Floor Statements

Madam President, I suggest the absence of a quorum.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, this afternoon I will preside over a Foreign Relations Committee hearing on the future of U.S. public diplomacy. Never has public diplomacy been more important for promoting U.S. national security interests, especially in volatile regions and areas where we are engaged in counterinsurgency. In order to evaluate past achievements, successes, and challenges in public diplomacy, the committee invited three former Under Secretaries of State for Public Diplomacy to testify on the matter earlier today. Given their wide breadth of experience, they will share their views about lessons learned from their tenure and their recommendations on tools and future strategy.

The three former Under Secretaries who are participating--Evelyn Lieberman, Karen Hughes, and James Glassman--promise to provide incredibly useful insight, and I am grateful they are able to be here for the hearing today. Not only are they important voices on public diplomacy, they have also been dedicated public servants in both the Clinton and Bush administrations.

I wish to make a point here. They don't stay, as do the vast majority of the people we have talked about who have spent 10, 15, 20, 25, 30, 35 years in the government. These people come from a different group. They are the group who come for a short period of time and bring incredible expertise and intelligence to the issues we face--expertise and intelligence, by the way, that we in the Federal Government could never afford to pay for. These three are perfect examples of that, and that is one of the reasons I wish to recognize them today.

During their years of service as Under Secretaries of State for Public Diplomacy, they oversaw our State Department's efforts to promote American foreign policies abroad using tools such as educational exchanges, public affairs and embassy outreach, international broadcasting, and the establishment of American corners or centers. They did this through communication with international audiences, cultural programming, academic grants, and international visitors programs. Public diplomacy programs such as the Fulbright Fellowship and Sports Envoy exchanges bring emerging leaders from foreign countries to visit the United States, promoting a cross- cultural exchange and contributing to sharing an American perspective with the world.

Although these three officials come from different sides of the aisle, they each hold unique perspectives on American public policy, and all share--and I can say from firsthand experience they all share a love of country and dedication to service that called them to government service. I was honored to work with each of them in various capacities over the years, especially during my tenure on the Broadcasting Board of Governors.

Evelyn Lieberman is a native of New York and a graduate of State University of New York in Buffalo. She first entered government service in 1988 as press secretary to my predecessor, now Vice President Joe Biden. In those days I was serving as chief of staff, and I had the privilege to work with Evelyn early in her career. In 1993 Evelyn moved over to the White House where she served as Assistant to the First Lady, now Secretary of State Hillary Rodham Clinton. Three years later, after serving also as Deputy White House Press Secretary, she was appointed Deputy Chief of Staff under Leon Panetta.

In 1997, President Clinton appointed her as director of Voice of America, and she served there for 2 years. During that time, I was a member of the Broadcasting Board of Governors, which oversees Voice of America programming, and I was fortunate to work closely with Evelyn once more.

In 1999, President Clinton nominated Evelyn to serve as the State Department's first Under Secretary for Public Diplomacy, and she was confirmed by the Senate. He could not have picked a better person. What happened back then was, we took the Information Agency and split it into two pieces. The Broadcasting Board of Governors created an independent entity for that, and then we brought the rest into the State Department, and Evelyn was the one who got that started and got it started on the right foot. She stayed there until the Bush administration.

Since then, since 2002, Evelyn has continued a career in the Federal Government serving as the Director of Communications and Public Affairs for the Smithsonian Institution.

The second witness today is Karen Hughes, who was appointed by President Bush to this position after serving as Counselor in the White House from 2000 to 2002. A Texas native, she holds a bachelor's degree from Southern Methodist University. Before embarking on a career in politics, Karen worked in broadcast journalism for 7 years.

When she was appointed as Under Secretary for Public Diplomacy in 2005, Karen was given the rank of Ambassador to underscore the importance of public diplomacy as a central component of U.S. foreign policy. While she was there, Karen implemented important changes including the creation of a rapid response unit in her bureau at the Department of State and many others.

Upon leaving State in 2007 to pursue work in the private sector, Karen told the BBC that her greatest achievement was ``transforming public diplomacy and making it a national security priority, central to everything we do in government,'' which is the goal I believe continues to this day.

During her tenure as Under Secretary, she represented former Secretary of State Condoleezza Rice in meetings with the Broadcasting Board of Governors, and I had the opportunity to work with her on promoting a free press overseas.

I have worked with all three of these people. These are extraordinary public servants, Republicans and Democrats; people who have disagreements on many things but came to the government, took incredible financial sacrifice, and worked together to solve bipartisan problems that have put the public diplomacy effort in a positive light.

When Karen Hughes left the State Department, President Bush nominated James Glassman to take her place. James is a Harvard graduate and a prominent writer and journalist, to say the least. He was confirmed by the Senate in June 2008 as Under Secretary of Public Diplomacy. Jim has done a whole lot of things. He has held senior roles at a number of leading news organizations, including the New Republic, the Atlantic Monthly, and U.S. News and World Report. He is also a former owner and editor of Roll Call.

Before joining the Bush administration, Jim served as a fellow at the nonprofit American Enterprise Institute for 12 years. In 2007, Bush nominated him to be chairman of the Broadcasting Board of Governors, and he served in that role until moving to the State Department several months later. As I said, I worked with Jim during my service on the board, and I saw firsthand his dedication to promoting American values and policies overseas.

Since the Bush administration left office, Jim has been working in the nonprofit sector, and he was recently selected to lead a new public policy institute at the George W. Bush Presidential Library.

Think about this: Here I am, a Democrat, and I can tell my colleagues there aren't three better people with whom I have worked in the whole world than Evelyn Lieberman, Karen Hughes, and Jim Glassman. They care. We have a lot of fights about a lot of things, but when it came to public service, these three individuals all did incredible work.

Political appointees make up an important constituency in our Federal Government. When a President requests their service, they often make real sacrifices to respond to that call, and I can tell you without a shadow of a doubt, these three made incredible

sacrifices, financial and personal, to answer the call of this country.

I hope my colleagues will join me in thanking Evelyn Lieberman, Karen Hughes, and James Glassman for answering the call to serve and for their work on behalf of the American people.

I yield the floor.

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

Mr. President, I ask unanimous consent to speak in morning business for 20 minutes.

Mr. President, following morning business, the Senate will resume consideration of H.R. 4213, the tax extenders legislation. Last week, the majority leader filed cloture on the tax extenders legislation. As a result, there is an agreement for a 3 o'clock filing deadline of first-degree amendments. As previously announced, there will be no rollcall votes today. Senators should expect a series of votes to begin tomorrow morning.

Mr. President, I rise to speak today about the importance of engineering education. As my colleagues know, this is an issue near and dear to my heart.

I believe we are at a crucial moment for STEM--for science, technology, engineering, and mathematics--that often reminds me of sailing. Whether you have done much sailing or not, we all know that you can construct the perfect sailboat, outfit it with the best sails, man it with the greatest crew, and if the wind is not blowing, you will not move. The wind is blowing for STEM and I believe we must work effectively to capitalize on it now.

Today, America's engineers have a central role to play in developing the innovative technologies that will help our economy recover and promote real job growth. In particular, as the global economy turns increasingly competitive, many nations are investing heavily in training their future scientists and engineers.

We don't know where the next generation of innovation will come from. That is the nature of innovation. But we want to do what we can to make sure it comes from the United States. This means we must have an innovation policy, one that helps to generate greater interest in STEM and actually leads to the production of greater numbers of engineers.

A few weeks after I took office, I began meeting with groups of engineering deans and other leaders in the engineering community to discuss these issues. I have learned many important things from these conversations. For example, while all the surveys today say that young people want to ``make a difference'' with their lives, they do not see engineering as the way to do that.

To someone of my generation, this is an astounding revelation. Engineers have always been the world's problem solvers. We need to make sure students are aware of that--so they will aspire to take on the challenges we face today.

I also learned about a challenge occurring on many of our Nation's college campuses. In talking to engineering deans it is clear that the present economic downturn has exacerbated a problem that has been with us for quite a while--that is the additional cost of educating an engineering student, which requires an investment in labs and other costly facilities. Simply put, most universities make more money on liberal arts students than STEM students.

We must start educating college and university administrators about the long-term benefits to the university and to the United States of spending the additional money required to graduate more engineering students.

Many administrators do get it. One is Pat Harker, president of the University of Delaware and an engineering graduate from Penn. Working with his engineering dean Mike Chajes they have increased last year's entering engineering class by 25 percent, but they do not have the lab space to accommodate these students. They now have to hold lab classes for engineering students on Saturday.

To figure out how to address these issues and grow the engineers and scientists we need, I again met with a small group of deans in the fall and worked with the American Society of Engineering Education to give them a homework assignment.

Yes, I turned the tables on them. This time the professors had homework. We sent out an informal survey to solicit ideas on how to increase the number of graduates from our engineering schools. We received some very thoughtful feedback from nearly 25 deans across the country. These comments provide a very clear picture of what needs to be done. Several common themes emerged from the surveys.

To begin, many of these deans said that we need a better way to communicate to parents, teachers, students, and school counselors about what it means to be an engineer. There was a great idea from Maryland about creating a web site on the rock stars of engineering such as Bill Gates, Steve Jobs, Alan Mullaly, and others.

They also agreed that green jobs are an excellent way to show young people how engineers make a difference. I think this comment from New York sums it up best: ``Service to the community and the belief in great causes

resonates with the millennial generation. This makes green energy and clean tech the perfect vehicle to entice youth into considering careers in science and engineering.''

Overwhelmingly, they told me that students need better preparation in K-12 science, technology, engineering, and mathematics education. For the past 5 years, the College of Engineering at Marquette University has been engaged in a range of STEM activities to increase the number of K-12 students who are interested in studying engineering and prepared for college courses in the field.

Marquette hosts nearly 50 Discovery Learning Academies every year. At these events, students spend several days engaging in hands-on learning activities in robotics, water quality, biomedical engineering, energy, bridges, and more.

The university also supports Project Lead the Way courses that provide an engaging, hands-on curriculum in STEM education. They support First Robotics teams that inspire young people to be science and technology leaders through team robotics competitions.

They created a scholarship fund to aid students in pursuing engineering who could not otherwise afford to attend school there. And to bring school administrators and teachers into the effort, Marquette holds a conference to motivate educators to begin STEM-related activities in their schools.

Marquette's dean told us, ``We have been at this for five years now and over that time, our incoming freshman classes have increased by 46 percent.'' This is great news.

The surveys also told us that, even if our campuses had the physical space to teach more engineering students, these deans would need additional faculty members and research dollars. I have to tell my colleagues, I am so encouraged by what they are doing in Utah.

In 2002, Utah's Governor challenged the higher education community through what they call the ``Engineering Initiative,'' to double--and then triple--the number of engineers and computer scientists they graduate. Each year since, the legislature has allocated funds to support engineering education. These funds have been matched first by the university, then by corporate donations, and, finally, by the Federal Government.

Utah's Governor also prioritized building requests from the college of engineering, while the State legislature started the Utah Science, Technology, and Research--or U-STAR--Initiative. U-STAR provides salaries and startup packages to hire faculty who are doing research that can find commercial applications.

Tenure-track faculty members grew by 46 percent since Utah's Engineering Initiative began. From 2002 to 2009, engineering research expenditures went from $25 million to $56.9 million.

The number of engineering degrees granted by the University of Utah rose 76 percent in the past decade, and roughly 80 percent of these undergraduates accept engineering jobs right there in Utah.

What is more, the College of Engineering spun off 35 companies in the past 3 years. For the past 2 years, the University of Utah as a whole ranked second only to MIT in the number of startups. These results are just remarkable.

I truly am impressed with the work some of our Nation's engineering colleges are doing and I am inspired by their ideas. On our end, I think there are 4 things the Federal Government can do to bolster these efforts:

First, we can help inspire more young people to pursue engineering in the growing green economy. That is why I am so pleased that President Obama launched the ``Educate to Innovate'' campaign. This campaign is a nationwide effort of private companies, universities, foundations, nonprofits, and science and engineering societies working with the Federal Government to improve student performance and engagement in STEM subjects.

As part of the ``Educate to Innovate'' effort, President Obama announced an annual science fair at the White House, so that ``scientists and engineers stand side by side with athletes and entertainers as role models.'' I think that is a very powerful message to America's youth.

Second, we can build a new generation of engineers through policies that promote STEM education. The fiscal year 2011 Department of Education budget submitted by the administration includes $833 million for STEM education. This includes funding to improve teaching and learning of STEM subjects, to support STEM projects in the ``Investing in Innovation'' education program, to create a new STEM initiative to attract undergraduates to STEM fields, and to close the gender gaps in STEM disciplines.

In addition, I was pleased to join Senator Gillibrand and a number of my other colleagues in introducing legislation last week that will further these initiatives.

This bill is the Engineering Education for Innovation Act, or the E- squared for Innovation Act. This legislation authorizes the Secretary of Education to award competitive planning and implementation grants to States to integrate engineering education into K-12 instruction and curriculum. It also funds the research and evaluation of these efforts.

Based largely on recommendations from the National Academy of Engineering and the National Research Council's ``Engineering in K-12 Education'' report, 77 organizations have voiced their support for the E-squared Innovation Act.

The third important step the Federal Government can take is to promote policies that encourage women and underrepresented minorities to enter engineering. While women earn 58 percent of all bachelor's degrees, they constitute only 18.5 percent of bachelor's degrees awarded in engineering. We cannot let that go on. That is ridiculous. African Americans hold only 4.6 percent of bachelor's degrees awarded in engineering, and Hispanics hold only 7.2 percent. How can we move into the 21st century? How can we be the great country we are going to be if we are so underrepresented by women and minorities? We can and must do better.

Last year, a bipartisan group of 13 Senators joined me in writing the Appropriations Subcommittee on Agriculture to urge greater funding to increase participation of women and underrepresented minorities in rural areas in STEM fields. That is the second thing I talked about for STEM education where there is clear bipartisan support. STEM education is not a partisan issue; it gets bipartisan support. It is important for all of us, and we all agree.

I am grateful that in response, the Agriculture appropriations bill we enacted last October included $400,000 to fund research and extension grants at land grant universities for women and minorities in STEM fields. This was a small but important step that we can continue to build on from year to year.

Last, we must continue to support research and development, a challenge that requires significant Federal as well as private investment. In our current economy, it is often hard, especially in this body, to imagine investing more in anything. But as Congress has recognized over the years and what was reinforced in the survey responses I received is funding is the lifeblood of research institutions. To yield more innovation, we need more R&D funding so universities can hire more graduate assistants and faculty, accept more engineering students, and ultimately create more jobs.

Utah is a great example of the importance of investing in research and development. The Bureau of Economic and Business Research estimates that for every $1 million of research generated by Utah's research universities, $1.5 million is created in increased business activity.

Listen to that. We are all talking about how to generate business activity. For every $1 million of research generated by Utah's research universities, we get back $1.5 million in increased business activity.

Moreover, a forthcoming report from the Science Coalition features 100 companies that can be directly traced to influential research conducted at a university and sponsored by a Federal agency. Examples include Google, Cisco Systems, SAS.

I become more encouraged every day that we have growing support for engineering. Engineers and scientists will foster the research and innovation that continues to lead America on a path to economic recovery and prosperity. Likewise, these discoveries and innovations will create millions of new jobs,

and they will help us to invest in our future security and prosperity. This is the target. This is the way to get to long-term economic health.

I yield the floor.

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

Mr. President, I ask unanimous consent that on Tuesday, March 9, after any leader time, the time until 11 a.m. be for a period for the transaction of morning business, with Senators permitted to speak therein for up to 10 minutes each, with the time equally divided and controlled between the two leaders, with the Republicans controlling the first portion; that at 11 a.m., the Senate resume consideration of H.R. 4213 and proceed as under the order of March 5, with all provisions of that order remaining in effect.

Mr. President, I ask unanimous consent that when the Senate completes its business today, it adjourn until 10 a.m. on Tuesday, March 9; that following the prayer and pledge, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day,

and the Senate then proceed under the previous order; further, that upon conclusion of the votes outlined in the order of March 5, the Senate then stand in recess until 2:15 p.m., in order to accommodate the respective party conferences.

Mr. President, I further ask unanimous consent that the time between 2:15 p.m. and 2:30 p.m. be divided equally between the leaders on each side.

Mr. President, tomorrow the Senate will resume consideration of the tax extenders legislation and conduct up to four rollcall votes beginning at 11 a.m. As a reminder, the filing deadline for second-degree amendments is 12 noon tomorrow; further, under a previous order, the cloture vote on the substitute amendment will occur at 2:30 p.m. tomorrow.

Mr. President, if there is no further business to come before the Senate, I ask unanimous consent that it adjourn under the previous order.

Madam President, it has been just over a year since I took office and since President Obama was sworn in. I think it is a good time and appropriate to reflect on just how far we have come. A year ago, the Presiding Officer and I came into office in the midst of the worst economic crisis since the Great Depression.

We had been spiraling deeper and deeper into recession for over a year. Almost three-quarters of a million jobs were lost in the month of January 2009 alone. Our credit markets were frozen, major edifices of our economic landscape had collapsed or were tottering on the brink, from Lehman Brothers to General Motors. Alarms were still ringing. Emergency policies were thrown in to the breach, things were bad, and there was no way to know how much worse they were going to get. We were on the precipice.

We could have fallen into the abyss, if not for the extraordinary actions we took. Those actions saved us from another full-blown depression. We are still not out of the woods, of course. Although we have had some good news recently, too many families, too many communities have been hit hard by job losses and falling home values. But we are nevertheless beginning to see evidence that we are finally turning the corner as a nation. While things are still not good, they are no longer getting worse and, in some areas, we have actually seen real improvement. I wish to share with my colleagues some of that evidence.

Here I have a chart showing the Dow Jones industrial average since October 2008. We all know it is not always the best indicator of economic health, but since the downturn was precipitated by turmoil in our financial markets, I will start with this.

As you can see, the market bottomed out just weeks after the Recovery Act was enacted, and it has been climbing ever since. The chart clearly shows we stopped the free-fall, we stabilized the market, and we are allowing it to grow again.

Here is another chart showing the Purchasing Managers Index. This is a survey of purchasing managers who report whether business conditions are better than, the same as or worse than the previous month. A score of 50 means no change, so anything over that should mean the economy is expanding. Anything below indicates the economy is shrinking. In this chart, it is clear business confidence plummeted in the fall of 2008. Only four times in the postwar period has this index fallen so low and never in the last quarter century. We can see it was not until March of last year, right after the Recovery Act took effect, that manufacturing confidence began to return. With other data, we know this occurred as businesses began rebuilding inventories, confident they had weathered the cash crisis of the winter.

This next chart shows our GDP growth over the last 3 years, from the beginning of 2007 to the end of last year, the last date for which we have good data. I have added a smoothing line to show the trajectory our economy has taken. As you can see, in 2008, the bottom fell out. It wasn't until last spring that we began to restore order. I will not pretend 6.3 percent growth for one quarter is good enough for me. Without jobs, it isn't. But it is clearly better than what was happening 12 months ago.

My last two charts, which address jobs, tell the most important tale. We know from past experience that job growth lags behind economic recovery. This chart shows how long that took in

previous postwar recessions. In every single postwar recession, jobs have lagged the economic recovery, whether it is 1 month in July 1908 or 22 months in November 2001 and everything in between.

There is a reason for this. Businesses need to use up their existing capacity, and they need to feel confident in the economic climate before they start expanding again. This process can be especially painful following a financial collapse, where businesses and households are forced to pare down their savings and reduce their spending. By doing that, they tamp down economic recovery, reduce spending, and that is why jobs have been slower to return than anyone would like. Also remember, if you are running a company and you have laid off people, that is a very traumatic experience. You don't want to do that again. The worst situation of all is to start hiring people back and then have to lay them off again. Businesspeople, especially those who care, don't want to hire people back until they are sure they can offer them a job they can keep. Can you imagine putting somebody through this twice?

It is important to remember this lag. Economists suggest we may be around 8 months into economic recovery, and the jobs are coming. We are 8 months into economic recovery, and the jobs are coming. While the record of recent recoveries is a sobering one, the last chart I have shows the beginning of our good news. With announcements over recent weeks, we have seen that unemployment is stabilized and may even be turning around. We have staunched the bleeding. All those charts show things started picking up right after we passed the stimulus bill.

That is not the only thing we did. There were extraordinary efforts to stabilize the financial sector through direct assistance and low interest rates. But passage of the Recovery Act marked the beginning of the turnaround. That is indisputable, looking at the data. Passage of the Recovery Act marked the beginning of the economic turnaround. We cannot be satisfied until we have all our jobs back, until our economy is working for everyone. But one thing we know for sure is that without the Recovery Act, we would be a lot worse off.

I wish to stress, this will not be a smooth path back to a healthy economy. There will be good days and bad days, good news and bad news. But these indicators show we have turned the corner, thanks in no small way to Recovery Act money that is still going out. Nationally, nearly 2 million jobs have been saved or created by activities funded by the Recovery Act. This is not something I alone am claiming. Economic experts from Moody's, CBO, Macroeconomic Advisers and more are telling the same story. But that is not all the Recovery Act has done. It has also given a helping hand to millions of Americans out of work by expanding and extending unemployment insurance. Meanwhile, 95 percent of working Americans benefited from tax relief. Under the Recovery Act, 95 percent of all working Americans benefited from the tax relief.

State and local governments received badly needed fiscal relief that allowed them to maintain essential services, including health coverage for millions of Americans, and retain workers which kept cops on the beat and teachers in the classroom. We will never know how bad the economy would have been if we had not acted. That is the nature of things. But the charts I have shown all tell the very same story, of an economic free-fall that has been slowed, stopped, and reversed.

Do any of my colleagues believe we would be in a better situation today without the Recovery Act? The timeline is clear. The data are clear. The Recovery Act is what brought the economy back.

The challenge we faced 1 year ago was a roughly $2 trillion hole in the economy. Consumer spending, fully two-thirds of the whole economy, was in free-fall. Failing to plug the gap would have continued the free-fall or, just as badly, condemned us to a lost decade similar to what Japan saw in the 1990s. During 1990s, the Japanese did not come back with a major effort such as the Recovery Act, and they had GDP level for a decade. You can imagine what that did to revenues, their deficit, and their jobs. That is what we would have been condemned with, if we had not gone with the Recovery Act.

Let's tell the truth about how we got here. It is absolutely essential to remember what the situation was 1 year ago when the administration came into office, not to go back and go over things that happened in the past but to make sure we don't do it again and to understand what caused this recession. The circumstances we inherited at the end of 8 years of the prior administration were the worst we have seen in generations. When the Bush administration came to office in 2001, the Federal budget was not only balanced, it was in surplus, in surplus to the tune of $236 billion, the largest surplus in half a century. Remember that. That was not that long ago. We were actually debating how quickly we were going to be free of debt as a country. We were on a path to financial independence, able to save for retirement of the baby boom generation, able to set aside something for a rainy day. That was only 10 years ago.

Tragically, that inheritance was squandered. Instead of a surplus of $710 billion that was projected in 2001 for last fiscal year, 2009, we wound up with a $1.6 trillion deficit. I hear my friends on the other side talk about deficits. This $1.6 trillion deficit didn't just develop. It came out of the policies of the last 8 years.

Two major factors account for the bulk of this reversal of fortune. First were the economic and budget policies of the last administration which gave no thought to paying for tax cuts or spending increases. We just had a debate about paying for the $10 billion for an employment extension. But we actually passed tax cuts, Medicare, other things that were never paid for that were hundreds of billions of dollars, not $10 billion, hundreds of billions. Tax cuts primarily for the wealthy and the wars in Iraq and Afghanistan together accounted for more than $500 billion of the 2009 deficit and $7.1 trillion over the next decade and none of it was paid for.

Second, we had the regulatory failures which permitted, even encouraged, the financial excesses that brought our markets down. They not only permitted it; they encouraged it. There was a feeling you didn't have to do any kind of regulation, only self-regulation. Alan Greenspan himself said he was dismayed self-regulation didn't work. That financial collapse battered our economy, reducing revenues and increasing necessary spending on unemployment insurance, food stamps, and other support programs. Here we are on the floor debating unemployment insurance, food stamps, and other support programs, when in the previous administration, when Congress was controlled by the other side, they didn't talk about these issues that cost over $7.1 trillion. They were not funded. There was no funding for the Medicare prescription drug program. There was no funding for the tax cuts. It is true the budget for next year will not be as close to balance as we all would wish, but I believe that is because of the hand we were dealt.

The best way to bring the budget back into order over the long run is to grow our economy. This is something everybody in this building believes in. Our inheritance from the previous administration was tax cuts, overwhelmingly tilted toward those who were already well off, unfunded new entitlement programs, and two wars paid for with borrowed money. All these transformed our country's finances, leading us down the path to where we are now, potentially on the brink of fiscal ruin. Instead of saving for the future, we are borrowing billions from China, Japan and other countries and falling deeper into debt.

There are two kinds of deficits, and we have not done a good job explaining this. Economists will agree. There is the deficit you create in good times by profligate spending and tax cuts. That is one kind of deficit. When the economy is going well, you should be building surpluses. However, once you are in the hole, you have to get out of the hole, and that is a different kind of deficit. For that kind of deficit, you need to get the economy moving again because growth is the only way you are going to get out of the hole.

President Bush inherited a balanced budget, a vast fiscal surplus projected at the time to be $5.6 trillion over 10 years. Instead, he left office having added nearly $5 trillion to the national

debt. That is a swing of $10 trillion. That means the Bush years cost roughly $30,000 for each and every American. I hear people from the other side talk about the deficit. This was a $10 trillion swing starting just 10 years ago and going up 2 years ago. What amnesia. Take a look at what happened. What I am telling you are the facts. We can argue about policy but, in fact, we were in surplus and had a projected $5.6 trillion surplus when President Clinton left office. We ended up with a swing of $10 trillion, adding $5 trillion to the national debt. Those are facts. Senator Moynihan from New York used to say everybody is entitled to their opinion but not to the facts. The facts are, there was a $5.6 trillion projected surplus when President Bush took office, and we are left with a $5 trillion deficit. That adds up to $10 trillion. In fact, it adds up to $10.6 trillion.

I think those of us who supported the Recovery Act need to own up to our own mistake: We have done a lousy job of explaining why the Recovery Act was needed and how it is working. We are doing a good job explaining the Web sites, but we have not done the macroeconomic explanation of why you cannot have jobs come back until the economy comes back. You cannot have the economy come back without having the Recovery Act.

To start with, I will say I know it increases the deficit in the short term. I don't like it, but that was an unavoidable byproduct. The best long-term solution to our debt problems is not a little frugality that cuts down on growth. It is a robust, healthy, growing economy. That is why most economists believe--when I say ``most,'' I should say the vast majority--that in spite of the short-run deficit hit of the Recovery Act, it will bring us closer to fiscal balance over the long term.

I know some of my colleagues on the other side of the aisle will take issue with this statement. I would simply remind them it is economic growth--something they have talked about for years--and economic growth alone, that will get us out of our present mess.

There is another mistake we made. As we were diligently working to ensure accountability for the program--and we have done a great job of that; and that is important--and connected specific parts of the Recovery Act to specific jobs created, we have missed the forest for the trees in our explanation. We have lost track of the real objective: to jump-start the broader economy. That is where the jobs are going to come from--the main jobs.

While the Recovery Act itself has created or saved 2 million jobs-- independent analysis confirms this--perhaps its most important impact has been the renewed confidence it has given to our economy. I absolutely totally, completely believe that. The jobs will come. The jobs will come. They always lag behind the economy. When the economy goes up, the jobs are not far behind.

The charts do not lie. We are rebounding. By returning faith to our consumer economy, the Recovery Act has had a much greater effect than the sum of its parts. To those who opposed the Recovery Act, I ask: What was your plan? Some said--and I presided and listened to the arguments--we should fill a $2 trillion hole in our economy with $200 billion. That was a plan doomed to failure. That is what the Japanese did, and they were faced with a decade of no growth.

Economists far and wide said that a $200 billion Recovery Act would have failed to halt a fall into depression. No reputable economists-- none--said this would have taken us from where we were--where we were a year ago, with 730,000 jobs being lost--to a 6-percent growth in gross domestic product for the fourth quarter of last year.

We have come a long way in this past year. We have not come far enough yet. We have a long way to go. But I believe to move forward we must remember how bad things were when we began, just how deep a hole we were in, and we are pulling ourselves out of it now. The Recovery Act has done its job and will continue to do its job.

Madam President, I yield the floor.

Amendment No. 3354 To Amendment No. 3336

(Purpose: To encourage energy efficiency and conservation and

development of renewable energy sources for housing, commercial structures, and other buildings, and to create sustainable communities)

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

Madam President, I ask unanimous consent to speak in morning business for up to 20 minutes.

Thank you, Madam President.

Madam President, I have spoken on the Senate floor many times about the importance of transparency in our markets. Without transparency, there is little hope for effective regulation. And without effective regulation, the very credibility of our markets is threatened.

But I am concerned that recent changes in our markets have outpaced regulatory understanding and, accordingly, pose a threat to the stability and credibility of our equities markets. Chief among these is high-frequency trading.

Over the past few years, the daily volume of stocks trading in microseconds--the hallmark of high-frequency trading--has exploded from 30 percent to 70 percent of the U.S. market. In the past few years, this trading has exploded from 30 percent to 70 percent of the entire U.S. trading market.

Money and talent are surging into a high-frequency trading industry that is red hot, expanding daily into other financial markets not just in the United States but in global capital markets as well.

High-frequency trading strategies are pervasive on today's Wall Street, which is fixated on short-term trading profits. Thus far, our regulators have been unable to shed much light on these opaque and dark markets, in part because of their limited understanding of the various types of high-frequency trading strategies. Needless to say, I am very worried about that.

Last year, I felt a little lonely raising these concerns. But this year, I am starting to have plenty of company.

On January 13, the Securities and Exchange Commission issued a 74- page Concept Release to solicit comments on a wide range of market structure issues. The document raised a number of important questions about the current state of our equities markets, including:

Does implementation of a specific [high-frequency trading]

strategy benefit or harm market structure performance and the

interests of long-term investors?

The SEC also called attention to trading strategies that are potentially manipulative, including momentum ignition strategies in which ``the proprietary firm may initiate a series of orders and trades (along with perhaps spreading false rumors in the marketplace) in an attempt to ignite a rapid price move either up or down.''

The SEC went on to ask:

Does . . . the speed of trading and ability to generate a

large amount of orders across multiple trading centers render

this type of a strategy more of a problem today?

The SEC raised many critical questions in its concept release, and I appreciate that the SEC is going to undertake a baseline review.

As its comment period moves forward, I am pleased to report that other regulators and market participants, both at home and abroad, have taken notice of the global equity markets' recent changes, including the rise in high frequency trading.

In the United States, the Federal Reserve Bank of Chicago, in the March 2010 issue of its Chicago Fed Letter, argued that the rise of high-frequency

trading constitutes a systemic risk, asserting:

The high frequency trading environment has the potential to

generate errors and losses at a speed and magnitude far

greater than that in a floor or screen-based trading

environment.

In other words, high-frequency trading firms are currently locked in a technological arms race that may result in some big disasters.

Citing a number of instances in which trading errors occurred, the Chicago Fed stated:

A major issue for regulators and policymakers is the extent

to which high frequency trading, unfiltered sponsor access

and co-location amplify risks, including systemic risk, by

increasing the speed at which trading errors or fraudulent

trades can occur.

Moreover, the letter cautions about the potential for future high- frequency trading errors arguing:

Although algorithmic trading errors have occurred, we

likely have not yet seen the full breadth, magnitude, and

speed with which they can be generated.

There is action internationally as well. On February 4, Great Britain's Financial Services Secretary, Paul Myners, announced that the British regulators were also conducting an ongoing examination of high- frequency trading practices, stating:

People are coming to me, both market users and

intermediaries, saying that they have concerns about high

frequency trading.

These developments come on the heels of another British effort targeting so-called ``spoofing'' or ``layering'' strategies in which traders feign interest in buying or selling stock in order to manipulate its price. In order to deter such trading practices, the Financial Services Authority, FSA, announced that it would fine or suspend participants who engage in market manipulation. Noting that some market participants may not be sure that spoofing or layering is wrong, the FSA spokesman said: ``This is to clarify that it is.''

In Australia, market participants are also requesting clearer definitions of market manipulation, particularly with regard to momentum strategies such as spoofing. In a review of algorithmic trading published on February 8, the Australian Securities Exchange called on its regulators to ``ensure that . . . market manipulation provisions . . . are adequately drafted to capture contemporary forms of trading and provide a more granular definition of market manipulation.''

It is critical our regulators understand the risks posed by high- frequency trading both in terms of manipulation and at a systemic level. As the Chicago Fed stated, the threat of an algorithmic trading error wreaking havoc on our equities markets is only magnified by so- called ``naked'' or unfiltered sponsored access arrangements, which allow traders to interact on markets directly--without being subject to standard pretrade filters or risk controls.

Robert Colby, the former Deputy Director of the FEC's Division of Trading and Markets, warned last September that naked access leaves the marketplace vulnerable to faulty algorithms. In a speech given at a forum on the future of high-frequency trading, which was cited by the Chicago Federal Reserve's recent letter, Mr. Colby stated that hundreds of thousands of trades representing billions of dollars could occur in the 2 minutes it could take for a broker-dealer to cancel an erroneous order executed through naked access.

According to a report released December 14 by the research firm Aite Group, naked access now accounts for a staggering 38 percent of the market's average daily volume compared to only 9 percent--compared to 9 percent--only 4 years ago. That means in just 4 years, what has been determined to be a risky enterprise has increased from 9 percent of the market's average daily volume to 38 percent. That is almost 40 percent of the market's volume being executed by high-frequency traders interacting directly on exchanges without being subject to any pretrade risk monitoring.

In January, the SEC acted to address this ominous trend by proposing mandatory pretrade risk checks for those participating in sponsored access arrangements. This move would essentially eliminate naked access, and I applaud the SEC for its proposal.

While I am pleased that the SEC has taken on naked access and has issued a concept release on market structure issues, there is much more work that still needs to be done in order to gain a better understanding of high-frequency trading strategies and the risks of front running and manipulation they may create. In the last few months, several industry studies aimed at defining the benefits and drawbacks of high-frequency trading have emerged. While these studies may not be the equivalent of a peer-reviewed academic study, they do have the credibility of real-world market experts, and they begin to shed light on the opaque and largely unregulated, high-frequency trading strategies that dominate today's market.

In addition to the Aite Group study, reports by the research group, Quantitative Services Group, QSG; the investment banking firm, Jefferies Company; the dark pool operator, Investment Technology Group, ITG; and the institutional brokerage firm, Themis Trading, all raise troubling concerns about the costs of high-frequency trading to investors and reinforce the need for enhanced regulatory oversight of these trading practices.

Last November, QSG analyzed the degree to which orders placed by institutional investors are vulnerable to high-frequency predatory traders who sniff out large orders and trade ahead of them. Specifically, the study concluded that splitting large orders into several smaller ones not only enhances the risk of unfavorable changes in price but also increases ``the chances of leaving a statistical footprint that can be exploited by the `tape reading' HFT algorithms.''

While traders have long tried to trade ahead of large institutional orders, they now have the technology and models to make an exact science out of it.

In a study put forth on November 3, the Jefferies Company examined the advantages high-frequency traders gain by colocating their computer servers next to exchanges and subscribing directly to market data feeds.

Jefferies estimates that these advantages afford high-frequency traders a 100- to 200-millisecond advantage over those relying on standard data providers. As a result, Jefferies concludes, high- frequency traders enjoy ``almost risk-free arbitrage opportunities.''

A Themis Trading white paper released in December elaborated on Jefferies' conclusion, noting that the combination of speed and informational advantages allow high-frequency traders to ``know with near certainty what the market will be milliseconds ahead of everybody else.''

The studies and papers I have mentioned underscore the need for the Securities and Exchange Commission to implement stricter recording and disclosure requirements for high-frequency traders under a large trader authority, as Chairman Mary Schapiro promised in a letter to me on December 3. We need--and we need now--tagging of high-frequency trading orders and next-day disclosure to the regulators, and we need them now.

For investors to have confidence in the credibility of our markets-- and that is absolutely key. America is great because of the credibility of our markets. If we don't have credible markets, we are in deep trouble. It is one of the things that makes America great and unique. For investors to have confidence in the credibility of our markets, regulators must vigorously pursue a robust framework that maintains strong, fair, and transparent markets.

I would make five points along these lines.

First, the regulators must get back in the business of providing guidance to market participants on acceptable trading practices and strategies. While the formal rulemaking process is a critical component of any robust regulatory framework, so, too, are timely guidelines that bring clarity and stability to the marketplace.

Colocation, flash orders, and naked access are just a few practices that seem to have entered the market and have become fairly widespread before being subject to regulatory scrutiny. For our markets to be credible--and it is essential that they remain credible--it is vital that regulators be proactive--rather be reactive, when future developments arise.

Second, the SEC must gain a better understanding of current trading strategies by using its ``large trader'' authority to gather data on high-frequency trading activity. Just as importantly, this data, once masked, should be made available to the public for others to analyze.

I am concerned that academics and other independent market analysts do not have access to the data they need to conduct empirical studies on the questions raised by the SEC in its concept release. Absent such data, the ongoing market structure review predictably will receive mainly self-serving comments from high-frequency traders themselves and from other market participants who compete for high-frequency volume and market share.

Evidence-based rulemaking should not be a one-way ratchet because all the ``evidence'' is provided by those whom the SEC is charged with regulating. We need the SEC to require tagging and disclosure of high- frequency trades so that objective and independent analysts--at FINRA, in academia, or elsewhere--are given the opportunity to study and discern what effects high-frequency trading strategies have on long- term investors. They can also help determine which strategies should be considered manipulative.

Third, regulators must better define manipulative activity and provide clear guidance for traders to follow just as Britain's regulators have done in the area of scrutiny. By providing rules of the road, regulators can create a system better able to prevent and prosecute manipulative activity.

Fourth, the SEC must continue to make reducing systemic and operational risk a top regulatory priority. The SEC's proposal on naked access is a good first step, but exchanges must also be directed to impose universal pretrade risk tests. If that is solely in the hands of individual broker-dealers, a race to the bottom might ensue. We simply must have a level playing field when it comes to risk management that protects our equities markets from fat fingers or faulty algorithms. Regulators must therefore ensure that firms have proprietary operational risk controls to minimize the incidence and magnitude of any such errors while also preventing a tidal wave of copycat strategies from potentially wreaking havoc on our equity markets.

Fifth, the SEC should act to address the burgeoning number of order cancellations on the equities markets. While cancellations are not inherently bad--they can in fact enhance liquidity by affording automated traders greater flexibility when posting quotes--their use in today's marketplace, however, is clearly accessible and virtually a prima facie case that battles between competing algorithms, which use cancelled orders as feints and indications of misdirection, and have become all too commonplace, overloading the system and regulators alike.

According to the high-frequency trading firm T3Live, on a recent trading day only a little more than 1 billion of the over 89 billion orders on NASDAQ's book were ever executed, meaning a whopping 99 percent of total bids and offers were not filled. Cancellations by high-frequency traders, according to T3Live, are responsible for the bulk of these unfilled orders.

The high-frequency traders that create such massive cancellation rates might cause market data costs for investments to rise, make the price discovery process less efficient, and complicate the regulator's understanding of continuously evolving trading strategies. What is more, some manipulative strategies, including layering, rely on the ability to rapidly cancel orders in order to profit from changes in price.

Perhaps excessive cancellation rates should carry a charge. If traders exceed a specified ratio of cancellations to orders, it is only fair that they pay a fee. The ratio could be set high enough so that it would not affect long-term investors or even day traders and should apply to all trading platforms, including dark pools and ATSs, as well as exchanges.

The high-frequency traders who rely on massive cancellations are using up more bandwidth and putting more stress on the data centers. Attempts to reign in cancellations or impose charges are not without precedent. In fact they have already been implemented in derivatives markets where overall volume is a small fraction of the volume in cash market for stocks. The Chicago Mercantile Exchange's volume ratio test and the London International Financial Futures and Options Exchange's bandwidth usage policy both represent attempts to reign in excessive cancellations and might provide a helpful model for regulators wishing to do the same.

Finally, the high frequency trading industry must come to the table and play a constructive role in resolving current issues in the marketplace, including preventing manipulation and managing risk. In order to maintain fair and transparent markets and avoid unintended consequences, market participants from across the industry must contribute to the regulatory process. I am pleased that a number of responsible firms are stepping forward in a constructive way, both in educating the SEC and me and my staff. I look forward to continue to working with these industry players.

We all must work together, in the interests of liquidity, efficiency, transparency and fairness to ensure our markets are the strongest and best-regulated in the world. But we cannot have one with the other--for markets to be strong, they must be well-regulated. So with this reality in mind, I look forward to working with my colleagues, regulatory agencies, and people from across the financial industry to ensure our markets are free, credible and the envy of the world.

Madam President, I ask unanimous consent that links to some of the studies I have mentioned be printed in the Record.

Madam President, I ask unanimous consent to speak in morning business for up to 5 minutes.

Madam President, I rise again to pay tribute to one of our Nation's great Federal employees.

From the day of its creation as the first executive department in 1789, the State Department has carried out the important work of American diplomacy, pursuing peaceful relations between the United States and other nations around the world. When our role as a world power grew in the late 19th century, our diplomats became peacemakers among nations. Since the end of World War II, we heavily invested our time, treasure, and human capital in the preservation of global peace during a time wrought with potential for war and mass destruction.

Today, in the aftermath of the Cold War and the September 11 attacks, our State Department personnel, and our Foreign Service officers in particular, work tirelessly to promote the American values of liberty and international cooperation.

Stationed in every region, they daily endure risks to their health and safety. They leave behind family and a familiar culture. These talented and dedicated men and women are the living embodiment of President Kennedy's declaration that, while we must never negotiate out of fear, we must never fear to negotiate.

Those in the Foreign Service must pass a rigorous examination and be prepared to serve in any of our 250 posts around the world. They have jobs as consular officers assisting Americans abroad, political or economic officers analyzing trends in foreign countries and promoting U.S. interests, management officers running our embassies or public diplomacy officers who share the story of America with foreign audiences.

The most senior and successful diplomats may become ambassadors, the public face of our Nation and the President's personal representatives abroad.

One distinguished Ambassador whose career exemplifies the work of our Foreign Service is Anne Patterson.

A native of Arkansas, Anne studied at Wellesley College and the University of North Carolina. She first joined the Foreign Service in 1973 as an economic

officer. Her initial postings overseas included Saudi Arabia and the United Nations offices in Geneva, Switzerland. From 1991 to 1993, Anne served as the State Department's Director for Andean Countries and later was appointed Deputy Assistant Secretary for Inter-American Affairs.

In 1997, Anne was nominated and confirmed as Ambassador to El Salvador, where she served for 3 years. She became our Ambassador to Colombia in 2000. While escorting the late Senator Paul Wellstone on a visit that year to a rural town, an explosive device was found nearby by local security forces. That incident underscores the reality of the many dangers our Foreign Service officers face while serving overseas.

Anne returned to Washington in 2003, where she served as deputy inspector general for the State Department. The following year, she was appointed Deputy Permanent Representative to the United Nations in New York. After U.N. ambassador John Danforth resigned in January 2005, Anne became acting ambassador, representing the United States at the United Nations. She continued to serve in that role for 6 months.

From 2005 to 2007, Anne led the State Department's Bureau of International Narcotics and Law Enforcement Affairs. In May 2007, after Ambassador Ryan Crocker left Islamabad to take up his post in Iraq, President Bush nominated Anne to serve as our Ambassador in Pakistan. She continues her work in Islamabad to this day, representing our Nation at a time of great importance with the United States-Pakistani relationship.

During the times I have had the honor of visiting her and our Embassy officials in Pakistan, I have been impressed by her dedication to furthering Americans' priorities in that country, to protecting our national security interests, and to managing our talented team on the ground.

The life of a Foreign Service officer is not easy. Anne and her husband and her two sons and stepdaughter can attest that Foreign Service families face many challenges during a career of living overseas and moving frequently. In addition, Foreign Service families must make significant sacrifices to serve in dangerous locales, such as Pakistan, Afghanistan, and Iraq, where there are restrictions on bringing spouses and children to post. These officers serve in the face of great hardship, not for financial reward but for the satisfaction of serving the United States of America, protecting its interests, and promoting peace among nations.

I hope my colleagues will join me in recognizing the enormous contribution made by Ambassador Anne Patterson and all those who serve in the Foreign Service and the State Department.

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

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

Madam President, I ask unanimous consent to speak as in morning business for up to 5 minutes.

Madam President, I yield the floor and suggest the absence of a quorum.