A resolution congratulating the University of Florida football team for winning the 2008 Bowl Championship Series (BCS) national championship.

Mr. President, I also want to recognize the excellent first speech that the Senator from Colorado just gave. I had a chance to hear part of it on the Senate floor and part of it in the cloakroom. We welcome him. If his first speech is any measure, he is going to make a significant contribution. So we are delighted to have somebody of his thoughtfulness and quality as part of this body.

Mr. President, the Senate now begins consideration of the conference agreement on the budget for 2010. I think we have to see this budget in its context. We have to understand what this administration has inherited from the previous administration. To be clear, it is a colossal mess--the worst recession since the Great Depression, a doubling of debt under the previous administration, and a more than tripling of foreign holdings of U.S. debt.

I try to suppress partisanship in my discussions on the Senate floor, but it is impossible to overlook the record of the previous administration. They have slammed this economy into the ditch. President Obama is put in the position of the cleanup crew. It is not pretty or easy, and it is going to be a difficult challenge for this country to come out of a policy stew that is impossible to choke down.

Let me be clear in my own view of how we got here. I believe we had an overly loose monetary policy under the control of the Federal Reserve ever since 9/11, an overly loose fiscal policy under the control of the White House and the Congress, record deficits, a massive buildup of debt--when the economy was relatively strong and right before the baby boom generation started to retire. That is remarkable.

If you look back into history, it is rare to have at the same time an overly loose monetary policy, low interest rates, Congress and the White House

running an overly loose fiscal policy with record deficits, even at a time of relative economic strength; on top of that, a dysfunctional trade policy with record trade deficits, which meant we were shipping hundreds of billions of dollars to other countries to buy their goods, over and above what we were producing, and a deregulatory environment administratively and in terms of the laws of this country that allowed things like the AIG derivative fiasco to develop completely without oversight.

Those elements created the seedbed for bubbles to form. So we didn't just get a housing bubble, we got a commodity bubble--wheat prices went to nearly $20 a bushel; we got an energy bubble, with oil prices up to $145 a barrel. So if one looks at this historically, we see the formation of these bubbles, and bubbles ultimately burst and create enormous economic wreckage. That is what has occurred here.

All of this was under the direction, fundamentally, of the Bush administration. This was their policy that was pursued for 8 years. Our friends on the other side controlled the House and Senate for 6 of those 8 years. They put into place the policies that have been the guiding principles of policy for this country for the last 8 years.

As a result, we saw a very dramatic deterioration in the budget picture under the Bush administration. They went from inheriting surpluses to putting us into record deficits. For 2009, there is a deficit of $1.7 trillion. In fairness to them, they are not responsible for that whole amount because part of it is the stimulus package that was enacted.

Clearly, they are responsible for at least $1.3 trillion of the $1.7 trillion of deficit in 2009. This is the record on deficit and of debt by the previous administration. After their first year in office, the debt was $5.8 trillion. We typically do not hold administrations responsible for their first year because they are working off the plan of the previous administration. If you look at the 8 years they are responsible for, the debt went from $5.8 trillion to over $12 trillion.

Mr. President, that is not the only part of this that is important to keep in mind. It took 42 Presidents 224 years to build up $1 trillion of foreign debt held by foreign entities. The previous administration tripled that. They ran up another $2.5 trillion of U.S. debt held abroad. Some say it is a sign of strength that people are willing to lend us all this money. I personally don't think it is a sign of strength. I think it is a sign of vulnerability that we are running record trade deficits, meaning record borrowing, much of that borrowing done abroad.

Last year, of the debt we had to finance, 68 percent of it was financed by foreign entities.

Mr. President, this President walked into a truly astounding set of circumstances. Here is what they are: Record deficits, doubling of the national debt under the previous administration, the worst recession since the Great Depression, and financial market and housing crises. Everywhere you look, this President inherited a crisis--in housing, in the financial sector, and in the fiscal sector. Also, 3.7 million jobs have been lost in the last 6 months, and we have ongoing wars in Iraq and Afghanistan.

So what do we do about it? The budget is a document that outlines the fundamental priorities of the country.

In this conference agreement, we have attempted to preserve the President's priorities of reducing our dependence on foreign energy-- critically important to our economic future--a focus on excellence in education, and fundamental health care reform.

If we look ahead to the fiscal future of America, no single thing is more important than reforming the health care system. Already, we are spending nearly 18 percent of our gross domestic product on health care. That is $1 of every $6 in this economy going to health care. We are on a trajectory to have 37 percent of our gross domestic product going to health care. That would be more than $1 in every $3 in our economy going to health care. Clearly, that is unsustainable. At the current rate of nearly 18 percent of our GDP going to health care, we are spending twice as much as any other industrialized country.

We are on an unsustainable course, and the President says we have to alter that, we have to expand health care coverage so that everybody is included so we can then institute the kind of cost controls that will be necessary. I know it is counterintuitive to think: How can it be that we are going to reduce costs if we are expanding coverage? The thing we know in our current system is that people without coverage still get health care, but they are getting it in the most expensive setting: they are getting it in the emergency rooms of our hospitals all across the country. We would be much better off having them have coverage and having them in a system that is a wellness system, one that is designed to keep people from getting ill and, if they become ill, managing their illness in a way that prevents the most costly of outcomes.

This conference report also provides $764 billion in tax cuts focused on the middle class. I know there has been a lot of talk in the press about some tax increases, and indeed there are. For those of us who are fortunate enough to make more than a quarter of a million dollars a year, we will be expected to pay somewhat more--not a lot more but a little bit more. If we are going to get our fiscal house in order, those of us who are most fortunate are going to have to pay a little bit more. But on a net basis, when you add in the tax increases asked for from those who are the most fortunate, with all of the other tax changes, the overall effect is to reduce taxes from current law by $764 billion over the next 5 years, and those tax reductions are focused on the middle class.

We also cut the deficit in half by 2012 and by two-thirds by 2014. We get it down to 3 percent of gross domestic product by 2014. Most of the economists say that is the key metric because at 3 percent of GDP, growth of the debt relative to our national income is stabilized. We keep the debt from growing the way it has been.

The discretionary spending level in this conference report is $10 billion below the President's proposal. We have cut his spending plan by $10 billion. In addition, there are reconciliation instructions for health care and education. They require at least $2 billion in deficit reduction.

I personally believe reconciliation, which is a special process here, a fast-track process, will not be used for health care because as people get into it, I think they will find it is a very difficult way to write major, substantive legislation. My own prediction is that reconciliation will not be used for health care. The committees of jurisdiction have until October 15 to report legislation in the regular order of business using the regular procedure. I have talked with the chairman of the committee that has most of the responsibility for health care, and, of course, that is the Finance Committee. Senator Baucus says it is his full intention to proceed under the regular order, not using the reconciliation instruction. But it is there as an insurance policy.

We also have the alternative minimum tax fix for 3 years, so we will not see a big increase in the number of people affected by the alternative minimum tax. There are some 3 million or 4 million people now paying. If we did not take these steps, 24 million people would be expected to pay the alternative minimum tax. Nobody wants to see that happen. So we have a fix for the next 3 years.

We also have disaster relief for the next 2 years. We call it a placeholder because it is an estimate of what disaster relief will cost for the next 2 years based on looking back over the last 5 years and doing an average.

This is a break from how we have typically dealt with disaster funding. Typically, we have done it through emergency designations. The President thought: Look, we know we are going to have disasters. Why don't we budget for them? It is a worthy experiment, and we will see how it works.

Even though none of us can predict what disasters might occur, we know the strong likelihood is that there will be disasters. Certainly, my state has experienced them. We have had flooding all across the State of North Dakota from one end to the other. I have been home three times in the last several weeks going from town to town all across North Dakota, from the Red River Valley in the east, to the Souris Valley in the central part of the state, the James, the Cheyenne--all of them,

are experiencing flooding that is unlike anything we have ever seen in recorded history.

We know there are disasters. There are going to be costs. In my state, hundreds of millions of dollars have already been experienced in terms of losses, roads, bridges devastated. We have even had dams significantly eroded by these weather events. We know there are costs associated with it, and we have tried to anticipate them in this budget.

Most important, this budget coming from the conference committee focuses on three key priorities: reducing our dependence on foreign energy, putting a focus on excellence in education, and fundamental health care reform.

First, with respect to energy, it reduces our dependence on foreign energy, creates green jobs, helps protect the environment, and helps with high home energy costs. It does that in three ways. One, it creates a reserve fund to accommodate legislation to invest in clean energy and address global climate change. Second, it provides $500 million above the President's level of discretionary funding for energy for fiscal year 2010. Third, it builds on the economic recovery package investments in renewable energy, efficiency and conservation, low carbon coal technology, and modernizing the electric grid.

By the way, modernizing the electric grid presents this country with an amazing opportunity to have a leap forward because we are really dealing almost in the horse-and-buggy era with the grid that we have that is not permitting us to shift power from places we can produce it--clean, green power--to places that need it.

In addition, we have in this budget coming back from the conference a focus on excellence in education. We generate economic growth and jobs. We prepare the workforce to compete in this global economy. We make college more affordable. We attempt to improve student achievement, which is at the heart of what education is all about. We do it again in three ways: by providing a higher education reserve fund to facilitate the President's student aid increases; we provide for education tax cuts to make it more affordable for our young people to go to college and other institutions of higher learning; and we provide the President's requested level of $5,550 for Pell grants and fully fund his education priorities, such as early childhood education.

The third key priority is fundamental health care reform, and that is accommodated in the conference report. We attempt to bend the health care cost curve to get costs under control, to improve health care outcomes for our nation's people, to expand coverage because we have more than 40 million people now without any health care insurance. We increase research, especially devoted to those areas of highest opportunity to make meaningful progress, and we promote food and drug safety. Again, we do that in three ways with a reserve fund to accommodate the President's initiative to reform the health care system; by funding for at least 2 years a reserve fund that further addresses Medicare physician payments; and continues investment in key health care programs, such as the NIH and the FDA.

I want to at this moment indicate that one of the key staff persons on our Budget Committee is himself in the hospital. Joel Friedman, who is the deputy staff director for the Budget Committee, a remarkable person, truly gifted, somebody who has the respect of people on both sides of the aisle, is in the hospital. Our thoughts and prayers are with Joel and his family. I don't know if he is able to watch this. Last week, he was not able to because he did not have C-SPAN in his room. But I want him and his family to know that the entire Budget Committee family--and that goes for Republicans and Democrats--is thinking of him and hoping for his swift recovery.

While we have focused on these key priorities of the President-- excellence in education, reducing our dependence on foreign energy, health care reform--we are doing it all in the context of dramatically reducing the deficit. In fact, we cut the deficit by two-thirds by 2014. As measured by the gross domestic product, which economists say is the best measure, we do even better than that, as measured by share of the gross domestic product, we are reducing the deficit by 75 percent, by three-quarters, from 12 percent of GDP in this year to 3 percent of GDP in 2014.

Again, that metric of 3 percent of GDP in 2014 is especially important because economists tell us that at that rate, we have about stabilized the growth of the debt. In other words, the debt will not continue to grow faster than our national income if we can continue deficits of 3 percent of GDP. My own view is we should do even better than that. Certainly, in the second 5 years, I think it is incredibly important that we do better than that given the fact the baby boom generation will be retiring.

In terms of the revenue changes in the budget resolution, I indicated earlier that if you look at total tax changes in the budget resolution--and this is CBO scoring, this is not my invention--the taxes are cut by $764 billion over the 5 years, and here is where: middle-class tax relief, $512 billion. That includes the 10-percent bracket, the marriage penalty relief, the child tax credit, education incentives, and all of the other 2001 and 2003 tax cuts that affect those earning less than $250,000 a year. All of those tax cuts are extended for the entire 5 years.

In addition, we have provided for alternative minimum tax relief for 3 years at a cost of $214 billion. We have provided for estate tax reform at a cost of $72 billion that will permit couples to avoid any estate tax if they have estates of $7 million or less. Let me say that excludes 99.8 percent of estates. Mr. President, 99.8 percent of estates will pay nothing--zero--under the budget proposal.

In addition, we provide $63 billion for the so-called tax extenders. Tax extenders are items such as the research and development tax credit. Those have to be extended every year or every other year, depending on which one we are talking about, and we provide for those as well.

Those tax cuts that amount to $861 billion are offset by loophole closers of $97 billion. And what we are focused on here is the offshore tax havens; the abusive tax shelters.

We now know, from the Permanent Committee on Investigations, that we are losing over $100 billion a year to these offshore tax havens; billions of dollars more to abusive tax shelters. I have shown on the floor of the Senate many times pictures of European sewer systems, and people have asked me: What has that got to do with the budget of the United States? Well, it turns out it increasingly has something to do with the budget of the United States because we have the spectacle of wealthy investors here and companies here buying European sewer systems--not because they are in the sewer business but because they want to depreciate those assets on their books for U.S. tax purposes-- and they turn around and lease the sewer systems back to the European cities that built them in the first place.

I picked out sewer systems, because that is most graphic, but it doesn't end there. We actually have companies buying city halls in Europe and depreciating on their books for U.S. tax purposes here leasing those city halls back to the European cities that built them in the first place.

Some say if you go after that kind of scam, you are increasing somebody's taxes. Well, I suppose in some sense you are. But you know what. Shame on the people who are doing it. The vast majority of us pay what we owe. But unfortunately, we have an increasing group of companies and individuals who are dodging what they legitimately owe here and they are doing it in these offshore tax havens.

I have shown on many occasions a picture of this little five-story building in the Cayman Islands that claims to be the home to 14,000 companies--14,000 companies. They say they are all doing business out of this little five-story building in the Cayman Islands. They are not doing any business out of there. They are doing monkey business. And the monkey business they are doing is to avoid their taxes in the United States. Shame on us if we don't close that down.

Some say: Well, this is a big spending budget--big spending. Really? That can only be the statement of people who haven't read this budget, because this budget takes domestic discretionary spending as a percentage of our gross

domestic product from 4.4 percent in 2010 to 3.4 percent in 2014. So as a share of our national income, domestic discretionary spending is going down.

Facts are stubborn things. Over the life of this budget, non-defense discretionary spending in dollar terms--in dollar terms--is being increased 2.9 percent a year. That is below the rate of growth of our national income. That is why, as a share of our economy, domestic discretionary spending is going down, not up. So when you hear claims this is a big spending budget, it is not this budget. They may be talking about some other budget, but the budget before us is the budget reported by the conference committee, and that budget is tough on spending, it is tough on deficits, it is tough on getting our country back on a more sustainable course.

We have a series of budget enforcement tools in this budget resolution that I am particularly proud of: 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. And we provide a point of order against mandatory spending on an appropriations bill.

This last one I want to emphasize I think is especially important. Because what we have found is our friends on the Appropriations Committee have found a new way around the rules here and they have started to put mandatory spending on discretionary spending bills. Let me be clear. Mandatory spending is for things such as Medicare, for Social Security. If you are eligible, if you qualify, you get your benefits. So that is called mandatory spending, and that is most of the spending of the Federal Government. Most of the spending is now mandatory spending. Medicare and Social Security are the biggest ones. We also have certain veterans benefits, which is mandatory spending for some of it, much of it discretionary.

Discretionary means under the discretion of the appropriations process each year. That is why it is discretionary. And discretionary spending, as I have indicated, is going down under this budget as a share of our gross domestic product. But we don't want mandatory spending to be increased in discretionary spending bills, and that started to happen a couple of years ago and we put this point of order in place to provide a barrier, a hurdle, against that bad practice.

We also have in this budget resolution provisions addressing our long-term fiscal challenges. I think everybody understands that health care is the 800-pound gorilla. Health care in our Federal accounts-- Medicare, Federal share of Medicaid, and other aspects of health care spending--is where we see spending of the Federal Government soaring and continuing to grow out of control. So there is the health care reform reserve fund that I previously described that is critically important to getting our fiscal future back in line.

We also provide program integrity initiatives to crack down on waste, fraud, and abuse in Social Security and Medicare. This is especially prevalent in Medicare. The previous Secretary--Secretary Leavitt--whom I had high regard for, came to see me one day. He had with him information about scams that were being conducted across the country to defraud Medicare, and he had pictures of phony operations in Florida that were in shopping malls where they had individual storefronts set up that were supposedly providing Medicare services, each of them billing $500,000 to $1 million a year in so-called services to Medicare-eligible patients.

When they pierced the veil, what they found was they weren't providing any services, they were just doing the billing. They were billing but they weren't providing any services. It was a complete scam. And there were dozens of them--dozens of these storefront operations. The Secretary himself went to some of them in the middle of the day and they were closed. They were closed for the public, but they were open for scam. We have provided funds to go after those kinds of fraudulent operations.

We have also provided a long-term deficit increase point of order to try to prevent any action by the Congress to increase the long-term deficit without facing a supermajority point of order hurdle.

Let me close on this quote by President Obama, because it is something I agree with very much. While I believe this budget has made good progress at getting our fiscal house back in order for the next 5 years, we have to do much more--much, much more. President Obama said this at the Fiscal Responsibility Summit he hosted at the White House at the end of February:

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 true. We have got much more work to be done, especially in the second 5 years. This is a 5-year budget, because of the 34 budgets written by the Congress, 30 of the 34 have been 5-year budgets. The President sent us a 10-year budget. Some have asked why we didn't do a 10-year budget. Very simply, because Congress almost always has done 5- year budgets because we know that the projections for the second 5 years are highly unreliable--highly unreliable. Frankly, a forecast for 5 years is a bit of a crap-shoot.

I used to have the responsibility of forecasting the revenue for my State. I had to do it for 3 years. I know how difficult it was to do that for 3 years. Five years is extraordinarily difficult, especially at a time like this of dramatic economic changes and a very steep downdraft. The reality is that 10-year forecasts have very little reliability. So we have done a 5-year budget here. That, as I say, has been done 30 of the 34 times Congress has written a budget under the Budget Act. Thirty of the 34 times, it has been a 5-year budget.

I say to my colleagues, I believe this budget is part of economic recovery. We are facing very tough winds. We are facing a very tough economic environment--the steepest downturn since the Great Depression--and we are going to have to be aggressive in terms of preventing a deflationary spiral that could suck this economy down. We saw it in the Great Depression--a failure of Government to act effectively until tremendous damage had been done: the unemployment rate rose to 25 percent, the stock market fell by nearly 90 percent. We had a circumstance in which 25 percent of the people--more than 25 percent of the people--were unemployed, with staggering devastation to the strength of America.

The Chairman of the Federal Reserve, Mr. Bernanke, has made it his life's work to study how to avoid another Great Depression. In his analysis, and others like it--as historians look back--the conclusion is there was a failure of the Government to act proactively. It waited too long. It believed the markets would correct themselves. It believed that somehow everything would work out without intervention. That proved to be a fatal mistake.

All of the elements of the Federal response have taken a different direction in this downturn, and it started with the previous administration, to their credit. The Federal Reserve has done a great deal to provide liquidity in this economy. Instead of pulling back, it has extended credit. The Federal Government, instead of pulling back in order to balance our budget in the short term, has put forward hundreds of billions of dollars in a stimulus package to provide an increase in aggregate demand to provide stimulation to the economy, to provide liquidity. Without it, I believe the collapse would be far steeper, far more serious, and far more threatening. And remember, what we are faced with is not just a national crisis, it is a global crisis, with global economic activity falling very dramatically all around the world. The response of almost every industrialized country has been like ours, to provide liquidity, to provide stimulus. China has a major stimulus program, Japan, and Europe; virtually all the countries of Europe. Russia has announced a major stimulus plan.

I believe those are the right policy responses, however imperfect-- and imperfect they are, the specific packages that have been developed. I myself thought we could have done much better in our stimulus package. I would have liked to have seen much more funding for infrastructure. I wanted much more funding for infrastructure

because I personally believe that is a place where you get a two-fer: You get a lift for the economy and you also get an investment that strengthens our economic competitive position for the future. But look, there was a substantial infrastructure component. I would have liked to have seen it be far bigger and more robust, but nonetheless, we are moving in the right direction.

This budget moves in the right direction. It is a contribution to economic recovery. It does preserve the President's key priorities of reducing our dependence on foreign energy, which must be done. It focuses on excellence in education, because if we are not the best educated, we are not going to be the strongest country in the world for very long. And it provides for fundamental health care reform--because that is the 800-pound gorilla that could swamp the fiscal boat of the United States, not to mention the boats of every American family and American companies that absolutely need cost containment--at the same time improving health care outcomes for the American people.

Finally, yes, dramatically reducing the deficit, reducing it by two- thirds in dollar terms, by three-quarters as a share of the gross domestic product of the United States over the next 5 years.

This is not a perfect document. If I were able to write it just by myself I think I could have improved it. I think every Member here believes that; that if they were able to write this document it would be a better document.

That is not our option. We have a Senate, we have a House of Representatives, we have a President. This is the work of all three entities: The President of the United States, the Senate of the United States, the House of Representatives. I believe we have produced an important step in economic recovery.

I urge my colleagues to support the conference report. I yield the floor.

Mr. President, answering through the Chair, that was in the President's budget. We did not provide for that in this conference report. What we did provide for is a deficit-neutral reserve fund. We did not specify an amount that would be necessary for health care because we do not know whether the right number is $200 billion, $400 billion or $600 billion, as the Senator referenced. What we do say is whatever that number is, it has to be dealt with in a deficit-neutral way. It has to be paid for.

The Senator is correct.

Madam President, I thank the Senator from Maryland, Mr. Cardin, who is a very important member of the Budget Committee. We were very lucky to have Senator Cardin join

the Budget Committee when he became a Member of the Senate, having come from the House where he served on the Ways and Means Committee.

If you look at Senator Cardin's career, it is a career of leadership, being elected at a young age in Maryland, rising to the most powerful position in the Maryland legislature, coming to the House of Representatives, and now to the Senate. We are very fortunate to have his background, his knowledge, and his skills helping us form a budget resolution for the country. I am indebted to him and I appreciate very much his wise counsel.

I ask unanimous consent that all quorum calls be charged equally to both sides for the duration of the debate on the conference report accompanying the concurrent resolution on the budget.

I want to indicate, for the purposes of our colleagues, that we have a series of speakers. We do not have this firmly locked in in terms of an order, but we are expecting Senator Enzi momentarily; Senator Gregg--I see Senator Enzi now; Senator Bunning approximately at 12:30; Senator Johanns at roughly 1 o'clock; Senator Lindsey Graham at approximately 1:30. I will answer, to the extent I determine necessary, as we go through these speeches. But I want to indicate that that is roughly the order of where we are: Senator Enzi, Senator Gregg, Senator Bunning, Senator Johanns, Senator Graham, and Senator Murray after that.

We have other Senators also in the train. But if other Senators wish to join this debate and discussion, they are certainly welcome. It will be important for them to call the cloakroom so they can get in the queue so that they do not have to waste their time waiting here on the floor as others speak.

With that, I see Senator Enzi has come to the floor. I will give him a few minutes to get ready, because he is, as is so often the case with Senator Enzi, not only on time but ahead of his scheduled time, and we appreciate that very much.

We are delighted to have Senator Enzi here. He is also an important member of the Senate Budget Committee. While we have differences--no doubt he will have a different view of this budget resolution than perhaps do I--nonetheless, we have great respect for the contributions he makes.

I yield the floor.

Madam President, very briefly because I see Senator Gregg is in the Chamber, and I know he is on a very tight timeframe.

I very briefly say to the Senator from Wyoming, I do not favor reconciliation for writing health care. I, personally, do not believe it will be used to write health care reform. It is here as an insurance policy. I think virtually everybody who has been engaged in the debate publicly and privately has now concluded it is not the preferred alternative for writing health care.

One of the things we did do is push back the date to October 15 for the committees to act to give them more time to work under the regular order. Chairman Baucus has made an absolute commitment to try to do this in the regular order. I have done the same. The majority leader has done the same.

I sincerely believe health care can and should be written without using the fast-track process of reconciliation. It is true it is here as an insurance policy, as a backstop. I would have strongly preferred it not even be that. But let me say, when it is the President of the United States, the Speaker, the majority leader here, it

gets fairly lonely as a conferee. But I do wish to say to the Senator, I agreed with so much of what he said. He is going to be a major player in health care reform. He already has been--certainly in the CHIP legislation.

I believe there is going to be a full opportunity to write it the way it should be written, which is in the committees of jurisdiction, with both sides fully participating. That is the best way and the right way to do it.

Madam President, I found the presentation of my colleague, for whom I have great respect--but on this presentation I found it highly entertaining, and it bears almost no relationship to the document that is at the desk.

It is very interesting, if you read the charts that the Senator presented, they all relate to the President's budget. You notice they don't relate to the budget that is before us. The fact is that we made significant changes in the President's budget, because after the President presented his budget, we learned in the Congressional Budget forecast that we were losing $2 trillion of revenue because of the economic slowdown over the next 10 years. So we made a series of very significant adjustments to respond to that reality.

In fact, over 5 years alone, we changed the Obama budget by $555 billion. Not one dime of that was reflected in the Senator's charts. They say if you are a lawyer and if you have the facts, argue the facts; if you have the law, argue the law; if you have neither, attack your opponent. That is what we have heard. They don't have the facts, they don't have the law, and they certainly are not talking about the legislation before us; so they launched an ad hominem attack.

Let me go back to the facts, because they are stubborn things. On spending, let's be clear. This budget takes domestic discretionary spending, as a percentage of GDP, from 4.4 percent in 2010 to 3.4 percent in 2014. That is not a big spending budget; that is a tough budget that reduces the share of our national economy going to Federal domestic discretionary spending. On nondefense discretionary spending, in dollar terms, over the 5 years of the budget, the spending is increased, on average, by 2.9 percent a year. That is less than the growth in national income. That is why the share of domestic discretionary spending as a part of our economy is going down under this budget.

The Senator said that somehow there is a $180 billion tax increase in this budget. Where? I mean, he made this same assertion last year. He said the budget last year was going to increase taxes. What happened with last year's budget? Did it increase taxes? No. It cut taxes by hundreds of billions of dollars. That is what this budget does. This budget cuts taxes, on balance, over 5 years by $764 billion. That is a fact. That is not made up for the convenience of a political debate. That is a fact. Taxes are cut under this budget $764 billion.

On reconciliation, I must say the speech by the Senator is beyond the pale. He acts as though reconciliation is against the Constitution of the United States. Well, it is interesting what he had to say when the shoe was on the other foot. When the shoe was on the other foot in 2001, and he wanted to use reconciliation, what did the Senator say then? Unfortunately for the credibility of his speech here, we have the Record. We know what he said then. Here is what he said then:

Reconciliation is a rule of the Senate, set up under the

Budget Act. It has been used before for purposes exactly like

this on numerous occasions. The fact is, all this rule of the

Senate does is allow a majority of the Senate to take a

position and pass a piece of legislation, support that

position. Is there something wrong with majority rules? I

don't think so.

So when they wanted to use reconciliation, it was a rule of the Senate, and it simply allowed the majority to work their will, and there was nothing wrong with it. Now when we have a reconciliation instruction as a backup, as an insurance policy, now it is somehow against the Constitution. Please. That is not going to stand up against the Senator's own record. The fact is that reconciliation has been used 19 times--13 by the party on the opposite side. I didn't hear and see crocodile tears from them about how it threatened the Constitution. In fact, the Senator described it then as a simple Senate rule that allowed the majority to rule.

I take great offense to the suggestion that this budget is made up. This budget is not made up. It is scored by the CBO, which is nonpartisan. This budget does precisely what I have presented it as doing. It reduces the deficit by two-thirds over 5 years. As a share of GDP, it cuts the deficit by three quarters. The Senator says, you have hidden the doc fix, which is this. We know doctors

who treat Medicare patients are scheduled to take major reductions. We have not hidden a thing. We have said that, after 2 years, fixing the downward spiral on doctors' reimbursement for those who treat Medicare patients will have to be paid for. That is not hidden; that is very clear, direct, and it is what we should be doing here--paying for things.

When we found we were in a circumstance in which we had $2 trillion less than the President had to write a budget, we had to make changes, and we did. We made responsible changes. One of the changes we made was to say that, no, doctors should not be cut. We will provide the money in this budget for the next 2 years so they are not cut. But after that, additional fixes would have to be paid for. That is what we have to start doing around here--paying for things.

And there is the alternative minimum tax. We have said in this resolution that the alternative minimum tax should not be imposed on anybody, and for the next 3 years it can be done without offsets, without paying for it, because we don't want to raise taxes during a time of economic downturn. But after the 3 years, further moves to prevent the AMT from being imposed have to be paid for.

The same is true on TARP funding. The Senator said we excluded TARP funding. Yes, we did because we could not pass $250 billion of TARP funding after the way TARP has been handled in the first round. It would not pass. The President said put it in as an insurance policy. He does not have a specific proposal before us, in any event. But we did not include it here because it could not pass this body.

On health care, the Senator suggests this is going to add $1 trillion to the debt. Not under this budget. Again, he failed to read the document. It makes very clear, if we are going to have health care reform, it has to be paid for. The reserve fund he kind of glossed over is very specific. I can only change the allocations to committees if the issue is paid for. I have no authority to change the allocation to committees unless health care reform is paid for.

On Make Work Pay, the President's middle-class tax cut, in addition to all the 2001 and 2003 tax cuts that are all included in this budget, over $500 billion of tax cuts for the middle class that are in this budget, the President's middle-class tax cuts that are over and above those that were included in 2001 and 2003, the so-called ``make work pay'' provisions, they are already provided for in the stimulus package. That is already the law for the next 2 years. If it is to be extended, this budget says we have to pay for it. That is exactly what we are going to have to do to bring the deficit down. We are going to have to start paying for things.

There are so many things that were said that are in error about this budget, it is breathtaking.

I wish to conclude on this note. If this budget is so bad, why didn't the Senator offer an alternative? In 2001, when I thought the Bush budget was fatally flawed, I offered an alternative on the floor of this body. This year, the Senator has offered no alternative. All he offers is complaints and misrepresentations and a rewriting of history.

The debt is on an unsustainable course. Why? Because the previous administration doubled the debt, tripled foreign holdings of U.S. debt, and put us on a course in which we face the worst recession since the Great Depression. That is why the debt is burgeoning. It is not as a result of this budget document. This budget document moves the deficit down, reduces it by two-thirds over the next 5 years.

We inherited a colossal mess--colossal. To suggest this President is responsible for this colossal mess after he has been in office 100 days does not stand the test of truth and will not stand any scrutiny. We all know how we got to where we are. The previous administration doubled the debt of the country at a time when the economy was relatively good. Unfortunately, when they left office, the economy was in the worst shape in 60 years. History will not treat the previous administration and their supporters on the Hill gently or kindly because they put us in this ditch. The President is seeking to lift us out of it.

I thank the Chair and yield the floor.

Mr. President, I want to especially thank Senator Murray. She is next in line on the Budget Committee. When I really want to threaten her, I tell her I am going to leave as chairman of the committee and she can take over.

We could not have a stronger or better ally than the Senator from Washington. Senator Murray is exceptional. I have so enjoyed getting to know her over the years and working with her. When there is something you need to get done, you need an assignment that can actually get done, you want Senator Murray on the case. She is somebody who is a performer. She gets results. I have such respect for her and the contribution she makes to this committee and to this Chamber. We are fortunate to have Senator Murray in the Senate.

I tell my colleagues, they have seen her in vote-arama go around this floor, convincing colleagues that perhaps this is not the time to offer an amendment, perhaps they could wait. They have seen how effective she can be in personal interactions to get results. It goes way beyond the procedural. It goes to the question of policy and getting a good result for the country. I am so blessed to have Senator Murray as the top Democrat on the committee. I thank her personally for everything she has done as a conferee to bring us to this point, to have a successful resolution and a budget that is responsible, that does help get America back on track.

I have heard from the other side: We have tax increases here. Let's get to the facts. The fact is, on balance, we have a very substantial tax cut in this budget proposal aimed at the middle class. They are the ones who deserve and need it. We have also heard that this leaves open the possibility of global climate change being used in reconciliation. Nonsense. There is an absolute commitment from everyone who is a party to this discussion. It is in the wording of the resolution that climate change will not come to this body or to the other body through reconciliation. It is not going to happen. It has the absolute commitment of the majority leader, of the Speaker, and of the President himself. He has said it to me directly. So let's not be chasing straw dogs here. Climate change is not going to be done through reconciliation, period.

Again, I thank Senator Murray for her constructive work on this budget.

I thank the Senator for her kindness. Next we have Senator Hutchison. How much time would the Senator require?

You certainly may.

Mr. President, I thank the Senator from Delaware, who has been so constructive on many critical issues since he joined the Senate. He is somebody whose career I followed closely when he was in the House of Representatives and as Governor of his State. He is one of the real clear thinkers on fiscal issues before this body. I thank him for all of the contributions he has made.

Next, we have Senator Whitehouse, a very valued member of the Budget Committee. He is one of the people who put a great deal of effort and energy into producing the budget resolution that came from the Senate which really served as the model of what we have before us in terms of the conference report. This is a conference report, as I have said repeatedly, that captures the President's key priorities of reducing our dependence on foreign energy, focusing on excellence in education, and providing for health care reform, which is a special passion of the Senator from Rhode Island. It also contains substantial middle-class tax cuts--in fact, over $750 billion in middle-class tax cuts--all the while reducing the deficit by two-thirds over the next 4 years.

As measured against a share of GDP, it is even better. We reduce the economy on that metric--and the economists say that is the best metric--by three quarters. No member of the committee has made a greater contribution on health care issues than the Senator from Rhode Island, Mr. Whitehouse.

Mr. President, I, again, thank the Senator from Rhode Island, Mr. Whitehouse, who is such a valuable member of the Senate Budget Committee, as is the occupant of the Chair, who has newly joined us and is already making good contributions to our work. We are delighted to have Senator Merkley, the occupant of the Chair and a Member of the Senate Budget Committee, with us and appreciate so much the efforts of Senator Whitehouse and Senator Merkley in developing a budget resolution that, by the way, our outline was largely followed in the conference committee. It is very close to what passed the Senate earlier. I think the reasons for that success are, No. 1, we did capture the President's priorities of reducing dependence on foreign energy, a focus on excellence in education, providing for major health care reform that is absolutely critical to the country's future and, at the same time, cutting the deficit by two-thirds over the next 5 years, by three-quarters as measured by the gross domestic product, and also providing very substantial middle-class tax relief, hundreds of billions of dollars--in fact, over $700 billion--of middle-class tax relief that is in this budget. I think we can be proud of that.

We have already seen the budget earlier today pass in the House of Representatives by a very wide margin. I anticipate, when we have our vote, it will also pass with a healthy margin.

I, again, especially thank Senator Whitehouse and Senator Merkley, who are key members of the Budget Committee who did so much to help us fashion a document that can command the respect of our colleagues.

For one moment, I would like to, as we are waiting for Senator Grassley to arrive, indicate that earlier there were a number of comments made to which I wish to respond. First, that reconciliation could still be used for global climate change legislation. Technically, that is true, but it is not going to happen. We have the absolute assurance of all those who are in leadership positions in the House and the Senate, the President of the United States--in fact, the President has assured me directly--directly--that he would not allow that. Let's take that off the table.

Second, we have heard concern from our Republican colleagues about the use of reconciliation. I share those concerns. I have opposed the use of reconciliation for these purposes. But my own belief is health care will not use the reconciliation process. I believe health care will move in the regular

order. The committees of jurisdiction have until October 15 to do so.

I see now that Senator Durbin, who is a member of our leadership, is here. If he is ready to go--how much time does the Senator request? I yield 15 minutes to the Senator from Illinois, Mr. Durbin.

Mr. President, I thank the whip, Senator Durbin, for all of the leadership he has provided that has helped us get to this point. We had some pretty direct meetings with some of our colleagues. Sometimes voices were raised, and there was a lot of energy in the room, but it is that kind of dialog which is essential to getting agreement. I think we have done that, and we have achieved it in a way that is responsible and fair, and I thank him very much for his leadership and his friendship.

Mr. President, Senator Grassley is next, and I would yield--how much time?

I yield 15 minutes off Senator Gregg's time to Senator Grassley, who is, by the way, let me just say, a very valuable member of the Senate Budget Committee, the ranking member of the Finance Committee, and somebody who is extremely constructive. We don't always agree. That is the beauty of democracy. But when Senator Grassley speaks, people listen because he has earned their respect.

Mr. President, let me take a moment to review what is in the resolution before us with respect to taxes because I think it is important to go over it. The actual tax changes on a net basis in this package are a reduction from current law of $764 billion. We have $512 billion of middle-class tax relief. All of the 2001 and 2003 provisions that provide individuals tax relief to the middle class are provided for for the next 5 years in this budget resolution. The 10 percent bracket, marriage penalty relief, all the other 2001 and 2003 tax cuts, including the child tax credit and the education incentives, all of them are in this budget.

We also have alternative minimum tax reform for 3 years, as the Senator indicated. We have estate tax reform going to $7 million a couple excluded from any estate tax. That means 99.8 percent of estates would pay nothing, zero.

The tax extenders for business are all included for a subtotal of tax relief of $861 billion.

On the other side we have $97 billion of tax raises. That $97 billion is loophole closers aimed primarily at offshore tax havens and abusive tax shelters. Let me just indicate, only 2 percent of taxpayers with business income are affected by the changes in the top rate because, again, all the 2001 and 2003 tax cuts are extended for those earning less than $250,000 a year. Only 2 percent of taxpayers with small business income are affected by the top rate changes. That means 98 percent are not.

Under the definition being used by our colleagues across the aisle, former Vice President Cheney would qualify as a small businessman because what they are describing as small business people is ``anybody who has on their income tax returns small business income.'' There are a lot of people who are very big business people, have big businesses, who show small business income on their returns.

Vice President Cheney, under the definition used by our colleagues on other side of the aisle, like any taxpayer with any small business income, qualifies as a small businessman. Vice President Cheney in 2007 had income of $3 million. He had $180,000 of small business income, small businesses in which he apparently has an interest. Under their definition, he is a small businessman.

I would say that is a tortured definition. There are people with much greater wealth--under their definition, Bill Gates is a small businessman. The richest or second richest man in the world is a small businessman. Under their definition, Warren Buffett is a small businessman. I don't think so.

In the Bush tax cut in 2007, people averaging over $1 million a year in income got on average a tax reduction of almost $120,000 a year. The vast majority of people got next to nothing, as this chart shows. But those with average incomes of more than $1 million got tax reductions averaging $120,000. That is one of the reasons we are in the deep hole we are in.

My assertion is, on the loophole closers we have, we can go after money that is owed that is not now being collected. The tax gap in the most recent year for which there is a calculation, 2006, amounted to $345 billion a year, money that is owed that is not being collected. That is the first place we ought to focus before we talk about a tax increase for anyone.

The second place we ought to look is these offshore tax havens. These offshore tax havens are running amok. Here is the conclusion from our own Homeland Security and Government Affairs Permanent Subcommittee on Investigations. This is from their work in 2007:

Experts have estimated that total loss to the Treasury from

offshore tax evasion alone approaches $100 billion per year--

It is $100 billion a year in these offshore tax haven scams--

including $40 to $70 billion from individuals and another $30

billion from corporations engaging in offshore tax evasion.

Abusive tax shelters add tens of billions of dollars more.

We do not have to wonder if our own Permanent Subcommittee on Investigations knows what they are talking about. We can just go to the newspaper. Here is February 20 of this year, the New York Times:

The UBS memo was blunt: The ``Swiss solution'' could help

affluent Americans.

That message, sent to the bank's executives in July 2004,

referred to a UBS plan to help rich customers evade taxes by

hiding money in offshore havens like the Bahamas.

The memo, along with dozens of e-mail messages like it,

were disclosed on Thursday in a blistering court document

filed by the Justice Department, which sought to compel UBS,

based in Switzerland, to divulge the identities of 52,000

Americans whom the authorities suspect of using secret

offshore accounts at the bank to dodge taxes.

We do not have to use our imaginations very much to figure out what is going on. Here is a little five-story building in the Cayman islands called Ugland House. It claims to be the home of 14,000 companies. Can you see them there in this little five-story building? Do you see them doing their business out of this building, 14,000 companies, supposedly doing business out of this little building down in the Cayman Islands?

They are not doing any business out of that building. They are engaged in

monkey business. What they are doing is an elaborate tax scam, much of it revealed in the UBS court documents; much more revealed in the collapse of Stanford Financial, which has shown that there are loads of companies, loads of individuals, who are engaged in dodging what they legitimately owe the United States by establishing these offshore tax haven locations, where they claim they do business, and all they are doing is dodging taxes.

Let me say, most of the largest U.S. corporations have subsidiaries in tax havens. Eighty-three of the one hundred largest publicly traded U.S. corporations have subsidiaries in tax havens, and 42 of these companies have subsidiaries in 10 or more tax havens--10 or more.

Sixty-three of the one hundred largest U.S. Federal contractors have subsidiaries in tax havens, and 33 of these companies have subsidiaries in 10 or more tax havens. Look, anybody who does not see what is going on is blind.

Here is the picture I hope people will pay attention to. This is a sewer system in Europe. A sewer system in Europe. What has that got to do with the budget of the United States? Well, it turns out to increasingly have a lot to do with the budget here, because this is a sewer system that was bought by a U.S. company that is not in the sewer business. They bought this sewer system in Europe to depreciate it on their books in the United States to suppress taxes they legitimately owe here. Do you know what they did. After they bought it so they could depreciate it, they leased it back to the European city they bought it from and paid for it in the first place.

If we do not cut down and stop this kind of scam, shame on us. Shame on us. And some of our friends over here say that is a tax increase. Well, sign me up if that is a tax increase to shut down this kind of scam. The vast majority of us pay what we owe, but a few get by with establishing these accounts in these offshore tax havens and engaging in these unbelievably abusive tax shelters.

So we need tax reform. We have got a tax system that is out of date and hurting U.S. competitiveness. We are hemorrhaging revenue. Right now we are only collecting about 75 percent of what is actually due under the current code. So without any tax increases, we can completely close the structural gap between spending and revenue in this country if we collect what the current system says is owed.

The fact is, the vast majority of us on tax day pay what we owe. But increasingly we have got big companies, wealthy individuals, who are not. Let's end it. Let's end it.

The AMT is another problem threatening millions of middle-class taxpayers that we have addressed in this proposal. Additionally, we have a long-term imbalance that must be addressed between spending and revenue. Finally, we need simplification and reform to keep rates low for the vast majority of us who are honest.

I have heard the argument on the other side that we have got the highest corporate rate in the world. Well, what is true is we do have one of the highest nominal tax rates, stated tax rates. But our effective tax rate on corporations is among the lowest in the world. That is because, while the statutory rate is 35 percent, the effective rate, what companies actually pay, is only 13 percent. When you take that into account, here is where we stack up. Here are the major industrialized countries in the world. Here is the average. Here is where the United States is. The only countries that have a lower effective corporate tax rate than the United States are Slovakia, Poland, Austria, and Germany. Everybody else has a higher effective corporate tax rate than do we. I make this review for the purposes of establishing this in the Record.

I note my colleague Senator Sanders, who is an important member of the Budget Committee, is here. I ask the Senator how much time does he seek?

I would be happy to yield 5 minutes. If the Senator would like more at the end of that time, he only needs to ask.

Mr. President, again I thank Senator Sanders for his kind remarks and for his contributions to the work of the Budget Committee. He has been a very energetic and important member. He has done an outstanding job of questioning witnesses before the committee, and he has also been someone who has worked very hard on community clinics, which I think are going to make a great difference across the country. There is a very significant increase for those clinics in this resolution, and the person responsible and the person who deserves credit is the Senator from Vermont, Mr. Sanders. We thank him for that contribution.

We are now approaching the 4 o'clock hour. We have Senator Coburn who wishes to come and speak at roughly 4:30; Senator McCain, whom I understand wishes to speak at roughly 4:45; I understand that Senator Udall from Colorado wishes speak as in morning business. I want to alert his staff, if they are listening, this would be a good time for him to come and speak, because we have some time between now and when we expect Senator Coburn.

I hope we are able to move to a vote soon after Senator McCain concludes his remarks. But we have yet to hear definitively that that will be the case.

I want to very briefly go over what I think is important about this budget. First, it preserves the President's key priorities of reducing our dependence on foreign energy, which is critically important to our national security and our economic security; a focus on excellence in education, because if we are not the best educated, we are not going to be the most powerful country for very long; and, third, fundamental health care reform.

We are on a course that is completely unsustainable in health care. We are spending nearly 18 percent of our gross domestic product on health care. That is $1 of every $6 in this country. But we are on a trend line to spend 37 percent of our gross domestic product on health care. That is more than $1 in every $3. That can not be the outcome. That will put us at a huge disadvantage both in terms of competitiveness in this global economy, and it would have devastating consequences on American patients, American consumers, American families, American business.

We know we need fundamental health care reform. The President has put that front and center before the Congress of the United States, and it is accommodated in this budget resolution. No. 4, we have the extension of middle-class tax cuts, over $700 billion in tax cuts included in this bill, most of it directed at the middle class.

In addition, this budget reduces the deficit by two-thirds over 5 years. Relative to GDP, we are reducing the deficit by more than that, by three-quarters between now and 2014, from 12 percent of GDP in 2010, to 3 percent of GDP in 2014. Those are the fundamentals of this budget.

Is it perfect? There is no document that is prepared by the hand of men and women that is perfect. So we understand this is not a perfect document. This is the product of compromise between 435 Members of the House of Representatives and 100 Members of the Senate. This is purely a congressional document. It does not become law. It is not signed by the President of the United States. It is a document to guide the spending and the revenues of the United States for the next 5 years.

Obviously, since we do another budget next year, the most important thing is what this budget does over the next year.

Remember that this President inherited an extremely difficult situation--massive deficits, an economy that was in the worst shape since the Great Depression, a circumstance in which the United States is having two wars. This President inherited a very tough situation.

We also know we are starting to see the signs of a turn in terms of consumer spending, in terms of housing sales, in terms of automobile sales. For the first time, we are seeing an improvement. Last week we had before us in our caucus Mr. Bernanke, Chairman of the Federal Reserve, who said he sees the economy turning, that the precipitous downturn seems to have stopped or ebbed at least, and he sees the prospect of the beginning of recovery later this year. We all hope that is the case.

This budget is an important part of an overall economic recovery strategy. While we have not adopted precisely the budget the President sent us, there is good reason for that. Because from the time the President's people made their estimates of the revenue available over the next 10 years, the Congressional Budget Office, some months later, did a new estimate which is the basis for our budget. The President's budget had $2 trillion more available to him when he wrote his budget than we have had available to us in writing our budget. That necessitated changes in order to achieve the deficit reduction he had called for and the deficit reduction most economists say is fundamentally necessary.

We wrote a 5-year budget, not a 10-year budget. Of the 34 budgets that have been written under the Congressional Budget Act, 30 of the 34 have been 5-year budgets. Why is that? Because forecasts for 10 years are notoriously unreliable. That is why Congress, 30 of the 34 times it has done a budget, has done 5-year budgets because the forecasts, even then, for the outyears were highly suspect. When we are talking about a 10-year forecast, that is just throwing a dart.

That is where we are. We have worked in a credible way to fashion a budget document that meets the needs of the American people, that puts us in a better position for the future. I freely acknowledge we must do much more, especially in the second 5 years. It is absolutely imperative we do more to get our long-term financial house in order. That is going to require entitlement reform--Medicare, Social Security. That is going to require tax reform because we have a tax system that is only collecting about 75 percent of the money due and owed under the current tax rates. We wouldn't need any tax increase of any kind to balance the books if we would just collect what is due and owed under the current system. Unfortunately, while the vast majority of us pay what we owe, we have an increasing number of people and companies that don't. That has to stop.

With that, I thank the Chair and suggest the absence of a quorum.

We are expecting Senator Coburn at roughly 4:30, Senator McCain at roughly 4:45, and Senator Udall of Colorado. If he is available and his people are within earshot, this would be a good time for him to come and use the time he has requested.

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

I have received information now that Senator Udall will be with us at roughly 4:15. Senator Udall at 4:15 for 10 minutes and then Senator Coburn at 4:30 for 10 or 15 minutes and then Senator McCain at 4:45 for roughly 15 minutes. I am not asking unanimous consent because we don't want to be locked in if one of them comes before another. We don't want to be wasting time. I may need time to respond to what other Senators might offer. We are hopeful that if there are any others who wish to speak, they will let their respective cloakrooms know.

I suggest the absence of a quorum.

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

Mr. President, it is my understanding Senator Udall of Colorado would like to speak as in morning business.

How much time would the Senator like?

Mr. President, I yield 10 minutes to the Senator from Colorado as in morning business.

Mr. President, I thank the Senator from Colorado. He has been such a bright addition to this Chamber, and we are delighted he is here. He comes very well respected from the House of Representatives. We count ourselves fortunate to have him participating in this budget discussion, and I look forward to working with him in the future.

Mr. President, I thank the Senator.

Mr. President, there are a couple of things I wish to respond to. I have respect for the Senator from Arizona, Senator McCain. We came to this Chamber at the same time. First, he said, on reconciliation I told him I was against it. In fact, I did not include it in the budget resolution out of the Senate. He said in conference committee I voted for it. I say this. I voted for the final agreement. I did not vote specifically for reconciliation. I opposed it every step of the way publicly and privately. I think it is a mistake. I have said so publicly and privately. I believe reconciliation will not be used for health care, even though it is authorized under the conference report. I believe that as people examine what would actually happen using reconciliation, they will be convinced it is not the appropriate way to do health care. I believe that, at the end of the day, the reconciliation approach will not be used for health care reform.

With that said, I want to make very clear--and you can ask any of the participants--I argued strenuously against reconciliation every step of the way. It was not included in the resolution here, over which I had direct control. It is included in the final conference agreement because the President wanted it as an insurance policy, the majority leader wanted it as an insurance policy, and the Speaker of the House wanted it as an insurance policy. And, frankly, although I have some influence, I don't have the ability to overcome the President, the majority leader, and the Speaker of the House.

The Senator also questioned a 10-year budget versus 5-year budget. Let me repeat what I said before. We have had 34 budgets under the Budget Act; 30 of the 34 have been 5-year budgets. The basic reason for that is not hiding things, as was asserted here; it is because forecasts beyond 5 years are notoriously unreliable. That is why Congress in 30 of the 34 times has written the budget on a 5-year basis. Frankly, the outyears of a 5-year forecast are not very credible, but years 6 through 10 are throwing a dart. I used to forecast revenue for my State. I know something about forecasting revenue and expenses. When you get beyond 5 years, you are in kind of a world that doesn't exist. That is total guesswork.

Beyond that, I didn't accept the trajectory the country was on in the 10-year budget that the President proposed. I believe we have to do far better. That is why the ranking Republican and I have proposed a task force of Democrats and Republicans, with the responsibility to come up with a plan, and if 12 of the 16 members of the task force could agree, that plan would come to Congress for a vote--not another study to sit on a dusty shelf somewhere, but a vote.

The Senator made a number of other assertions with respect to this budget. He termed it ``generational theft.'' Let me say that the trajectory we are on has nothing to do with this budget but has everything to do with the reality of the fiscal circumstance of this country. Our spending is above our revenue. There is a structural gap; and the Senator is absolutely right, if we allow that to play out uninterrupted, it will constitute generational theft. But this budget makes the first steps toward turning that around. It reduces the deficit by two-thirds, in dollar terms, over the next 5 years, and, in terms of a share of GDP, which the economists say is the better measure, it reduces the deficit by three-quarters, 75 percent, from 12 percent of GDP to 3 percent. Additionally, at 3 percent of GDP you basically stabilize the growth of the debt relative to our national income.

Why are we in this circumstance? It is because the previous administration doubled the debt, put this economy in the worst recession since the Great Depression, and now we have to dig out. The first thing we have to do is give lift to the economy. The stimulus was passed to provide liquidity to the American economy, because the only place it could come from was the Government. We have learned in past economic downturns that if the Government fails to acts, you could have a deflationary spiral that would suck the economy down as we saw in the Great Depression.

In the short term, I make no apologies. I am known as a deficit hawk, somebody who believes in balanced budgets, somebody who has fought for them my whole career. But when you have a severe economic downturn, that is not the time to turn away from the Government being the last resort, the Government providing the liquidity to the system to prevent a collapse.

This budget is responsible. As I have said at every step: in the second 5 years, we must do much more. The President has said that. The President is committed to it. So am I. If our colleagues are serious about entering into a long-term negotiation about entitlement reform and tax reform, count me in. Count me in. It has to be done. It is in the interest of the country. That is where we agree.

Mr. President, I see Senator Alexander is here, a very valued member of the Budget Committee, someone for whom I have high regard. We may not agree on every detail, but I certainly have great respect for the contribution he has made to the Budget Committee.

How much time does the Senator desire?

I yield 10 minutes off Senator Gregg's time and say to the

Senator, if he requests more, we will absolutely be happy to extend it.

Will the Senator yield?

Let me say, if I had not agreed, I probably would not have been a conferee. There are certain things such as higher powers around here.

Mr. President, I thank Senator Alexander. I am serious when I say he is a very valuable member of the Budget Committee. He has made a real contribution there, and we thank him for it.

We now have exhausted all of the speakers who have given us notice on both sides. We are awaiting word on whether we can go to a vote. I am hopeful we can go to a vote soon, but we will need to hear from the leadership on both sides as to when that might be possible.

We have had a spirited, healthy debate today on the question of the budget. I feel strongly that this is a responsible approach. Adopting the President's clear priorities of reducing our dependence on foreign energy, focusing on excellence in education, providing for major health care reform, all the while providing more than $750 billion of additional tax relief to the American people, focused on middle-class taxpayers, and reducing the deficit dramatically, reducing it by more than two-thirds in dollar terms, by more than three-quarters as a percentage of the gross domestic product, getting to a deficit level which will stabilize growth of the debt.

Again, I am swift to say much more needs to be done in terms of long- term deficit and debt reduction. I believe deeply we ought to have a special process for entitlement and tax reform. As I have noted throughout this debate, for the long term, we are on an unsustainable course in this country. That is a situation that is not the creation of President Obama. That is a situation that was the creation of the previous administration that inherited massive surpluses and turned them into massive debts. That is a fact, and there is no way to change that fact.

The previous administration left this country in the deepest recession since the Great Depression. Of course, the deficit has skyrocketed as a result. That is not the fault of the President who has been in office for 100 days. He inherited this mess. He is expected to clean it up, and he has taken aggressive, vigorous action to move us in the right direction, and the American people are responding. The latest polls show that now there has been a tripling of the percentage of people in this country who believe we are now on the right track--a tripling in the 100 days of this Presidency.

I was the second Senator to endorse Senator Obama. The first Senator to endorse him was his colleague from Illinois, Senator Durbin. I was the second Senator to endorse him. I had never endorsed in a Presidential primary before. I did it because I saw something exceptional in Senator Obama. I saw in him somebody who is not only very smart, but extraordinarily calm, somebody who has the right temperament to deal with the crises that any President confronts.

I must say, I have been so proud to have been an early supporter of this President because I believe he is keeping the promise that he made to the American people to turn us in a new and better direction. He adopted the motto of ``Yes We Can.'' That is the motto I had when I first ran for the Senate in 1986. When he found out, he said maybe he owes me royalties. I said: No, you don't owe me a thing.

I am so pleased that he is the President of the United States at this moment in time. He has the right background, the right temperament, the right intelligence, the right character to be our leader at this extraordinary time of challenge.

While our budget is quite different than his because we had $2 trillion less in revenue to write the budget because of the changing forecast, because of the nature of the economic downturn, nonetheless we were able to preserve his key priorities, and I am proud of it.

Mr. President, I see the ranking member, Senator Gregg, is here. Perhaps he can enlighten us as to whether there are additional speakers or when we might be prepared to vote.

I suggest the absence of a quorum.

Mr. President, I ask the Senator, would he like additional time for debate or should we call the vote for 5:30 p.m. and yield back all time?

First, I thank Senator Gregg for that sentiment. Let me say that Joel Friedman of my staff, who is a very senior member of the Budget Committee staff, one of my deputy staff directors, is in the hospital, has been there for about a week. We are very concerned about his recovery. I care deeply about Joel, his wife Debbie, his family, his children. He is someone who has labored extraordinarily hard in the months leading up to consideration of the budget. I know he is frustrated not to be able to be here, and I want him and his family to know we are thinking of them, we love them, we miss him very much, and we are praying for his swift recovery.

We have a circumstance in which we have intense debates, as we have had today, but on both sides there is a respect for the professionalism of the other side, and we certainly appreciate Senator Gregg's professional staff. They are outstanding. Their word is good, they are people of character, and they wish nothing but the best for this country. Senator Gregg is an outstanding leader; someone whom I actually share many views with about our long-term budget circumstance. Sometimes that is not altogether clear as we have this debate about short-term budget situations, but I believe he is absolutely right about our long-term budget condition and the need to do much more.

I appreciate very much the way he approaches his job. He takes on his position with knowledge, he does it in good faith, and I appreciate very much the way he conducts our Members on the other side and the work of the committee. We have a very smooth-functioning committee because of the good professional relationship we enjoy.

Again, I wish to applaud his staff, certainly my staff as well, especially Mary Naylor, my staff director, my

other professional staff, John Righter, Steve Bailey, Sarah Egge Kuehl, Jim Esquea, Josh Evenson, Michael Feldman, Brodi Fontenot, Joel Friedman, John Fuher, Joe Gaeta, Robyn Hiestand, Cliff Isenberg, Mike Jones, Jackie Keaveny, Matt Mohning, Jamie Morin, Stu Nagurka, Kobye Noel, Anne Page, Steve Posner, Purva Rawal, Josh Ryan, Matt Salomon, and Ben Soskin. Let me say they have worked weekends for months and months and months, late into the night for months and months and months, as has Senator Gregg's staff, and we all owe them a great debt of gratitude.

Mr. President, we would be agreeable on our side. Again, I wish to thank the ranking member for his graciousness throughout this process and for organizing the work of the committee and the work on the floor in a way that I think does reflect well on this body and certainly well on the committee. This is the way the Senate should function. We debate vigorously, but at the end of the day, we get the job done in a way that assures that the American people can feel both sides have been represented with vigor. That has certainly been the case today.

I thank the Chair, I yield the floor, and I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that at 5:30 p.m. today, the Senate proceed to a vote on adoption of the conference report to accompany S. Con. Res. 13, the concurrent budget resolution, with all statutory time yielded back.

I move to reconsider the vote and to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I thank all of my colleagues for the way the debate was conducted. I especially thank those who voted for the conference report. We are missing a number of Senators, and we hope for their speedy recovery, Senator Kennedy and Senator Rockefeller. We also very much appreciate the extraordinary work of staffs on both sides. I again thank the ranking member of the committee for his continuing courtesy and professionalism.

Madam President, picking up on the comments made by the chairman--and I fully accept his sincerity and his belief and his desire not to use reconciliation, but that is not, as he said, the position of the President, the Speaker of the House, and the majority leader. I think we can assume if those three folks want reconciliation to be used, it is going to be used.

The practical implications of reconciliation are to devastate the constitutional prerogative of the Senate. The purpose of the Senate is to debate, discuss, and then amend items of major--major--policy.

The point is, reconciliation was put into this document, which we just received, for the purposes of muzzling the minority and making the Senate into having the same status, from a parliamentary procedure standpoint, as the House, where amendments are not allowed, where discussion is limited, and where an up-or-down vote is the only option given to the membership.

It is not only a terrible idea from the standpoint of the impact it has on the constitutional role of the Senate--which has been explained very effectively by people such as Senator Byrd as being a place where we are supposed to give the minority the capacity to make points and discuss matters of high policy and complex issues in an open forum with the ability to amend--but it is also a very difficult way to proceed on an issue of such complexity as health care reform or the climate change issue. The practical effect of using reconciliation will be that a bill will pass in this Congress, especially in this Senate, which the American people will know is not fair. They will know it is not fair because there will have been no ability for the minority or for people who disagree with the way the bill was written down at the White House to object to it or to amend it.

That type of legislation--major health care legislation, which affects every American--in order for it to be effective and in order for it to be accepted by the American people, needs to be perceived as, and really be, a fair document, reached through compromise, with the purposes of having all the different stakeholders at the table in order to discuss the issue. Regrettably, that is not going to happen under the reconciliation instruction.

I would note that even though the chairman has said--and I am sure he says this in all sincerity; I know he says it in all sincerity--he believes reconciliation will not be used in health care, it can be used and will be used on health care if the President and the majority leader and the Speaker of the House want it to be because that is why they put it in.

In addition, the idea it will not be used to raise the national sales tax on energy or a light switch tax, which is what is being proposed relative to the carbon tax, that also probably does not apply because the language of the bill is not binding. It simply says it is assumed. ``Assumed'' is a pretty weak--in fact, I cannot think of many words that are any weaker than the term ``assumed.'' It is assumed reconciliation will not be used in the area of climate change legislation, which means it can be used in the area of climate change legislation and probably will be if there is a determination by those folks who want to push that issue to do so.

It is ironic this bill--for which we have had two major votes in this Senate that said: Do not use reconciliation for the purposes of climate change--has in it such weak language on that issue, basically opening the door to using reconciliation for the purposes of climate change.

But the reconciliation issue, as serious as it is--and it is a serious issue because it goes to the purposes and the role of the Senate, in my opinion; and it also, in my opinion, will undermine the quality of the product produced in the area of health care or climate change--is not the core problem with this budget. The core problem with this budget is it spends too much money, it raises and creates too much debt, especially on our children's backs, and it raises and spends too much in the way of taxes. It is going to have a dramatic impact on the quality of life in this Nation as it plays out, as it is creating an unsustainable government, a government which neither our generation nor our children's generation, nor our children's children's generation are going to be able to pay for because it is going to increase in size so much and create so much in the way of deficit and debt, which will have to be paid for by our children and our grandchildren.

To try to put this in perspective, the budget basically raises discretionary spending by $1.5 trillion. We are going to hear some arguments from the other side of the aisle that: No, it does not do that. I will get to that in a second. They are essentially doing the Obama budget, the President's budget. The Director of OMB says there is virtually no difference between the two. They are 98 percent the same.

Essentially, they are raising discretionary spending by $1.4 trillion, mandatory spending by $1.1 trillion, and raising taxes by $1.5 trillion. In fact, it may be a lot more. They are making absolutely no savings in the area of spending accounts, which are critical to getting this deficit down and under control.

As we have mentioned on numerous occasions, but which is accurate and needs to be repeated, they double the size of the debt in 5 years, they triple it in 10 years, and they leave our children with a debt which is 80 percent of GDP--a public debt which is 80 percent of GDP.

The practical effect of having a debt that is 80 percent of GDP is that basically you have a nation which cannot sustain its obligations of debt. Today, our public debt to GDP is about 40 percent. If you wish to get into the European Union, your public debt can only be 60 percent of GDP. Under this budget, we are going to 80 percent of GDP. Latvia could get into the European Union, but we could not under this budget. That is what is going to happen. It is not a question of some sort of theoretical event. Under the spending program of this budget--and because the Congress is now totally controlled by the liberal side of the aisle and because the President is of that party--this is going to happen. It is not like it is not going to happen. It is going to happen.

What is driving these massive deficits? Primarily, it is massive spending increases. It is not too tricky an issue. Under President Obama's budget, and under the budget that is brought here by our colleagues on the other side of the aisle--although they tried to obfuscate the spending; at least the President is forthright about his spending--the spending of the Federal Government goes up dramatically.

This chart I have in the Chamber shows, historically, Federal spending has been about 20 percent of GDP. That is about what we can afford, historically, because our revenues are a little bit below that--19 percent of GDP. Under this proposal, the spending goes up radically in the next year, year and a half, and then it comes down as a result of the end of the recession and then it starts going up again. But it never comes down that much. It is 23 percent, 24 percent, 25 percent of GDP.

The problem is spending. The President is very forthright about this. He says he believes strongly--and his party, obviously, agrees with him--that you should significantly increase the size of the Federal Government, that you should significantly increase spending because if you increase the size of the Government, if you move the Government to the left, if you increase its spending, you create prosperity. He believes governments create prosperity.

Well, we do not agree with that. We think the way you create prosperity is having a government you can afford. That does not mean you eliminate Government. It means you have one you can afford. The proposal here is not for a government you can afford. It is just the opposite: a government we cannot afford, a government that is not sustainable. The way to create prosperity is by having a government you can afford and giving individuals the ability

to go out, make investments, takes risks, and create jobs. That is how you create prosperity--not by radically increasing the size of Government, radically moving it to the left, which is exactly what is proposed in this budget.

All this new spending leads to a massive increase in debt. In fact, one of the more interesting statistics--because I noticed the chart of my colleague from the other side relative to George Bush--this President dwarfs--dwarfs--what President George W. Bush did in the area of adding debt to our children's backs. It dwarfs that. If you take all the debt created in this country since George Washington through George W. Bush, President Obama's budget--and the budget which is being brought here by the other side of the aisle, if it were honestly scored and correctly accounted for, which would be essentially the same as President Obama's budget--doubles the amount of debt that has been put on our books by all the Presidents in all the history of this Nation. That is a tragic event for us, but it is an even more tragic event for the next generation.

I hear the other side constantly talking about what President Obama inherited. Yes, he inherited tough times. But the issue is not what he inherited. The issue is what he is going to bequeath, what he is going to leave the next generation. What he is leaving the next generation is an unsustainable Government. You do not have to listen to me to believe that. The chairmen of the Budget Committees on both sides of Congress-- on the House side and the Senate side--have said the budget, as presently proposed, is unsustainable in the outyears. Their budget is unsustainable in the outyears. Of course, they eliminate the outyears. They only did a 5-year budget. The President did 10 years. They took off the last 5 years so they would not have to talk about it. But it is not going away at the end of 5 years--still growing, still out of control. And it is unsustainable in their own terms.

Why is it unsustainable?

This chart shows the bottom line of why it is unsustainable. It is called the debt. To quote one of the sages and oracles around here: ``The debt is the threat,'' and the debt is just going up and up and up. It is an unsustainable situation.

What does ``unsustainable'' mean? That is some sort of term we throw out and people don't really catch on. What does it mean? It means the average American family at the end of the President's budget will have $130,000 of new debt--every family in America--that they will have to pay for as part of the Federal debt. It means the average American family will have $6,000 a year of interest payments on that debt for which they will be responsible. It means our children will inherit a government which will cost them so much that basically one of two things will happen to them: The economy will have to be inflated radically to pay off this debt, thus reducing the value of the dollar, eliminating savings of most Americans and creating an economic tax of inordinate proportions through massive inflation; or taxes on all Americans will have to be significantly increased at a rate that we have never seen in our history--other than in World War II--a rate which will essentially mean Americans would not be able to go out and buy a home. They would not be able to go out and send their kids to college. They would not be able to buy that car or live that lifestyle our generation had.

With the debt at 80 percent of GDP, it will mean for the first time in the history of our country, one generation will have passed on to another generation less of a nation--less prosperous, less strong, less opportunity. Totally unfair, but that is exactly what will happen. There is no way around this. Their budget locks us into this path. They themselves admit it is not sustainable, but that hasn't caused them to hesitate in going forward, and going forward in an aggressive way to expand the size of government and not pay for it and leave our kids with these massive debts.

I think it is appropriate at this time to also talk a little bit about the specific budget before us, which is the compromise between the House and the Senate budget because there is so much misdirection and disingenuousness about this budget that it is staggering. I give the President of the United States and his people credit, including Director Orszag and OMB. They attempted to send an honest and straightforward budget where they actually told us what was going to happen and what the costs were going to be. They put in one big gaming mechanism in the area of defense where they assumed $1.6 billion of spending, which everybody knew wasn't going to occur because they counted on the war costs going on for 10 years at their present levels--and we all know that is not going to happen--and then they claimed savings when those war costs were reduced. That was a fairly big item. But outside of that item, for the most part they gave us a budget that had integrity to it in the area of what it really was and what it was really going to cost.

This budget which was just sent to us is just the opposite. It is filled with gamesmanship, with stuffing spending under the rug so we don't notice it, with tools that avoid enforcement mechanisms, and with things such as the reconciliation instructions, which are a total adulteration of the congressional process when it is used relative to a public policy issue as big as the question of health care.

Let's note a few of the things they have left out of their budget to get to their alleged number. Remember, their alleged number is around $500 billion of deficit in the fourth and fifth years, and they pound their chest in great praise of themselves: Oh, we reduced the deficit to $500 billion. We have reduced it by half or three-fourths or whatever they want to claim. That is a little hard to sell to anyone with any common sense. When the deficit is run up to $1.8 trillion or $2 trillion and then brought down to $500 billion, that is not moving forward, folks; that is taking six steps back and one step forward and claiming that we are moving forward. We are still going backwards.

This budget goes backwards at an atrocious rate. It goes backwards at an atrocious rate, and it doesn't even tell us how much it goes backwards because they hide so much of their spending and their costs underneath the rug.

In the area, for example, of the doctor fix--we all know around here what the doctor fix is. The doctors in this country get reimbursed under Medicare, but we have this stupid, arcane rule around here which every year cuts the doctors' reimbursements by some amount, and now it is up to 20 percent. So every year we have to fix that. It is an expensive fix, but we do it every year, so we know we are going to spend that money to fix that arcane rule that ends up cutting doctors' reimbursements arbitrarily and unfairly.

The President's budget accounted for that. They accounted for that fix. Does this budget account for that fix? A very small part of that fix--a very small part of that fix. They leave out about $50 billion of that fix.

In the area of the alternative minimum tax, we know the alternative minimum tax wasn't supposed to apply to 20 million Americans; it was only supposed to apply to a small number of Americans who make a huge amount of money who could avoid paying taxes because they used tax avoidance mechanisms. But because of the failure to index that system, we now have 20 million Americans who will be subject to the alternative minimum tax if we don't fix it every year.

So what do we do? Every year we eliminate the application of that tax to those 20 million Americans because it was never supposed to be there to begin with. But what does this budget do? The President had the integrity to say he was going to do that throughout his budget. They were not going to assume the revenues from the alternative minimum tax because they knew for a surety that they were not going to get those revenues because every year we repeal that tax that applies to those folks. So what do they do in their budget?

Unlike the President, they don't account for all the alternative minimum tax. They score some of that revenue to themselves, taking advantage of that revenue. So instead of having the full cost of the alternative minimum tax in their bill, they have a small percentage of it--not a small percentage of it; about half of the cost accounted for in the bill. So they leave out a big number relative to the alternative minimum tax--about $70 billion--or about $80 billion, actually.

Then the TARP, the President asked for more TARP money. It certainly looks as though, when you listen to all of these things coming out of the White House, that they are going to need more TARP money. They put that TARP money in his budget; they leave it out. No, no TARP money. Well, maybe arguably they will not step up when the President asks them to and finance the issue of how we maintain our financial stability as a country relative to our financial system, but I suspect if the President asks for TARP, it will be allocated, and they should have scored it. At least the President did that.

Budgeting for disasters: We know we have disasters. The President knows we are going to have disasters. It appears the House Democrats and the Senate Democrats don't know we have disasters, or if they do, they decided not to budget for them because they left those numbers out in order to get to a better number on their deficit figure.

Health care reform: We know we are going to get health care reform. We are going to get it through reconciliation probably. They are going to ram it down the throats of this Congress. It is going to be their bill, and we know their bill scores at $1.2 trillion over 10 years. That is how it scores. The President had the integrity to say he would put half of that in here. He put in $650 billion of that cost into his budget. Does it appear anywhere? No, it doesn't. The Democrats in the House and in the Senate, they are not going to pay for health care at all. They put in this euphemism of a reserve fund that claims they are going to pay for it, when we know that is about as likely as their use of pay-go to enforce any spending around here.

The Make Work Pay tax credit, one of the premier items of the President, remember; we hear so much about how there is not going to be a tax increase on working Americans. Well, let's point out the fact that working Americans are going to get hammered pretty hard under this bill in the area of tax increases. First, they are going to get hit with a carbon tax, and a carbon tax is essentially a national sales tax on the production of electricity and the use of electricity. So if someone uses electricity in their home and turns on their light switch, they are going to get hit with a carbon tax.

The estimates of that tax are huge--huge. MIT did a study and said it is $300 billion a year, massive numbers. It is $3,000 per household if we take that study and just divide the number of households into the cost of the study. But independent of that tax, which doesn't appear anywhere in this budget, by the way, other than the fact that we know it is coming through some reserve fund, alleged reserve fund--they wipe out the President's Make Work Pay tax credit which he asked to be extended. They assume it would not be extended. Why? They know it is going to be extended because if the President tells them to extend it, they are going to extend it.

Why do they not put it in here? They don't put it in because they want to make their bottom line look better--look better. Then they actually skim down the middle-class tax relief. They have already scored the fact that they are going to tax wealthy Americans--alleged wealthy Americans--people making more than $250,000. They have already scored that and taken in that money.

Remember, most of those people, the vast majority of those people, are basically running a small business, and when we raise their taxes, what can't they do? They can't expand their small business. They can't add jobs. They are the engine of jobs in this country, by the way. So they are going to tax them, take their money away from them, put it into the Government, expand the size of the Government on the allegation that the Government can create prosperity, not small business.

Small business doesn't create prosperity as far as our colleagues on the other side of the aisle are concerned. No, no, they tax them. No, it is the Government that creates prosperity, so let's take more money from small business, move it over here and give it to the Government, and we will create prosperity for Americans.

Well, tell that to the person who is running the restaurant or running the garage or has a little software company who would like to use his money or her money in order to reinvest it so they can actually hire some more people and actually produce some value in this society, versus expanding the Government and creating more consultants and more people who are out there spending money in a very inefficient way, for the most part. But that is their policy. They won the election. Fine. But in winning the election, they also said they weren't going to tax middle Americans.

Well, look at the document. There is $180 billion of taxes on middle- income Americans which they do not define from where it comes. They simply say it is there. It is in there somewhere. Well, somebody is going to have to pay it. I think it is pretty safe to say it is going to be working Americans who are going to have to pay that $180 billion.

Why did they raise those taxes on working Americans? Why did they go back on their campaign promises, both in the Make Work Pay area and in the taxing working Americans? Well, they did it so they could make their bottom line number look better than the President's. At least the President had integrity. He had honesty. He came to us and said: I am going to extend Make Work Pay. I am going to have a middle-class tax cut. The other side of the aisle, the Democrats in the House and the Senate don't play by those rules. They play by the old rules of let's obfuscate, hide, sequester money and make it look as if we are saving money when we absolutely know for sure the spending is misrepresented in the bill and the taxes are misrepresented in the bill.

Then they have the temerity to use the phony 920 number. We all know 920 is a phony number. This is an account we set up, and when we claim savings, we put things into 920. In other words, I am going to increase spending on the XYZ program because I like XYZ. Well, where do I get the money for that if I am going to try to stay revenue neutral? I am going to get it out of account 920. I am going to spend $40 billion on the XYZ program and the offset is going to be account 920. Account 920 is an account that for all intents and purposes leads to a cut around here. It never leads to anything. It is not specific. It should come out of all accounts. It never happens, but they were a little off in the numbers they wanted to get to, so they did a 920 account in their budget to the tune of, I think, $40 billion or more--$48 billion.

All of that added up, and their real number, their real deficit numbers--the numbers that the President actually had, ironically--come out pretty close to the same. If we put back in all the stuff they have hidden under the rug, all the stuff they claimed they are not going to do, which we know they are going to do, we come back to deficit numbers which are almost exactly what the President's deficit numbers are.

There is no $500 billion deficit in the fifth year; it is $924 billion--if you put back in what they have hidden, claimed, obfuscated, manipulated, and generally tried to play games with around here.

So the President's numbers were accurate. He deserves credit for that. But this budget is a fraud on its baseline numbers. The reason this is important, besides the fact that there is actually $400 billion of spending almost every year that is not accounted for in this budget, is that the deficit, at these numbers, is around 5 percent of GDP. A deficit of around 5 percent of GDP and a public debt of around 80 percent of GDP leads you to being a country that is essentially unsustainable in its fiscal policy. It leads to a nation where the dollar loses its value, where our debt cannot be sold, where inflation is rampant, tax policy is basically so heavy that productivity is significantly stifled. They want to hide that number. At least the President had the integrity to admit that. The House and Senate Democrats have tried to hide that.

There is one other point that needs to be made here, because of the foolishness of the statements about how they are going to reinstitute a real pay-go. You know, I understand that the Blue Dog Democrats on the House side come from districts where their people expect them to be fiscally responsible. They have gotten on this banner of pay-go. They say we are going to assert pay-go. That will be the rules that guide us, and we will make sure all the

spending is paid for and the tax cuts are paid for. That is called pay- go. They say that as a mantra, to the point where it has become a term of art that implies you are fiscally responsible.

Look at this budget. My colleagues on the House side, who are Blue Dogs, claim to wrap themselves in the banner of pay-go, but they have no banner on their pole. There is no pay-go in this bill that will have a significant impact. In fact, the budget passed by the House and Senate put in place policies that would obfuscate pay-go to the tune of approximately $2.4 trillion. So on the face of this, they have ignored pay-go in their own budget. The ultimate insult is that the most significant public policy event we are going to do, probably in the term of anybody in this Congress, going back to the beginning of Robert C. Byrd's term, forward to the end of probably the youngest Member of the Congress who is serving today's term, which is the issue of rewriting the health care system of this country--17 percent of our GDP--the single most significant public policy event we will ever undertake--affecting every American everywhere, at all different levels, they formally, by law, waive pay-go in this bill for that exercise.

The Blue Dog Democrats in the House say we have the pay-go protection. Nobody who is being forthright with their constituents should go out and claim that pay-go is going to be a disciplining event. It isn't, hasn't been, and will not be--especially on the most significant issue we confront, which is the question of health care reform.

We have already talked, of course, about reconciliation and the affront that is to the Senate procedures and the constitutional role of the Senate. But it should be noted that using reconciliation also creates the situation where you can run through a massive tax increase, such as the carbon tax, and use it to pay for health care reform. Don't think that that is not being considered around here. Assuming that reconciliation won't be used in that area is an optimistic projection, because the majority leader has already said publicly that--and I am paraphrasing--isn't it interesting that the revenues from the carbon tax, or the national sales tax, light switch tax, pretty much is what we need in order to do the first few years of the health care bill as we see it.

So offsetting those two has obviously been an idea that has presented itself to the majority leader, and he wields significant authority here. He was able to keep reconciliation in over the objections of our chairman, allegedly, so I know he is powerful, because the chairman is extraordinarily powerful. When two powerful forces meet, if one of them survives, we know that one is really powerful. We know the majority leader is really powerful because he was more powerful than the chairman on the issue of reconciliation. So that is serious. We could use the carbon tax to pay for the health care, which is possible. I am not saying it is going to happen, but it is possible while using reconciliation.

That brings me back to my closing point, which I want to reiterate. It is about debt. It is about the fact that when this is all said and done, when all the smoke has risen, there will still be burning a massive explosion of Federal debt, an explosion so large, increases so dramatic, that I don't see any way out from under it with this budget. I am so concerned about where this takes our opportunities as a Nation. When you pass on--and it is not that far away because we are talking 2013, 2014, when we start getting big numbers. When you pass on a deficit of 4 to 5 percent of GDP, a debt of 60 to 80 percent GDP, where do we go as a Nation? Let's think about that for a minute. How does a nation get out from underneath that? Doesn't the world start to look at us and say, my God, has America lost its way? Is it no longer capable of disciplining itself and living in a responsible manner? When they say that about us, where does our Nation end up? Where do we leave our children?

It is a serious issue. Yet it is right here, and this budget is the point. If we pass this budget in its present form, with the outyear spending and outyear debt, I don't know how we get out from behind it.

I yield the floor.

Mr. President, I would like a few minutes. First, I know that one of the senior staff members on the chairman's side, Joel Friedman, is going through some very difficult health situations. I know he wanted to talk a little bit about that. We wish him the best. I know my staff, who works closely with him, feels great concern. The concern goes out to him and his family. We certainly wish him the best during this very difficult period dealing with this very difficult health issue.

Mr. President, let me, again, express the concern of my staff and myself for Joel and his family and wish him the best in this very difficult time and wish his family the best. We certainly hope he returns to good health soon.

Let me second the words of the chairman. This committee has contention. Even when the chairman produces a bill which is utterly incorrect and takes us totally in the wrong direction, I totally respect his efforts. I say that with some humor. The strength of this committee, besides the fact that it is a very influential committee in the Senate, is that we approach the issues in a forthright, professional manner. There is, on both sides of the aisle, a genuine and sincere and very successful effort to make sure the committee does its business in an orderly, professional, and cooperative way, which we hope brings credit to the Senate and the way the Senate should function. I believe it does.

It is, in large part, because the chairman sets that tone, as does his staff--Mary Naylor and the excellent people she has working for her; and on my side, Cheri Reidy, Jim Hearn, Allison Parent, and all the other folks who spend hundreds of hours, especially during this very intense period as we run up to the final passage of this extremely important piece of legislation. Their commitment, their professionalism is what allows this Congress to function well, and we very much appreciate it.

I could go on at some length on the issue of the budget, but I think people have probably heard enough of myself on this issue--although I wouldn't want to say that--and I know I would love to hear the chairman further discuss this, and he would love to hear myself further discuss it, but it is probably time to move it along and allow the chips to fall where they may. I would suggest we yield back all time and we vote at 5:30.

I thought they reserved 15 minutes.

I thank the Chair, and I thank the distinguished chairman of the committee for those kind remarks, and I hold him in high esteem as well.

First of all, the budget we are voting on had bipartisan opposition in the House of Representatives. Seventeen Democrats voted against this budget. Most of those are what you call conservative Democrats, or whatever title they want. That is what I will call them--fiscally conservative Democrats. They think this budget leaves too much of a legacy to our children and grandchildren in the way of debt. So bipartisan opposition ought to tell this White House and this majority something, and I hope in time that will become very clear.

Today, the Senate begins its debate on the congressional budget resolution, and it will pass shortly, I am sure. The budget process started, of course, with the President's budget coming to the Hill on February 26. That was about 2 months ago. During the committee process--and I participated in that process, and I participated in the floor process--we faced one key question, and that was: Should we apply more or less budget discipline to the record debts and deficits of my President, President Obama, on what he inherited January 20, 2009?

Over the past few weeks, we have heard a lot about revisionist fiscal history or it might best be described as heavy editing of recent budget history. I was pleased to see the distinguished Budget Committee chairman make the record clear: President Obama inherited a $1.3 trillion deficit. I agree with that. I don't take exception to that. Those are quantifiable facts. Republicans don't disagree that President Obama inherited a large deficit.

One point of clarification, though, needs to be made. The deficit and the debt were bequeathed on a bipartisan basis. That was due to the makeup of the Presidency last time and the Congress over the last 2 years. The Democratic leadership obviously controlled the House and Senate during the years those budgets were drawn up--2007 and 2008. The Democratic leadership wrote the tax and spending bills President Bush signed in the last Congress. So congressional Democrats negotiated the bailout bill with the Bush administration. Those fiscal policy decisions, though at times very combative, in the end were jointly made on the one hand by a Congress, controlled by the Democrats, and by the administration, controlled by a Republican President. So it was bipartisan.

The antirecessionary spending, together with the lower tax receipts and the TARP activities, set a fiscal table of a debt of $1.3 trillion. That, in fact, was on the President's desk when he took over the Oval Office on January 20 this year. That is the highest deficit as a percentage of the economy in post-World War II history. Not a very pretty picture, Mr. President.

I have a chart here that shows that part of the story, and that part of the story is the gray there, as you can see.

As predicted a couple of months ago, that picture got a lot uglier with the stimulus bill. So for the folks who saw that bill as an opportunity to ``recover'' America, with Government taking a larger share of the economy over the long term, well, they can say: Mission accomplished. For those who voted for the stimulus bill--and I didn't-- you put us on a path to a bigger role for the Government. Over $1 trillion of new deficit spending was hidden in that bill. It caused some of the extra red ink in this chart.

So I point to what is called the inherited aspect of the debt, and those are

the red bars on top of the gray bars--what was inherited.

I think supporters of that bill need to own up to the fiscal course they charted. Again, that is the red line, if you want averages, and it is the red bars for what has been done since this President has come to office.

To be sure, after the other side pushed through the stimulus bill and the second $350 billion of the TARP bill, CBO reestimated the baseline. A portion of this new red ink up front is due to that reestimate. The bottom line, however, is that reestimate occurred several weeks-- several weeks--after the President and a more robust Democratic majority took over in January of this year. Decisions were made. And do you know what happens here? Decisions have consequences. So fiscal consequences followed.

The budget before us, for the most part, follows the fiscal trail blazed by President Obama. As the administration's top budget official said: This budget is 98 percent like the President's budget. I want to congratulate the chairman on keeping some of the tax priorities of the Senate, however. One deals with the alternative minimum tax patch. Although shorter than I proposed, it is dealt with over 3 years. The chairman also kept part of the Senate's middle-income tax relief.

But on both the tax and the spending side, we need to take a hard look at what is going on at the end of this budget term--2014. The budget resolution conference report claims to reduce the deficit from $1.7 trillion this year to about $520 billion in 2014. However, the final year of the budget fails to include the revenue loss from the alternative minimum tax patch for that year. It fails to include the revenue loss for fully extending the 2001 and 2003 middle-class tax relief, the President's Making Work Pay tax credit, the Medicare physician fix, and natural disasters, but it does include illusory, unspecified future discretionary spending cuts. When you add it all up, the thing it fails to do--or claims to do but doesn't--the conference report falls hundreds of billions of dollars short of its claimed deficit reduction.

So let's return, then, to the basic question I asked at the very beginning and also asked when we started the budget process several weeks ago. The question, once again, is this: Should we apply more or less budget discipline to record debts and deficits which my President, President Obama, inherited on January 20, 2009? This budget does answer that basic question. It makes the fiscal situation even worse. Inherited debt doesn't stay at its unacceptably high level; it doubles to 82 percent of gross national product.

So we have another chart here, with the red line going up toward the top in the 10-year outlook that the Congressional Budget Office shows to be over 80 percent. Abnormal deficit levels become normal deficit levels. Again, you see here what is normal and what isn't normal. Levels once considered a fiscal vice by most people--at, say, the peak during the Bush years--of 3 to 4 percentage points--here in the years 2007 and 2008, as you can see from the chart--are very dramatically dwarfed during the outyears of the President's budget. Fiscal vices become what? Fiscal habits, under this budget. I would ask anyone whether they define that plan as fiscal discipline.

Everyone in this body wants to help get our economy back on track. If the economy gets back on track, everybody wins. From a fiscal situation, there is no better policy development than growing the economy. More economy to be divided over an increasing population, so more economy for more people to have more. If we do not grow the economy, we have less for more people.

I think everyone in this body would agree that we ought to grow the economy. Likewise, we know small businesses are an extremely important part of our U.S. economy. I like to say that small business is the engine that drives the U.S. economy. President Obama agrees that small businesses have generated 70 percent of the net new jobs over the past decade, and most economists agree with that.

One month ago we debated the budget resolution on the Senate floor. During that debate, the Senate spoke on this point. Senator Cornyn's small business tax relief amendment passed by an overwhelming 82 to 16; in other words, 82 of the people in this body agreed with President Obama.

Senator Snowe had a similar amendment that was accepted by the managers of the floor bill. Last week the Senate spoke again. This time the question was phrased on a motion to instruct the budget resolution conferees on the importance of keeping taxes on small business low. The vote grew even more: 84 in favor of it, 9 against it. Unfortunately, the conferees did not adopt the Senate budget resolution protecting small businesses from tax increases.

America's small businesses have been suffering during this recession. We will hear it in our events back home--I do. A very good source of answers on the environment for small businesses is found in the monthly survey of small businesses, the survey by the National Federation of Independent Business, NFIB, a spokes-organization for small business. They are well known around here. They have been conducting this survey for 35 years.

The NFIB membership includes hundreds of thousands of small businesses all across America. I encourage every Member to check out this important survey and particularly this month's survey.

This survey shows some extremely disturbing trends. On credit availability, small businesses are getting squeezed very hard. We have a chart that shows this trend. Particularly, look out here at the year 2009 on the right side of this chart. It is way down as far as the percentage change compared to before. This credit crunch and other factors have contributed to a near record low in the NFIB's index of small business optimism.

I have a chart that puts this data in perspective. We have here, over a long period of time, the optimism of small business. What you see is the attitude of decisionmakers in small business America. Those are the decisionmakers for businesses that President Obama and Congress agree are the businesses most likely to grow or contract jobs. The pessimism is at its second lowest point in those 35 years of surveying. The data should concern every policymaker in this town.

As bad as the two sets of data are, it gets even worse. This chart shows the net increase or decrease in small business hiring plans. The survey asks the business owner whether he or she planned to expand or contract employment over the next 3 months. As you can see right here, it is very negative. This chart shows small business activity contracting tremendously. Small business hiring plans are at their most negative level in the 35-year history of this survey.

With this pessimistic environment, we should not be surprised, then, that small businesses are hemorrhaging jobs. The President's recent efforts to increase lending to the small business sector are commendable. The centerpiece of the President's small business plan will allow the Federal Government to spend up to $25 billion to purchase the small business loans that are now hindering small banks and lenders. Unfortunately, very well intentioned as it is, that is a drop in a very empty bucket. Remember, small business accounts for about half of the private sector.

Moreover, the positives that will come to small business from this relatively small package of loans which will ultimately have to be paid back will be heavily outweighed by the negative impact of the President's proposed tax increases on those very same small businesses, the business sector. Helping small businesses get loans just to take the money back in the form of tax hikes is not wise. It would be wise to make those loans possible, but these tax policies that the President is thinking about doing are going to hinder small business.

Don't take my word for it. Just today the National Federation of Independent Business wrote to all of us, all the Members of the Senate, on this point. NFIB's hundreds of thousands of small business owners oppose this conference report. I ask unanimous consent that a copy of that letter be printed in the Record.

Here is what the NFIB says in that letter:

NFIB is concerned the conference report assumes the top

individual tax rates will expire, which would mean a tax

increase from some small business owners.

Do we really want to raise taxes on these small businesses that create new jobs and employ two-thirds of all small business workers? With these small businesses already suffering from the credit crunch before the entire country, do we really think it is wise to hit small business again with this double-whammy of a 20 percent increase in marginal tax rates?

As we move forward from the budget process, the President and the congressional Democratic leadership have an opportunity to change course. From my 33 town meetings in Iowa during spring break, they want to change that course. There is a lot of concern about the legacy of debt that we are leaving to children and grandchildren. Both budgets would perpetuate the double whammy of constricted credit and high taxes directed at America's job engine, small business.

So as I close, in the coming months we Republicans will try to persuade our Democratic friends who have all the controls of fiscal policy to change course. One way they can change course is to focus like a laser beam on jump-starting the Nation's job engine--the small businesses of America. We need to reverse the direction of the sharply downward-sloping arrow that you have seen on some of these charts. That is where the President and the Congress agree that we need to get more job growth.

I quoted the President: 70 percent of the new jobs--small business. We in this party agree with that. As we move on from the budget, let's recognize the reality and the importance of small business.

I yield the floor.

Mr. President, I would like to briefly respond to my friend from North Dakota, the chairman of the Budget Committee. The chairman was responding to my remarks on small business and the effects of proposed 20 percent higher marginal rates on small business owners.

The budget brought before us raises taxes on small business owners. There can be no question about it. Here is how it works.

The President's budget proposes to raise the top two marginal rates from 33 percent and 35 percent to 40 percent and 41 percent respectively, when PEP and Pease are fully reinstated. President Obama's marginal rate increase would mean an approximately 20 percent marginal tax rate increase on small business owners in the top two brackets.

Many of my friends on the other side will say that while they agree that successful small businesses are vital to the success of the U.S. economy, the marginal tax increases for the top two brackets will not have a significant negative impact on small businesses. The chairman appears to fall into this camp.

Proponents of these tax increases, like the distinguished chairman, the senior Senator from North Dakota, seek to minimize their impact by referring to Tax Policy Center data that indicate about 2 percent of small business filers pay taxes in the top two brackets. In testimony before the Senate Finance Committee, Dr. Bob Greenstein, director of the liberal think tank, Center on Budget Policy and Priorities, also used that figure. Moreover, Secretary Geithner has testified that this Treasury Department agrees with that figure. They argue that a minimal amount of small business activity is affected.

However, there are two faulty assumptions to this small business filer argument.

The first faulty assumption is that the percentage of small business filers is static. In fact, small businesses move in and out of gain and loss status depending on the nature of the business and business cycle. The nonpartisan Joint Committee on Taxation has indicated that, for 2011, approximately 3 percent of small business filers will be hit by these proposed higher rates. These statistics compare to a 2007 treasury which showed 7 percent of flow-through business owners paying the top rate. In the latest analysis, when the impact of the alternative minimum tax--AMT--is fully included, that percentage may drop some.

Small Business Administration--SBA--data provide evidence of the dynamic nature of small business. You can find that data on the SBA Web site in its frequently asked questions discussion. The website is www.sba.gov/advo. According to SBA, 67 percent of small businesses survive for 2 years; 44 percent of small businesses survive at least 4 years; and 31 percent of small businesses survive at least 7 years.

The second faulty assumption is that the level of small business activity, including employment, is proportionate to the filer percentage.

According to NFIB survey data, 50 percent of owners of small businesses that employ 20-249 workers would fall in the top two brackets. You can see it right here on this chart.

According to the SBA, about two-thirds of the Nation's small business workers are employed by small businesses with 20-500 employees.

Newly developed data from the Joint Committee on Taxation demonstrates that 55 percent of the tax from the higher rates will be borne by small business owners with income over $250,000. This is a conservative number, because it doesn't include flow-through business owners making between $200,000 and $250,000 that will also be hit with the budget's proposed tax hikes.

Now, as is frequently the case in debate, the proponent of an idea seeks to change the nature of the debate by changing the question. We witnessed a bit of that this afternoon.

Notice the distinguished chairman did not dispute the basic thrust of the points I raised. Instead, he said, we, on this side, used an unfair or inappropriate definition of small business. He cited examples of former Vice President Cheney and Microsoft founder Bill Gates, Jr. The point seems to be that the 750,000 flow-through small business owners, again those most likely to expand or contract their workforces, who will be in the bulls-eye of the 20 percent higher marginal rates, should be ignored. We should focus instead on one or two examples. The point seems to be that it is fine to target the large group of small business owners if you can find a Cheney or Gates example.

On this point, I direct the distinguished chairman and the full Senate to the Treasury Conference on Business Taxation and Global Competitiveness Background Paper. It was put out on

July 26, 2007. The current Treasury is spending some time updating this data and will be incorporating the full effect of the alternative minimum tax--AMT--for 2011. If colleagues examine the study at page 20, table 3.3, they will find an insightful analysis. The study sorted Treasury data for flow-through entities. The analysis sorted the data to isolate active manager/owners from the broader pool of all flow- through filers. When so sorted, Treasury found that the lion's share of income and tax was still born by those manager/owners. I ask consent to have printed in the Record a copy of the Treasury table.

Even the Tax Policy Center, an institution in accord with President Obama and the congressional Democratic leadership's goal of raising the top rates on small business, shows a large slug of active small business income in taxpayers in the top two brackets. I will ask consent to include a TPC chart printed in the Record.

The proponents of a tax increase of up to 20 percent in the marginal rates of small business owners should bear the burden to disprove the concerns those on our side have raised. Perhaps they could work with Senator Snowe, Senator Cornyn and others to craft an exception that shields the small businesses that employ two-thirds of all small business workers from the tax increase. Pointing to an extreme example, like a Vice-President Cheney or a Bill Gates, Jr., may make great sound bites for politics.

It, however, will not amuse the small business owners who have worked hard to build a business. It won't amuse the workers they need to layoff. It won't amuse the suppliers they have to curtail purchases from. The bottom line is the budget contains a tax increase that is aimed at small businesses most likely to expand or contract. That tax increase is significant and real to those small business owners. They, not the politicians voting in the tax increase, will have to deal with the added tax burden.

Last week, a strong bipartisan group of 84 Senators agreed there is a problem here. We are raising taxes on Small Business America. We ought to be careful.

Throwing out a red herring involving Vice-President Cheney or Bill Gates, Jr. doesn't deal with the problem we have raised.

Mr. President, I ask unanimous consent to have the materials to which I referred printed in the Record.

Madam President, last November the American people voted for change. I think it is appropriate today, as we are considering the conference report on the budget, which is the blueprint for our Nation, and we also celebrate the 100th day of Barack Obama's Presidency and his administration--I think it is time to reflect where we have been in these last 100 days and the changes that have occurred. But first it is important to point out the mess President Obama inherited.

The United States is engaged in two wars. We have the worst economic crisis since the Great Depression inherited by this administration. We have record deficits inherited by this administration. The international reputation of the United States is badly damaged.

In 100 days, the Obama administration, working with us in Congress, has an impressive record of accomplishments. I think it is important to point out that the No. 1 priority, as all my constituents tell me on a daily basis, is to fix our economy. Our economy is in deep trouble. The American Recovery and Reinvestment Act put the recovery of our economy first by creating jobs. We need more jobs, to save jobs, create jobs. The Obama administration put that as their top priority.

But they also invested in America's future in education, in health care, and in energy; protecting our essential services for America's most vulnerable people; and providing tax cuts to help restore consumer confidence in our economy.

That was the first priority. That bill has passed and its impact is now being felt in our country. But in the Congress, under the leadership of President Obama working with us, other things were accomplished in a very short period of time.

The Lilly Ledbetter Fair Pay Equity Act was passed, guaranteeing we have an enforceable right for equal pay.

We passed the Children's Health Insurance Program that now covers 4 million more children with health insurance. I am particularly pleased that law includes dental care so children will be able to see a dentist.

We passed legislation protecting public lands and protecting our environment for future generations.

We passed the Edward M. Kennedy Serve America Act, for Americans to be able to engage in volunteer service to their country throughout their lifetime.

The Obama administration, working with this Congress, has restored America's international leadership. We have made it clear from the beginning that this Nation will not permit the use of torture, focused our missions in both Iraq and Afghanistan of going after the terrorists--which is what we should do to make America safe--and prepared to join the international community in combating global climate change.

We have done a lot during the first 100 days--quite a record. Today we are on the verge of passing the budget conference report which will provide a new blueprint for America's future. What are the priorities? The priority first, is the economy. Again, we have to get out of this recession. This budget allows us to invest in creating new jobs. It will do it in a fiscally responsible way and will invest in health care, energy, and education.

President Obama, as I pointed out earlier, inherited quite a fiscal mess. President Bush, during the 8 years of his Presidency, started with a surplus. Let me remind you, 8 years ago we had a surplus, a $236 billion surplus in 2000. The current year's deficit is $1.75 trillion. This was the fiscal recklessness of the Bush administration that has been inherited by the Obama administration. It has cost us jobs. We are losing half a million jobs each and every month. That is what was confronting the President back when he took office.

We have a housing crisis, people losing their homes. They are still losing their homes today. We have to pay attention to that. We have got to give confidence so that people can keep their homes. It is important for individuals, it is important for our communities, it is important for our economy.

Banks are not lending money. They still are not lending money. We have got to get our financial system working the way it should so that America can grow. We have got to help small business. That is the growth engine of America in order to create jobs and move forward with innovation.

What we need to do is have a budget that puts our priorities on America's future. Well, the budget President Obama has that we are about ready to pass does that. It helps our economy but does it in a fiscally responsible way. It puts us on a glide path to reduce the Federal budget by two-thirds by the year 2014.

We are working on the economy, working on creating jobs, but we are also working on fiscal responsibility to get out from this deficit. Because we not only have a moral obligation to our children and grandchildren to pay our bills, it is critically important for the fiscal strength of America that we get our budget back into balance. So as we come out of this recession, as we create the jobs that this budget will allow us to do, we also put us on a glidepath toward fiscal responsibility.

But the budget recognizes another essential point. We are not going to do things the way we have done them in the past. We have an administration that is prepared to tackle the tough problems. It is one thing to get out of this recession and to try to balance the budget and get our budget balanced, but we have got to deal with the underlying problems that America confronts. We have got to fix a broken health care system, because it is too expensive and drains our economy.

We have got to become energy independent, because that drains our economy and our budget. And we have got to invest in education. Our children are our future. We have got to put our resources with our children.

The budget recognizes that for America to be able to have a strong budget in the future, we need to fix our health care system. We talked about this for a long time. We have talked about fixing it. Well, we now have a President who has said the only option that is not on the table is the status quo. I agree with President Obama, we have got to fix the system. Why?

First, it is way too expensive. Not only is it a drain on Federal taxpayers but to every person in this country. Our health care system is twice as expensive, per capita, than the next most expensive system in the world. And yet we have seen, during the Bush years, the 8 years of his Presidency, the number of uninsured grow from 40 million to 47 million. There are 47 million Americans who do not have health insurance. And we do not have the health care results that would warrant such a large expenditure of our Federal economy in health care. We should have better results. We do not have those results, so we have got to fix our health care system.

What does this budget resolution do, the conference report that is before us--that will shortly be before us for a

vote? What this budget resolution does is allows us to move boldly toward universal health coverage, toward universal coverage. Why is that so important? Well, you see, someone who has no health insurance today enters a health care system in a very expensive way. They use our emergency rooms for primary care, to the extent that they get primary care. They do not have prevention. And they enter our system in a much more costly way. Illnesses that could have been detected early are left untreated. They enter our system in a very expensive way.

Many times people without health insurance do not pay their bills. But they get paid. Guess who pays them. The taxpayers of this country. Those who have insurance pay more for their premiums and doctors and hospitals because of people who have no health insurance.

It is in our national interest to get everyone covered by insurance. This budget conference report will allow our committee to bring in a bill to fix our health care system to provide universal coverage that will provide better quality care and save us money.

This budget allows us to save money in the health care system by investing in preventive health care. If we get more people tested for early detection of diseases, it will save us money. We invest in health information technology so we can eliminate a lot of the waste in our health care system, the administrative costs. Not only will it eliminate costs, unnecessary costs, but you will have better management of care. Doctors and hospitals will be able to communicate with each other. They will understand the complexities of your own individual health history and be able to build health protocols to give you more cost-effective, quality care. That is using technology. This will help us.

We need to deal with the disparities in health care. We know there are gaps across racial and ethnic lines. We need to narrow that, pay attention to that. This budget allows us to move in that direction to eliminate these disparities.

The budget allows us to reform our own Medicare system. Medicare is the largest insurance program in our country. Our elderly and disabled depend upon our Medicare system. But our Medicare system needs to be changed and reformed. Ask any physician about the sustainable growth rate methodology for reforming, for paying their fees every year. We have got to change that. We have got to eliminate this physical therapy and rehab cap. It makes no sense at all.

This budget resolution allows us to reform the Medicare system to make it more cost effective, and the budget resolution provides for the backup of budget reconciliation instructions.

What does that mean? I want to give you my interpretation. That allows us to use regular order to get this issue dealt with, to get health care dealt with. We have been talking about it for years. It is time to act. It is time to fix our health care system. And this is not a partisan issue. It is not a Democratic issue or a Republican issue. This is an issue that affects our country. It is an American issue. We need to work together on it. But it is not regular order to use a filibuster to prevent this body from taking up these issues. And that is what the budget reform process was all about many years ago.

I hope every Member of this body will work together so we can fix this health care system. That is what we need to do. Nobody has a monopoly on the best ideas. President Obama has reached out and said: Look, I know what we need to accomplish. You know what we need to accomplish. Let's work together and get it done so we can make health care more accessible, and people can get quality care in a much more cost-effective way, saving the taxpayers of this country money, helping our economy grow, making American companies more competitive internationally. If we fix the health care system, all of that is possible if we get it done right.

I want to compliment--I see the Chairman of the Budget Committee is on the floor, Senator Conrad. I want to thank him for his leadership on these issues. You now have a budget that will allow us to deal with these priorities. But the budget resolution also recognizes that for America to be strong, we also need to become energy independent. And the budget resolution allows us, our committees, to do that. We need to become energy independent for the sake of our economy.

We saw the impact on our economy when energy prices went up and down, and we had very little to do with it. But if we get the energy policy right, we are going to create green jobs, more jobs in America. This is about our economy. This is about helping America grow. So smart energy, energy independence, is the right thing to help our economy. By the way, it is also important for national security. We should not be challenged to fight wars because we need imported oil. Let us become energy independent for the sake of our national security, and, yes, let us become energy independent using good green technology, because it is good for our environment and we can do something about global climate change, working with the international community.

But the budget goes further and says, look, if we are going to be a strong nation, if we are going to get our future budgets in balance, if we are going to be competitive internationally, if our economy is going to grow, and the American standard of living is going to grow, we are going to invest in education. Education has got to be our top priority.

We can do a much better job at pre-K through 12 and quality education. Every child should have access to a quality school. This budget resolution allows our committees to move in that direction, and to bring down the cost of higher education for the typical family. Too many families today are being denied the opportunity to send their child to college because they simply cannot afford the cost of higher education. We have increased Pell grants. It is another great record of this Congress. We increased the Pell grants. This budget resolution allows us to go further to bring down the cost of higher education.

The budget resolution recognizes that we have to empower families to be able to afford and to participate in our economy. So tax relief to middle-income families is extended and expanded in this budget resolution.

The budget resolution recognizes that small businesses are the driving force behind job creation. Most of our jobs are going to be created by small businesses. Innovation comes from small companies. So this budget resolution allows us to continue the incentive so that small companies can get the credit they need, can get the help they need to be able to not only survive this economic downturn but to turn it around and create new jobs.

I particularly thank the conferees for continuing to include the increases, the 2-percent increases, in the Small Business Administration, an agency that was decimated under the prior administration. I offered an amendment in the committee that was adopted that increased that appropriation to $880 million. We want the SBA to be the advocate for the small business community, to fight Government agencies to make sure they make contracts available to small companies, to help mentor small companies so they have a business plan that can get a loan from a bank. That is what we want the SBA to do. And now with this budget support, the SBA should be able to build and help our small businesses in America.

Last November America voted for a change. We are delivering on that expectation. This budget resolution that has come out of the conference committee allows our committees, working with President Obama, to tackle the challenges confronting our Nation. The conference committee gives us the blueprint we need by focusing on different areas for helping in tax relief, for bringing our budget better into balance, helping working families, and investing in universal health care and educational opportunities and energy independence.

I urge my colleagues to support the work that has been done by our conferees. Let's work together to refuel and revitalize our Nation.

I yield the floor.

Mr. President, I will talk, as my colleague has, about the Federal budget, the budget resolution that has been prepared for our consideration as a result of the conference that has occurred between the House and Senate. I express my thanks particularly to the chairman of the committee, Senator Conrad, for the work he and his staff and other members of the committee have done, Democrat and Republican, including Senator Gregg.

I wish to respond a bit to what my colleague from Texas said. This administration didn't inherit a day at the beach. They have inherited a tough situation. We as a country have been around sort of officially since 1787, and if you go from 1787 to 2001, I think that is about 214 years. We ran up in that period of time roughly $5 trillion worth of debt. We essentially doubled that over the last 8 years. We doubled it in only 8 years. We ran up as much new debt in the last 8 years as we did in 214 years as a nation. I didn't hear nearly the kind of bemoaning and railing about the growth in the deficit and the national debt during those 8 years as we hear today from our friends on the other side of the aisle.

I think my colleagues know I am not a real partisan guy, but I think it is important to say this is the hand we have been dealt. The question is what do we do about it. We have a couple of wars we are fighting. We have an economy that is the worst since the Great Depression and we have to do something about it. One of the first things we have decided to do about it is to try to jolt the economy back to life. I remember those old Frankenstein movies where Dr. Frankenstein is in the lab trying to put the electrodes to the monster and jolt that monster back to life. We are trying to jolt not a monster back to life but an economy back to life. Economists on all sides-- liberal, conservative, and everything in between--have said, you have to spend a lot of money and hopefully it will be used to produce jobs and add to the value that will be for a good purpose in our country.

That is what we have done with the stimulus package. As we go through this year, and probably the next year or so, the deficit is going to be a whole lot bigger than I am comfortable with. I was elected to the House and served there for 10 years before I became Governor. I was a deficit hawk and in my heart I still am. I wish to talk about some things we can do, ought to do, and in some cases are doing, to bring the deficit down further.

I am encouraged when I hear our new President say the deficit is large this year, but over the next 4 years we will reduce the deficit in half. I think that is fine. The important thing is we don't just stop there, and if we have the same administration or a new one, it is important that we continue to make progress and drive the deficit back to zero. I am one of those people who thinks it is appropriate to spend when we are in a time of economic calamity, when we are in a time of war, and as it turns out right now we are in both. Hopefully, 4 years from now--hopefully sooner than that--we won't be in both and we can turn back our spending. When the economy is sound, when we are not in a national disaster, in war in places around the world, I think it is appropriate to balance our budget. In fact, one of the things I was proudest of as Governor is we not only balanced our budget for 7 years in a row, we reduced taxes and paid down our debt a little bit, and that made me proud, and the legislature too. Hopefully, we will be in a position in the years to come, as we were in 1999 and 2000, when we paid down the debt.

I have suggested to the administration some things we can do, and I have talked about them here on the floor, to reduce the deficit. I wish to talk about one of them and mention one of the others as well. In order to better match revenues and expenditures going forward, we obviously cannot avoid the question of taxes. As far as I am concerned, before we start raising a lot of taxes, the first thing--maybe the better thing--for us to do is to collect the taxes that are owed. Every year we hear about the tax gap. The last one was actually officially done, I think, about 8 or 9 years ago by the IRS and they figured that at the time we had a tax gap--monies owed to the Treasury, not being collected by the Treasury--of about $300 billion a year. By most estimates I hear today, it is almost $400 billion a year. If we can only recover half of it or a third of it, we are talking about real money that would make a real dent in our deficit.

We make a lot of improper payments in this Government of ours. I chair a subcommittee that has jurisdiction over that sort of thing. We know our improper payments that we made into the Federal Government last year were right around $72 billion, mostly overpayments, some underpayments. We need to do a better job. At least we know now for the most part where the improper payments are going, or at least the departments that are making them, but we are not doing a very good job of actually going back, after we have made an overpayment, especially, and recovering the money, recapturing that money. We call it postaudit cost recoveries. We are just beginning to scratch the surface in one of our big entitlement programs, Medicare. Starting about 3 years ago we hired some private firms and said, For monies we have overpaid to providers or medical suppliers, corporate suppliers, let's go back and get the money we have overpaid. We said we were going to do it in three States--California, Texas, and Florida. The first year of this effort we recovered almost nothing. The second year we recovered a little bit. Last year we recovered about

$700 million. That is real money. The idea is not to just do it in 3 States but to do it in all 50 States, and I am encouraged that we are going to do that. If we can recover that kind of money for overpayments in Medicare, my guess is we could recover some money in Medicaid. If we have two of our three big entitlement programs that are sucking up a lot of money, one of the first issues we should face there is reducing the overpayments and going after the money and recovering that money we have overspent or, in some cases, misspent.

The third area we need to focus on is the area of major weapons systems. We have spent a lot of money. Going back to I think it was 2000, we were overspending on major weapons systems cost overruns by about $50 billion in 2000. In 2005 we were up to $200 billion. Last year we were close to $300 billion in major weapons systems cost overruns. Clearly that is an area where we can do better and have to do better. Secretary Gates has come forth with a number of proposals and reforms that deserve our support, and I hope they will enjoy our support as we go forward, to try to better align our weapons systems with buying for the kinds of wars we are likely to fight. We could do a much better job in terms of controlling our costs for those weapons systems as well.

The Federal Government owns a lot of property, not just land, not just military bases, not just buildings, but all of the above, and in some cases we don't use them. We pay security for those properties, we may pay utilities for those properties, but we don't use them. We don't do a very good job of disposing of properties that are not being used. We need to dispose of those properties. Those are only a couple of things we can do and ought to be doing. I hope in the years to come we will do more of each of those.

One other thing I would mention is most Governors have what we call line item veto power--the ability to go and line out a single line item in a budget. They have it by virtue of the Constitution so they can veto bills, they can go through the lines of their bills and veto lines and different pieces of a spending package that they have signed into law. We have something like that in the Federal Government. It is called rescission power. The President can sign an appropriations bill into law, submit that to the Congress, and the Congress can vote it up or down. But if we don't do anything, then it kind of goes away. The President sends rescission messages to us from time to time and we don't do anything, and the rescission of the proposal sort of goes away.

If we go back to 1995, 1996, there was a proposal in the Clinton administration that changed that. The idea was to make the President's rescission powers look more like line item veto powers. I thought it was a flawed effort. I think line item veto powers are oversold in terms of their value of reducing the deficit, but there is some virtue there. They are a good tool to have in the toolbox. But in 1995, 1996, what they came up with, it passed here in the House and Senate and it was signed into law. The President proposes a rescission, the Congress has to vote on it, and unless they vote it down with a two-thirds vote in the House and in the Senate, that proposed rescission is going to become law. Think about that. We are not talking about a bill. We are saying a line or a couple of lines in a bill, the President could propose to rescind those and his recommendations on rescinding spending in an appropriations bill or a tax bill or an entitlement bill, or all of the above, would actually become law unless two-thirds of the House and the Senate said no, we are going to override that. That is a huge shift of power from the legislative branch to the executive branch. I didn't think it was a good idea then. The Supreme Court didn't think it was a good idea either. If not the Supreme Court, one of the top circuit courts of appeal said they didn't think it was a good idea. They threw it out for being unconstitutional.

Having said that, I think the idea of at least compelling us to give a Presidential rescission a day in court, a day on the floor, is a good idea. What a number of us, 21 of us have done, is we have cosponsored legislation that we introduced this week, Democrats and Republicans. The idea behind the legislation is when the President signs a spending bill--not a tax bill, not a revenue bill, not an entitlement measure, but when he or she signs an appropriations bill into law, he or she would have the right to send us a rescission message to propose to reduce or rescind spending in that spending bill. We would constrain how much the President could rescind. He couldn't rescind more than 25 percent. If they are unauthorized, there is no limit. The long and short of it is, though, the President would send a rescission message and we would have to vote on it. We could vote it down with a simple majority; in the Senate, 51 votes, or in the House with 218--not a two- thirds override, not both Houses, just a simple majority in either the House or the Senate. We limit the time for this to occur. In fact, we limit the amount of years that this could be law to 4 years--4 years. I call it a 4-year test drive with enhanced rescission powers for a President. If the President abuses it, if the President should say to the Presiding Officer from New Mexico: Unless you vote for my top priorities, I am going to go after your top priorities, to try to intimidate a Member of the Senate or House--that could happen. As a result, we provide for this 4-year sunset. After that, the law goes away. If Presidents, current or future, continue to abuse this, they will not continue to enjoy this particular balance.

Do I think this will balance the budget? No, I don't. Do I think it might be of some help? Yes, I do.

I will close with a comment on earmarks. Some people think earmarks are the devil's work. The earmarks that we submit in my State--Senator Kaufman and myself, Governor Castle before he became Governor--were earmarks that we are proud of. We have three budgets in Delaware State government, and one of the major budgets is the operating budget which basically runs the State. The second is the capital budget--bricks and mortar, schools, roads, prisons, and that sort of thing. The third piece of our budget, the third budget, if you will, is something called a grant and aid budget. The Governor proposes the operating budget. The Governor proposes the capital budget in my State. The Governor doesn't propose the grant and aid budget in my State. That comes from the legislature. We found in the 1990s that the grant and aid budget was growing like Topsy, kind of crowding out spending in the operating budget and the capital budget. What we decided to do was put a constraint on the growth of the grant and aid budget, no more than 2 percent; no more than 2 percent of revenues. That put a halt to the growth and kind of put things back on the right keel.

With respect to earmarks, among the things we have done here--there is nothing inherently wrong with earmarks, directed spending, but when they are growing like Topsy, as they were for a while, that is not a good thing. We have now decided to limit earmarks to 1 percent of revenue which I think is appropriate.

The second thing we didn't know for the longest time is where the earmarks were coming from and who was asking for them. We didn't know necessarily who was going to benefit from the earmark. We have addressed that so we know both.

The other thing I believe we have addressed is called air drops, where you have a conference committee with the House and Senate on appropriations bills, you don't have an earmark in either one, yet out of the conference committee emerges an earmark from somebody and we don't know where it came from and it wasn't in either bill. That shouldn't be allowed.

The last thing I would mention is at the end of the day, you have the ability for the President to look through a bill, whether with earmarks or other forms of spending, and say maybe this is a bad idea. This is an egregious form of spending. It should be addressed, and basically say to us in the Senate or the House: I have signed this bill into law, but I wanted to come back and vote on a couple specific items. If I cannot get 50 colleagues to vote for an earmark that I have made on behalf of Delaware, I should probably not be asking for that earmark in the first place. That is the long and short of it.

There are a lot of things we can do to continue to make progress. We are getting down to 3 percent of GDP in the next 4 years, and I applaud that. There

are other things we want to do. I look forward to working with the chairman. Those are just a few of the ways we can make additional progress.

I applaud the chairman, and I thank him for all his work. I cannot imagine what it is like to bear the burden of this or any budget, but he has done it well and in good humor for a long time.