $60 billion the final year, to get down to $508 billion. That is a reduction of more than two-thirds over the 5 years, as a share of gross domestic product, which is what the economists like to look at, because that takes out the effect of inflation.

You can see we are reducing the deficits from 12.2 percent of gross domestic product in 2009, down to less than 3 percent in 2014. That is the magic goal, less than 3 percent of gross domestic product. Because at that level the economists tell us you stabilize the growth of the debt. That is the goal the President set, getting down to 3 percent of GDP or less in a deficit in the fifth year, and we beat that goal by a little bit.

There has been a lot of talk about the spending in this budget resolution. I want to make clear here is what happens. The spending again is a share of gross domestic product. Again the economists say that is the most fair comparison over time because it takes out the effect of inflation. You can see in 2009, we are spending 27.6 percent of GDP in this budget. That is a very high level historically. And, of course, the reason for it is the tremendous economic downturn, the need to provide stimulus to the economy, to provide lift. So spending is at a high level as a share of the gross domestic product in 2009.

You can see each and every year we step it down until 2012, and then basically it stays at that level for 2013, 2014, at about 22 percent of GDP. So we are going from 27.6 percent of GDP this year to 24.5 percent in 2010, down to 23.3 in 2011, and then basically stabilize at 22 percent of GDP through 2014, again getting down to our target of a deficit of less than 3 percent of GDP in the fifth year.

Again, on spending, to go into some additional detail, breaking down discretionary spending, as you know, in the budget we have mandatory spending, things such as Social Security and Medicare. Those are mandatory programs, mandatory in the sense that if you qualify, the Federal Government pays for what you have coming. Discretionary programs are programs that are open for the Appropriations Committee to adjust every year. If we look at the discretionary side of our budget, we can see, on defense, we are providing the full request by the President, a 3.8-percent increase. Internationally, we are not providing the President's full request because of the diminished resources available to us. So we cut the President's request by $4 billion. We are still providing an increase of almost 18 percent. Why are we giving such a large increase to international accounts? The reason is quite simple. We are engaged in two wars.

The Secretary of State called me the weekend before this weekend at home. The Secretary of Defense called me at

home. Both delivered the same message. They were a little unhappy, disappointed that I was cutting international accounts by $4 billion from the President's request. They emphasized the importance of these increases because what has been done before is to make supplemental requests outside the budget. This President said no more of that. We are going to be direct. We are going to be open in the money we are requesting. These funds are needed to deal with Iraq and Afghanistan and Pakistan and other threats we are facing around the world.

Interestingly, I have never before, in my 22 years in the Budget Committee, had the Secretary of Defense call me to support the budget for the State Department. Why would the Secretary of Defense call me and ask me to increase what I have provided for in the international accounts? He told me: There is a lot that is being spent out of the Defense Department budget that should be spent out of the State Department budget for activities in Afghanistan and Iraq. President Obama has put those categories of spending where they belong, and it ought to be supported. Of course, I have great respect for them both. I had to tell them: When you lose $2.3 trillion, you have to make a lot of changes to make it add up. So I felt compelled to reduce these accounts from the President's request.

Domestic spending, we increase by 6 percent. The President asked for more in that category. Again, we simply could not make the numbers work without making reductions.

So the total in this area, $1.03 trillion, is from last year. This year it is $1.08 trillion, for a combined increase in discretionary spending of 5.3 percent. We can see on nondefense discretionary, that combines international and domestic, we are giving a 7-percent increase. The President asked for over 10 percent. Again, I know there are people who are disappointed. I am sorry, but my responsibility is to deal with the reality with which I am presented. The reality I was presented with was $2.3 trillion less in revenue. I have had to make reductions in the discretionary accounts. I have had to make reductions in mandatory accounts. I have had to make changes on the tax side of the ledger in order to get the deficit down to a sustainable level.

Revenue changes in the budget resolution: I have heard some say we have all these tax increases. That is not what the Congressional Budget Office says, when they look at my budget and look at all the proposals and compare it to current law. They conclude that I am providing $825 billion of tax reduction. That is a different story than we hear coming from some quarters. That is not my claim. This is what the Congressional Budget Office finds when they look at my budget and compare it to current law. Why the difference? First, we have extended all the middle-class tax relief provided in 2001 and 2003; specifically, the 10-percent bracket, the child tax credit, the marriage penalty relief. All that is continued in this budget, as well as education incentives. On top of that, alternative minimum tax reform costs $216 billion to prevent 24 million Americans from being subjected to the alternative minimum tax. We also have estate tax reform; estate tax reform at $3.5 million an individual, $7 million a couple. Those people who have estates of less than that amount will pay zero in estate tax. Over 99 percent of the estates in America will pay zero, nothing, not a penny. That is a reform that needed to be made. It is included in this budget. The President called for it, and we have adopted it.

We also have a series of business provisions and the so-called tax extenders, things that need to be adjusted every year. We do it in this budget for a subtotal of tax relief of $958 billion. We have an offset to that, certain loophole closures, shutting down abusive tax havens, abusive tax shelters, offshore tax dodges that will raise $133 billion for total tax cuts of $825 billion.

In the President's budget, he has recommended that we not continue all the tax relief contained in the 2001 and 2003 acts for people earning over $250,000 a year. We have adopted that recommendation in this budget. All of the middle-class tax relief from 2001 and 2003 is here. It is funded. It is provided for.

In addition, the President called for additional tax reductions for middle-class people, the so-called make work pay provisions. Two years of that is already funded in the economic recovery package. So that will continue for the next 2 years. The President wanted to make that program permanent. Again, we could not do that in light of the new forecast. So we have provided that those make work pay provisions can be extended, if they are paid for. They will continue for the next 2 years, but after that, if they were to be extended, they would have to be paid for.

We also provide for important budget enforcement in the budget resolution. We have discretionary caps for 2009 and 2010. We maintain a strong pay-go rule. We have a point of order against long-term deficit increases, a point of order against short-term deficit increases. We allow reconciliation for deficit reduction only, which was the original purpose of reconciliation. We provide a point of order against mandatory spending on an appropriations bill; no backdoor stuff that used to go on, people raiding the Federal Treasury by coming in here and changing mandatory spending on an appropriations bill.

The budget resolution also addresses our long-term fiscal challenges in these ways. No. 1, we have the health reform reserve fund. That is absolutely the key element to dealing with our long-term buildup of deficits and debt. That is the part of our spending that is absolutely out of control. The only way to get it back under control is fundamental health care reform which is provided for in this budget on a deficit-neutral basis. We also have program integrity initiatives to crack down on waste, fraud and abuse and a long-term deficit increase point of order to require 60 votes to increase the deficit long term.

President Obama has said this about the need for further work on our long-term fiscal situation. Let me be clear: The first 5 years--this budget is a 5-year budget--we do quite a good job, a credible job of getting the deficit down. We reduce it by more than two-thirds. We get it down to less than 3 percent of GDP. But the second 5 years of the President's plan, even if we extended our budget for 5 years, is going to require much more effort. We are on an unsustainable course for the long term. In the next 5 years, I think we have done a credible job of moving in the right direction, reducing the deficit by two-thirds. But beyond the 5 years, we have big problems on the horizon.

The start in this budget to deal with it is health care reform because it is the 800-pound gorilla. But it is going to take more than that. It is also going to take tax reform because we have a tax system that is hemorrhaging to these offshore tax havens, abusive tax shelters and, frankly, a system that is very inefficient at collecting the revenue that is due. If we collected the money that is due under the current Tax Code, we would have no structural deficit. We wouldn't need any tax increase. If we just collected the money that is due under the current tax levels, we would have no structural deficit. The problem is, we aren't collecting the money that is due under the current code. We are only collecting about 75 percent of what is due. A big reason for that is the explosion of offshore tax havens, abusive tax shelters, the tax gap. All those things are rendering the tax system very ineffective.

The President recognizes the need for further action to address the long-term fiscal imbalance as well. He said:

Now, I want to be very clear. While we are making important

progress towards fiscal responsibility this year, in this

budget, this is just the beginning. In the coming years,

we'll be forced to make more tough choices, and do much more

to address our long-term challenges.

That is the truth. We are going to have to do much more in those years beyond the 5 years of this budget.

Finally, I would like to address the question of a 5-year budget versus a 10-year budget. The President sent us a 10-year budget. We have written a 5-year budget. Some have said that is an attempt to conceal the effect of the second 5 years. The President sent us a 10- year budget. It has been fully scored by the Congressional Budget Office. There is no hiding of anything. The President provided us a 10- year budget. I was critical of the previous administration for not providing a 10-year budget because I was concerned they

were hiding the effect of their tax cuts in the second 5 years. This President has made no attempt to conceal his 10-year plan. He sent it to us. It has been scored by the Congressional Budget Office. We know what it is.

But Congress, when it writes budgets, has almost always written a 5- year budget. In fact, of the 34 budgets Congress has written under the Budget Act, 30 have been 5-year budgets. Why? Because the projections for year 6 through year 10, the projections for revenues and expenditures for years 6 through 10, have been woefully inaccurate. They have been notoriously unreliable. But never have I seen them more unreliable than right now. That's because of the extraordinary uncertainty we're facing in the near term. Inaccuracies in the forecasts for the next several years will compound into huge differences in years 6 through 10.

So we wrote a 5-year budget that fully discloses the spending and revenue for the 5 years. We did not write a 10-year budget. Congress almost never has. But the President did. And the President's 10-year plan is fully disclosed.

We have done our level best to make changes that were necessary in what the President sent us in order to address his key priorities and at the same time to reduce the deficit in the way that he called for and to reach a deficit that was less than 3 percent of GDP in the fifth year.

I am proud of what we have done. Is it a perfect document? The work of men and women is never perfect. We are flawed. I will confess to that. To me, the greatest flaw is we still have not fully coped with the long-term deficit and debt challenge to this country. Much more will have to be done.

Senator Gregg and I have one proposal. We have a proposal for a task force that would require Members of Congress and the administration--16 of them--to be given a responsibility to come up with a plan to get our long-term deficit and debt condition in order. If 12 of the 16 could agree, that plan would come to Congress for a vote.

I believe it is going to take some special effort, some special structure to deal with these long-term deficits and debt threats. I want to say for myself, I do believe the long-term debt accumulation does fundamentally threaten the economic security of America. While we have a good start in this first 5 years, much more must be done.

Mr. President, I thank you for this time.

I will yield the floor.

Before I do it, I thank Senator Gregg, the ranking member of the Budget Committee. There are many policy issues that divide us. There are some where we are joined at the hip. But Senator Gregg has been a thorough professional in all of the work of the Budget Committee this year. His staff is outstanding as well. I recognize Senator Gregg as somebody who has credibility. He may say some things that are somewhat uncharitable about the budget I am presenting today. I understand that. That is his job. He has strong feelings, and I applaud him for them because that is what we need. If everybody in the room thinks the same thing, nobody is thinking very much. I will tell you one thing, Senator Gregg is thinking. He cares deeply about the economic future of this country, and he is doing his level best to get us on a path that makes more sense. I applaud him for it. But I would be remiss if I did not recognize the professionalism and leadership he has exhibited in the work of the Budget Committee this year. In no way does that mean he endorses this plan. He will make very clear he does not. He strongly disagrees, as is his right. But I do want to recognize the very good working relationship we enjoy.

I thank the Chair and yield the floor.

Mr. President, if I could say, our hockey team lost to his hockey team in the last one-tenth of 1 second. I say to the Senator, our Congressman in North Dakota said: We don't want the flood fight to have the same outcome.

We don't want to have won this right to the end and then lose it at the end. So even the hockey game has provided inspiration for the flood fight. We wish we had won the hockey game, but it is most important that we win the flood fight.

Mr. President, I would like to come back to the argument I continue to hear advanced--that because we have gone from the 10-year budget the President proposed to a 5-year budget, something is being hidden. I don't believe anything is being hidden from anyone.

Of the 34 budgets the Congress of the United States has done since the Budget Act, 30 of them were 5-year budgets--30 of the 34. Only four were 10-year budgets. The reason Congress has tended to do 5-year budgets--not just tended to but overwhelmingly has done 5-year budgets--is that the outyear forecasts are notoriously unreliable; notoriously.

Some have said I criticized the previous administration for not doing a 10-year budget. Indeed, I did--because I believed they were trying to hide the effect of their tax cuts in the second 5 years. But this administration did not do a 5-year budget. This administration did a 10-year budget. There is nothing hidden. It is all out there for anybody to see. The Congressional Budget Office has scored the President's 10-year budget. Some of us have expressed concern about the second 5 years.

People get in a habit around here and they get used to doing something a certain way, they get used to criticizing budgets a certain way so they keep doing it. It was legitimate to criticize the previous administration for not doing a 10-year budget. It was legitimate to suggest they might have something to hide. But this administration did a 10-year budget. We in Congress--remember, ultimately the budget is a congressional act. The President does not have to sign it. It does not become law. Congress has almost always done a 5-year budget; 30 of the 34 budgets written under the Budget Act have been 5-year budgets, including the last 5, including 2 in which Senator Gregg was the chairman. Again, it has been done that way, number one, because the outyear forecasts have been notoriously unreliable and, number two, because we do a budget every year.

In fact, there is some question whether a 5-year budget is required because we are going to do a new budget every year. So what matters the most in any budget is the first year.

But I did wish to address that because I see this criticism. I saw it in the David Broder column. I have immense respect for him. I saw it in the David Rogers column. I have immense respect for him. But I don't think the criticism applies in this particular situation. Nobody has been more clear, publicly or privately, than I have that the second 5 years of the Obama budget raises a real concern about the sustainability of our fiscal direction.

Let me just say, if you took my budget, which is a 5-year budget, the budget that came out of the Budget Committee, and extended it for 10 years, you would see dramatically lower deficits and debt than in the President's budget. In fact, I believe the first 5 years we have saved $600 billion from the President's proposal. In the second 5 years the total savings--for the 10 years, if we extended our budget 5 years, would be over $2 trillion. That is just in the nature of the beast. You know, the savings grow over time. We have put in $600 billion of savings in the first 5 years.

With respect to the question of spending, we are only increasing domestic spending--and that includes defense, that includes international, and that includes domestic spending in the appropriated accounts--5.3 percent. That is a modest number. Some of our friends on the other side want to absolutely freeze spending. I say to them I think that would be a serious mistake in an economic downturn, to absolutely freeze spending. In this situation, where the economy is contracting sharply, consumers cannot fill in the gap. They are tapped out, and they are worrying about losing their jobs. Companies cannot fill in the gap because they, too, are threatened. The only entity with resources to step in, to fill the breach, is the Federal Government.

One of the things we learned in the Great Depression was that profound mistake that was made was not necessarily on the fiscal policy side--although that didn't help--but the biggest mistake was on the monetary policy side controlled by the Federal Reserve. They did not expand the money supply. They did not provide liquidity to prevent the contraction from deepening, from growing, and from becoming far more destructive.

Thank goodness we have learned. That is not what is happening here. The Federal Reserve is providing liquidity, and that is on the monetary side. On the fiscal policy side, we did pass a large stimulus package-- as imperfect as it was. We provided a large stimulus package to help fill in some of the gap between where the economy should be and where it is, the gap that was exacerbated by a more than 6-percent contraction in the economy in the fourth quarter of last year.

I believe we are doing many of the right things--again, however imperfectly. If I were able to design the stimulus package, I must say it would have been much different. I would have put much more money into infrastructure. I believe that would have been a better way to stimulate the economy. Even so, there was substantial infrastructure in the stimulus package. Not as much as I would have preferred but, nonetheless, a significant amount. Additionally, I think the Federal Reserve is going in the right direction with respect to the policies it is pursuing in terms of providing liquidity and credit.

When we talk about Hoover economics that our colleagues on the other side of the aisle embraced back in the 1930s, the fundamental assumption was that markets were self correcting. That is what Hoover economics was founded upon, the notion that the Federal Reserve did not need to take countercyclical action and that the Federal Government did not need to take countercyclical actions in terms of helping people who were unemployed. Hoover opposed providing that kind of Federal Government assistance.

Today we know that such assistance actually one of the most stimulative things you can do because that money gets into the economic bloodstream very quickly. It gives lift to the economy, it reduces the size of the contraction, it reduces job loss, it reduces

more and more homes going into foreclosure because people can't pay their mortgage, it reduces the vicious cycle that can suck down an economy.

I just wish to be clear. When we have been critical of their stance against stimulus, their stance against doing the things that are being done by the Fed, they have this mantra they chant. Too much spending-- let me look at our budget in terms of spending. In the short term, yes, spending increases because you are countering the cycle of the economy, so we are up to 27 percent of GDP in spending this year. But then we step it down to 22 percent of GDP, of gross domestic product, by the fifth year. So that is going in the right direction--even for our friends on the other side.

They say too much taxes. Let me remind them, in the President's proposal, on a net basis, according to the Congressional Budget Office, his budget cuts taxes $2.2 trillion. That is a 10-year budget. Our budget on a 5-year basis cuts taxes $825 billion, on a net basis. Yes, there are some tax increases on those of us who are high-income earners. Yes, we have our taxes increased somewhat. But on an overall basis, the President's budget has significant tax cuts from current law, as does the budget that is before us now.

Third, they say too much debt. Look, I am in agreement with them. But where were they in the good times during the Bush administration, when they doubled the debt of this country? They doubled the debt of this country when economic times were relatively good--until the end of the Bush administration when the economy collapsed. That is what this President inherited. He inherited an economy that was in full collapse: It declined 6 percent in the last quarter of last year; an economy that was in free fall; an economy with a housing crisis, a financial crisis, a banking crisis, and a fiscal crisis.

I say to my friends on the other side, it was their policies that put us in the soup. It was their policies of doubling the debt, of tripling foreign holdings of U.S. debt, that put us in this ditch. Now this President has to try to clean up the mess and part of cleaning up the mess is higher deficits and debt in the short term. That is unavoidable. That was already happening in a very dramatic way before this President ever took office. He inherited a deficit. If he had done nothing, he would have inherited a deficit this year of $1.3 trillion. That is after our friends on other side had already doubled the debt over the previous 8 years, and, worse, tripled foreign holdings of U.S. debt. Now we have China as the biggest creditor and our friends here say: Gee, China might not continue to finance our debt.

My friends, where were you? I warned about that starting in 2001. Anybody can review the record. You can go back and look at what I said on the public record over and over and over, that we were headed for big problems financing our debt. The party on the other side did not seem to respond.

Now, all of a sudden, they are concerned about the debt they have passed on to this President. That is not fair. I am plenty willing to say, as I have said publicly, the second 5 years of the Obama budget needs a lot more work. We are going to have to do a lot more to keep the deficit going down. But the first 5 years is a good start for the President's budget and ours is even somewhat better. In fairness to him, we had to make additional adjustments in his budget because the Congressional Budget Office said we lost $2.3 trillion in revenue--$2.3 trillion from the forecast the President was working off of that was made some time earlier.

I hope, in this debate, we do not try to lay at the desk of this President, who has been in office less than 3 months, disasters he inherited. No. No, we are not going to let that happen. That is not going to go unconfronted because that is not fair. This President walked into more crises than I can think of confronting any President, going back to Franklin Delano Roosevelt--a housing crisis deeply underway before he ever took office, a banking crisis deeply underway before he ever took office, a financial crisis deeply underway before he ever took office. So let us be fair in this debate and discussion about where responsibility lies.

Barack Obama, President Obama did not create any of these problems. He has been asked to clean up the mess and an incredible mess it is.

One other point I wish to make, and a place where I do strongly agree with Senator Gregg, is the need to do much more for the long term. That is why he and I have proposed a 16-member task force given the responsibility and the authority to come up with a plan. If 12 of the 16 could agree, that plan would come to the floor for a vote because I do not believe we are going to get through this without special measures and special procedures and a process to take on this long-term debt bomb that overhangs our country. But let's be fair about who is responsible for building the foundation of this mess. It does not lie at the feet of President Obama.

I see the Senator from Alaska. Is the Senator seeking time?

This would be a perfect time. I would be happy to yield the floor and give her an opportunity. While the Senator is getting ready, she has, as the Chair knows, has had a skiing accident. We are glad to see she is up and ambulatory and here at work. We are delighted she is back.

I yield the floor.

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

Mr. President, I wish to go back for a moment to the question of a 10-year budget versus a 5-year budget, because I have heard so many questions raised about why we did a 5-year budget rather than a 10.

Again, the Congress has done 34 budgets under the Budget Act, 30 of which have been 5-year budgets. A key reason has been that the longer term forecasts are notoriously unreliable. CBO said the current forecast ``has greater than normal uncertainty.''

CBO'S current forecast, particularly for the near term, is

subject to a greater than normal degree of uncertainty . . .

Both the magnitude of the contractionary forces operating in

the economy and the magnitude of the government's actions to

stabilize the financial system and stimulate economic growth

are outside the range of recent experience.

The Federal Reserve Chairman, Mr. Bernanke, said the economic outlook is subject to considerable uncertainty.

This outlook for economic activity is subject to

considerable uncertainty . . . One risk arises from the

global nature of the slowdown.

He went on to say:

If actions taken by the Administration, the Congress, and

the Federal Reserve are successful in restoring some measure

of financial stability--and only if that is the case--there

is a reasonable prospect the current recession will end in

2009 and that 2010 will be a year of recovery.

Again, very small differences have very big effects over time.

Senator Gregg himself said in March of this year:

Ten-year forecasts are very much a guess . . .

That is why almost every time the Congress does a 5-year budget rather than a 10-year budget. In fact, the last five budgets done by Congress, including three under Republican chairmen, have been 5-year budgets.

Now, there has been some suggestion by columnists that doing a 5-year budget suggests you are hiding something. Again, I want to emphasize, President Obama came forward with a 10-year budget that has been fully scored. Nothing is being hidden from anybody. That score is out there. It is available. It is public. So there is nothing being hidden. And Congress has almost always done 5-year budgets just because of the extraordinary uncertainty of those outyears.

I also want to say, for a moment, those who argue that this budget has too much spending are up against the factual record. The factual record is that in this year, the spending will be 28 percent of gross domestic product. We bring that down very sharply in the first 3 years. We get it down to 22 percent of GDP by 2012. Again, there is a deficit in the fifth year of less than 3 percent of GDP, which the economists tell us is critical to having a sustainable debt.

Let me say my own view. I believe we have to do better than that. I believe we have to do better than that. I believe the outyears under any of the budgets are unsustainable. I believe we have to have some special process such as the one Senator Gregg and I have proposed, and I am completely open to other suggestions about how we deal with the entitlement reform and the tax reform we so badly need.

I see our colleague, Senator McCain, is now in the Chamber. We advised his office we would like to get him in at about this hour, so I would be happy to take a break and give Senator McCain a shot at this.

I yield the floor.

Mr. President, I thank the Senator for his observations on the budget. I do wish to indicate the budget before us is different than the budget the President sent us. First of all, the Senator mentioned reconciliation instructions. We have no reconciliation instructions in this budget--not on health care, not on climate change, not on education. My own belief is that was never the purpose of reconciliation. Reconciliation was really designed to be for deficit-- --

I am happy to yield.

Well, I would say this to the Senator: I don't know, but I know it is not part of this resolution, and that was rather intense debate, as my colleague can imagine. I have said publicly and privately what I believe. I don't believe reconciliation was ever intended for the purpose of writing this kind of substantive reform legislation such as health care reform, such as climate change.

As people get into how reconciliation actually works, I think they are going to be a lot less eager to pursue it. If I could just give two examples.

I thank the Senator. I would just say I am going to argue strenuously against it in conference committee. The Senator asked me what will be the result. I don't know. Am I going to be able to prevail in the conference committee on this matter? I don't know. But I really do think--I hope colleagues who think reconciliation is the answer will think very carefully about how it actually works.

Anything in reconciliation, first of all, is subject to the Byrd rule. The Byrd rule says any legislative proposal that does not score, that doesn't cost money or save money, is subject to automatic strike. Any provision that the score is only incidental to the policy change is subject to automatic strike.

Our distinguished Parliamentarian has said, if you try to write major legislation in reconciliation, you will be left with Swiss cheese. So I hope people are thinking about that. I know there are attractive features of reconciliation, and it is true I think Republicans abused it in writing the tax reductions because I deeply believe reconciliation was only intended for deficit reduction. So I think it was wrong to have been applied solely for tax reduction during the years the Republicans were in control. I don't think two wrongs make a right. I don't think we should do it for substantive legislation that is really not deficit reduction legislation.

One other thing I wish to say--and I hope people are thinking very carefully about this. The way reconciliation works is there is only one instruction for revenue, one instruction for spending, one instruction for debt in a year. So if you are going to put all of these provisions together, you are going to have education, you are going to have health care reform. You may well have to do those in one bill--in one bill. Now, are we really going to do that? Are we going to have education reform and health care reform put in one legislative vehicle? I think we better think very carefully about that. So I thank the Senator from Arizona for his observations.

I do wish to stress that the budget we have before us is substantially different than the budget the President sent, and there is a simple reason for that. We have $2.3 trillion less over 10 years to write this budget. This is a 5-year budget, so we made $608 billion in changes. In spending alone on the discretionary side, we have reduced discretionary spending over 5 years by $160 billion--$160 billion. We have changed the mandatory side of the equation by $240 billion. We have changed the revenue line by almost $160 billion. So I hope as people look at this budget, they will recognize substantial changes have been made in light of the new forecast. We have attempted to be responsible, and we have gotten the deficit down by two-thirds by the fifth year and less than 3 percent of GDP, which is what all the economists say is necessary to stabilize the debt.

My own strong belief is we need to do even better than that in the second 5 years in light of the retirement of the baby boomers and in light of this enormous debt that has been stacked up. Again, that did not happen--it was not the fault of President Barack Obama. He inherited a colossal debt. He inherited a colossal fiscal crisis, financial crisis, housing crisis. It wasn't his fault. He didn't create it. He is in on the cleanup crew.

I thank the Chair and yield the floor.

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

Madam President, we have heard a lot of concern this afternoon about deficits and debt and spending from our colleagues on the other side. I wish to remind them of a little of the history of what brought us here. This is what happened with spending when they were in charge--spending about doubled in the Bush administration. Of course, we know the debt more than doubled, and we are left with an ocean of red ink.

That is what this administration inherited. This wasn't President Obama's doing. This is what he walked into. Here is what happened to the debt and the deficit under the previous administration. They actually inherited substantial surpluses, which they rapidly turned into record deficits and then plunged the thing right off the cliff. If we are going to be fair about how we got here, I think the other side is going to have to accept an awful lot of responsibility. Here is what happened to the debt--it more than doubled, from $5.8 trillion in 2001 to $12.1 trillion in 2009.

Senator Gregg, the ranking Republican on the committee, said: I am willing to accept this short-term deficit number, not debate it, because we are in a recession and it is necessary for the Government to step in and be aggressive, and the Government is the last source of liquidity. So you can argue that this number, although horribly large, is something we will simply have to live with.

That is the ranking member of the Budget Committee. Look, I think he is entirely right. The hard reality is we have no choice but to accept, in the short-term, these large deficits as the Government seeks to provide liquidity to prevent an all-out collapse. But over time, this budget brings the spending down. I am not talking about the President's budget now. I am talking about the budget I have presented here. We take the budget--total discretionary spending--from 9.5 percent of GDP in 2010 down to 7.3 percent of GDP in the fifth year.

When you distinguish between defense and nondefense discretionary, what you see is that I am bringing them both down at about an equivalent rate. So defense, in 2010, will be 4.8 percent of GDP; at the end of the 5 years of this budget, it will be down to 3.7 percent of GDP. Similarly, nondefense discretionary will be 4.7 percent of GDP in 2010, and we take that to 3.6 percent of GDP in 2014.

On the discretionary accounts, which is about one-third of all Federal spending, on the discretionary accounts, both defense and nondefense, I am bringing them both down as a share of our national income and doing it in about the same proportion.

We are doing that because, look, we don't have a lot of options. When the President wrote his budget, he had $2.3 trillion more in revenue than we have. Now, he did his budget some time earlier, and the forecasts were more robust. Once CBO did their more recent forecast, $2.3 trillion was gone. That requires a response, if we are also going to answer the President's charge to dramatically bring down the deficit, and we have also done that--from $1.7 trillion in 2009 to just over $500 billion in 2014. That is a reduction of more than two-thirds in the deficit of the United States.

Of course, economists like to measure it in terms of a percentage of gross domestic product rather than dollar terms because that adjusts for inflation. But look what we have done in that way: We have gone from 12.2 percent of GDP in 2009 to less than 3 percent as a deficit and share of the economy in 2014--again, more than a two-thirds reduction--and we get below the magic 3 percent, which is where most economists say we stabilize the growth of the debt.

I am quite proud of what this budget has accomplished in the 5 years of its term. I am the first to acknowledge that when Senator Gregg stands and says we are not doing enough about the second 5 years, sign me up. I agree with him entirely. Certainly, the President's budget has far more debt and deficit in the second 5 years than ours, if you extended our policies. But I would say that either one of them doesn't do enough for the second 5 years. We have to do much more. That is why Senator Gregg and I have proposed a special procedure to give 16 Members the responsibility to come up with a plan, and if 12 of the 16 agree, then that plan would come to Congress for a vote.

Now, we changed the President's budget over the first 5 years by $608 billion. That is a lot of money. Madam President, 30 percent of it is on the revenue side, 31 percent on the discretionary spending. In other words, we reduced the President's spending by $167 billion over the next 5 years. Anybody who doesn't think that is a big deal, come to my office and listen to the phone calls.

The mandatory spending we reduced by 39 percent of the total $608 billion we changed from the President's budget. So we distributed the pain about equally. We did it on a proportionate basis.

Mandatory spending is the biggest part of the budget, so they took more of the reduction. Discretionary spending and revenue were done of about equal proportion. We tried to be fair. We didn't go to just one committee of jurisdiction, or two committees, and say: You take the whole burden of making these changes. We went to everybody, and we said, you know, we have to share the pain and we have to share it equally.

Again, on the question of spending in the budget that is before us--I am not talking about the President's budget. The President's budget is not before us; the budget the Budget Committee has is before this body, the budget that we are going to vote on, which nobody, it seems, wants to talk about. They want to talk about some other budget. But they don't have a budget of their own.

If our budget is so bad, where is their budget? They don't even have a budget. So if our budget is so bad, where is their budget? We don't see their budget. I just say this: On nondefense discretionary the average annual increase under the budget resolution is 2.5 percent. Some say we ought to just freeze it. I don't think that would be very wise to do. That wouldn't even offset inflation. But this is a pretty tough budget that is before us. I want my colleagues to know, nondefense discretionary spending is increased over the life of this budget on average 2.5 percent.

Let's go to that final slide, if we could.

Where are the increases in the nondefense discretionary accounts under this budget resolution? You can see, here is where they are. The biggest chunk is defense. More than one-third of the increase is in national defense. That is in part because the President, instead of hiding the costs of the war, has put the costs of the war in the budget. That is what we have done. So if you look at the nondefense discretionary increase under the budget resolution, one-third is defense.

Madam President, 14 percent is international and 10 percent is for our veterans. We have given the biggest increase for veterans health care ever--and deservedly so. They have suffered the wounds of war and they deserve to have those wounds treated and they deserve to be treated with respect when they come home. So 10 percent of the increase is there. Ten percent is education, 10 percent is income security, 8 percent is the census.

One-twelfth of the increase is the census that has to be done every 10 years. That is an extraordinary expense, but here it is. We have to deal with it and we do. Natural resources and environment are 6 percent, transportation is 3 percent, and ``other'' is 2 percent.

The discretionary increase comes in those categories. I hope my colleagues, as they discuss the budget, deal with the budget that is before us. It is substantially different than the budget the President sent us because, again, when the President wrote his budget he had $2.3 trillion more in revenue over 10 years than we do under the new scoring that was done just before we concluded work on this budget.

I think the American people would expect us to make changes when the facts change. When the revenue changes dramatically I think they would expect us to make adjustments, and that is what we have tried to do.

I am quite proud of this budget document that we have produced, this outline for the country, because we have done our level best to keep faith with the priorities established by the President. He said to me, when I told him we were going to lose $2 trillion--he said: Look, do everything you can to preserve my priorities. He said, No. 1: Please do everything you can to make sure we can reduce our dependence on foreign energy. That is not just the President's priority, that is the priority of the American people.

No. 2, he said: Do your level best to preserve my priority by focusing on excellence in education because if we are not the best educated, we are not going to be the strongest country on Earth very long--and we have done that in this budget.

No. 3, he said: Please preserve my priority on major health care reform because that is the place that is going to take us over the cliff, in terms of our long-term economic future. That is the thing that is burdening families and businesses and taxpayers, so please do everything you can to preserve my key priorities, and do it in the context of dramatically reducing the budget deficit.

We have done that in this budget. We have preserved his priorities on reducing dependence on foreign energy, on excellence in education, on major health care reform. We provided reserve funds, deficit neutral reserve funds for each one of those categories, and we have reduced the deficit by two-thirds. We have gotten it down to 3 percent of GDP, which was his charge to us. We have done it all, even though we faced a dramatic reduction in revenue available to us.

Does that mean we could just copy the President's budget? Obviously not. We had to make adjustments, and we made $608 billion of adjustments over the first 5 years. I believe that was necessary and appropriate and prudent, and I hope we can hold onto those changes as we go through the markup. I am already hearing there are people who want to come here and increase the spending. I have already heard people are going to offer amendments to take away some of these adjustments. I am told Republicans and Democrats are meeting right now, this afternoon, to figure out how to come in and change this budget, to raise the spending. I am told there are a lot of Members represented at this meeting.

Let me send a word to them: Change this at your peril. We have carefully crafted this package to be able to win majority support. I think you better think very carefully about changing what we have brought to the floor because you might move it in your direction--more spending--only to wind up with a defeat on final passage of this budget. I hope those who are meeting will think very carefully about coming to the floor and trying to increase the spending in this resolution.

I yield the floor.

Madam President, let me be very clear. I absolutely reject the notion that the budget the Budget Committee has brought before this body has gimmicks or is misleading in any way.

I tell you what we do. We say things have to be paid for. Let's talk about the reserve funds that were just criticized. The reserve funds for health care, for energy, and education have a condition attached. The condition is, if the committees of jurisdiction come forward with legislation, they have to pay for them. That is the gimmick.

In Washington, things are so screwed up they think if you require something to be paid for, it is a gimmick. I do not think it is a gimmick to require things to be paid for. We should have been doing that a long time ago.

No. 2, he referenced the docs fix. The docs fix is this. Under current law, doctors who treat Medicare patients are going to have a cut. The President said: No, they are not going to have a cut. We will put it in the budget. But he had no offset for it. We are saying: No, we do not want the docs who treat Medicare patients to get a cut either. But, committees, if you produce the savings necessary to do that, we will not have the docs cut. You know what. That is what we have been doing.

I am on the Finance Committee. We have been assuring that the doctors who treat Medicare patients do not take the cuts that are in the law. But we have paid for it. That is what this budget does. It says to the Finance Committee: Do not cut the docs, but pay for it. Do not just put it on the budget, and do not worry about sticking it on the debt.

I am proud of that. That is exactly what we should have done.

On the alternative minimum tax, we say, for the next 3 years, when we are in a time of economic weakness and vulnerability, you can fix the alternative minimum tax that will otherwise affect 24 million Americans up from 4 million today. We say: No, do not let them get hit with more taxes at a time of economic weakness. But beyond the 3 years, if we are going to fix the alternative minimum tax--and indeed we should--pay for it. Pay for it.

That is what this budget says. That is no gimmick. That is being responsible.

On health care, the reserve fund says: Yes, we should have major health care reform. But pay for it. So the administration has said, it is their intention to pay for it. That is the intention in this budget, that it be paid for.

Let me be clear. These reserve funds, the ones triggered in the legislation are paid for. They call that a gimmick. I call it responsible. I know it is a new concept in this town.

Most people here, I have to tell you, our friends on the other side, their record is not pretty. When they were in charge, they doubled the debt. They were for every tax cut and every spending initiative. The result is they exploded the debt, doubled the debt of this country, tripled foreign holdings of debt. We are saying: No, we are not going to continue on that path. We insist on a trajectory that dramatically brings down the deficit. That means we have to insist that all these good things get offset, get paid for.

Now, the argument on the other side is, it will not happen. Not going to happen. We are not going to pay for things. Well, shame on us. Shame on us if we do not. Shame on us if we do not pay for the doc fix. We have been paying for it. Why all of a sudden do we say we cannot?

The alternative minimum tax. I will be the first one to say we have not been

paying for that, against my votes, because I do not want the alternative minimum tax to be imposed. But it ought to be offset so it does not add to the deficit.

The same is true on energy. We should have significant energy legislation to reduce our dependence on foreign oil. But we ought to pay for it. I was part of a group called the Gang of 10--5 Democrats, 5 Republicans--who became the Group of 20--10 Democrats and 10 Republicans.

We came forward with major energy legislation to reduce our dependence on foreign energy, but we paid for it. We provided the offsets so it did not add to the deficit or the debt. I hope very much that is the principle we adopt.

I yield the floor and look forward to my able colleague's rejoinder.

Madam President, again, there are not gimmicks here. There are requirements to pay for things. I know that seems like a gimmick to some because they are not used to paying for anything in this town. But that is what this budget says ought to be the operative principle: You start paying for things. If you want to have the doc fix, and I do, you pay for it.

That is what we have been doing in the Finance Committee. We have been paying for it. The President sent a budget that says you don't have to. But then we lost $2.3 trillion. So we are back to saying: Yes, you have to pay for it.

The alternative minimum tax for 3 years, when the economy is down, we say: No, do not raise revenues some other place to offset that because that would not make good economic sense at a time of weakness.

But when the economy recovers, offset the costs. That is exactly what we are going to have to do to get the books back in balance around here. The President put into his budget over $200 billion for disasters over the next 10 years.

The Congressional Budget Office would not score it. They say it is too speculative. Nobody at this point can tell you what the disasters are going to be. Look, I am especially sensitive to this. I have a major disaster going on in my State right now. I would love to put the money in. But there is not a soul on Earth who can tell you how much it is going to be at this point in time. We do not know if the levees are going to hold or if they are going to break.

To put in a number that has no relationship to any reality, that is honest accounting? I appreciate the President's attempt, but the Congressional Budget Office would not score one thin dime of it because they said it is too speculative.

I find it so curious. The other side complains all the time about ``too

much spending, too much debt.'' You do something to reduce spending in the budget I have offered--we cut the President's budget on domestic discretionary spending by over $160 billion--and now they complain about that.

I do not know how you ever get to the end without insisting that things get paid for and reducing spending and trying to get in place an overall fiscal condition that puts you on the right glidepath.

Now, the gentleman says you do not get to 3 percent of GDP because you have these reserve funds.

The reserve funds require, before anything happens, that the reserve funds be deficit neutral. That is a condition, a requirement. So, yes, you do get to 3 percent of GDP on the deficit, because we are not going to release those reserve funds, and I am the one who has been given the responsibility to decide whether they are released. We have put in a condition, and I can't release them if they are not paid for. Hallelujah, let's start paying for things around here.

I yield the floor.

Madam President, I yield 5 minutes to the Senator from New Mexico.

Madam President, from Senator Gregg's time, I yield 15 minutes to the distinguished Senator from Utah, Mr. Hatch.

Madam President, just one part of what the Senator has said do I wish to seek to clarify, and that is that while the United States does have

the second highest stated corporate rate, we have one of the lowest effective corporate rates in the industrialized world. The reason for the difference is all the exemptions and exclusions that exist in our code for corporate rates. So while we do have the second highest published or nominal rate for corporate taxes, if you look at all of the industrialized countries in the world and what their effective corporate tax rate is, you find that ours is well below average.

Now, that doesn't mean we shouldn't have tax reform because many of us believe we need thoroughgoing tax reform, but I think there is a certain amount of confusion about the difference between our statutory rates and our effective rates.

I am happy to.

Madam President, the Senator is correct. I am on the Finance Committee, and I have this responsibility on the Budget Committee. It is very clear, while we do have a high nominal rate--I think we are second highest in the industrialized world--the effective rate that companies actually pay, we are near the bottom.

At this point, I wish to yield 25 minutes to my colleague from North Dakota.

On a number of previous speakers, I am afraid I had to be away from the floor to deal with some of the challenges back home with flooding. Some of the previous speakers have referenced tax increases as part of the budget I have offered my colleagues in the Senate.

Let me indicate very clearly, the budget resolution that is before us has net tax cuts, net tax cuts of $825 billion. The other assertions directed at the President's budget about tax increases--and there are tax increases in the President's budget and in my budget, but they are completely dwarfed by the tax cuts that are in our budget.

In the President's budget, over 10 years, he has $2.4 trillion of net tax cuts. In other words, if you take the tax raises that are in the President's budget and you stack them up against the tax cuts in the President's budget, he has a net of $2.4 trillion of tax cuts over 10 years.

In the budget I have offered my colleagues that has come from the Budget Committee, that is a 5-year budget instead of a 10-year budget of the President, we have net tax cuts of $825 billion.

Here is why that is so. Middle-class tax relief from 2001 and 2003 is all extended in this budget. That means the 10-percent tax, the child tax credit, the marriage penalty relief, the education incentives, all those things are extended in this budget for those earning less than $250,000 a year.

The net effect of that change alone is $601 billion tax relief. In addition, we provided relief from the alternative minimum tax for 3 years. That costs $216 billion. We have estate tax reform that takes the level of exemption to $3.5 million per person, $7 million per family. That means 99.8 percent of the people in this country will pay no estate tax. None. Zero. That costs $72 billion.

We have business tax provisions and extenders, those provisions that periodically have to be extended. They are incentives to the business community. That costs $69 billion. That is a total of $958 billion of tax reductions over 5 years. And then if you look at the offsets, the loophole closers, going after the offshore tax havens, the abusive tax shelters, that raises $133 billion for net tax reduction over 5 years of $825 billion, most of it for the middle class.

I see Senator Thune here now. If he is ready to go, we would be ready for him to go. How much time does the Senator seek?

I yield 15 minutes of Senator Gregg's time to Senator Thune.

I thank the Senator from South Dakota for his amendment and indicate clearly that this budget resolution does not prejudge in any way the climate change debate. It does not assume that there will be cap and trade or that there will not be. It leaves to the committees of jurisdiction the responsibility to come up with the best possible plan and to do it in a deficit-neutral way. That is the trigger. That is the condition. Whatever plan they devise must be deficit neutral and will have to go through the legislative process.

I yield 7 minutes from Senator Gregg's time to Senator Johanns.

We have no objection.

Mr. President, I thank Senator Johanns for offering his amendment early on like this. I think this is the way we ought to function on a budget resolution. Let's get these amendments up and debate them and have a chance for people to get votes early in the process.

Mr. President, on our list, Senator Bond was to be next.

I ask the Senator, how much time does he need?

Mr. President, I thank Senator Bond for the time he has given to the budget discussion tonight.

I ask Senator Sessions, how much time would he like?

All right.

Mr. President, I yield from Senator Gregg's time 7 minutes to the Senator, who is a member of the Budget Committee, and a very active and valued member of the committee, Senator Sessions.

Mr. President, I ask unanimous consent that on Tuesday, March 31, when the Senate resumes consideration of the budget resolution, the statutory time remaining be 40 hours, each side controlling 20 hours.

Mr. President, I further ask unanimous consent that we come in at 10 a.m. and go to the budget resolution, with Senator Patty Murray being recognized for 15 minutes; at the conclusion of her remarks, that Senator Gregg or his designee be recognized for the purpose of offering an amendment with 1 hour equally divided; that at the conclusion of that debate, Senator Boxer be recognized to offer an amendment in relationship to the Thune amendment and that there be 1 hour equally divided; also, at the end of that period, that I be recognized, or my designee, for a possible side-by-side to the Johanns amendment. We may not need that, but we may, and so I ask unanimous consent that that time be reserved as well.

With that, we are ready to stand in recess for the day. I think we are ready to go to closing.

Mr. President, I appreciate the courtesy of the Senator from North Dakota, who is always extraordinarily courteous, professional, and generous. Before we begin the specific debate on the issue of the budget, which obviously we both have to be here for--and I know he has a lot of things going on in North Dakota with the flooding--I would like to make a few remarks off topic.

(The further remarks of Mr. Gregg and Mr. Conrad are printed in today's Record under ``Morning Business.'')

Thank you, Mr. President.

Let me first thank the chairman for his generous comments, and let me second those relative to himself and his staff.

We obviously have a deep difference of opinion as to the best way to proceed relative to shepherding the financial house of our Nation, and especially specifically relative to this budget that has been sent to us by this President. But I have an immense amount of respect for him and his staff, who are professional and extremely courteous, and we have a great personal and working relationship, which actually makes the job much more enjoyable as a result of that.

And, of course, we send to North Dakota our deep concerns about what they are going through with the floods. I know the Senator was out there this weekend supporting the folks who are working so hard to try to protect their communities--an amazing story: 80,000 volunteers in a town of 90,000. It is very impressive. Let's hope the waters recede before they do any more damage.

I should mention that UNH beat North Dakota in the hockey game this weekend in the NCAA. I noticed my colleague from North Dakota did not actually mention that.

Nor do we.

It was an exciting game, and North Dakota played extraordinarily well.

Mr. President, we do differ on this budget. The budget that has been proposed by the President of the United States has essentially been given its stamp of approval by what has been brought forward by the Senator from North Dakota. There are virtually no differences. As Director Orszag said, they are 98 percent the same, and they are.

This budget, in our opinion, represents a clear and present danger to the financial health of our Nation and to the financial security of our children. It is a budget which spends far too much money, taxes far too much, and borrows an extraordinary amount--it is clearly far too much. It basically repeals the essential laws of common sense--the essential laws of common sense--that say you cannot simply keep spending at a rate that you cannot afford to pay for forever and not have to suffer as a society, and suffer significantly.

Margaret Thatcher sort of captured the tempo of this budget. To paraphrase her, she might have said about this budget: The problem with the Obama budget is that at some point you run out of money.

If you follow the proposals of this budget, you are going to run out of money sooner rather than later. In order to understand this budget, you have to understand the dramatic nature of this budget. Historically, when we have debated budgets in this body, they have been important because they obviously represent guideposts for our Congress, but they have not been a philosophical document that has redirected the Nation fundamentally.

On the part of the President--I give him credit that he is not trying to hide this--his budget openly attempts to redirect the Government of the United States and move it significantly, dramatically to the left, expanding the role of the Government in all sorts of areas, expanding the cost of Government in a historic way, and expanding the burden of the Government in the area of taxes and in the area of borrowing in a way which we have never contemplated as a nation.

To try to put it into perspective, under the budget prepared by the President and sent up here--and it is essentially the same as the budget we are receiving from the Senate Democrats today--the President's budget doubles the national debt in 5 years. That is pretty bad. Then it triples the national debt in 10 years. And that is intolerable.

Now, I have tried to figure out how you explain to people what $1 trillion or what $15 trillion is or what $17 trillion is. It is very hard. Conceptually, it is extraordinarily difficult to get your hands around what $1 trillion is.

As you can see, I had this chart made up when the original estimate was $15 trillion--it went up to $17 trillion--to

show the number of zeros here. It is a staggering amount of money that is being added to the Federal debt. You have to ask yourself: Who is going to pay all this money? This is real money. It has been spent on programs the President wants. Who is going to pay it all? Who is going to pay $15 trillion--with all of these zeros?

Well, unfortunately, our children and our children's children get that debt. It gets put on their backs. At the end of the President's budget, the average household in this country will owe $130,000 in debt for the Federal Government--$130,000. They will have an interest payment on this debt--the average household--of over $6,000. So the debt they are getting may actually exceed the value of their house.

Put another way--which was first coined by my esteemed chairman--he designed this wall of debt. This is the wall of debt, as shown on this chart. This is what the Federal debt does over the period of the Obama budget. It goes straight up. It is a massive wall of debt, which is an incredible burden on our Nation, and really an unacceptable burden if you are going to be accurate about it.

To try to put it in a more understandable term, as shown on this chart: This is a picture of President Obama, of course, on the right side of the chart. On the left side of the chart are pictures of all the Presidents we have had in our Nation since our Nation began 232 years ago, starting with George Washington and going through George W. Bush.

In that period, from George Washington through people such as Madison, Adams, Lincoln, Grant, Hayes, Wilson, Roosevelt the first, Roosevelt the second, Truman--in this period from George Washington all the way through George W. Bush, we have accumulated about $5.8 trillion of national debt. That is how much those Presidents added to our national debt.

Within the first 5 years of this Presidency, President Obama will add more debt on the backs of our people and our Nation than all these Presidents put together. Within 5 years, he will have taken the total debt put on the backs of Americans and doubled it since the country began--a staggering fact.

Now, does this have to happen, the addition of all this debt because of the fact that he has inherited a terrible situation? And he has, and we all admit to that; this economy is in a very difficult way. No, it does not. Yes, in the short term there has to be a government that is run at a deficit in a very significant way in order to try to get the economy going because we all understand the Federal Government is, right now, the only liquid entity around here. So the money is being pumped into the economy to try to give it some lift.

But this recession is not going to go on forever. We are a resilient nation. We will recover from this recession. It will be over hopefully sooner rather than later. But it certainly is not going to run that much longer in the terms of this Presidency. Certainly, by the midterm of this Presidency, we should be out of this recession.

So you would presume--you would presume--at that point, say, in 2011 or 2012 at the latest, the spending of the Government and the deficit of the Government would start to come under control, that there would be some attempts to bring it down and manage it in a more historic way.

Unfortunately, that does not happen under this budget. What the President is proposing is that we continue to grow the size of Government at an extraordinary rate, independent of whether we are in a recession. The average deficit over the term of this President's budget is $1 trillion a year--$1 trillion a year. That is a staggering number. To put it in a historical context, that adds up to about 5 to 6 percent of gross domestic product, and historically the deficit has been about 2 percent of gross domestic product. At the end of this Presidency, the public debt, which is what people own outside the Government, will be 80 percent of the productivity of the country--80 percent of the productivity of the country. What does that mean, 80 percent of the productivity of the country? Well, historically, the public debt has been about 40 percent of the productivity of the country, but under this President, he is going to take that public debt very quickly up to 60 percent, then to 70 percent, and then, by the end of the period of the budget proposed, it will be at 80 percent. That is such a high number, when you couple it with the deficits of $1 trillion a year, that you get to a point where it is simply not sustainable. That is why this budget is a clear and present danger to the fiscal health of this Nation and to the opportunities of our children. In fact, ironically, if the United States were to try to seek membership into the European Union--which, of course, we have no interest in doing, but those are all industrialized nations and they do have a standard for operating their governments in a responsible way. The standard of the European Union is, public debt can't exceed 60 percent of Gross Domestic Product, that deficits can't exceed 3 percent of GDP. We will be twice that number, and it is not sustainable.

Now, did this have to happen? Did the President have to run up these debts? If we had stayed on a pure glidepath and done nothing--in other words, operated the Government as it is--as it is--this blue line would be the cost of the Government. We would actually almost be in balance by the year 2018. That is current law. Now, CBO uses very arcane rules as to how it builds a baseline, but it is the baseline that we determine as a Congress to use. I wouldn't accept that baseline as a recipe for future policy because there are some tax increases in there I don't like, but even if you were to factor out the tax increases, the line would come in the middle here. The reason this goes up so significantly, the reason President Obama's budget goes up so significantly in its deficits is because they propose a radical increase in spending. It is pretty much that simple. It is not about economics or taxes; it is about spending. Essentially, the President's proposal is to incredibly increase the size of the Federal Government and the amount it spends, not only in the short run, which we all accept is necessary--although it has been poorly handled relative to the stimulus bill; worse than poorly handled, it has been a waste of money relative to the stimulus bill--but this is the spike in spending to reflect the deficit and the attempt to address it through the stimulus bill. But look here: After we are out of the recession in the year 2011, the line keeps on going way up--way up--to 25 percent of GDP by the end of this budget.

Well, you say, what does that mean, 25 percent of GDP. Well, how big a government is relative to the productivity of the economy defines how productive the economy will be. You can't have a productive economy if the Government is taking out all the money. It doesn't work very well. Historically, we as a country have tried to keep--and this is the black line here, and you will see it has been very level ever since the year 1958--this is the average, this black line, of how much spending the Government has done. It is around 20 percent of GDP, the product of the United States. Under the Obama years, as proposed by President Obama, that is going to be increased at a staggering rate--huge increases in spending.

President Obama is not trying to hide this. He has not tried to be-- he has been very open about it. He said, to paraphrase him, essentially: I believe we create more prosperity by expanding the size of Government in a number of areas. In fact, if you listen to the Senator from North Dakota, he listed all these areas they are going to explode the size of Government in, moving it dramatically to the left, and increasing it at an incredible rate. In the budget document he sent, he said exactly that. He said: At this particular moment, Government must lead the way in providing the short-term boost necessary to lift us from a recession that is severe and lay the foundation for prosperity.

He went on to say he intended to do this by spending a great deal of money on his priorities, which were clean energy, education, health care, and new infrastructure. However, he doesn't stop spending the money after this recessionary period; he keeps it going into the outyears at a rate which is not sustainable. It is simply not sustainable. You can't take the money from the productive side--from the people who are working and producing jobs and taking risks and going out there and actually producing wealth for this Nation, in the sense that they are actually producing something we have to

sell and use in trade and basically create jobs as a result of that-- you can't take the money from them and move it over to the Government at a rate that exceeds the historical norm at this level and expect you are going to be able to maintain prosperity for the years to come. It doesn't work. It does not work. As Margaret Thatcher says, you eventually run out of money.

The effect of this massive increase in spending is a massive increase in debt. This is the national debt, publicly held debt, which I discussed before, as a percentage of GDP. It averages about 36 percent since 1958. That is the black line right here. It has been up, it has been down, but that is the average. Under President Obama's plan, it goes straight through the roof, and this, I say to my colleagues, is the threat. This is the threat. This is the clear and present danger to our people, to our Nation, and to our children's future, because when you get debt up to that level, you are not able to function as a government. People get concerned about buying your bonds and buying your dollars and using your currency.

You don't have to listen to me to find out that is the case. The Chinese Government has made that very clear, and they happen to be the biggest holder of our dollars. In fact, the chairman is always talking about how outrageous it is that the Chinese own so much of our debt. Well, they own it because they considered it to be a good investment, and if they didn't own it, we would be paying a lot more in interest payments and in taxes in this country and our dollar would be less valuable. But Mr. Zhou, the governor of the central bank in China, has said he is getting concerned about this crisis and about the value of our dollar. The Premier of China said: ``We lent such huge funds to the United States and, of course, we are concerned about the security of our assets.''

Well, it is disconcerting and obviously not very nice to find out for us as a nation--one that has always considered itself to be a reasonably independent and strong Nation, the most independent and strongest in the world--that the Premier of China, who owns most of our debt outside the United States, is worried about it.

Why is he worried about it? Why are the Chinese worried about it? Why are the other nations which buy our debt worried about it? Because they look at this line, they look at this budget. This isn't done in a vacuum. They know what this budget proposes. The President's budget proposes massive increases in spending but absolutely no fiscal discipline. It has discretionary spending jumping by $1.4 trillion-- trillion--it has mandatory spending, a net mandatory spending increase, as it was sent up here, of $1.1 trillion, and it has zero savings in the core accounts, which are mandatory accounts. That leads to these massive debts.

It also has, interestingly enough, $1.5 trillion in new taxes. Now, that is a pretty staggering figure in and of itself, $1.5 trillion. I was entertained to hear my colleague from North Dakota say: Well, actually, we get a tax cut in this bill. That is going to come as a real surprise to all the people whose taxes are going to go up very significantly as a result of this budget. For small business people, taxes are going to go up dramatically as a result of this budget. People who take charitable deductions and homeowner deductions in the higher brackets, their taxes are going to go up, which will probably affect charitable giving under this bill.

But the most insidious tax proposed in this budget is something euphemistically called a carbon tax. Well, what is a carbon tax? That is a way to bury a term so you never understand what they are doing.

A carbon tax is literally a new national sales tax on your electric bills, a brand new national sales tax. We don't have a national sales tax in this country. What is being proposed in this budget by this President is a brand new national sales tax on your electric bill. So every time you hit your light switch in your house, you are going to get hit with a new tax--a sales tax--and it is a big one. It is a big one. The White House sent this specious estimate of it. They said it was $646 billion, but that was low-balling the number. MIT, which doesn't have a dog in this fight, took a look at a similar proposal, along with a number of other groups, and they said it would actually generate over $300 billion in new taxes every year. It works out to about $3,000 per household. So everybody living in America today who has an electric bill or other energy bills, as a result of this new national sales tax, if the President gets what he wants, is going to pay $3,000 more in taxes a year, on average, for their energy bills. That is a huge tax, and it is an incredibly regressive tax. I saw this chart that the chairman brought up, saying we are going to create green jobs. That is all about this energy tax, by the way. That is akin to calling it a carbon tax; they are going to call it creating green jobs. What are they going to call the jobs they are sending overseas? Because industries in this country, which have to use a lot of electricity-- those are the hard-core industries that we still have in this country-- can no longer compete because they got hit with this massive increase in taxes on their energy production and use. What are they going to call those jobs? Green jobs sent overseas? The simple fact is, this type of tax increase is incredibly regressive. Sales taxes are regressive by definition, but a sales tax that is targeted on the productive side of the ledger, as this one is, is exceptionally regressive, as is the dramatic increases in taxes on small businesses in this country.

Now, my colleague has said a number of things about how their budget is different from the President's. It is a little bit different, but it is 98 percent the same, and that is the score. I think I have a chart which reflects that. This is the difference between the two budgets. They are identical on discretionary for all intents and purposes, identical on outlays, identical on revenues. Interestingly enough, however, CBO came back and gave us--CBO is the Congressional Budget Office--an honest evaluation of the President's budget, and some of the things they said, which hopefully scared a few people around here, were that the President's budget increased deficit spending by $9.2 trillion over 10 years, $2.3 trillion more than what the President had told us; that on an annual basis, it averages out to a budget deficit of about $1 trillion a year, and that the percent of public debt jumps, as I have mentioned, but it needs to be reemphasized that it jumps from what it is today to 80 percent of GDP. The deficits jump to 5 or 6 percent of GDP.

The administration has had both the Treasury Secretary and the OMB Director up here over the years--the OMB Director has been coming up here for years but the Treasury Secretary just recently--testifying that the deficits in excess of 3 percent weren't sustainable. They said that; we didn't say that.

So when CBO honestly evaluated their budget and did things such as actually calculate the fact that there was 8.1 percent unemployment, and it is probably going to go up and, as the President said, the top rate would be 8.1 percent, but we weren't there yet--when CBO put the real numbers onto the President's numbers and got these massive increases in spending and in debt, well, these folks decided that we cannot have that. They wanted to get that back down to 3 percent. Did they do it by reducing spending or reducing any of the President's spending initiatives? No. Zero. Do you know how they did it? They did it by playing the old-fashioned games around here of smoke and mirrors and hiding the ball, saying one thing but meaning another.

The President, to his credit, and to the credit of Mr. Orszag, was forthright in their budget, which was probably as close to an honest statement--with exception of the defense number--of what was really happening here relative to spending and what was going to happen as we have had in a long time. I congratulated them for that and still do. But we went backward with this proposal from the Democratic leadership. So that they could get it below 3 percent as a percentage of GDP and get their deficit and debt numbers down, they left out of their budget $1.1 trillion of spending and taxes that President Obama had in his. They are not different, so it is just games. They didn't score their budget correctly or honestly or straightforward. Their budget becomes the ``tax too much, spend too much, borrow too much, and now hide too much'' budget. At least the President's budget wasn't a ``hide too much'' budget, although his defense number has serious problems

with it. At least he didn't take $1.1 trillion in very illusory action, moving the shell around so that you cannot find the real numbers, claiming they made real savings in those accounts. It is actually just pretty ridiculous to take that step backward.

Of course, they now claim that they cut the deficit in half. Now, that is where we depart from common sense. There are a lot of things on which they tried to repeal the law of common sense in their budget, but this is the most outrageous. First, they increased the deficit fivefold and then they reduce it back to half of that and then claim they are cutting the deficit in half. That is like taking six steps back, three steps forward, and saying you are making progress. You are not making any progress. They are so far out of whack with what has been the historical norm that it is not even acceptable. The deficit they ended up with after taking six steps back and three steps forward is still in the 4-percent range. It is still throwing debt on the books at a rate you cannot afford, and it is absurd to claim that is fiscally responsible.

Well, before I get into what we would do, I will mention a couple of gimmicks that are played here because they are beyond the shell game gimmick, which is pretty outrageous--moving around $1.1 trillion so they don't have to put it on the budget. They take it off budget, essentially, so they can look as if they are doing better than the President, even though they have the exact same policies and numbers as the President, for all intents and purposes.

They do a couple other things. They have reserve funds--lots of them. This is a way to make like you are doing something that is fiscally responsible by saying: You cannot spend this money unless you can pay for it. The only problem is that they make the reserve funds in the most critical area--specifically, health care, which we all know we are going to want to address this year. They create this incredible activity. They put into place a health care reserve fund, which means they are going to rewrite the policy of health care for this country. Every part of this Nation is going to be affected.

You heard the chairman say that 17 percent of the gross domestic product in this country is involved in health care. The purpose of this proposal--the health care reserve fund--is to address that 17 percent. There is virtually nothing in this country that isn't affected by that. Either everyone is directly affected or a member of their family is or their job is.

There is a rule here called pay-go, which has become the mantra of the other side of the aisle about how they are going to be fiscally disciplined. I never heard anyone from the Democratic party or the Congress, including the President when he was running for President and running for Senate, fail to talk about how they were going to use pay- go to discipline the Federal Government because it implies that they are going to pay for what they are doing. It is a great term, by the way. The only problem is, they don't ever use it. They claim they are going to do it, but they never do. I call it ``Swiss cheese-go'' because there are so many holes in it. In the last 3 years, when the Democrats ran the Congress, they avoided pay-go in the amount of $341 billion in spending.

This health care trust fund is a brazen act of putting a hole in pay- go. Up front, they say we are not going to apply pay-go to health care reform. Pay-go has a rule that says that in the first 6 years you have to meet it, and the second 5 years you have to meet it. No, we are not going to do that; we are going to be able to spend it over 11 years before you have to meet the pay-go rules. Why don't you just give it up and say we are not going to discipline ourselves. There is no pay-go rule, and it is a problem.

The second gimmick that really concerns me--it is more than a gimmick--is a big-time exercise of threatening the prerogative of the Senate and the constitutional purpose of the Senate, which is the use of reconciliation. This is a term of art, and nobody outside the Congress really understands it. Essentially, reconciliation was put into the budget process when the budget was created for the purpose of making sure that what the budget said should be spent or should be taxed actually occurs, so that there was a procedure to reconcile--to say to committees if they exceeded a certain amount of spending and it wasn't inside the budget: You must change that spending; if your tax policy created more of a deficit, you must change that tax policy. It is a procedure which, over the years, has evolved. It has been used aggressively by both President Clinton and President Bush to pursue policies that already exist or to adjust policies that already exist-- whether it happens to be already existing laws on welfare or existing laws on tax policy. Yes, it has been used effectively and aggressively in those areas. But it has never been used to create a brand new policy on something that has as dramatic and all-encompassing and pervasive effect on the American public as to change the entire health care system or something like that. It has never been used to create out of whole cloth, ab initio, a brand new major tax system, such as a national sales tax on electric bills, and its use is solely a purpose of the Senate. The House doesn't need reconciliation.

How does reconciliation work? It basically eliminates the prerogative of the Senate to amend the bill. The greatest prerogative of the Senate is that we have the right to debate, to discuss, and to amend legislation. The House doesn't have that right. The House has something called a Rules Committee, and it is under the control of the Speaker. The membership of the Rules Committee is made up 2 to 1, plus 1, so the Speaker could never lose a vote in the Rules Committee. The Rules Committee sets out for the House of Representatives when a bill comes to the floor--no matter the policy of the bill--and that you will have this many hours of debate and they will allow this many amendments and here is what they are. They can run through a bill in a half hour if they want. That is the way the House has functioned for years. It is the way the House was supposed to function when it was set up constitutionally. The Senate, on the other hand, has no such rule. When a bill is brought to the floor of the Senate, it is open for debate, discussion, and amendment. If you can get 60 votes, you can get it off the floor.

The budget sets up a process to allow the Senate to function more like the House. The budget is on the floor for 50 hours of debate. Amendments are allowed--any amendment, really, but at some point people run out of energy and stop offering amendments--and there has to be a vote.

In order to reconcile parts of the budget, the reconciliation system was set up where there is 20 hours of debate and virtually no amendments because they would have to be germane, and that is a high standard to meet here.

So the reconciliation situation is that it allows you to basically ram through the Senate--as you would through the House--a bill without amendment, discussion, debate, or amendments. It is a huge weapon. If used incorrectly, it fundamentally undermines the constitutional purpose of the Senate. It turns the Senate into the House of Representatives and makes us a body in which amendments are not allowed and debate doesn't occur, of any significance. It has a truly debilitating effect on the idea that you will have a body in this constitutionally structured Government of economics and balances where debate occurs vociferously and aggressively and where problems can be aired out in a more timely and orderly manner than occurs in the House of Representatives. So it should never be used to ab initio create a massive, new program, such as a tax on everyone's electric bill. It should never be used for the purpose of undertaking a major policy event, such as rewriting the health care of the United States, which will affect everybody.

To the chairman's credit, he doesn't have it in this bill. He understands that. He has spoken out fairly effectively on this point-- probably more concisely and effectively than I have spoken on it. But the House of Representatives has put reconciliation instructions in. What earthly reason could there be for the House of Representatives to put reconciliation instructions in their bill? They don't need it; they have a Rules Committee.

It is obvious. This is a game, a very dangerous game. The House puts in

reconciliation instructions but the Senate doesn't put it in because the leadership knows that maybe it cannot get that across the floor and doesn't want a vote on such a thing. So they can take it to conference and, much to nobody's surprise, the conference budget comes back with reconciliation instructions, which control activities on the Senate floor.

It is totally inappropriate that the House should be dictating to the Senate how we are going to legislate and structure our debate system here on the floor and try to make us into the House of Representatives. It is unconscionable in the context of the constitutional structure of our Government. Yet that is the game that is being played here, and it is a cynical game. It is totally wrong. If for no other reason, everyone in this body should not vote for a budget that has reconciliation in it.

On our side of the aisle, we think we can do better. I have talked at some length about the clear and present danger this budget represents to our children because of the massive increase in debt. We don't think that has to be the course of action. You don't have to run the spending of the United States up to 23 percent of GDP, which this chart reflects, way above 25 actually, way above the historical norm. That is not necessary. Short-term spending may be necessary for this significant problem we have with the recession, but you do not have to take the Government and expand it radically, move it to the left, and spend money on what these groups are and constituencies are at this rate. The Government should live within the basic historic norm of 20 percent of GDP as part of its spending. That is where we part ways philosophically.

The President genuinely believes, and the party passing this budget, the Democratic Party, generally believes you create prosperity--and the President said it; he used those terms--you create prosperity by expanding the Government significantly in these different areas of social interest. You do not if you are spending up those areas so much that people cannot afford it.

It does not happen that way. The way you create prosperity is by keeping Government at an affordable level, doing what it is supposed to do while you give individuals the ability to go out and be productive, take risks, and create jobs. That is a difference of philosophy here.

When the President proposed in his budget the way he is going to address health care, where we presently spend 17 percent of our gross national product on health care right now--that is 5 to 6 percentage points more than the next closest industrialized nation, so there is a huge amount of money being spent on health care--he proposes we explode that spending by another $1.2 trillion. We don't have to. We can get every American insurance, and good insurance, without radically increasing the amount we are spending on health care. We can do it by more effectively spending the money we already have in the health care system.

If you are spending 17 percent of the gross domestic product on health care, you do not have to take it up to 18, 19, 20 percent. In fact, if you do, you are probably not getting much efficiency out of it. Rather, spend more efficiently the money you are already spending.

We believe as a party that everybody has a right to decent health care insurance, and we also believe as a party we can do that within the context of the money that is already available by being more efficient, by giving people more choices, and by not putting the Government between patients and their doctors. We do not believe in nationalizing the health care system, which is basically what these numbers are, the stalking horse for, that the President is proposing.

In the area of energy, the President's answer to energy is that you put in place a new national sales tax, as I have mentioned before, on every electric bill in this country, everybody's electric bill, so that when you turn on your light switch you get hit with a new sales tax. That is probably not going to produce a whole lot of energy. It is going to probably undermine the productivity of our economy, and it certainly is going to ship a lot of jobs offshore.

The way to produce a better energy policy is to look in an environmentally sound way for more American supply and you can conserve more energy. So we drill, and we can drill in an environmentally sound way in identified offshore areas and produce more American energy. You create more powerplants through using nuclear power, a totally clean form of energy from the standpoint of pollution to our air. You use wind, solar, and other alternatives, but you acknowledge the fact that you cannot possibly get to the goal we have to get to, which is enough energy to continue to maintain our international competitiveness as a nation and continue our prosperity as a nation, if we are just using solar and wind.

Solar and wind make up 2 percent of our national energy supply. If you triple it, you only get 6 percent, and tripling it would be a little difficult because there are a lot of people who do not want windmills in front of their houses, whereas nuclear can be expanded, whereas we can drill and find more American energy more effectively, whereas we can use oil shale, which we have more of than Saudi Arabia has oil, to produce energy more effectively, and we can be more conservation minded, and there is agreement on that, obviously, on both sides of the aisle. But you do not accomplish this by sticking the American people with a brand new national sales tax.

In the area of cost discipline, clearly we do not have to run up spending at these rates. We should bring them back down, and the way you bring them back down is by addressing entitlement spending.

This budget that was sent up by the President of the United States, who claims he is interested in fiscal responsibility--although, obviously, it is sorely tested by the numbers in this budget, these trillions of dollars of new debt--does not, on net, reduce the entitlement accounts. He does suggest that Part D premiums be paid for in part by wealthy people. I agree with that. We have actually offered that amendment on our side of the aisle for the last 2 years under this Democratic Congress and were beaten every year on that proposal. I am glad the President is on our side this time. Maybe we will be able to adopt it. It is called the Ensign amendment.

The fact is, unless you have a comprehensive approach to disciplining entitlement spending so it is affordable, and we continue to deliver reasonably good quality care and support to senior citizens, we are not going to get these spending issues under control. You cannot kick this can down the road, as the President has said. You have to start, and the President has not started now. This budget has nothing in it to that effect.

In one other area where we would do something significantly different is defense. This budget basically assumes a declining funding of defense for the next 10 years that is significantly less than what is presently funded as a percentage of GDP.

We are at war. I wish al-Qaida was going to go away. I wish these folks who represent such a huge and immediate threat to us, especially if they get their hands on a weapon of mass destruction, did not exist, but they do. They do exist, and they are a threat--a very significant threat. We cannot confront them through goodwill because they are not interested in goodwill. We have to confront them with a military that is properly funded, properly cared for, and properly armed. That, unfortunately, takes money.

The first obligation, the first absolutely most important obligation of the Federal Government is national defense. Yet this budget, first, does not include sufficient funding for the President's war costs and, second, as a practical matter, it simply assumes that you can run the military on the cheap, I guess, and that is a big mistake.

We do have differences, as Chairman Conrad has said, over how this budget is structured. They come back to this very core issue of debt, of what we are leaving our children, what we are passing on to our children. It is simply not right for one generation to give another generation less than what we received from our parents.

We, as a nation, have always--always--had the older generation pass to the younger generation a better, stronger, and more prosperous nation. Yet we are now on a pathway, if this budget is followed forward, where the debt and the deficits will be so high

that our children will not be able to have as good a life as we have had. The cost of maintaining this Government will so burden them their ability to finance a home, buy a home, send their kids to college, or just live a lifestyle that is something of the level and enjoyment and prosperity that we have had will be seriously--seriously--threatened. It is not fair to do that, not fair for one generation to do that to another generation. Yet the numbers do not lie.

I understand the Democrats did not want to show us the second 5 years of the budget. They hid it, along with a lot of other things they hid, in this budget, but the President showed us the second 5 years of the budget. Every American should take pause because when you see the debt go up by $9.2 trillion, when you see the public debt ratio to GDP go to 80 percent, when you see deficits annually of $1 trillion a year on average for as far as you can see, when you see a deficit rate of 5 to 6 percent of GDP, you are talking about a country which is headed toward a fiscal crisis the likes of which we probably have not seen since the Great Depression. It is a country which cannot afford its Government. It is a nation that will be passing on to its children significantly less than was passed on to us.

Mr. President, I yield the floor.

I suggest the absence of a quorum.

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

Mr. President, I ask unanimous consent that for the remainder of this debate on the budget over the next 50 hours, the time be equally divided under a quorum call.

Madam President, we are awaiting a speaker, but while we await the speaker, who is on his way--I think Senator Specter is coming--I want to respond to a couple of points by the Senator from North Dakota.

He quoted me, with a huge chart--I always appreciate that, get my name out there; my eloquence is once again reestablished--but it is regrettable that he didn't continue the quote. The point I made in that was that in the short term there is a necessity to spend money because the Government is the last source of liquidity right now, and we need that in order to try to get the economy going. But what is inexcusable about this budget is that in the years 2011, 2012, and beyond spending continues. It goes down from 28 percent to 23 percent and then it starts to go back up to 23, 24, 25 percent of gross domestic product. It is spending done entirely by deficits--an average of trillion-dollar deficits over the next 10 years under the President's budget.

The point is, of course, you may have to spend now. We do have to spend now. The spending is not done that well. It was a total misappropriation of money. The stimulus bill was just walking around money for different interest groups in which the appropriators happen to have a vested interest. Legitimate. Most of them were very nice groups. But most of them didn't stimulate the economy. But after the stimulus event is over and the recession has abated, to continue this level of spending is unconscionable. It creates a debt that our children will have to bear, a debt that is unfair to pass on to them.

My point, of course, is, as we move into the out-years we have to try to rein in spending, try to control spending because the issue is spending. That

is the bottom line. The problem is spending.

So you have this budget that has been proposed which is dramatically increasing the size of the Government intentionally. The President said he wants to do that. He said: I intend to create prosperity by expanding the size of the Government. He does it through creating a massive amount of debt--$9.2 trillion of new debt over the next 10 years, running the size of the debt as a burden on our economy up to 80 percent of gross domestic product--which is not sustainable and which will basically throw us into a situation where our children will not be able to afford the Government that is being passed on to them.

So when the Senator quotes me--and I appreciate him quoting me--I wish he would continue the sentence or continue the paragraph or the thought because it is the rest of the thought where the issue lies. The issue doesn't lie in the short term; the issue lies in the long term. The issue lies in what we are passing on to our children. The issue lies in the fact that under this budget, as brought to us, the debt and the deficit are exploding at a rate that no country can support. None. It creates financial hardship for this Nation if we continue down this path.

On another point, the Senator from North Dakota continues to bring up these charts about how they are bringing their deficit down below 3 percent, and the President has his up at 4.5 percent. The 4.5 percent is not sustainable. Everybody agrees with that. And 3 percent of the gross domestic product is barely sustainable.

How do they get there? They get there by simply using the old- fashioned shell game around here, which has been used for years, which is not putting on the budget that which we absolutely know is going to occur. At least the President had the decency and forthrightness to put into his budget these things we absolutely know are going to be spent on.

They claim with these reserve funds: ``Oh, we are responsible by doing reserve funds.'' That is a totally disingenuous statement. The President knows these reserve funds are not legitimate, and that is why he didn't use them. He put it in the doctor's fix and scored it. They put in a doctor's fix and don't score $90 billion, approximately. It is a significant amount.

The President said we are not going to have AMT; we are going to have a permanent fix on AMT. For 3 years this budget that is brought to us doesn't score AMT as revenues, but for the last 2 years it scores it as revenues. Why do they take these revenues even though we know we are not going to get them? So they can make their numbers look better, get below this 3 percent level, which is just a game.

Health care: The President in his budget says health care in his reform is going to cost about $400 billion over these first 5 years. Is any of that in this budget? None of it. A reserve fund, which is not even subject to pay-go, is used in order to mask that number. That helps to get below the 3 percent.

I mean, it is the use of the old gimmicks, the things which we at least respect the President for having come forward and saying: They are gimmicks, and therefore I am not going to use them. So just lay the President's numbers over this budget, and you get the exact same budget. When Peter Orszag, Director of the OMB, said there is 98 percent identity between these budgets, he was right and the practical effect was right.

The budget that was brought to the Senate floor is a profligate budget. It is a budget which basically goes out and spends at a level of 22 percent of gross domestic product for as far as the eye can see and generates revenues of 18 percent, 18.5 percent if they are lucky. That is after they raise taxes on the alleged wealthy--the small businesspeople of this country, the people who create the jobs--after they have hammered the small businesspeople who create jobs with a $1.4 trillion tax increase, hit us with a national sales tax on our electric bills, taking all that money and not using it to reduce the deficit at all, just use it to expand spending--after they have done all that, they have this huge gap which runs up debt, debt which is going to be unsustainable and unaffordable for our children.

It is certainly not appropriate. But at least the President was honest about it and straightforward and did not use a bunch of gimmicks to try to hide it so we could have an open and fair debate about it.

Unfortunately, that is not the case in the budget that is brought forward here. It is a budget which uses these games. Games which for a long time, have been used too often. I probably used a few of them when I was chairman.

But it is about time, since we have a President who is willing to come forward and say: This is the way it should be done, that we follow his lead and at least have the integrity to say he was right when he was transparent.

I yield the floor.

Not to belabor the point, but if they are so devoid of gimmicks, why did they waive their own pay-go rule in the health care reserve fund? I mean, on the face of it, they lost the argument. It is their budget. It takes the pay-go rule and emasculates it, and it is their pay-go rule. They are not making them subject to their own rules of fiscal enforcement in their own budget.

So, yes, gimmicks are replete. That is just one of them. The alternative minimum tax, that is a gimmick. They know they are not going to get the revenues from AMT. They score the revenue numbers from AMT in the last 2 years. That is a total gimmick. Everybody knows that is a gimmick here. We do not account for TARP II. Now, maybe they are not going to support their President on TARP II. They do not account for it, so I guess they figure the President does not need anymore money for assisting the financial stress the country is under; the President does. We do not account for it.

Disaster costs. How do you eliminate disaster costs in the budget and claim it is not a gimmick? We all know there are disasters to fund. My goodness gracious. Clearly, there are disasters that are going to require significant funding. In an attempt to be forthright on that, the President put in a number. Taken out of this budget. Why? Because they wanted to get under this number, 3 percent.

Nothing to do with whether disasters are going to occur or not occur over the next 5 years or whether we are going to spend money on them over the next 5 years. It was purely an accounting gimmick, nothing more, nothing less than an accounting gimmick.

Health care reform. The President's own budget scores it at $372 billion. Do you think this Congress is going to step up and say to the President: Oh, we are going to pay for this, even though you do not think we should pay for it. I doubt that. I mean, another gimmick. The President was at least forthright and said it was going to cost $372 billion, and he put it in his budget. Why are they not paying for it on the other side, not because they do not think it is not going to be there, this cost, but because they want to get under this 3 percent.

Interest. My goodness. How do you gimmick interest? Well, they did it. They are not accounting for the interest, which these expenditures obviously incur. Interest is a pretty stable number. You are either going to get it and have to pay for it or you are not. The fact is, the goal was to look better than the President, even when you were doing exactly what the President wanted you to do.

It is pretty hard to come here with a straight face and claim your number is significantly different than the President's. It would be nice if it were. I wish it were. I wish it were. But it is not. What it all leads to is a massive amount of debt--a massive amount of debt. Even 3 percent is not sustainable. But, certainly, the real number, which is 4 to 5 percent, is clearly not sustainable. Even 60 percent, is not sustainable, which is the number they claim they get to. I mean, that is not sustainable. That is not an acceptable number, and, in fact, would not even get you into the European Union, it is so unsustainable.

But it is not the real number, 80 percent is the number, 80 percent of public debt to GDP. That is the projected number.

So these numbers are staggering. They should give everyone pause and cause them to say: What are we doing here? What are we doing to our kids? To our Nation? Are we going to hand them off to a country that is so deeply in debt, that is running up debt at such a significant rate, or are we going to try to kid our kids and say: Oh, well, you know, we--those numbers are not real. You are not going to get stuck with these numbers and this amount of debt.

We know we are going to stick them with these numbers and this amount of debt. I hear all about this--we have all heard this almost interminably now: Well, the last administration did this, and the last administration did that. I would point out that this Congress was controlled by the Democratic Party for the last 2 years.

So it was not just the Republican President, it was the Democratic Congress that was spending money. I have never been one to be very--to have defended the last President on the issue of spending because I thought the Presidency did not do a very good job on spending. I voted against most of the things that were passed around here that spent money.

The Part D premium, which was the worst example, $8 trillion unfunded liability. The agriculture bill, massive expansion, inappropriate. Done. Highway bill. Massive expenditure, $26 billion dollars of earmarks.

So, yes, there was failure to discipline the budget on the spending side of the ledger in the last Presidency. But there was an accomplice around here. It was called the Democratic Congress. Now, regrettably, we have a President who said very openly, he is going to spend money, and a lot of it, to promote prosperity by expanding the size of Government on all these different accounts which he deems to be worthy.

I imagine they are worthy. The only problem is we cannot afford them as a culture or as a government because the cost to our children will be a debt they cannot bear. You can try to pass a budget that covers that up through games and darts and gimmicks and shell games and various little exercises in redoing the accounting rules, such as changing pay-go.

But in the end, we all know what it is going to lead to, which is a deficit and a debt that is not sustainable and a nation put at risk as a result of that.

Mr. President, at this point, I yield to the Senator from Iowa, and I ask unanimous consent that upon completion of his statement, unless the Democratic membership has a speaker to intercede, the next speaker be the Senator from South Dakota, who will be recognized to offer the first amendment, which I understand on our side is going to be acceptable.

Yes.

Mr. President, I yield the Senator 6 minutes.

Mr. President, I wish to congratulate the Senator from Alabama, who has always succinctly and effectively described what we are confronting here, which is a wall of debt, a massive wall of debt, which will overwhelm our children. So I thank him for his statement.

At this point, I think the chairman had some comments on proceeding.

Madam President, if my colleague from North Dakota would yield for a question on this subject.

Our colleague from Utah, Senator Hatch, if he would just observe, this issue is not a new one. I know Senator Grassley, who is on the Finance Committee, is here, and there has been a lot of discussion about this: Do we have an extraordinarily high rate of taxation on corporations or don't we? We just heard on the floor that we rank I think the second highest in tax rates on corporations. Well, this is not some arcane discussion between people who can't understand exactly what is happening. We rank, I believe, third from the bottom in the rate of taxes paid by corporations of all of the OECD countries-- 30-some countries, we rank third from the bottom, not from the top.

So they come out here and say: Well, we have a high rate. Our statutory rate is high, toward the top, no question about that, but that is not what corporations are paying. They are not paying the rate, they are paying the rate minus all of the deductions and loopholes. The fact is, the corporate tax burden in this country is right close to the bottom of all of the other industrialized countries. Now, this ought not be debatable. We can easily find out what the facts are. So are we competitive with respect to the corporate income tax? The answer is yes.

I understand why the Chamber of Commerce and others want to perpetuate this notion that somehow we overtax corporations, but, in fact, the taxes paid by American corporations rank right near the bottom of all of the 30 or so OECD countries, the industrialized countries--right toward the bottom, not the top. That is what they, in fact, pay. If we are going to debate public policy, let's debate it with a set of facts so that we all understand what the facts are. The fact that people are talking about this in the context of what is the tax burden on corporations? The answer is, we are toward the bottom of all of the OECD countries. Those are the facts.

Madam President, I know this is a very important debate, this issue of the budget. This is: What are our priorities? I have said often that 100 years from now, we will all be dead and the only evidence of what our value system was right here, right know, will be evaluated by historians. Historians will be alive, and they will look back and say: What did that country believe in? What was their value system? What did they think was important? What did they invest in? So take a look at all of this and then make judgments.

We will have a debate all this week on this issue: What is important for the country? What do we believe represents our highest set of values? Kids? I have always said I know what might be in second, third, or fourth place in people's lives, but I certainly know what is in first place--their kids, right? So what about our budget with respect to health care for kids, just as an example. When we establish the priorities of what is important in our country, this is where we do it: in the budget. We debate it, we think about it, and then we say: This is what our country believes to be important. Here is what we should invest in to make this a better place in which to live.

I came to the floor to say something about the financial crisis and the financial meltdown in our country because that has a profound impact on this debate on the budget. This financial meltdown has begun to dry up the Federal revenues on the tax side. It has pushed up dramatically the expenditure side because we have what are called stabilizers in our economy. When people lose their jobs, they get unemployment checks. So we have these economic stabilizers that increase spending, even during this financial crisis when you see decreased revenue. That has a huge impact on this budget.

If this financial crisis has this kind of an impact on the budget, then we have a right to know what has caused all of this to happen, and what can we do to make sure it never happens again.

Last week, the Secretary of the Treasury announced a number of steps for financial regulatory reform, and those are a move in the right direction. He says we are going to regulate hedge funds, we are going to require the oversight of what are unregulated derivatives--these fancy, exotic financial products these days--we are going to require many of them to be regulated, although not fully. He needs to go further. But the Secretary is moving in the right direction to regulate hedge funds, to get rid of this dark money and bring derivatives and CDOs and credit default swaps and so on into the daylight. Then he talks about a powerful regulator that would be able to take a look at systemic risks and so on. I think all of that advances the ball and is in the right direction.

But this doesn't yet answer the larger question we have to answer with respect to this financial crisis and this meltdown. That larger question, using an automobile metaphor, is this: Is it time for a tuneup or is it time for a complete overhaul of the system? I come down on the side that you have to overhaul the entire system if you are going to provide the confidence needed in the American people going forward.

Now, let me explain how I see what has gone on. For the last 15, 20 years, we have had a bunch of people who were worshiping at the altar of this new type of finance--new financial instruments, new larger financial institutions, securitized credit, and selling the risk forward so that someone giving a home loan to a prospective homebuyer doesn't have to underwrite it or care so much about the risk, because they can sell that risk to an investment bank or a hedge fund, and sell it several times--these fancy, complex financial products.

I mentioned credit default swaps. There also has been a dramatic expansion of debt and leverage with almost every part of our financial enterprise in this country. Congress repealed the protections that used to exist for banks called the Glass-Steagall Act. Congress not only repealed these protections that used to protect banks so they could not invest in real estate and securities, and so on, but then allowed for the creation of the very large holding companies so they could get involved in one big financial swap--one-stop shopping. Gramm-Leach- Bliley did this, supported by the Clinton administration, I might say. These are all new-fashioned ideas. They got rid of the old-fashioned ideas, such as Glass-Steagall--just deregulate the market and don't worry about them.

Alan Greenspan chimed in, saying: I want to make a nice sound with all of this deregulation that is going on in Congress and I believe in self-regulation. We don't have to regulate. The Chairman of the Federal Reserve Board, Mr. Greenspan, said that would work. The lending terms and the incomes were from outer space; the incomes were unbelievable in all of these areas. And then the lending terms were completely unsupportable, and I will describe a few of those today.

We need to overhaul all this. What do we do to overhaul this? We have to get rid of this too-big-to-fail notion. We are now allowing banks that are too big to fail to merge with troubled banks, making them, apparently, too much bigger to fail, which is bizarre. We need to get rid of the holding companies, which never should have been allowed to happen in the first place. We need to go back to Glass-Steagall and create a portion of that to separate banking from the other risk enterprises.

Until we do that and address those fundamental questions, I think it is going to be very hard to instill the kind of confidence we want to instill in the American people. The New York Times asked the question in their editorial on Sunday of this week: What is it we are trying to fix? What caused the meltdown?

If you go back to the mid-1990s, I wrote an article in the Washington Monthly Magazine that was a cover story in 1994, I believe. The title was ``Very Risky Business.'' I wrote about derivatives, and I wrote that about tens of billions in derivatives that then existed. I introduced four pieces of regulation to regulate derivatives trading. None of it was acceptable because those involved in the new, modern approach to finance felt that you don't regulate these things. They will self-regulate and everything will be fine.

Of course, it was not fine and we had not only the notion of too big to fail, but the repeal of Glass-Steagall. We had the deregulation of all of this and the fusing of banking with riskier enterprises in holding companies. Regulators came to town boasting about the fact that we were willing to be blind. We had products developed that were hard to understand for even those engaged in trading them. Coupled with that, we had an unbelievable culture of greed, and the result was a financial meltdown.

The question is, what has caused, as the New York Times said, this house of cards? What is the cause? Do we know? Well, the fact is we need to know in order to move forward. The American people need to know. There needs to be a narrative that says here is what happened. We understand a portion of what happened, and it has been a calamity. Nobody understands all of it. The Attorney General of New York is doing some investigations here and there, but there is no comprehensive investigation. I believe there ought to be a select committee of the Senate, and I have introduced such legislation, with Senator McCain as a cosponsor. I believe we must do a select committee of the Senate to address these issues. I believe we also ought to have a financial crimes task force at the Justice Department to prosecute that which is discovered is illegal--a whole series of things.

We need to reconnect Glass-Steagall and decide that too big to fail is a doctrine that itself is old-fashioned, and we have to run our banks through a banking ``carwash'' of sorts, where you get rid of the bad assets and keep the good and rename them, if necessary. We need a banking system that is a circulatory system of our economy. But we cannot ignore what happened. We have to understand what happened and we have to fix it.

Let me go back to 1999, if I might, during the debate over the repeal of Glass-Steagall and passage of a bill called Gramm-Leach-Bliley. I was one of eight Senators who voted against it. On May 6, 1999, I said this bill will, in my judgment, raise the likelihood of future massive taxpayer bailouts. It will fuel the consolidation of mergers in the banking and financial services. I said that 10 years ago. I felt that would happen if we decided to let the big banks get bigger, without regulatory involvement. I said during that debate that we will, in 10 years time, look back and say we should not have done that repeal of Glass-Steagall, because we forgot the lessons of the past.

I wish this didn't happen, but it did. I wish to talk about what we do now. There are four steps. One, investigation. We need to find out what happened here. The New York Times has said--and I agree--in their questions on reform--in Sunday's editorial, it says that without an investigation, the reform effort will be, at best, hit or miss and, at worst, a charade.

Congress should start now to gear up for an investigation, using as its model the 1930s Pecora inquiry into the stock market crash, or the Watergate hearings of the 1970s. Here is a picture of Mr. Pecora, whom I described. Mr. Ferdinand Pecora was chief counsel of the Senate Banking Committee during the 1930s investigating the Wall Street banking and stock brokerage practices. He was involved in an investigation that I think was a very important one with respect to the cause and effect of the Great Depression. A real investigation is necessary and it will at least give those people who are furious about what happened an understanding and an outlet to understand and be a part of knowing what happened.

Now, I want to talk about the roots of some of this and why I think it is scandalous. The trigger of this financial crisis, I think, was the subprime scandal. Under the subprime scandal, there was so much debt and leverage that it was nearly unbelievable. We need something such as that to develop the narrative of what happened.

Let me describe the triggering mechanism with respect to the subprime lending. I went to the Internet today, and I will read a couple of invitations on the Internet. This is from speedybadcreditloans.com:

Do you want your loan approved on the terms you desire,

with easy credit and no credit check? This is the smartest

and fastest way to get the money you need for a home loan.

Bad credit, no credit, bankruptcy, you have been declined

before? Don't worry at Speedy Bad Credit Loans we have

lenders dealing with all kinds of credit loans. You will get

the money you need, and fast.

That is today. They are willing to loan on those terms today.

You can go to the Internet and find a dozen of these. In fact, I will show you this. Leading up to this crash, this financial crisis, Zoom Credit said this in their advertisement:

Credit approval is seconds away. Get on the fast track, and

at the speed of light they will approve you. Even if your

credit is in the tank, Zoom Credit is like money in the bank.

We specialize in credit repair and debt consolidation.

Bankruptcy, slow credit, no credit, who cares?

Is it a surprise that a financial system that allows this nonsense to go on somehow, at some point, collapses? That is not a surprise to me.

Here is Millenium Mortgage's advertisement:

Twelve months, no mortgage payment. That's right, we will

make your payments for the first 12 months. Our loan program

may reduce your current monthly payment by as much as 50

percent and allow you to make no payments for the first 12

months. Call us today.

Countrywide, the single largest mortgage company in America--by the way,

its CEO was able to get out of this with around $140 million, or so, I am told. They said:

Do you have less than perfect credit? Do you have late

mortgage payments? Have you been denied by other lenders?

Call us. Are you a bad risk? Call us, we will lend you some

money.

What did the biggest mortgage company in our country do? It made all these mortgages and then wrapped them up into securities--they securitized them. I have described it like the making of sausage, when they used to pack them with sawdust as filler. They packed these securities with good loans, bad loans, subprime loans, and conventional loans, and sold them to an investment bank, or a hedge fund--and, by the way, when you read about the toxic assets in the bowels of these institutions, these are the toxic assets.

Is it a surprise? This is bad business. They all made big money. They were like hogs at a trough, with unbelievable greed. They made massive amounts of money. Yet they were able to sell the risk forward, and the people in the hedge funds made money, and the people in the investment banks made money. The amount of money they made is unbelievable. Bear Stearns went belly up. Alan Schwartz, the CEO of Bear Stearns the 5 years prior, made $117 million. Jimmy Cane, the previous CEO, 5 years prior, made $128 million. At Lehman Brothers, Dick Fuld, 5 years prior to him going bankrupt, made $350 million. This was a carnival of greed. Everyone was doing well, except the economy, with this unbelievable avalanche of debt and leverage that all completely collapsed.

Now, we have a situation today where we have the American people trying to figure out what happened. I described the subprime loan scandal, which was at its roots. They were all making a lot of money by victimizing the American people. I should say some of the people were not victims. Some of these folks were willing victims because they wanted to buy a house with a special deal and flip it and make money. They got caught. They are not really victims. They were trying to profiteer. A lot of other folks were victims of this sort of scam.

I mentioned that these big investment banks took on all these assets and then got bailed out, and we now think there is $9 trillion of American taxpayers' money at risk going out through the back door of the Federal Reserve Board, Treasury, and the FDIC--$9 trillion. There has never been a hearing about that. No one has been able to get the Federal Reserve Board before a hearing to tell us where those trillions of dollars are pledged, who got the money, and how much money did they get. You cannot find out. The information we do have is pried out of the Federal Reserve Board. Bloomberg News corporation filed a lawsuit to get some of this information. That is unbelievable.

I mentioned these big financial firms that got all these bailouts. About $45 billion in TARP funds have gone to Bank of America. Bank of America got $30 billion in January of this year. Bank of America, last September, was urged to buy Merrill Lynch, a failed investment bank, by the then-Treasury Secretary Paulson. So what happened was the marriage was arranged by the Treasury Secretary and was going to be consummated in January. It turns out that in December, Merrill Lynch, which lost $27 billion in 2008, paid $3.6 billion in bonuses to their employees.

Let me say that again. An investment bank called Merrill Lynch that lost $27 billion--$15 billion in the fourth quarter alone--paid $3.6 billion in bonuses in December just prior to being taken over by Bank of America. Then Bank of America received $20 billion in TARP funds from the American taxpayers--in addition to $10 billion it had just been paid, which was initially allocated to Merrill Lynch. Pretty unbelievable.

Here are the Merrill Lynch bonuses, $3.6 billion. The top four executives got $121 million. This is for a company that lost $27 billion last year and was a failing company. Madam President, 694 executives got more than $1 million each. These are bonuses that would normally have been paid in January. They were paid in December, and my suspicion is they were paid by arrangement with Bank of America to be paid before the end of the year and before $30 billion went from the American taxpayers to Bank of America that just took over Merrill Lynch. That means, in my judgment, the American taxpayers paid bonuses to those who worked for a company that lost $27 billion in a year.

Do people have a right to be furious about this situation? You bet they do, and they should.

There are a lot of needs we have in this country to try to find a way to fix this situation so it never happens again. But as I have indicated, the first step, it seems to me, always is to try to understand what has happened and what to do about it.

The Washington Post had a story recently. In fact, I believe it was an editorial. They talked about the fact that hedge funds were not a part of the problem in this financial meltdown. I don't know about that. Let me show some examples of incomes at the hedge fund level. This is a man named James Simons. There is no implication here about being right or wrong, legal or illegal. My point is about the spectacular amount of income, what I call incomes from outer space. Mr. Simons made $2.5 billion last year--$2.5 billion. It is interesting. He runs a hedge fund.

Here is a man named John Paulson, who also runs a hedge fund. He made $2 billion last year. It seems to me he is probably profoundly disappointed because the year before, John made $3.7 billion. And, oh, by the way, my best guess is that each of them probably pays a 15- percent income tax rate, something called carried interest. But that is another story for another day. They pay income tax rates, in most cases, that would be below the marginal tax rate paid by their receptionist in their office. That is not their fault. That is the fault of the Tax Code and the fault of this Congress for not changing it.

John Paulson last year made $3.7 billion. He has a reason probably to come home and say: Honey, we need to tighten our belt here. Madam President, $3.7 billion--by the way, that is $10 million a day. In 2007, he made in 4 minutes what the average worker works for a year to make. Incomes from outer space, big old hedge funds--they play a role in this collapse. The Washington Post said they have played no role. Oh, really? Really? Where are they in the food chain of derivatives, credit default swaps, CDOs? Does the Washington Post know? Of course, it doesn't. It doesn't have the foggiest idea what role hedge funds may have played in this situation.

What we do know is there is a lot of dark money out there traded off the exchanges. Nobody knows what risk you have. That is why you have had all these big-shot bankers walking around acting like they are in some sort of seizure because nobody knows how much risk has been taken on. Every time we turn around it is more. It is billions, hundreds of billions, then trillions of dollars.

As I said earlier, we need to create a select committee in the Senate and soon. It is this body's job. We are the ones who send the money out. We are the ones who have said we are going to provide $700 billion of TARP funds. It is our responsibility to track it and to understand what has caused its need.

Second, I think there is a substantial reason--by the way, there are some attorneys general of this country, including Mr. Cuomo in New York, who are doing first-rate work in investigating. But I think there is substantial reason to believe there is a need for a national financial crimes prosecution task force.

Do I think all of this is criminal? Not at all. I think some of it is born of ignorance, some of it is born of greed, some of it is born of deliberate, willful blindness. But there are some, in my judgment, who desperately deserve to be investigated and, if necessary, prosecuted.

Finally, real reform. Real reform exists when we have real regulators, when we revisit 1999 and restore a portion of Glass- Steagall, when we decide to take down the ceilings and walls of these large holding companies, when we decide we are going to restore, once again, trust in banks.

Let me also say that in my home State, I visit with a lot of community bankers. They are not at risk. They did not do this. They did not invest in these assets. Most of them did banking the old-fashioned way. They took deposits and made loans. When they

made loans, they underwrote the loans. That is the way banking ought to be done. We need to revisit that with respect to some of the largest banking and financial enterprises in our country.

I am convinced we can fix all of this. I understand there is great anxiety. None of us have been here before. No one quite knows what is the medicine to try to address this economic illness. I understand. There is reason to be anxious. But I am also convinced we can and we will find the opportunity to put this back on track and fix what is wrong in this country. We will not fix what is wrong unless we understand the core and root cause of what has happened.

There is nothing I see--nothing I see--that is going to give us that answer. It is our responsibility. If we are required to put up the money, to try to find a way to invest in future health and so on, it is our responsibility to find out what happened and make sure it cannot happen again.

Steps are being taken in the right direction. I applaud those steps by the Treasury Secretary and others. But we are not nearly there with the giant steps that are necessary to fix that which has been existing now and growing for a decade or two.

Finally, I was telling a group the other day about Ray Charles, who used to sing that great song ``America the Beautiful,'' when he sang `` . . . spacious skies, For amber waves of grain, For purple mountains majesties. . . .'' The interesting thing about Ray Charles, who sang that song unlike anybody else could sing it, was he was blind. Somehow, to me, it always meant it wasn't so much someone being able to see this as it was to experience what the idea of America is. America is an idea. Part of this idea, born over two centuries now, is we have the capability to do almost anything if we get together and decide to work together. We can do that now. We can put this country back on track. This is a financial collapse of significant proportions, perhaps the greatest crisis we have faced since the Great Depression. But I am not despondent about that if we can begin to take the steps--not the baby steps but the big steps--in the right direction to decide to fix what went wrong. The first step to do that always is to understand what went wrong and then join together and say: We can make this right; we can make a better future happen if we decide to link arms and come up with the answers.

I am going to speak, at some point later, on the budget as well. But nothing impacts this budget in a more profound way than the financial collapse and meltdown which we have seen. It dramatically increases the need for funding for economic stabilizers, unemployment and so on and it substantially reduces the revenue. It has caused a substantial increase in deficits. Even as we debate this budget going forward for 2 years, 5 years, 10 years, the fact is we have to get this right. We have to put this economy on track, and I believe we can do that if we make the right decisions very soon.

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

Mr. President, reserving the right to object, and I will not object, the point is following the next Democratic speaker, if there is one?

I do not have an objection.

Mr. President, I suggest the absence of a quorum.

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

Mr. President, I understand I now have the right to offer an amendment, but prior to offering the amendment, I wish to make a couple comments.

I have watched this debate develop, and it develops with a certain tempo every year. One of the comments that has been made in the paper by the chairman--and it was also made by the President, interestingly enough--is that if we disagree with the budget as brought forward by the President, we should offer our own budget. Historically, the way this has happened is that the party in the minority has not offered a budget. Traditionally, the party in the minority has offered a series of amendments to try to improve the majority's budget.

That is the tack we have taken this year. That seems like a more logical tack to me because it is a more bipartisan approach. We are simply trying to reach out to the majority and say: Hey, listen. If you accept this amendment and this amendment and this amendment, your product--the budget you have brought forward--is going to be a much better product. For example, if you reduce the amount of spending in your bill because your bill spends too much; if you reduce the amount of taxes in your bill because your bill taxes too much; and if you reduce the amount of borrowing in your bill because your bill definitely borrows too much, then the amendments which we offer to accomplish those three points would significantly improve your bill.

In addition, we are going to offer amendments which address positive policy initiatives. For example, we will offer an amendment to try to improve the energy policy of our Nation by allowing Americans to produce more American energy rather than buy it overseas, and to conserve more American energy--which is the approach we should take. We will allow Americans to produce more American energy by allowing more drilling in an environmentally safe way, by allowing more nuclear plants, by allowing more wind and solar energy, at the same time conserving. We will offer that amendment.

We will offer an amendment to improve the budget by offering a positive policy on health care where every American could be insured but where we do not add another $1 trillion in spending and don't step off on the course of nationalizing our health care system. We will offer amendments which will try to get under control the real threat we have as a nation, from the fiscal policy standpoint, which is the out- year debt, the fact we will be passing on to our children debts which are not sustainable, debts of a trillion dollars a year as far as the eye can see. That is not sustainable. So we will offer policies in that area, relative to trying to have a more balanced approach toward spending around here rather than a profligate approach toward spending.

That is the approach we take to improve this budget by amendment. It is a bipartisan approach. We are not going to set up our budget versus their budget and have a partisan debate. We are going to suggest they change their budget and make it a more positive document and more bipartisan document. Interestingly enough, this is exactly the same approach taken by the chairman when he was in the minority and I happened to be the chairman, and I respected that approach and I did, on occasion, ask where is your budget and he came back with his statements, which were eloquently and brilliantly presented, that said he would do it by amendment. In fact, they were so eloquently and brilliantly stated I brought some of the statements here so other Members can see the eloquence of our chairman on the subject.

March 10, 2006, when I offered a budget and I asked: Where is your budget, Senator? And he said:

We will offer a series of alternatives by amendment.

Concise. People are concise from North Dakota. Sort of like New Hampshire. That is why we like each other. Then he made another statement when I asked the question where is your budget, Mr. Chairman, and said, on March 14--a more expansive statement:

Mr. President, the chairman says we have offered no budget.

I did say that.

The chairman well knows the majority has the responsibility

to offer a budget. Our responsibility is to critique that

budget.

We have great admiration for the chairman. I listened to his words when I was chairman. We are following that course of action. So I hope that as we move down the road with this discussion that we have no more statements in the newspaper to the effect there is no budget being offered by the Republican side.

On another subject, I heard--and I listened to what the President said on the issue of this auto bailout issue. I have deep reservations about this. I have been a strong supporter of the initiatives that this administration has taken trying to stabilize our financial industry. The financial industry is the core systemic element of our economic well-being as a nation. The availability of credit at a reasonable price, reasonably easy to obtain, is the essence of a strong and vibrant capitalist system. It goes to the core question of Main Street and how you make Main Street work.

If you think of us as a body, a nation as a body, the financial system is the blood system, it is the arteries, it is what moves the blood through the system. So it is critical that we have a viable financial system. I have been very supportive of the administration's initiatives in this area. I have been very supportive of Secretary Geithner's initiatives and I have been very supportive of Secretary Geithner. But this idea that we should step in to underwrite the automobile industry is something with which I have real problems. I had problems when the prior administration did it at the end, in the final days, and I have problems with it now. It is an important industry--no question. But, remember, cars are produced in this country that are not necessarily produced by these two companies, GM and Chrysler. There are also cars produced by Ford, Toyota, Honda, BMW. A

variety of companies have manufacturing facilities in this country, so it is not as though the entire system is threatened relative to employment of the people in the auto industry. It is these specific companies that are having problems and they are important but they are not systemic.

Equally significant is the fact that these companies have had problems for a long time in the production of a product that is competitive. Before we start putting tax dollars into these companies, there has to be a very specific plan that shows they will be viable, that these tax dollars will not be good dollars chasing bad dollars, and that means there has to be a plan, No. 1, to produce products people want to buy; and, No. 2, reduces significantly the debt so the bondholders actually take a fairly significant haircut; and, No. 3, brings their employment contracts in line with the employment contracts of their competitors. None of that has happened so far. It is very hard to justify putting money into this industry in this present climate and under the failure of proposals to come forward to accomplish that.

Something else the President said has raised a question to me. That is, he is saying that the Government is going to insure the warranties of these automobile manufacturers, specifically GM. Because if Chrysler affiliates with Fiat, that would not be necessary, I presume. That is a fairly significant step for the U.S. Government to take, that we are going to insure the warranties on cars. Is that the business of the Government? Is that the purpose of the Government? Does that mean we put a new telephone line in my office in Portsmouth for people who have problems with their transmissions? That they are supposed to call me?

Let's be honest about this. This is probably not a course of action that makes a whole lot of sense, that the Government is going to get into the business of underwriting the warranties of a manufacturer.

I have deep reservations about the course of action here. I do hope before we put any more money into this--in fact, I hope we will not put anymore money into it, but if there is more money going into it, there is at least a clear and defined plan that shows these companies will be viable, which means they have to put on the table a plan that shows they are going to make products we support, that people want to buy, bondholders are taking a fairly significant hit, and their union contract and the legacy contracts are adjusted to be more in line with the competition.

Amendment No. 739

On the specifics of the amendment which I am offering at this point, I ask the clerk to report my amendment.

I ask unanimous consent the reading of the amendment be dispensed with.

This is a pretty simple amendment. It comes about as a result of one of the elements that I see as the core of the problem with the President's budget, and that is that we, under the budget as proposed by the President, are going to pass on to our children an unsustainable Government and a debt which will essentially put them in a position where their quality of life will be dramatically reduced because of the burden of the debt they have to pay relative to the Federal deficits that have been run up. The President's budget doubles--you have heard this before--doubles the national debt in 5 years, triples it in 10 years. These are massive expansions in debt. It is hard to put these numbers into context, but they represent the fact that every household in America, by the year 2019, will have $130,000 debt on its back added as a result of this Presidency, and $6,000 of interest payments that they will bear as a result of this Presidency.

That means the debt added to their backs and the interest added to their backs probably will exceed their mortgage payments--to pay for the Federal Government. So it doubles it in 5 years, triples it in 10 years. The burden will be extraordinary on our children because they are the ones who will have to pay the cost of this. It will lead to a decrease in the quality of life of our Nation because the burden of paying this will lead to one of two options: Either we inflate the currency, thus reducing the value of the dollar--and inflation is a dangerous thing for society to have happen to it; it makes everybody's work less valuable and it makes the products they produce more expensive--or, alternatively, the tax burden to pay for this will have to go so high on all Americans--this is not just the wealthy; the wealthy already are going to be taxed under this budget--it will go so high on all Americans that their discretionary income which they might use to buy a house, which they might use to send their children to college, which they might use to buy a car, to live a better lifestyle, will be eliminated or significantly reduced, anyway, because they will have to go through the burden of paying taxes to cover the debt that we are running up now. We are, our generation, running it up and we are handing it on to the next generation. It is very wrong for one generation to do this to another generation.

We will be creating under this budget, or the President is proposing to create under his budget, a wall of debt which goes up and up, a wall of debt which will be sitting on top of the American economy and the people of this country. The American people are not going to be able to get over this wall of debt. They will run right into it and the economy is going to run right into it, and it is going to have a devastating impact on us.

Other countries are going to be worried about this. Other countries that buy our debt and support our ability to function as a nation are going to be worried about the size of this debt. In fact, the Premier of China has already said--and he is the largest holder of American debt instruments outside of the United States--has already said that he is concerned about this. If China or other nations start to get concerned and are not willing to buy our debt, then that puts us in a difficult position because if we are going to run up all this debt and we have nobody who can buy the debt, that is when you hit inflation. That is when serious things happen.

We do not have to look too far to see it already happening in other nations. Ireland. Ireland got its debt so out of kilter it just had its credit rating reduced. A whole nation, which is considered to be a pretty vibrant nation and which for a period was considered to be the most vibrant economy in Europe, had its credit rating reduced. That is a huge event for Ireland and it reflects the fear that the Irish economy will not be able to support the deficits and the debt that are being run up.

How large was the Irish debt and deficit that led to this credit rating--credit downgrade? Their deficit was 12.4 percent of GDP. You say that is pretty darn high, no wonder the credit rating agencies said the Irish debt may not be sound or as sound as other nations.

How high is our deficit going to be? Under this budget resolution, this year it is already going to be 12.2 percent. We are closing in. Under the President's budget proposal, it will exceed 13 percent this year if the proposals in his budget are enacted. We are closing in on the Irish situation. We are spending a lot of money we do not have and we are running up a lot of debt we can not afford. In fact, stated another way, if you look at all the debts, all the deficit and all the debt run up on the United States since the beginning of our country-- 1789, when we began running up debt, that is when George Washington was President--this is a picture of all the Presidents here. If you look at all the debt they ran up on our Nation from George Washington through people such as Buchanan, Polk, Lincoln, of course, Grant, Garfield, Wilson, Harding, Franklin Roosevelt, Truman, right up through George W. Bush--all the debt run up by all these people, all these Presidents throughout all their administrations, the President of the United States, President Obama, is suggesting that he, under his budget, we should double that--double this cumulative debt run up on our country since 1789 in about the first 5 years of his Presidency.

That is incredible. That is an incredible explosion in debt. It gets back to this chart I held up that says we are going to double the debt in 5 years under this Obama proposal--President Obama's proposal--and triple it in 10 years. It is incredible.

I do not think that is affordable. I don't think our Nation can do that. So I have offered the amendment I call the 1789 amendment. We are going to refer to it as the 1789 amendment. Actually it says there will be a point of order against a budget that proposes that the debt of this Nation should be doubled during the period of that budget--that if that debt would double, that a budget which would propose that debt would double the amount of debt run up since 1789 through January 20, 2009--if a budget comes to this floor which doubles the debt of the United States, which has been run up since 1789, through 2009--run up under all the Presidents of the United States prior to President Obama, there would be a point of order against that budget.

Does a point of order mean the budget can't be passed? No. The budget can be passed. It is just going to take 60 people to pass it rather than 51. That seems reasonable, that if you are going to leave our children with a doubling of the debt in 5 years and a tripling of the debt in 10 years, that you ought to be willing to get 60 votes to do that.

The reason for this, of course, is to highlight and make it clear to the American public what we are doing to ourselves. I do not expect to win the point of order very often--especially if my colleagues on the other side of the aisle have 58 votes. But that point should be made so the American people see in a very clear way what is happening to them. That is what this is about--making it very clear to the American people that if the deficits are going to go up in this way, that if a President proposes to run a $1-trillion-a-year deficit for 10 straight years on average--$1 trillion, think about that for a moment, a $1 trillion a year deficit for 10 straight years on average--wow. We used to get concerned around here, and rightly so, whether we were running a deficit in the range of $200 billion.

We are now talking about $1 trillion a year under this President's budget, as the deficit that is proposed. Five to 6 percent of the gross national product will be deficit spending, with the practical implication that it adds to the debt almost $9.3 trillion, tripling the debt, taking the debt as a percentage of GDP up past 80 percent, which is an unsustainable number. It is so unsustainable, in fact, that we wouldn't even be able to get into the European Union if we wanted to because they don't allow countries in that have that amount of debt. Can you imagine that? We are worse off than all the countries in Europe that are part of the European Union because of the level of debt being proposed in this budget.

Nobody wants to use Europe as an example, but that is a pretty significant benchmark. We will be headed toward a situation where the value of our currency is at risk, where our ability to sell debt will be limited or affected, where we have a potential for massive inflation, and where we essentially will pass on to our children a country they cannot afford because the tax burden to support the government will be so overwhelming. We should not do that. I don't think we should do it.

The history of this Nation is that every generation passes to the next generation a better and more prosperous country. The implications of this budget are that we will be unable to pass to the next generation a better and more prosperous country. This amendment, which we call the 1789 amendment, says, if we want to pass a budget that doubles the debt over all the debts that have been run up in this Nation since 1789, we need to get 60 votes rather than 51. We have to get nine more people to agree. That seems a reasonable threshold and, hopefully, a transparent event that will make it clear as to what the budget is doing to the next generation.

I yield the floor.

I was going to put them in lights, but they don't allow that as part of the rules.

Mr. President, will the Senator yield for a question?

Mr. President, is it not true that under the rules of reconciliation, an instruction to the House Energy and Commerce committee that is contemplated for purposes of health care, for example, would not prevent that committee's ability to use the reconciliation process for the purposes of climate change legislation because a reconciliation instruction cannot specifically state which matters within its jurisdiction a committee should address to comply with its reconciliation instruction, which is only a dollar number?

Mr. President, I would agree, and I am wondering why we would need reconciliation instructions. I ask the Senator this question: Why would the House need reconciliation instructions? Do they not have a Rules Committee? Would not the only purpose of reconciliation instructions in a House bill be to have a conference report approve a reconciliation instruction, which would tie the hands of the Senate? It certainly wouldn't tie the hands of the House, would it? In tying the hands of the Senate, it would allow Senate committees to reconcile the issue of a cap-and-trade bill and create a carbon tax--or a national sales tax--every time somebody turns on a light switch in America; and there would be no way to limit that once there is a reconciliation instruction in a conference report.

I think the Senator from Alabama is absolutely right; that could be the only conclusion. Is there any other conclusion that can be reached? I don't believe there is. The only purpose of a reconciliation instruction in a House bill is for the purposes of controlling the floor of the Senate--not the floor of the House--and set up the possibility of passing it in a conference report.

Mr. President, I would ask the Senator from Alabama this: The Senator from California has correctly stated that reconciliation has been used often in this body before. It was used by President Clinton, since I have been here. It was used by President Bush. I voted for most of the different reconciliation bills. But is it not true that reconciliation, when it has been used before--even though used for significant events--has always been used for already existing policy; whether it is changing the rates of taxes, whether it is changing the way the welfare system was adjusted relative to who was covered or whether it was changing the way we deal with student loans?

It was always used on existing policy that had been pretty well aired on the floor of the Senate. It has never been used for the purpose of creating, ab initio, a brand new major tax, which would essentially tax every American every time they turn on their light switch--a national sales tax--which would introduce industrial policy and which would affect virtually every American as to their jobs--sending many of them overseas--and as to the ability to be competitive. Has it ever been used for such a broad, extensive public policy event of creating massive new taxes that don't exist today--a national sales tax--and massive new industrial policy?

It would mean that policy and those taxes would come across this floor without amendment, with 20 hours of debate, and an up-or-down vote. Has it ever been used in that context in the Senate?

Mr. President, I really take to the floor, first of all, under the order to call up an amendment I have at the desk.

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

Mr. President, this is an amendment I have decided to offer to our colleagues as a supplement to an amendment offered by Senator Thune.

Senator Thune makes the point that global warming legislation should not increase electricity prices. It is very interesting because I didn't hear the concern from the other side of the aisle--it also refers to gasoline prices--when gasoline prices hit almost $5 a gallon in our home States. We didn't hear an outcry. There was no global warming legislation. It had nothing to do with it; it had to do with manipulation. We didn't hear any outcry about that.

I think Senator Thune doesn't go far enough because we believe that revenues from a climate bill, should we pass one--and I certainly hope we will--would be used to offset any kind of an increase in electricity and gasoline prices, and we would have the revenues from a cap-and- trade system to do just that. So I think Senator Thune's amendment doesn't go far enough. We not only don't want to see an increase in prices, we want to have the revenues coming in through cap-and-trade legislation to make consumers whole.

In his argument for his very narrow legislation, which I will be voting for--I don't have a problem with it--Senator Thune cited a study by MIT to argue that climate legislation is a tax. In fact, the MIT study actually shows why it is important to capture the overall picture because the MIT study actually points out that the monetary value of allowances under a cap-and-trade program is something that Congress would have the option of using to give a family of four a tax rebate--a tax rebate--that could be as high as $4,500 per year by the middle of the next decade.

So I find it amazing that my Republican friends who oppose taking any action on global warming suddenly have discovered the consumer and they are worried that the consumer would pay high prices when we fight global warming when, in fact, a well-designed program--and I say to the Chair, as he is a proud member of our committee--a well-designed program, as he knows, will give us the ability to refund money to consumers and make sure they are healthy and kept whole.

So this legislation simply says that we will ensure that our legislation relating to clean energy does not increase electricity or gas prices or does not increase the overall burden on consumers, and that is the key. So it is going to be a boon for consumers.

So we will be voting for the Thune legislation and hopefully for the Boxer legislation so that we cover all of our bases and we know that global warming legislation is not going to hurt consumers but actually keep them whole and clean up their environment; it is going to create green jobs and all the rest.

I wish to spend a couple of minutes talking about this budget, and I wish to start off by thanking members of the Budget Committee. Again, my colleague in the chair is a member of the Budget Committee. They worked very hard under the leadership of Senator Conrad to come up with a product that keeps President Obama's priorities intact, that does more for deficit reduction, and I am very pleased about it.

I wish to say that I am very pleased the American people have not fallen for the same old, same old policies of the Republicans as they try to demolish this new President and they try to destroy his reputation and try to bring him down. We don't have the charts that talk about the same old policies, so if we could get those. There is a series of charts.

I have taken to the floor before to talk about the comments of my Republican friends during the debate on the Clinton budget, and we all know--here is the message. We all know the Republicans repeat the same old politics, the same old policies that got us into this crisis.

I wish to take you back to 1993. The Republicans came to this floor, and they tried to demolish the Clinton budget. Not one of them voted for it. The Democrats had taken over from George Bush's dad. Things were in very bad shape.

This is what the Republicans said about the Clinton budget in 1993:

It is just a mockery. It is just a mockery, said Committee chairman Pete Domenici.

Senator Hatch: Make no mistake. These higher rates will cost jobs.

Phil Gramm said: I believe hundreds of thousands of people are going to lose their jobs as a result of this program--including Bill Clinton, he predicted, would lose his reelection.

Connie Mack: This bill will cost American jobs.

What happened as a result of the Clinton budget? Twenty-three million jobs were created. It was the best record ever in peacetime--the best record ever in peacetime.

Senator Roth of the other side: It will flatten the economy. It is bad policy.

And on and on and on.

Now here we have today--this is years later, more than 10 years later--the same old politics, the same old policies. Just listen to my Republican friends trashing Barack Obama's budget: disaster, disastrous, terrible, deficits as far as the eye can see. That is what they said about the Clinton budget too--deficits forever. Guess what. Guess what. Not only did we have a balanced budget under Bill Clinton by the end of his term, we had a surplus.

So as our Republican friends come to the microphone, I want my colleagues to listen carefully to their words. I am proud of the American people for seeing through this. They understand what got us into this mess. Clearly, what we can see is the same old, same old, same old; the party of nope: Nope, we can't change. Nope, nope. I, frankly, would rather be in the party of hope than the party of nope, and hope is what the American people want.

In this budget, we recover from the Republican deficit. It is true in the short-term we are going to see deficits go up. But as shown to us by Senator Conrad, who is the biggest deficit hawk in this Senate--I challenge anyone to be more of a deficit hawk--we see we are beginning to turn these deficits back down to sustainable numbers.

We know why the American people support President Obama and the Congress right now--because they saw that George Bush took record surpluses and turned them into record deficits. The national debt increased by 85 percent. The foreign-held debt more than tripled. This is the Republican deficit we are dealing with now, and we don't like it. But we are going to fix it as we did under Bill Clinton. We fixed it then, we will fix it now. The people are smart. When Republicans come to the floor and they fight President Obama, the people in this country--Democrats, Republicans, and Independents alike--are saying give this new President a chance. He inherited this mess.

Let's look at the rest of the deficit that happened with our families. Health insurance premiums have risen, energy prices increased, college costs skyrocketed, and the gap between the wealthy and the middle class widens. That is the part of the deficit this President was left with. We are losing the middle class in this country. That is very clear. It is very clear. All you have to do is look at income levels. That is why when my Republican friends come to the floor to trash the President and the budget, they understand what has happened. It is not a mystery.

This is not a theoretical argument about who is right and who is wrong. We now know what happened in the Clinton years: the best economy in peacetime, 23 million jobs, surpluses, debt on the way down. We know what happened. When George Bush took the keys to the Oval Office, he turned it around into the Republican deficit. We know that happened. The people are smart; they get it. That is why they support this.

Let's look further. I said before when George Bush took the keys to the Oval Office, there was a surplus of $5.6 trillion. That was the projected surplus. They turned it into a deficit of $10.6 trillion. That is what happened under the Republicans. Why should we listen to what they are saying now? They are saying the same old thing. GOP, SOP, same old policies.

Now, what our President is saying is that we are going to have a road to change. That road to change is going to be paved with a few simple things. One is energy independence; two, making college affordable; three, lowering health care costs; four, middle-class tax cuts; five, cutting the deficit in half in the next several years. Let me repeat them. Energy independence, making college affordable, lowering health care costs, middle-class tax cuts, and deficit reduction.

What do my Republican friends stand for? The same old policies, the same old thing--no investment, no imagination, no realization that until we get off of foreign oil, and we lead the way on global warming, and we lead the way on lowering health care costs, we are going to be stuck in the same old place. That is why this budget is so crucial and important, because it is a roadmap of our Nation's priorities.

The President ran on these issues. He is doing what he promised he would do--everything. The American people are saying that we know times are tough, but this President is trying, this Congress is trying. That is better than the status quo. If you read anything about the years of the Great Depression, you realize that what our people wanted then was what our people want now; they want us to try. They want us to shake things up, to invest in our people, and to create the jobs that will come along with these important policies.

There are a lot of middle-class tax cuts in this budget. The President extends the child tax credit, eliminates the marriage penalty, and increases education benefits. These are important for our people. So this budget, all told, makes a lot of sense for our country.

Senator Thune has offered an amendment in which he says electricity and gas prices should not rise as we pass global warming legislation. We agree with that. We don't think his amendment goes far enough, because what we want to see is global warming legislation that passes that uses the revenues to help consumers, that uses the revenues to invest in new technologies, that uses the revenues to create jobs, to build transportation systems, to make sure our forests continue to act as carbon sinks, taking carbon out of the air.

Mr. President, how much time do I have remaining at this point?

Mr. President, I ask if the Chair will let me know when I have 5 minutes.

Mr. President, I said before that when my Republicans friends come to the floor, the American people should be wary. That is because they trashed the Clinton budget, and they were wrong then. Now they are trashing the Obama budget, and they are going to be wrong again. Even more than that, let's see what they said about the Bush budget--the Bush budget that led us into this mess.

Senator Gregg I have a lot of respect for, but he was wrong on the Bush budget. He said the Bush budget would drive the deficit down and produce a surplus in 2012. It is hard to believe that was the prediction. We had deficits as far as the eye could see under George Bush. The leader of the Republicans on this predicted there would be a surplus under the Bush budget. As a matter of fact, we are in the biggest economic mess since the Great Depression that this new President has to lead us out of. We need to help him. We really need to help him. It is very important that we do.

I thank the Budget Committee for including in the budget a reserve fund that will be able to make global warming legislation a reality. In other words, the committee is saying this may happen and they have set aside a reserve fund. It is important. It sets the stage for legislation. I guess the message I want to give to my colleagues who oppose any legislation--and there are a lot of them--I have bad news for them. Whether they support it or not, action on global warming has already begun. The train has left the station. The Supreme Court--this Supreme Court--voted 5 to 4 that the Clean Air Act actually does cover carbon emissions, greenhouse gas emissions and, therefore, the EPA has the power to say to our businesses: Clean up your act for the good of society.

Frankly, as far as I am concerned, knowing what I know about the consensus of scientists, I think it is urgent that the EPA act. But I also know it would be far better if this Congress acted, because if we acted, we could set up a cap-and-trade system. The EPA cannot do that without legislation. That cap-and-trade system will bring in revenues to help our businesses, help our consumers. I think at the end of the day it will lead us to millions of green jobs, a new economy, and lead us down the path of energy independence.

Let me say to my friends who will oppose the legislation when it comes--and it is coming--here is your choice: You can fight it tooth and nail and stop it any way you want. You can even say never use reconciliation, even though you supported it 17 times in the past. If that is what you want to say, say it. We already have the New England States which have come together and they are doing a cap-and-trade system. The western States have gotten together and they are doing a cap-and-trade system. We have the Midwest involved with Canada doing a cap-and-trade system. We have the EPA having to act because of the Supreme Court. We have the California waiver out there.

So we are acting on global warming. The question is: Will we do it in a way that turns this challenge into an enormous economic opportunity-- and, of course, that is what I want to do. That is why so many businesses, and now

more and more labor unions, are supporting the passage of climate change legislation. Look, we know, because our own scientists have told us here at home, there are risks to public health if we don't act: more heat-related deaths, water-borne diseases from degraded water quality, more cases of respiratory disease, including lung disease, from increased smog, and children and the elderly are vulnerable. We know what the future will be like. We would never, ever, take our kids in an automobile and park it in the sunlight next to a supermarket, lock all the windows, and go inside and leave them alone. We would never do that. Well, as legislators, we cannot do that to our constituents.

The fact is we know what is happening. The IPCC, Intergovernmental Panel on Climate Change, warned us that unchecked global warming would lead to reduced snowpack in the western mountains, critically reducing access to water. We are already seeing insect invasions damaging our forests. We know that every State in this great Union will be impacted, and some are already impacted. We know that. In New York, a report predicts that northeastern cities could be hit the hardest as sea levels rise, including flooding of their subway system. We know Florida is another very vulnerable place. A huge population is exposed. New Orleans and Virginia Beach are ranked in the top 20.

It doesn't matter where you are in this country, you are going to be impacted. Your agricultural sector will be impacted, your tourism sector will be impacted, your fishing industries will be impacted.

So here is the deal: Either we pass legislation that turns this challenge into a great opportunity, gives us the resources to get us on the path to energy independence, gives us resources to create millions of green jobs, or we allow the States to do what they want to do, and that is fine. I support that. There will be various States doing their own cap-and-trade system. The whole world will do it. But Members of the Senate will think, oh, if that is what they choose to do, that is their choice. But we will fight global warming, and we already are. It is just that we are not doing it in a way that is beneficial to our working people, our families, and our children.

I have to tell you a story. We had yet another hearing in the Environment Committee on the latest science on global warming. We heard what we expected to hear--the predictions are getting more and more dire. The Republicans invited a witness, and I think the occupant of the chair will remember this. He was a very good witness. But at the end of his remarks he lost his way. This is what he said:

I don't know why everybody is so worried about high levels

of CO2. We have had levels that have hit a

thousand parts per million before, and everything was just

fine.

I asked him:

Sir, you are an expert. When was it?

He said:

Eighty million years ago.

I said:

Who lived then?

He said:

The dinosaurs.

I have to say that is not an answer I am going to give to my grandkids--that in order for them to live in the future, they are going to have to become dinosaurs or they won't make it. This is ridiculous.

The Senate is the last place to get the message. We are going to do everything we can to bring legislation later. I know what the Budget Committee did was a sound decision. They said we are not getting into it, but if the committees do act, we will set aside a reserve fund, so they can make sure there will be an order when they do act.

I am very happy to say that my House colleagues are working on legislation. The prospects are looking very good over there. We will be ready to go. But let me say this: The choice is between a livable world and one that is not livable. If my colleagues cannot understand this, then I am very sorry. But in any case, we are going to fight global warming. We will do it in the right way.

We are going to have an amendment that goes beyond what Senator Thune has done. I am going to tell my colleagues to support the Thune amendment and the Boxer amendment so that we make sure our consumers are kept whole as we move forward with legislation.

I reserve the remainder of my time.

Reserving the right to object, what I am concerned about is, according to MIT, if we did a cap-and-trade system and we did it right, a family of four would get a tax rebate of $4,500. What is happening here is they are trying to make it more difficult for us to get a cap-and-trade system, get the revenues, and return $4,500 per family. I object.

Reserving the right to object. It is hard for me to believe that three or four Senators come to the floor to try to control the agenda of the various committees, which we are very proud to serve on.

I also wish to say that 19 times since 1980 has reconciliation been used, and by far and away more times by the Republicans--namely, 13 times they used it. They never came here and complained. They used it. I have the record.

Mr. President, I ask unanimous consent to have printed in the Record the number of times Republicans have used reconciliation.

I object to the Senator's unanimous consent request.

Mr. President, the problem with this--and I could support it if it were made clearer--is it doesn't take into account that we could have some very important new programs that actually result in consumers getting rebate checks. So you may have an increase temporarily, before we get free of foreign oil, in an energy cost that is totally offset by a refund and a rebate. So this would hamper the committees from doing what MIT says we should do, which is, when we do tackle this issue of energy independence, make sure we have the revenues to rebate funds back to the American people.

I do not want to block the possibility of that so I am going to object in a moment. But I have to respond to Senator Gregg. This is the first time I saw the Reagan revolution be so downplayed by my Republican friends. ``Oh, nothing new was done by reconciliation.''

It was the Reagan revolution. It was Bill Clinton changing welfare as we know it. I have it all here. So let's not say now, oh, the 13 times the Republicans supported reconciliation it wasn't anything major; it was little minor things.

The record is replete with what reconciliation did. Why are they so afraid of reconciliation? They embraced it time after time. Don't be so fearful of the rules of the Senate. Reconciliation is a rule allowed by the Senate. Let's not say we could never do it again, never look at it again. It doesn't make any sense.

I am going to object to this because I think in the end it could cost consumers more.