Floor Statements

Mr. President, I ask unanimous consent--I think this has been discussed on both sides--that we have up to 30 minutes equally divided on this amendment before the vote.

I have no objection.

Mr. President, I appreciate the efforts of those who have worked on this financial responsibility bill. I wish to say, however, that I do not believe they have reached a successful conclusion, one that is principled and lawful in describing and mandating how a company that cannot pay the bills should be dissolved.

Throughout America, hundreds of thousands of businesses every day that are unable to pay their bills seek protection, as they often call it, in bankruptcy. All the claims against the company are stayed. A bankruptcy judge, skilled in these matters, in an open, public hearing, with witnesses under oath, determines whether the company has a realistic chance to survive and help structure the bankruptcy reorganization so it can survive, or it determines that the company is unable to survive, that it is unlikely they could pay off their creditors and most likely would only add to the debt, and they close the company down.

This is and has been the law in America since virtually the founding of the Republic. It is something that is principled, well settled as to how it occurs.

This legislation is the exact opposite, in a sense, it institutionalizes the TARP process. Only now, they will not have to come to Congress, as they did this last time, over how to dissolve some big company. They will have too much power, in my view, in a sealed proceeding--not public, not under oath--too much like the last time when the Secretary of the Treasury meets in private meetings with bankers and doles out billions and billions of dollars, puts $100 billion, $80 billion in an insurance company, AIG, all without any accountability, all without any oversight, all without the kind of integrity that is the essence of the American legal system.

I am concerned about it. My amendment would make bankruptcy more usable for large, complex cases that have derivatives in it. It would allow the cases to be brought in large bankruptcy court areas so that there is sufficient expertise and personnel to handle it, and it would deal with the problem of derivatives that some have raised and gives the courts more flexibility to do that. I think it is the better approach. It is our historic, fair approach. The American people will know the same judgment that falls on them and their small businesses will fall on the big boys.

I appreciate the opportunity to make these brief remarks. I see Senator Corker and Senator Kyl are here, and I will yield.

Mr. President, how much time remains on this side?

Mr. President, I wish to share a few things briefly before we move into the vote. William Kristol today raised a fundamental question in a blog site regarding the way this bill is written when he said:

This is a giant power grab for the FDIC and Treasury, who

could use their new powers to tug the strings of our

country's largest financial institutions like a puppeteer.

I would also refer to a letter of April 12, from the Judicial Conference of the United States. This is a thoughtful letter in response to an inquiry from Patrick Leahy, the Judiciary Committee chairman, in which they express grave concerns about the legislation. Among other things, the Judicial Conference says:

The legislation does not envision objection, participation,

or input from the bankruptcy creditors (whose rights will be

affected) in the course of appointing the FDIC as receiver.

Indeed, the legislation proposes to deal with this petition

in a sealed manner, only the Secretary and the affected

financial firm would be noticed and given the opportunity of

a hearing.

I think that is insufficient.

Finally, I received a letter today from a number of superb and well- known economists, legal scholars and leaders--Darrell Duffie, Dean Witter Distinguished Professor at the Graduate School of Business, Stanford University; Tom Jackson, Distinguished University Professor, University of Rochester; Kenneth Scott, Parsons Professor Emeritus of Law and Business, Stanford Law School, George P. Shultz, Distinguished Fellow, Hoover Institution, David Skeel, Professor of Corporate Law, University of Pennsylvania and John B. Taylor, Professor of Economics, Stanford University.

I ask unanimous consent for 30 additional seconds.

Mr. President, these individuals put forth in detail their concerns about this procedure, and they point out why bankruptcy is necessary, because the rule of law applies and the process is more defined in this appropriate way. They tell us, with much care, why my amendment would be the best way to solve this problem. They say, in part, the following:

Despite the best intentions by the sponsors of Title II,

our view is that it will increase rather than decrease the

likelihood of financial crises . . . It might be preferable

for the Congress [to] wait until the Financial Crisis Inquiry

Commission completes its report . . . In the meantime,

however, proposed amendment No. 3832, which has been filed by

Ranking Member Sessions of the Senate Judiciary Committee,

takes a bankruptcy route . . . Amending Title II along these

lines would be a big step toward the bankruptcy approach we

favor, and we urge you to move in this direction.

Mr. President, I ask unanimous consent to have printed in the Record the three items I have just quoted from.

I thank the Chair, and I yield the floor.

Mr. President, I wish to call up amendment No. 3832 and ask for its immediate consideration.

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

Mr. President, they say the proof is in the pudding. The proof is an ultimate test of an idea or an evaluation. It literally means you can show us a wonderful recipe and tell us about the fine ingredients, but we want to know what it tastes like in the end. The actual result is what is important. So I think the American people know that in the bill we are dealing with today, we are still too involved in the maneuvering of the dissolution of companies that fail. We create special procedures for larger companies than we do for routine companies throughout the country. The pudding tastes bad.

My colleagues tell us this bill has the right ingredients, but the ultimate result, I think, is to provide government-funded bailouts in some way or another, through another name, actually now called orderly liquidation authority. I understand the provisions are better perhaps than they were when the discussions began and are more rigorous in some ways. I still feel more needs to be done to create the kind of integrity and the consistency and the principled approach to dissolution of a failed corporation that good law requires.

The legislation before us provides the government with vast, sweeping regulatory authority. I know a lot of people in the country--and I respect my good friend, Senator Dodd. He is such a fabulous Senator and so knowledgeable about these areas. But I talked to my car dealers and they have to meet with State regulatory loan officers and they have always had to deal with State legislation and control and certain Federal rules apply. But what this legislation does is, it is one more example of an expansive mentality as far as fixing a discrete problem, which started out to be fixing Wall Street, too big to fail, and now we have a historic alteration of the respect we get for State and local government to manage lending matters. We have the Federal Government now doing that under this consumer title. I am not sure we have fully thought that through. I don't think it is necessary, frankly.

Some of the regulatory authority that was involved in controlling financial institutions that were part of the financial crisis we faced, I think, was

because this regulatory authority caused or failed to prevent the crisis. It may have even made it worse. Instead of ending too big to fail, this legislation, I am afraid, institutionalizes it.

Professor John Taylor, the author of the Taylor rule, which, because it was violated, probably helped precipitate this crisis. If his rule had been followed carefully by the Federal Reserve, I think we would have had a far less serious problem than we had. He is a professor of economics at Stanford University. He is well respected. He made this point clear in a recent editorial in the Wall Street Journal. This is what John B. Taylor, the Taylor rule author, observed:

The financial crisis of 2008 demonstrates why it is

dangerous for the orderly liquidation section of the Dodd

bill to institutionalize such a process by giving the

government even more discretion and power to take over

businesses.

He goes on to say:

The proposed liquidation process would have the unintended

consequence of increasing the incentive for creditors and

other counterparties to run whenever there is a rumor that

the government official is thinking about intervening.

He goes on to describe other reasons why he thinks the language as we have it is unwise.

Peter Wallison, former general counsel to the Treasury Department, voiced his strong opposition to the proposed legislation saying:

Not only does the Dodd bill establish too big to fail as a

national policy, but it makes the idea real by creating a

system for bailing out large financial companies if they get

into trouble. Of course, ``bailing out'' is not the phrase

used in the bill; the preferred language there is ``orderly

liquidation.''

So Mr. Wallison makes clear--I will not go on and quote all of his remarks, but he makes clear why he believes this is a dangerous institutionalization of special privileges for large companies. I think the Dodd amendment signals to creditors they will get a better deal if they lend to the big regulated firms, and this is what Mr. Wallison says:

They believe they will get a better deal if they lend to

the big regulated firms rather than lending to the small

competitors. The bill does this by making it possible for

creditors to be fully paid when a too-big-to-fail financial

firm is liquidated, even though this would not happen in

bankruptcy.

Mr. Wallison hits the nail on the head, I am afraid. Select creditors--those with good lobbyists or those otherwise deemed too big to fail--will definitely get a better deal under the backroom process of orderly liquidation than they would in bankruptcy.

Let me be clear. The unhealthy government connection to Wall Street can only be eliminated, I think, through the legitimate utilization of historic bankruptcy process. ``Orderly liquidation,'' as defined here, will not achieve the result.

When the legislation was first introduced, Senator Leahy wrote the Judicial Conference of the United States--that is the Chief Justice and his Judicial Conference group of judges there--and asked him for their views on the legislation. The Judicial Conference responded that the bill failed the ultimate test. They said:

This is a substantial change to bankruptcy law because it

would create a new structure within the bankruptcy courts and

remove a class of cases from the jurisdiction of the

Bankruptcy Code. The legislation, by assigning to the FDIC

the responsibility for resolving the affairs of an insolvent

firm, appears to provide a substitute for a bankruptcy

proceeding.

That is a significant statement. This is the Supreme Court, the Judicial Conference, giving us their insight into this.

The letter goes on to say:

This could be especially problematic if creditors have

changed position based on rulings in the course of the

bankruptcy proceeding. The legislation does not envision--

Let me continue to quote this:

The legislation does not envision objection, participation,

or input from the bankruptcy creditors whose rights will be

affected in the course of appointing the FDIC as a receiver.

In other words, the normal process by which creditors and others can participate, object, cross-examine, is cut short.

The letter goes on to say:

Indeed, the legislation proposes to deal with this petition

in a sealed manner--

Not in a public, open manner, where lawyers cross-examine witnesses under oath, but in a sealed manner, the Judicial Conference says.

It goes on to say:

Only the Secretary and the affected financial firm would be

noticed and given the opportunity of a hearing. The financial

position of affected creditors may have been changed within

the context of the firm's bankruptcy case in such a way that

the creditors' rights may have been changed dramatically.

They go on to say this could raise constitutional questions. They said:

Any resulting due process challenges--

They are talking about the due process clause of the U.S. Constitution--

would impose a significant burden on the courts to resolve

novel issues.

In addition, they go on to say this:

We note that petitions under this title involving financial

firms would be filed in a single judicial district.

Delaware.

The Judicial Conference favors distribution of cases in

other courts.

Well, I think the Judicial Conference is making clear one thing in its correspondence. Bankruptcy, with its rules and procedures, not orderly liquidation authority, is the best way to approach dissolving a financial institution. We are not talking about banks. Banks would be still contained within the FDIC. They have a long history of being able to resolve banks in financial trouble. But I think--I can only say I share the opinion of the Judicial Conference. I think it is shared by a number of presidents of the Federal Reserve banks.

In recent testimony on a panel before the Joint Economic Committee, Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, stated the following:

I believe the most credible way to do this would be to

amend the bankruptcy code to deal with nonbank financial

firms and bank holding companies. Expanding the bank

resolution process established under the FDIC Improvement Act

as the current Senate bill does would give regulators and

policymakers the opportunity to exercise a great deal of

discretion in a liquidation or restructuring to reward some

creditors and not others. A bankruptcy proceeding would

follow the rule of law and thus would be less susceptible to

manipulation by private parties or the political process.

So that is the opinion of the president of the Federal Reserve Bank of Philadelphia. Does anybody think that dissolution of GM and other companies and all the things they have gone through was not politically manipulated? Anybody who has closely followed it does, and that is one of the things that outraged Americans. They are angry that big companies got special procedures for their failure to pay their debts, where the average small company, mid-sized company, even large company in America would be subject to the rigors and the fairness and the order of established bankruptcy law.

So the president of the Federal Reserve of Philadelphia said it would be less susceptible to manipulation by private parties for the political process. Amen. That is true. You get a bankruptcy judge, he has a 14-year term. They are used to handling these cases, and they can handle them. Mr. Plosser goes on to say, limiting government choices and leaving resolutions to the rule of law and the court system, in my view, is the best way to end bailouts--limit unhealthy risk taking and extinguish the notion that some institutions are too big to fail. That is what the president of a Federal Reserve bank said. I could not agree more. That is why I have introduced the Bankruptcy Integrity and Accountability Act, which I believe we will be able to vote on tomorrow.

There is no greater legal system than the one we have in America. It is a system that is admired not only because it is efficient, in most instances, but because it is fundamentally fair. You know when you walk into a courtroom that you are going to get the same treatment as other parties, whether you are a mom-and-pop organization or big AIG. The amendment I have offered would provide that same type of security.

One issue that has been raised by a number of experts is a lack of confidence in the FDIC to adequately handle these kinds of dissolutions. I share those concerns. Professor Wallison stated:

The absence of any expertise in resolving failed nonbank

financial institutions anywhere in the Federal Government is

one strong reason for relying on bankruptcy for

most failures. If there is likely to be expertise anywhere in

resolving failed financial institutions, it would be in the

bankruptcy courts.

I agree. Bankruptcy as the first choice for disposing of a failed nonbank financial institution would avoid a number of problems. These are problems that are associated with creating a government resolution authority. Governments are, by nature, political. It would assure that the prebankruptcy creditors take losses of some kind, avoiding the moral hazard and maintaining market discipline. In other words, if you don't feel like and don't have to take a loss by an improvident investment, it encourages you to make more risky investments, creating danger of more improvident financial activities in the future. The rules will be known in advance under bankruptcy. So creditors will be aware of their rights as well as the risks.

Creditors will decide whether they believe a company has prospects to repay them, and it would outweigh the risk of throwing good money after bad in helping maintain the company in bankruptcy. Bankruptcy judges look forward and try to save companies. They stop litigation that can shut down a company. They give the company a chance to reorganize and succeed and pay all their creditors. That is always their goal. But good bankruptcy judges know from history that many companies can't be saved. The best thing to do is shut them down before they lose anymore money and distribute the remaining assets equally and fairly according to established rules of priority as part of the bankruptcy process. That is what bankruptcy is.

In the amendment I have offered, we make sure the necessary expertise for dissolving these institutions is available. We allow the Federal Stability Oversight Council, the proper functional regulator, the Federal Reserve, and the Department of Treasury to file legal briefs in the court if they need to to make sure their voice is heard concerning relevant issues. This would allow the court to gain valuable information and insight. We also concentrate Federal bankruptcy expertise by limiting venue in the cases to the 12 districts with the Federal Reserve Banks. This is something we vetted with professors and bankruptcy experts. Harvey Miller, the renowned bankruptcy expert, looked at this provision and told us he believes it is properly tailored to provide the necessary expertise to address these types of cases.

I believe it is something the Judicial Conference of the United States would agree is better than limiting it to just one court--a situation they raised as problematic. On substance, I think we can't overemphasize how the resolution authority fails the ultimate test.

Professor David Skeel wrote an opinion piece in the Wall Street Journal with Mr. Wallison on April 7 of this year, in which they asked this question:

Which system is more likely to eliminate the moral hazard

of too big to fail?

They concluded that bankruptcy was the answer. They posit:

In a bankruptcy, as in the Lehman case, the creditors

learned when they lend to weak companies, they have to be

careful. The Dodd bill would teach the opposite lesson.

Let me highlight for my colleagues what I believe this amendment does and why I think it is necessary.

First, the amendment protects against systemic risk by eliminating the moral hazard that arises when financial companies and their investors think the government will bail them out. Under the Dodd approach, the approach of this legislation, financial company management and shareholders could have an incentive to seek resolution authority, thus gaining access to taxpayer bailouts. Under the Bankruptcy Integrity and Accountability Act, which I have offered, the only option for insolvent companies would be through the bankruptcy process, and they can survive bankruptcy. But if they are not able to survive it, they should not survive it. That process would be either reorganization or liquidation.

There is a process for that to be established. Under this system, all costs of reorganizing or liquidating a company are paid by the private sector, by the failing company, and those who chose to do business with the failing company.

Thus, unlike under the Dodd bill, there will be no federally administered resolution authority with access to bailout funds, or borrowed money from the Treasury, Federal debt guarantees, or any other kinds of tool that politicians might access to bail out some politically empowered private company, and to avoid the day of reckoning that rightly should fall upon companies who can no longer operate effectively.

Under this bill, there will be no Federal Reserve section 13(3) authority with which the Fed can pump taxpayer money into firms to rescue them from insolvency.

The second way this amendment would reduce systemic risk is by protecting against the threat that derivatives contracts will cause one company's failure to cascade through the financial sector like falling dominoes. Under the current Bankruptcy Code, derivatives contracts are exempt from the automatic stay that prohibits the collection of debts outside the bankruptcy court. Virtually all other debts are stayed when the bankruptcy process occurs. As a result of this event, derivatives counterparties can demand collateral and satisfaction of the debt, and it can create a run on a failing companies' assets as more and more derivative counterparties demand their collateral. Because of the interconnectedness of financial firms and the derivatives holdings, a run on the failing firm's assets can cause failure to cascade through the financial system as party after party becomes exposed to succeeding demands on collateral. This is a problem that has been raised. This amendment would stop that danger by allowing debtors, with the consent of a new Federal Stability Oversight Council, to invoke the automatic bankruptcy stay against derivatives obligations when the facts show that the debtor's failure could genuinely trigger cascading systemic risk. This would alter bankruptcy law to deal with these large financial institutions, where derivatives can play a complicating factor, and this would give the kind of discretion I think would help avoid that.

Finally, the Bankruptcy Integrity and Accountability Act would reduce systemic risk because a new chapter 14 bankruptcy procedure will apply to all nonbank financial institutions regardless of the size. Under the act, everyone will get the same protection. Nobody will have access to special Washington favors. This, too, protects against systemic risk. Under the approach of the Dodd legislation, there will be special rules for those companies that are wealthy and powerful enough to be determined too big to fail. Those special rules will include a publicly funded and government-administered resolution authority that affords the financial firms the right to fail without facing under oath their creditors and without bearing the costs of the proceedings. Also included will be the right to access taxpayer funds for the payment of certain private debts of the firm.

This special system, created by the bill before us, would create incentives for smaller companies to consolidate until they, too, are too big to fail. As a result, risk would be concentrated even more so in a few hands that the failure of one company can threaten to bring down the entire financial system. In place of this created system under the Dodd legislation, a system that protects large companies more than all others, our amendment would create a fair and equal system for the failure of all financial institutions, regardless of their size. As a result, financial institutions would have no incentives to become larger, and thereby increasing the risk that one company's failure will cause the failure of the entire financial sector.

There is one critical aspect of the bankruptcy process that we can't overlook and cannot be overstated. When people loan money to or buy stock or buy bonds in a corporation, or otherwise provide credit, they have an expectation that if that company fails to prosper and is unable to pay all the debts the company owes, that the company at least will be hauled into bankruptcy court, and they will have an opportunity to present their claims and to receive whatever fair proportion of the money that is still left in the company as their payment.

It may be 10 cents on a dollar, or it may be 90 cents. They understand that

bankruptcy judges have the authority to allow the company to continue to operate, to stay or stop people from filing lawsuits against the company to collect debts, to allow the company a period of time to operate, to evaluate whether they can pay off more debtors by continuing to operate than shutting the company down. If a bankruptcy court sees the company is so badly in financial crisis that it is going to collapse anyway, the court can shut it down immediately before they can waste assets and rip off even more people. That is what a bankruptcy court does every day.

The Judicial Conference letter I referred to earlier notes that under the resolution process, some other problems might arise. They note this:

The legislation does not envision objection, participation,

or input from the bankruptcy creditors (whose rights will be

affected) in the course of appointing the FDIC receiver.

It does this in a way unlike the classical way that company officials have to respond when their companies fail. What happens? The creditors all gather. The bankruptcy petition is filed, voluntarily or involuntarily, by the creditors. They are hauled in by a Federal bankruptcy judge who has a 14-year term and specializes in bankruptcy matters. They are required to produce records and documents of the financial condition of the company. The CEO is called in to testify under oath. The bondholders, the stockholders, the creditors, secured and unsecured, the employees, and the workers all get to have lawyers, and they examine the witnesses who can be called. They can call their own witnesses and, in the result, you create a factual record that helps set the groundwork for the orderly priority setting of who is entitled to payment of the limited amount of money in the corporation.

This is what they do every day. This is what ought to happen. Executives prefer not to have to do that. They prefer, like AIG, to go over there and meet with the Federal Reserve, or with the Secretary of the Treasury, and sit down and wheel and deal and get $70 billion. And nobody is under oath, that I can see. None of this is done publicly, as it is in a bankruptcy proceeding. They get to continue to operate and have their fat salaries, when any other company would be out of there and would cease to exist.

This is the problem that upsets the American people, and they are right to be upset.

We do not need to provide special treatment for the people who created the financial crisis that has damaged this country for the next decade probably, and set off ramifications worldwide. I know a lot of this was systemic irresponsibility by a lot of people, but I have to say, the failure of these executives to manage their companies correctly--there are letters to this. They do not need to be provided a sweetheart process by which they can get money from the Treasury and keep their companies going and not be subjected to the same examination, the same requirement to produce documents and records to justify their existence that average corporations do. They need bankruptcy.

I believe America would be better if we do that. I believe our economy will be stronger and that there will be more certainty in the process. If they fail, they fail. If they loan money to a company that fails, they may lose some or all of it. That is just the way it is. It happens every day.

But some people on Wall Street convinced themselves and they convinced politicians and government officials that they were too big to fail. They were so large and were so important that they could not be treated like everybody else; they needed to be bailed out. The people who regulated them and the Secretary of the Treasury, a Wall Street maven himself, a Goldman Sachs guy, and others, met in secret and plotted this thing out and got us to pass legislation in Congress that said--my wife corrects me. She said: Quit saying ``got us'' when you voted against it. I voted against the legislation. Congress passed legislation to allow the Secretary of the Treasury to buy toxic mortgages and assets from bad banks that were in trouble--in a state of panic, if you want to know the truth.

What did they do? Ten days later they bought an insurance company, AIG. They put $70 billion in it, totally contrary to what we were told just a few days before and without the slightest hint of embarrassment.

The legislation we passed, the $700 billion TARP bailout, was the greatest abdication of congressional responsibility in the history of this Republic. We have never given one man--the Secretary of the Treasury--the power to deal with his friends and have $700 billion to deal with. It is an outrage really. That is why people are upset, and they have a right to be upset. I am upset.

All I am saying is, we have a regular process for dissolution of companies that get in trouble. If they cannot pay their bills, they ought to fail like any other company, and the big guys on Wall Street should not be given special treatment. This legislation will end bailouts and will put them in the same process that any corporation in America would be in if they failed to pay their debts in a responsible manner.

I urge my colleagues to consider the amendment. Remember that bankruptcy is a favored process by the Federal Reserve people, that the Judicial Conference of the United States Federal courts has raised questions about this legislation as it presently exists. I think the principled and appropriate way to deal with the dissolution of failed companies is through the bankruptcy process. Unlike orderly liquidation, bankruptcy passes the ultimate test. I urge my colleagues to support the amendment.

I yield the floor.

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

Mr. President, I wish to make a few remarks about the financial regulation bill, the Restoring American Financial Stability Act. Certainly, we need to take some steps to deal with the catastrophe we have gone through--the damage and destruction, and the financial mismanagement that has been wreaked on us and from which people are still suffering today.

This crisis exploded in the fall of 2007. It was centered in the housing market and home loans. The question people ask and should ask is: How did it happen? Did Congress know about it? Why didn't Congress do something about it?

There is a false myth out there--many have heard it--that somehow this crisis was a product of Ronald Reagan and his disciple George Bush because they did not believe in regulations, they opposed regulations, deregulation is what caused this and more regulations would have prevented it. And so to the rescue, this myth says, come Democratic colleagues and President Obama with more new regulations that are going to fix the problem.

I believe good regulations can be helpful. Anybody who has lived in the world and been in businesses and governments knows there are bad regulations that drive people crazy every day, that drive up the cost of products, that costs jobs in America, and that should not be on the books. The question is: How do we have a good regulation or a bad regulation?

Let me focus for a second on a critical component of the fundamental problem, which was the housing market, and how our government-sponsored entities, Fannie Mae and Freddie Mac, came to be responsible for half of the housing loans in America--50 percent of the housing market. How did they get involved in that, and how was this the big factor in the economic destruction we suffer?

Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Veterans Administration backed 96.5 percent of home loans in the first quarter of 2010. It used to be you went to your bank and they loaned you the money. If they did not think you were creditworthy, you did not get the money. Some people would complain, but a lot of times people were saved from very unwise decisions because their banker correctly intuited they were not going to be able to make these payments, there was too much risk because they had a better perspective on who could be successful in paying off the loans.

Before Freddie and Fannie collapsed in 2008, they owned or guaranteed $5.2 trillion in mortgages and mortgage-backed securities, almost half of their $12 trillion market. Prior to that, Freddie and Fannie were leveraged at twice the rate at Bear Stearns which failed. In other words, they had half the real capital for the loans they made, as did Bear Stearns, which failed.

Because of this improvident policy, Freddie and Fannie have cost the taxpayers $126 billion. That is an incredible sum of money. Fannie Mae reported a $72 billion loss for 2009; Freddie Mac reported a $22 billion for 2009; and it came in last week asking for another $10 billion.

CBO, our Congressional Budget Office which analyzes these costs, projects Fannie and Freddie will ultimately cost the taxpayers $389 billion. But that amount is not on the government's books. Because of the way our books are managed, these two institutions are supposed to be somehow quasi-private and thus not affecting the government Treasury. But they did affect the government Treasury.

I asked the question at the beginning: How did it happen? What did Congress know and did not know, and why did Congress not act? These are good questions. I am pushing back a little bit. I am not going to continue to have all this talk that somehow Ronald Reagan is responsible for this crisis.

Let me read a letter. I do not think a lot of people paid much attention to it at the time, but it was very real. I remember reading from it in debate during that time. It is a letter to my colleague from Alabama, Senator Richard Shelby, who was chairman of the Banking Committee. It is dated March 31, 2008, from the Board of Governors of the Federal Reserve System, signed by none other than Alan Greenspan, Chairman of the Federal Reserve.

Remember, at this time, Senator Shelby and Republicans had become concerned about the health of Freddie and Fannie. They realized they were overleveraged and presented great risk. This was 2004, about 3 years before the collapse occurred. Senator Shelby felt something should be done about it. My Republican colleague offered legislation to do something about it. This is what Alan Greenspan wrote:

Thank you for requesting the views of the Federal Reserve

Board on the legislation you have proposed to improve the

supervision and regulation of government-sponsored

enterprises.

That is GSEs, that is Freddie and Fannie.

As I stated in my testimony of February 24, the Congress

needs to create a GSE regulator with authority on a par with

banking regulators, with a free hand to set appropriate

capital standards, and with a clear process sanctioned by the

Congress for placing a GSE in receivership.

It had begun to dawn on them that these GSEs could go into receivership. They were so overleveraged. They were on the verge of collapse. That is what he wrote to Senator Shelby in early 2004.

He goes on to say, and this language is dramatic:

To fend off possible future systemic difficulties, which we

assess as likely if current trends continue unabated,

preventive actions are required sooner rather than later.

Isn't that a dramatic statement, ``To fend off possible systemic difficulties''? Did we not have the whole system go into a spin and we are still suffering from it and may for years to come?

Then he goes on to say:

The Board believes your proposed legislation makes

substantial progress toward meeting these objectives.

With regard to the receivership issue, the Board continues

to believe that the Congress needs to clarify the

circumstances under which a GSE can become insolvent and, in

particular, the resulting position--both during and after

insolvency--of the investors that hold GSE debt. The process

must be clear before it is needed. Leaving the matter

unresolved, as it is under current law, only heightens the

prospect that a crisis would result in an explicit

guaranteeing of GSE debt. In this area, too, your proposal

makes substantial strides.

It is basically an endorsement of Senator Shelby's efforts. Not basically, it is a flat out endorsement. He goes on to say:

With regard to capital, the Board continues to believe that

determining the suitable amount of capital for GSEs is a

difficult and technical process, and, that a regulator should

have a free hand in determining both

the minimum and risk-based capital standards for these

institutions. Your proposal, which gives the new regulator

more discretion in these areas, is an important improvement

in this respect.

This was an endorsement by the Federal Reserve Board of Senator Shelby's efforts to reform. What happened? Senator Shelby brought it up in the Banking Committee, and it passed the committee on a straight party-line vote. All Republicans voted for increased regulations, increased accountability, increased capitalization of Freddie and Fannie, and every Democrat on the committee voted against it.

When it got to the floor, it was subject to a 60-vote filibuster. It was clear the Democrats had sent word they were not going to support it, and there was no prospect of passing the bill. Although he bill passed in committee, it never actually passed the Senate floor.

I want to say the idea that the only greed, the only mismanagement was with private bankers is not accurate. There was plenty of that. I have no grief to bear for the big guys on Wall Street. They rolled the dice. I voted against their bailout and I do not believe they should have been bailed out at all. They should have suffered the consequences. We would probably be better off today economically because we would have taken the hit and gotten it out of our system. We can dispute that. All I can say is there are other areas of greed and mismanagement.

But currently, 96 percent of home loans are backed by government institutions--Fannie, Freddie, VA, the Housing Administration. Who is to say they are always perfect? We know, as Senator McCain has pointed out in his amendment to this legislation that is before us today, that we can still do more about it.

Since 96 percent of housing mortgages are now backed by government institutions, why does this legislation not deal with it? Why does it not? It completely sidesteps the issue. Why? Because we would have to deal with how to score and add to our debt another $400 billion. Is that one reason?

Is another reason because Freddie and Fannie have been so powerful politically that they have been able to fend off the oversight they should have been subjected to from the beginning? Is it a belief somehow because they are quasi-government institutions that they can do no wrong, that only private industries and institutions can do wrong?

I don't know exactly why all of this is so, but it is not dealt with, and it should be dealt with. Senator McCain's legislation will deal with it. He made a speech Thursday in which he delineated the history of how this all occurred. I thought it was very valuable insight. Americans should know about this. When the government comes in and allows politics and governmental policy to override financial reality, then we can get in trouble. If you order agencies or agencies are willing to make bad loans because they think that somehow it is good policy, do people think nobody is going to have to pick up the tab some day in the future? I am afraid they are.

The situation we are in arose from the fact that richly paid GSE executives and their political supporters had no skin in the game on the loans they were making. They were getting their salaries, and they kept getting their salaries even when it became clear the firms were mismanaged and heading for disaster and were going to be bailed out by the American taxpayers. They operated recklessly and they, I believe it is fair to say, were the precipitating cause, frankly, of the collapse of the financial markets; if not the cause, one of the primary causes of it. It is unbelievable and improper that when we propose legislation to restore America's financial stability, we don't fix the Freddie and Fannie problem.

I ask unanimous consent for 30 additional seconds.

The Wall Street Journal wrote that ``reforming the financial system without fixing Freddie and Fannie is like declaring a war on terror and ignoring al-Qaida.''

Fannie and Freddie were at the center of it. They were a cause of it. They need to be reformed, and I am disappointed that the one thing this government should be doing, which is fixing these quasi-government agencies, is not occurring.

I thank the Chair, and I yield the floor.

Mr. President, I wish to share a few remarks about the recent arrest of the Faisal Shahzad, the individual who allegedly attempted to detonate a car bomb in Times Square in a plot to kill a lot of Americans.

I have been asked about that incident several times over the last several days, and I think I was incorrect in making comments to reporters and even to friends about the precise legal situation in which we are involved. Let me briefly summarize what I think the current state of the law is, and all of us will then be better able to respond to the questions we may be asked.

The Christmas Day bombing suspect, Umar Farouk Abdulmutallab, as was established pretty quickly, is an unprivileged enemy belligerent and is thus eligible to be tried for his offenses and detained as a person at war against the United States. Mr. Abdulmutallab is an individual who could be held as a prisoner of war, if the military so chooses, for so long as the hostilities continue, just as we did in World War II and every war the United States has been part of. Also, the military would be entitled to try Mr. Abdulmutallab, the Christmas Day bomber, by military commission. That is what we would normally do, and that is what was done in World War II when we caught Nazi saboteurs plotting to blow up targets in the U.S.

I believed the administration made a mistake when they treated Mr. Abdulmutallab as a civilian criminal and provided him Miranda rights and appointed him a lawyer, which we have to do if we are going to treat somebody as a criminal rather than an unprivileged enemy belligerent. I believe firmly that was an error, and the

normal procedure should be for these types of individuals to be tried or detained by the military because they are not criminals, they are warriors.

Yesterday's arrest of the Times Square bombing suspect, Faisal Shahzad, raises similar questions. My initial thought was that the Supreme Court has clearly held that a U.S. citizen who has joined the enemy to fight against this country can be designated as an unlawful enemy belligerent and could be detained for the duration of hostilities. That is a fact Abraham Lincoln never had any doubt about when he took people prisoners. I guess George Washington, when there was the Whiskey Rebellion, he never had any doubt he had the ability to attack, destroy, or arrest people when they were at war with the United States. Fortunately, he did not have to go so far, but that is the kind of thing the Supreme Court reaffirmed in Hamdi v. Rumsfeld.

In the Hamdi case, Justice Sandra Day O'Connor, who wrote the opinion, made clear that a citizen who has taken up arms in hostilities against the United States can be designated as an unlawful enemy combatant--``unlawful enemy belligerent'' is the phrase she used--and she wrote the opinion which said:

There is no bar to this Nation's holding one of its own

citizens as an enemy combatant. . . . A citizen, no less than

an alien, can be ``part of or supporting forces hostile to

the United States or coalition partners'' and ``engaged in an

armed conflict against the United States''; such a citizen,

if released, would pose the same threat to returning to the

front during the ongoing conflict.

That is perfectly sound and perfectly reasonable. She concluded that Mr. Hamdi, who was captured alongside the Taliban in Afghanistan but who was an American citizen, could be detained for the duration of the hostilities authorized by the Authorization for the Use of Military Force that Congress passed, authorizing military force against him in order to keep him from rejoining the enemy.

We have had quite a number of people who have been released from Guantanamo, who have been captured in the process, who have returned to the combat and attacked us. So it is clear that under Hamdi, the administration has the authority to detain the Times Square terror suspect as an unprivileged enemy combatant if he can be linked to our terrorist enemies within the definitions of the Military Commission's Act.

But I want to be clear. There is a distinction: this suspect, unlike the Christmas Day bomber and the 9/11 plotters, cannot be tried via military commission under current law. He can be detained by the military, but not tried by military commission. In previous conflicts, military commissions were used to try civilians who took up arms against the United States in ways that violated the rules of war. For example, Herbert Haupt was one of the Nazi saboteurs who was prosecuted via military commission after plotting to blow up targets within the United States in the early months of World War II. He was a naturalized U.S. citizen, and the U.S. Supreme Court, in the landmark case of ex parte Quirin, allowed the commission to go forward with his trial, and I think he was executed. A number of the people involved in that case-- most of those who sneaked into the country by submarine, as I recall, off our coast, to blow up our cities and infrastructure and kill civilians--were tried for being in violation of the rules of law, very much unlike a German soldier who was captured on the battlefield during the Battle of the Bulge. They were detained as prisoners of war throughout the war. Because these people had violated the rules of war they could be tried by a military commission.

But what happened in the Haupt case ex parte Quirin is no longer law. Since 2006, the Military Commissions Act that Congress passed required and made it clear that the military commission trials are only available for alien unprivileged enemy belligerents. Accordingly, the Times Square bombing suspect who appears to be a citizen must be prosecuted, if he is prosecuted and tried at all, in Federal court--if the reports are accurate that he is a citizen.

I want to be sure. I think we have this matter straight. I believe an alien unlawful belligerent who is captured should not be treated like a criminal. They should not be appointed a lawyer that day to tell them don't say anything. They should not be advised of their rights because they are prisoners of war. If their actions amount to a violation of the rules of war, an alien unlawful enemy belligerent can be tried in civilian court, if we choose, or tried by a military commission. But if they are a citizen and they are caught under these circumstances, they can be detained in military custody, but they can't be tried by a military commission. They can only be tried by the civilian courts in civilian trials.

With regard to the matter of Miranda warnings, Miranda is not a constitutional requirement. It was never part of American law until recently--40 years ago, 50 years ago. No nation in the world I think-- except perhaps one, I forget which one--provides that you have to warn people they have a right to remain silent. We can ask them questions. They can remain silent. We can't force them to talk, but we don't have to read them the Constitution before we ask them questions. But we do.

So, to me, it makes no sense that we would provide this extra constitutional right to unlawful enemy alien combatants like a Christmas Day bomber. They should be detained by military custody. If they need to be tried, the choice should be made between whether to be tried in civilian courts or military courts. The ability to obtain good intelligence about the operation is more enhanced, in my view, without any doubt--even though sometimes people who are given the Miranda rights talk--but there is no doubt we will have less people talking if they are appointed lawyers and read Miranda rights than if we don't.

Since war is won or lost so often on the question of who has the best intelligence, we should not provide lawyers to individuals who are at war with us and seek to destroy our country and kill innocent men, women, and children.

I think that is the basic state of the law today. I have been a bit confused myself, and I am glad my staff has helped me get correct.

I yield the floor.

Madam President, we are talking about financial reform. There is a lot of attention and a lot of the Members of the Senate are trying to keep up with it and trying to make sure we create a reform package that effectively deals with corporations that have so mismanaged their business that they need to be dissolved or broken up or liquidated, as is normally the case when a company in America cannot pay its bills.

This happens every day for smaller companies. It becomes a bit more complicated, sometimes a great deal more complicated, when the corporations get bigger and bigger and bigger. The way our corporations are normally dissolved, if they are financially insolvent and cannot operate, has always been bankruptcy court.

There are bankruptcy judges all over America. It is a Federal court system. Bankruptcy is referred to in the U.S. Constitution. It has worked very well. I guess what I am concerned about is, some of the provisions that are in the proposed legislation that is floating about would alter that traditional idea in ways that may be unwise.

Senator Leahy, the chairman of the Judiciary Committee, I am the ranking Republican on that committee, and I have talked about this a little bit. It is getting to a point where we need to figure out what is happening here. The matter is highlighted by a letter from the Judicial Conference of the United States--Mr. James Duff, the Presiding Secretary, of the Judicial Conference of the United States. Chairman Leahy asked them their opinions on some of the proposals for dissolution of companies, the orderly liquidation of companies.

The Judicial Conference responded in a letter that was received by Senator Leahy, and I do believe it raises important questions. I truly do. I am a person who spent a lot of time practicing law, both as U.S. attorney and in private practice in Federal court, and have some appreciation for how bankruptcy courts operate. I would say, we ought to pay attention to what the Judicial Conference says to us. It is a kind of correspondence they take seriously. They do not lightly send off letters to the Senate. This was in response to a question. So this is what Mr. Duff replies on behalf of the Judicial Conference, in reply to Senator Leahy:

As you noted, Title II would create an ``Orderly

Liquidation Authority Panel'' within the Bankruptcy Court for

the District of Delaware for the limited purpose of ruling on

petitions from the Secretary of the Treasury for

authorization to appoint the Federal Deposit Insurance

Corporation (FDIC) as the receiver for a failed financial

firm.

Then it goes on to say:

This is a substantial change to the bankruptcy law because

it would create a new structure within the bankruptcy courts

and remove a class of cases from the jurisdiction of the

Bankruptcy Code. The legislation, by assigning to the FDIC

the responsibility for resolving the affairs of an insolvent

firm, appears to provide a substitute for a bankruptcy

proceeding.

You see, when people loan money to a corporation, people buy stock in a

corporation, they buy bonds of a corporation or otherwise loan them money, they have an expectation that if that company fails to prosper and pay what they owe, that company at least will be hauled into bankruptcy court and they will have an opportunity to present their claims and to receive whatever fair proportion of the money that is still left in the company as their payment.

It may be 10 cents on a dollar, it may be 90 cents on a dollar or whatever you get. They understand that bankruptcy judges have the authority to try to allow the company to continue to operate, to stay or stop people from filing lawsuits against the company and collecting debts, to allow the company a while to see if they cannot pay off more debtors by continuing to operate than shutting them down.

But if they see the company is so badly in financial crisis that it is going to collapse anyway, they come in and shut it down before they can rip off more people. So that is what bankruptcy courts do every day. So this letter indicates that by assigning the FDIC responsibility for resolving these affairs, it provides a substitute for bankruptcy, which is denying the lawful expectations of people who loan money to or bought stock in these corporations.

They go on to say:

We note, however, that the legislation will result in the

transition of at least some bankruptcy cases to FDIC

receivership in situations where a firm is already in

bankruptcy, either voluntarily or involuntarily.

In other words, it appears that legislation would allow a case to be taken out of bankruptcy that was already in the bankruptcy court.

It goes on to say:

The legislation does not envision objection, participation,

or input from the bankruptcy creditors (whose rights will be

affected) in the course of appointing the FDIC as receiver.

Indeed, the legislation deals in a sealed manner; [secret

manner, apparently] only the Secretary and the affected

financial firm would be noticed and given the opportunity of

a hearing.

That will have major impacts on a stockholder or bondholder or a creditor of a corporation. The FDIC is going to meet with this big company, this big bank, and work out a deal and not even tell the people who loaned the corporation money in good faith and have certain legal rights, at least they always had previously. These rights, somehow, will be extinguished or cut off.

It goes on to say:

The financial position of affected creditors may have been

changed within the context of the firm's bankruptcy case in

such a way that the creditors' rights might have changed

dramatically. Any resulting due process challenges would

impose significant burdens on the courts to resolve novel

issues for which the bill provides no guidance.

They go on to say:

In addition, we note that petitions under this title

involving financial firms would be filed in a single judicial

district. The Judicial Conference favors distribution of

cases to ensure that court facilities are readily accessible

to litigants and other participants in the judicial process.

Under the current proposal all of these cases are going to be tried in Delaware. I do not know if we have enough judges in Delaware.

They go on to say this:

With respect to the limited review [that means appellate]

to be conducted by the panel created in section 202, [of the

proposed legislation] we note that the authority may exceed

what is constitutionally permitted to a non-Article III

entity.

What does that mean? That means some of these powers are judicial powers given only to Federal district courts presided over by senatorially confirmed, presidentially-appointed, lifetime Federal judges. We can't just give them off to somebody else to decide. It is just not constitutional. We don't have the powers in the Congress, or the President doesn't have the powers to take over judicial roles.

They continue:

A previous statute was held unconstitutional because it

conferred on the bankruptcy courts the authority to decide

matters reserved for Article III courts.

It goes on to talk about that.

Let me tell my colleagues what CEOs don't like. Do we want to be tough on CEOs? I will give some suggestions.

If they can't run their companies and they can't pay their bondholders, can't pay their debtors, their stock has become worthless. People invested in their companies believing they were legitimate, believing the representations of their financial condition, and it turned out to be false. They do not want to be in a court where they raise their hands and have to give testimony under oath. They don't want to be in that position.

The way the law has been thought of and is worked out to handle these cases is to have a Federal bankruptcy judge preside over this process. There are bankruptcy rules about what the judge can and cannot do. Each entity that has an interest in the matter can have lawyers. The stockholders can have lawyers. The bondholders can have lawyers. The creditors can have lawyers. The workers can have lawyers. The employees can have lawyers. The guys have to come in under oath. They have to bring their financial statements. If they lie, they go to jail for perjury. This is a powerful thing. A lot of these big wheels don't want to subject themselves to it. I would say, if we want to be tough on these companies, don't create some FDIC buddy group that has been supervising them and sees their role as trying to work with them. Have a real judge.

We can create a system where we select experienced judges, create some special procedures for larger bankruptcy cases. We should consider that.

My one comment before I wrap up is, we should listen to the Judicial Conference and recognize there is a danger to the rule of law to legitimate expectations of creditors and stockholders by this new change, this unexpected change in the law. We should allow classical procedures to work. If we need to improve them and make some special provisions for dissolution of corporations to help bankruptcy judges do the job better, I would certainly favor that. That would allow us to function in a lawful way, a principled way, and not allow people to meet in private and secret, as we have seen happened recently, and dissolve their cases in a matter that is not open and free to the entire public, as would happen in bankruptcy court.

I ask unanimous consent to have printed in the Record the letter from the Judicial Conference.

I yield the floor.

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

Mr. President, I briefly wish to share a few thoughts about Judge Thomas Vanaskie, who has been nominated for the Third Circuit Court of Appeals--a very important position. He currently serves on the U.S. District Court for the Middle District of Pennsylvania. I do intend to support his nomination, giving deference to the President, but I would just like to share a thought or two about his testimony before the Judiciary Committee.

Judge Vanaskie testified he believed American courts should not use foreign law in interpreting the Constitution, but he did believe the Supreme Court properly used foreign law in cases such as Lawrence v. Texas, and I think that is a bit contradictory. He also testified that the Supreme Court properly used foreign law in Roper v. Simmons, where the Court concluded that the Constitution, because of ``evolving standards of decency,'' would now prohibit States from imposing the death penalty on juveniles who commit murder. I think that is a legitimate public policy issue to discuss, but the question is, Does the Constitution say a State is not able to decide at what age people are executed?

Judge Vanaskie said, at another point, that foreign law was relevant to determining fundamental constitutional rights. Well, our Constitution is the one we have, and judges, if they are faithful to their oath, will enforce our Constitution--the one we have. It is difficult for me to comprehend how somebody could conclude that a legal action in the European Union would provide illumination to a judge on how to interpret our Constitution and what the Founders meant and the plain meaning of its words.

So I think this is a bad philosophy, and it evidences a detachment of the judiciary from the limited role they are given. We have limited powers, the President has limited powers, and the courts have limited powers. Courts are not empowered to reinterpret our laws and our Constitution based on some better idea they think they may find in France. They are not. This is not a little bitty matter. It is a trend that is occurring in our courts, and I am disappointed that several of the President's nominees seem to be seduced by these ideas, including speeches made by Justice Sotomayor where she talked about how she favored Justice Ginsburg's views about that.

So I wish to give this judge the benefit of the doubt. He did say he didn't follow this doctrine to the full extent of it, and I will give him the benefit of the doubt. But also, some of his statements indicate that he may yet be seduced by this idea. He had difficulty articulating any limit on the commerce clause. The commerce clause says Congress can regulate commerce. Does that mean everything? Does regulating commerce mean you can reach down into Oklahoma and tell an individual farmer: You have to have insurance? That raises a serious question of constitutional power, and does that impact interstate commerce? Well, you could theoretically conjure up a way that it could, but I want to know that a judge understands there is some limit to the amount of reach the Federal Government can have.

We have had a number of people complaining about the process of confirmation and judges languishing before the Senate. In particular, my friend, Senator Whitehouse, noted the nominations of Judge James Wynn and Judge Albert Diaz to the Fourth Circuit. Senator Whitehouse hasn't been here but since 2006, so maybe he isn't familiar with some of the procedures that have gone on before. Wynn and Diaz's nominations have been pending in the Senate for only 167 days. That is half the time--half the time--that President Bush's circuit court nominees waited--350 days.

In fact, four of President Bush's nominees to the Fourth Circuit never received any hearing, and they were highly qualified nominees. Those nominees--Mr. Steve Matthews, Chief Judge Robert Conrad, Judge Glen Conrad, and former Maryland U.S. attorney Rod Rosenstein were well qualified and had the bipartisan support of their home State Senators. Yet they were blocked steadfastly from ever moving forward. President Bush nominated Steve Matthews in September of 2007 to the same seat on the Fourth Circuit for which Judge Diaz has now been nominated and expects to be confirmed--and will be confirmed, I am sure.

For Senators to be whining about how long it takes Judge Diaz to move along, in a fairly steadfast way, in light of what was done to Mr. Matthews, is a bit much to me, I just have to tell you. We all know this is a robust body. We don't mind speaking our minds. But Mr. Matthews had the support of his home State Senators and received an ABA rating of ``qualified.'' He was a graduate of Yale Law School, had a distinguished career in private practice, and he waited 485 days for a hearing and never got one. So his nomination was returned and expired in January of 2009.

Another of President Bush's nominees, Chief Judge Robert Conrad, was nominated to the seat for which Judge Wynn is now nominated. He had the support of his home State Senators, received an ABA rating of unanimous ``well-qualified,'' which is the highest rating. Judge Conrad met Chairman Leahy's standard for a noncontroversial consensus nominee. He had received bipartisan approval by the committee when he was confirmed by a voice vote to be U.S. attorney and later district court judge for the District of North Carolina. He was then chief judge. Senators Burr and Dole sent letters in support of that confirmation. Yet he was blocked.

I know he can make decisions because, if I am not mistaken, I used to say he was the point guard for the University of North Carolina basketball team. I think that was incorrect. I think he was point guard for Clemson. Regardless, anybody who can play a point guard in the ACC can make decisions. He was chosen out of all the prosecutors in America by Attorney General Janet Reno to conduct a very sensitive investigation of President Clinton, when he was accused of some

wrongdoing. He conducted that and concluded no charges ought to be brought. This was a highly qualified person. Yet he was blocked.

My time is up, but I know every nominee is not brought up immediately or when some people would want to call up the nomination. It requires unanimous consent to bring up a nominee, to immediately get a vote, and unanimous consent isn't always given, so it does slow down people. I do believe we ought not to unnecessarily delay persons, but I would want to say that the alacrity by which President Obama's nominations are moving far surpasses anything like the difficulties that President Bush's nominees had. I have been here, I have seen it, and I know that to be a fact.

I hope we can create a climate where judges have a reasonable time on the calendar, that they have hearings in the Judiciary Committee, that there is opportunity to raise objections, when they are made, and the nominee comes to the floor and eventually can be brought up for a final confirmation vote. That would be my request.

I see it is time for the vote, and so I yield the floor.

Mr. President, I thank Senator Alexander for his remarks. I share his analysis. He is exactly correct. It is very important for America that we recognize what he has said but even more important now, since I think the American people overwhelmingly understand and support that, that we take some action that would actually help us to get in the game of nuclear power production.

I remain baffled by some of the generalized statements of the administration on nuclear power but lack of action that could move us forward and get us out of this funk we are in, where we are not doing anything. We have to start catching up with countries that are serious about nuclear power. It will help make us more productive, help create a lot of high-paying jobs in America, clean power, 24 hours a day, 7 days a week, no emissions into the atmosphere, no CO2. It has so many benefits that I am convinced we need to move forward.

I wish to make remarks on another issue; that is, the nomination of Marisa Demeo to the DC Superior Court. It is not a nomination that comes through the Judiciary Committee, as most Federal judges do. Because she is a DC Superior Court nominee, the nomination went through Homeland Security. Although, it is not a lifetime appointment, if you are an advocate or resident of the District of Columbia who might have to one day appear before a judge, you do want to know that Congress has made certain that once that judge puts on the robe, he or she is capable of putting aside personal views and applying the law evenhandedly.

Unfair jurisprudence to one party is detrimental, costly, and painful. We need to make sure our nominees exercise judgment-- objective, fair judgment--and not allow their personal politics or ideologies to influence their decision making.

I am not comfortable enough to say that Ms. Demeo is capable of doing that. I am just not. Her background and record raise issues with me. I wish to be fair, but I think we need to talk about them.

The DC Superior Court does have broad jurisdiction. It includes trial matters, criminal, civil, family court, landlord, tenant, and so forth. A judge needs to be impartial in all those matters. Ms. Demeo's background provides evidence that she may be more political and strong- willed personally than impartial.

Her prior experience includes serving as regional counsel for the Mexican-American Legal Defense Fund. In this position, she made a number of troubling statements. For example, she argued that ``governments have a legal obligation to help those who don't speak English well.'' We have an obligation, all of us, to help people who do not speak English, and I think that is so. But as a judge, I am wondering: Does this mean that constitutionally she is saying the government has a legal obligation to do that? That seems, to me, the tone of her statement.

During her tenure at MALDEF, the organization sued the State of Texas because high schools did not offer their exit exams in Spanish. One does not have to be a lawful citizen of our country to attend the schools of Texas, even those unlawfully in the country can enroll in high schools. Apparently, the state of Texas decided individuals should do their exit exams in English to get a high school diploma. She opposed that.

She opposed the nomination of Miguel Estrada, a fabulous Hispanic nominee. He had superior academic credentials, was a brilliant writer, and testified beautifully, I thought, before the Judiciary Committee. She said this about him:

The most difficult situation for an organization like mine

is when a President nominates a Latino who does not resonate

or associate with the Latino community and who comes with a

predisposition to view claims of racial discrimination and

unfair treatment with suspicion and with doubt instead of

with an open mind.

I don't think that is an accurate description of Miguel Estrada, who came here as a young man from Central America. I don't think that is an accurate description of him. I am disappointed she would make that statement about him. I am unaware of any provision in the Constitution which requires that judges show favoritism to one party or another based on their ethnicity. A judge, no matter what their background, racial, ethnic, religious, political, should give everybody before the court the same fair treatment. It is not necessary for a Caucasian to hear a case involving a Caucasian or for a Latino to hear all cases

involving Latinos. Every judge puts on a robe, and that robe symbolizes their absolute commitment to objectivity.

After the Democrats successfully filibustered Mr. Estrada, one of the first nominees to be blocked by repeated, sustained filibusters--this was not too many years ago, less than 10, about 7 or 8. We still have problems in the Senate as a result of the alteration of Senate tradition where nominees are filibustered. I try not to do that. The Gang of 14 settled that, saying filibusters, under extraordinary circumstances, now become possible. This was after the Estrada nomination.

She was proud of blocking Mr. Estrada. She bragged about it. She said:

This shows just because we have a Republican President and

a Republican Senate, it is still possible to defeat

candidates who are so conservative that they take us back in

civil rights.

I disagree. I disagree with her analysis of Miguel Estrada's position. I heard him testify. I think he would have been a fabulous member of the U.S. courts.

Being a liberal means never having to say you are sorry about what you say to other people. In opposing Linda Chavez--a wonderful writer, thinker, and passionate advocate for civil rights--she stated this in opposing Linda Chavez:

We generally support the nomination of Latinos to important

positions, but Linda Chavez could really turn things backward

for the Latino community. I do not appreciate that. Linda

Chavez would not have turned things back on the Latino

community. I don't know what she means by that.

She went on to say:

A Spanish sounding surname does not make a person

sympathetic to the concerns and needs of the Latino

population.

She, therefore, would appear to only embrace the kind of Latino nominee who agrees with her politically. It is not truly a question of ethnicity, is it? It is a question of something different, a political approach to government and law.

On May 13, 2004, she participated in a press conference with the coalition against discrimination and the Constitution to ``challenge the extremism of the Federal marriage amendment backers.'' I guess that means I am an extremist.

Quite a number of Senators in the majority, as I recall, voted to say that a marriage should remain as it has always previously been interpreted: to be a union between a man and a woman. But she says this is an extremism amendment. I don't think so.

I know there is a legal dispute about gay marriage, one in the District of Columbia now. She already stated where she is on the matter, declaring it a fundamental right. I do not believe that is a fundamental constitutional right for a same-sex union to be declared a marriage under the law of the United States. It never was for the first 170 years of the existence of this country.

Ms. Demeo is no friend of immigration enforcement. When the INA announced a plan to enter into the FBI's National Crime Information Center database the names of 314,000 individuals who had been ordered deported but who fled and absconded and did not submit themselves for deportation, in an effort to simply comply with a judicial final order, she decried that move. She responded that most of the violators who are guilty only of violating civil immigration laws do not pose a threat to national security. I am not saying they pose a threat to national security. They have come into the country illegally. They somehow became apprehended. Maybe they committed some other crime. They were ordered to be deported and they should be deported. If they do not show up and abscond, they should be in the NCIC, just like anybody who has a speeding ticket and they did not pay their fine.

She also criticized the government's Operation Tarmac, which identified and ordered the deportation of 600 workers with access to sensitive areas at airports who had violated immigration law. We had 600 workers at airports with access to sensitive areas, and they were found to be illegally here and ordered deported.

Indeed, she is an advocate for amnesty openly. I guess we can disagree on that. Good people certainly disagree on that. She is a big fan also of affirmative action programs. There is a fine line between affirmative action and quotas and mandatory racial preferences, and I fear she has crossed that line.

During the Clinton administration, when Energy Secretary Frederico Pena announced his resignation, she insisted he be replaced by a Latino, indicating that was necessary for Latino concerns to receive consideration. I think it is all right to ask that happen. But to demand that and to insist that only a person of your ethnicity can give fairness to your ethnic group I think is wrong and goes against fundamental American concepts of law.

In a 2000 opinion editorial for the San Diego Tribune, Ms. Demeo fully embraced the concept of dangerous identity politics, in my view. She said:

We must create the pressure to move the nominations of

Paez--

Who had been nominated to the Federal bench--

and other Latino nominees. . . . Latinos must be appointed in

greater numbers at all levels, especially to the appellate

courts, where most of the decisions interpreting the

Constitution and Federal laws are ultimately made. Without

sufficient representation at every level, equal justice for

Latinos--or even the perception of justice--will not exist.

I think that is overstatement. It is one thing to advocate, and I respect that, advocating for more people, groups who appear to be underrepresented. That is a legitimate factor that would play in a nomination. To use that kind of language, I think, is dangerous because it suggests fairness is not otherwise obtainable.

Perhaps Ms. Demeo can set these views aside and be fair on the bench. I think they are extreme in many instances. I am not certain she can. It appears to me she is entrenched in a political approach, a lifestyle of emphasizing rights for one group or another and not so much the idea, the American vision of equal rights for everybody. That is the core American principle; that everybody in a court of law is entitled to equal rights. A judge and our juries are charged to that effect, and judges put on a robe to show they are going to be unbiased and that they are going to follow the law regardless of what their personal views or friendships or so forth might be. So that is my concern and the reason I have decided I will oppose the nomination. I assume she will go on and have her vote soon and will probably have a majority and be confirmed. But if she is confirmed, I hope Judge Demeo will think about some of the issues I have raised and make sure in her own heart of hearts that when she takes that bench, she is not going to favor one party or another based on their religion, their ethnicity, their politics, or her personal social agendas. I believe that is important.

I have some quotes from some letters in opposition to Judge Demeo's nomination. Numbers USA has said her nomination ``would be a setback for the nation in terms of seeking to restore the rule of law in immigration.''

The Eagle Forum is a conservative group that has studied the nomination and has written regarding the basis for opposing the nomination as Judge Demeo's advocacy for issues, such as ``in-state tuition for illegal aliens, the handling of the census for purposes of redistricting, photo ID voting laws, official English initiatives, amnesty for illegal aliens, affirmative action, and traditional marriage.''

The Concerned Women of America wrote:

Her bias is so ingrained and so much the main thrust of her

career that it [is] not rational to believe that she will

suddenly change once confirmed as a judge. Rather it is

reasonable to conclude she would use her position to

implement her own political ideaology.

They go on to say:

Demeo reveals her own bias and lack of constitutional

knowledge by her statement that the Constitution is a

``flawed document that embodied the historical bias of its

time.''

Well, it is certainly not a perfect document, we all know that, and it has been amended because it did have some provisions that could not stand historical scrutiny, such as the question of slavery and equal rights for all Americans. But I do think her statement is troubling to me as a whole because I don't think it is a flawed document. Our Constitution is the greatest document ever struck by the hands of man at a given time, somebody once wrote.

The Traditional Values Coalition notes that she has ``demonstrated a willingness to undermine our nation's effort to secure our borders against illegal immigrants.''

They go on to make a number of points.

Others have written, which I will ask to have printed in the Record.

The nominee, whom I don't have anything against personally, if confirmed--and I suspect she will be--will have to think about these issues, commit herself totally and completely to fair and equal justice to everybody who appears before her and put aside some of the advocacy positions that have marked her sustained efforts during her professional career.

Mr. President, before I leave the floor, I ask unanimous consent to have printed in the Record the letters from Concerned Women of America, the Eagle Forum, Numbers USA, and the Traditional Values Coalition.

I thank the Chair, and I yield the floor.

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

Mr. President, I shared recently with my colleagues my concern about the surging Federal debt and the ramifications that arise from that, and how it has a damaging effect in ways a lot of people have not considered on our economy and on the quality of life of the American people.

A scholar at the Cato Institute published an excellent op ed in yesterday's Washington Times on the impact of borrowing on the American economy. Savings are essential, as we all know, for economic growth because it is from those savings that people borrow, and then they are able to invest in new factories, equipment, research, development, and create businesses that create jobs. That is how we get economic growth. It is part of our tradition of a free economy, and it has served us well. Very few would deny that this is the best way to allocate wealth, rather than trying to have a government-mandated economy.

When the government issues debt and private citizens and corporations buy it, that, by definition, steers that money, that savings, from the productive or private sector of the economy toward the government. If the government wasn't issuing the debt, or borrowing the money, people would have money that they would likely invest in private corporations through bonds or stocks. They might place it in a bank and buy a CD, and then the bank would loan that to a private company, or some person who is wishing to build a home or a shopping center, creating jobs and growth in the economy. Some of our colleagues like to think that you can borrow money and you can increase debt and it is free money. But we know that is not true. Nothing comes from nothing. Everything has a cost, and it will be paid for one way or the other, at one time or another.

The unprecedented Federal debt that we are dealing with today is unlike anything we have seen before. I think it is fair to say that both parties have blame to share, but I have to say we have never seen anything like the President's 10-year budget and what impact it will have on the debt in our country.

Our debt in 2008 was $5.8 billion. In 2012, it is projected to double to $11.6 billion. In 2018, it will triple to 17.6 billion. That is a tripling of the entire debt of the United States in that many years. People would say, well, what does that mean? I say to you it means one thing I can show you. You borrow that money--somebody loaned it to the government. When the government took that loan and borrowed that money, they have to pay interest on it.

Just to show what the Congressional Budget Office has told us about what that actually means, in 2009 we paid $187 billion in interest on our debt. That is going to go up every single year, according to them, until 2020 when we will be paying $840 billion in 1 year in interest on the debt.

All of us have projects in which we believe. We believe in education or health. We believe in helping seniors or

young people. We believe in highways and research and development, national defense, the National Institutes of Health, science and technology, improving our energy use, cleaning up our environment. Those things cost money.

According to the projections of the Congressional Budget Office, $840 billion will have to be taken off the top. It will have to be paid first. That will be larger than anything in our budget, including defense, unless it continues to surge, and we hope it does not. It will be larger than any other account. It will be crowding out money we could have been spending on things that work.

Some of the money we spend does not work. Too much of it is wasteful Washington spending. Some of this money is very productive, and we like to think we are making the world a better place. We are going to have less of it because of this interest.

The unprecedented Federal deficit last year of $1.4 trillion is a stunning number, and the projected $1.5 trillion deficit this year will be taking $3 trillion out of the economy. In fact, the CATO scholar, Richard Rahn, compared the percentage of money the government is taking out of the economy in this recession with how much the government took out of the economy in previous recessions and found that the current depletion of savings that is going to the government is unprecedented over the last 30 years.

He says in 2009 the government took 38 percent of all the gross savings in the country by borrowing it, money that might have been available to a shopping center guy or a startup company or a person who needs to buy a home. They would borrow the money. The government is borrowing the money. The number of dollars in savings in this country is limited. We are taking 38 percent of it.

By contrast, it did not take more than 15 percent in any other recession in the past 30 years. The average takings have been less than 5 percent.

I will show this chart: savings taken by the government during recessions. The average per quarter in the last 30 years is 1 or 2 percent. In the 1982-1983 recession, it hit about 12; in the 1992-1993 recession, it hit about 15 percent; in 2003-2004, about 11 or 12 percent. Look at this, 38 percent in the 2009 recession we are in.

Some say this is worse than anything we have ever seen before. It is very bad, and it is unprecedented. If it is so easy, and if there is no cost to borrow, why don't we borrow twice as much? We all know there is a cost. We have to make judgments about how far we can go, how much we can continue to borrow.

We borrowed $800 billion for the stimulus package. Now we have a $270 billion stimulus package that is proposed. Since that would not fly as a big package, it is being broken up. We voted to have another $18 billion for a 2-month extension of unemployment insurance, the doctor fix, and some other items. We just borrowed it.

We thought when we did the largest expenditure in the history of the Republic, when we borrowed $800 billion for the stimulus package--I thought that was more than we could possibly afford to borrow to try to stimulate ourselves artificially out of this economic slowdown. It worried me. In fact, I supported a plan that I believe would have cost half as much and created more jobs using the studies of the President's adviser on economics, Christina Romer. It would have been more productive than the one Congress did.

One of the great tragedies of this whole process is how little stimulus we got out of the $800 billion. As Gary Becker, the Nobel Prize winner, said, it was not a stimulus package. It was not written to create jobs and growth. He predicted it would not create jobs, and he, unfortunately, has turned out to be correct.

Senator Coburn and several of us and others opposed this bill because it ought to have been paid for. It should have been paid for out of the stimulus package. Unemployment compensation is certainly one of the items that was in the stimulus package. The doctor fix--what about that? We have to do that, don't we? Yes, we do. We really do. From where should that money come?

The failure of compensation to our physicians--please understand--is a result of a law we passed that we now cannot adhere to that if it is in effect would cut physicians' pay for Medicare patients 21 percent. Many physicians are already quitting taking Medicare patients. If this were to pass, we would have very few continuing to take Medicare patients. The whole system would collapse. They are not getting paid enough now. Private insurance pays them much more than the government does. How should we pay the doctors? Don't we have to borrow the money?

One of the great flaws in the health care bill was the failure to fix the Medicare doctor payment. That was the crisis always in Medicare. The proposal that passed on a partisan vote in the Senate, the proposal to have a new health care program to raise taxes for Medicare, bringing in more money for Medicare, cut benefits from Medicare.

Did they fix the crisis, the doctor payment first, like what had been said had to be done from the beginning? One of the reasons we needed health care reform is because we needed to have a permanent solution to the doctor payments shortfall. Did we use the money for that? No. We took the money and created an entirely new spending program, a new health care program.

Our colleagues are proposing that we just borrow the money, the $371 billion it is going to take over 10 years to fix the doctor payments.

This is why the American people instinctively understand that we are not in control. We are out of control. We are in denial about how serious our situation is. I think the American people instinctively are right.

People say: Oh, the townhall meetings are angry. Some of them are angry. I sense they are just deeply concerned about the country they love, and they have a sense--and it is correct--that we are irresponsibly managing our duties here. As a result, we are saddling them and their children with the largest increase in debt the Nation has ever seen. It has the potential to put a cloud over the long-term growth in our economy.

I do believe we are going to get some economic strength from this stimulus package. It is impossible to spend $800 billion and not get some economic growth from it in the short term. In 1 more year it will almost all be spent. I guess before the election we will have a lot of money being spent, and we are going to get some benefit from that, and I hope we will have a long-term positive benefit.

The Congressional Budget Office, our group that we ask to analyze spending and score the cost of legislation, analyzed the $800 billion stimulus package and this is what they said. I think it makes sense and I am afraid it is true. For the first 2 or 3 years, we are going to have an economic lift from this flood of money into the economy. But over 10 years, the Congressional Budget Office has concluded that the $800 billion in spending will not improve the economy. Their score was that the economy would grow less in 10 years having passed the stimulus package than if we passed nothing--if we didn't spend anything. Why is that? Mr. Elmendorf said the reason is that when you borrow $800 billion, you crowd out borrowing from the private sector, which is where our economic growth is. You take available money that the private sector could have borrowed to run their businesses and factories and the government spends it on pork programs and social programs. This chart shows exactly that. I didn't know that 38 percent of the money that is being saved in this country would be gobbled up by Federal Government borrowing to keep our ship afloat so we can still try to buy our way out of this recession.

The experts say recessions are cyclical. If you don't do anything, you will come out of it. We hoped some sort of stimulus package could help us come out of it faster, with less pain, and I was prepared to vote for and I did vote for several packages that would be more job oriented and more targeted to growth. But we didn't pass that kind of bill. We passed a big governmental spending bill. It was predicted not to be growth oriented, it was predicted not to be job creating, and apparently, unfortunately, that has been basically true.

So I am hoping we will have some growth for a few years here, but I am confident, and logic tells me, that in the outyears that growth will not be as vigorous as it would otherwise have been because we are going to be carrying an unprecedented amount of debt

and we are going to be paying an unprecedented amount of interest every year, and this will crowd out private borrowing and cost the government a stunning amount of interest. That means the government will not be able to do anything to improve the lives of the American people because that money first has to go to pay the interest.

I wanted to share that, because there are some people who are saying that those of us who objected to this bill--this small $18 billion debt expansion that passed today--somehow we don't love America and we don't love people in need. We believe and we offered legislation that would have paid for these expenses by taking it from unobligated funds and programs that don't work effectively in our country. So we would have been able to fill this $18 billion need without increasing the debt. But instead of doing that, the majority of the Senate, or Democratic leadership, pushed through legislation that would borrow it.

I guess that is the path we are on, to have an $800 billion stimulus, a $270 billion stimulus II, to start a new $2.5 trillion health care bill--with these kinds of bills, more and more spending each year, and more and more debt. But we have got to stop. I know it is hard to say no and hard to make the tough choices, but that is what we have been elected to do.

I think we have to get serious about it. I am getting serious about it. I don't intend to continue to vote willy-nilly for these debt- increasing bills. I believe this Congress has got to get serious about our financial future and take some commonsense steps that can lead us into a better future.

I thank the Chair, and I yield the floor.

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

Mr. President, we seem to be muddling along here with short-term extensions and incremental stimulus bills to deal with a failure as this Congress decides what we are going to do about unemployment insurance and physicians' pay and things of that matter that are in the bill.

I believe this is an important discussion, I do, and I am worried about where we are. This legislation before us would add another $18.1 billion to the national debt. Just like that, another $18 billion. Oddly, that is almost the same amount of money that was tacked on to the Defense bill last year, and I produced a chart about it and demonstrated what happens when we get into that mode of appropriating, when we forget what our budget is and we treat everything as an emergency and just ignore our budget and spend. The truth is, this cannot continue.

Every witness we have had before the Budget Committee--every one-- two-thirds of which are usually called by our Democratic leader, and usually about one-third are Republican witnesses--have all said our spending and our debt is at an unsustainable rate. They didn't say that lightly. What they meant was it is unsustainable. We cannot continue to spend like this and to borrow this amount of money on top of the $800 billion that is now being spent that we appropriated last year--$800 billion. Every penny of that $800 billion is borrowed because we don't have the money. We are already in debt to fund another $800 billion in stimulus, and we will have to, of course, borrow that.

I think a lot of people haven't understood that. People tell me, when I am in my State, that they are shocked, stunned, and worried about our spending. They know we are spending too much, but I don't think they know how much we actually are spending and how much we are adding to our debt and that it can threaten the future viability of the American economy for a short-term benefit.

I will just remind my colleagues that the history of stimulating an economy with borrowed money has not been too good. If it was, Japan would have a booming economy today. They have been trying this year after year and it has not worked for them.

We were told we would have an unemployment rate that would stop at 8 percent if we would just pass this $800 billion and borrow the money and spend it today to stimulate the economy. It sounds so good. It sounds so tempting. But I didn't believe it was an appropriate allocation of that much money, No. 1; and No. 2, that the money we were being asked to spend was going to be spent in ways that would stimulate the economy and create jobs.

I cited here before the vote an op-ed in the Wall Street Journal by Gary Becker, the Nobel Prize winner from the University of Chicago. Mr. Becker said that, in his opinion, the bill fell far short of being the kind of stimulative spending that would create jobs and help this economy bounce back and, therefore, he had to oppose it. Mr. Becker is in his seventies and he was just sharing his experience. He had another person participate with him in the research that led them to that recommendation. Was Mr. Becker proven right or not?

The great tragedy--the biggest tragedy with the stimulus package--was what little stimulus we got. If you spend $800 billion, it is breathtaking how much that can be done with it. The Alabama general fund budget for the entire State, including State government and State troopers and all of that is less than $2 billion. But $800 billion? That is huge. So I am worried about what we are doing.

At the time the legislation passed--this stimulus package that added so much to our debt--the Congressional Budget Office, whose Director is hired by our Democratic majority, had good people working in that office. They try to do a good job. They have some economists who I think have been successful in years past at predicting things. They said: Yes, if you spend $800 billion in the next 2 to 3 years, you will have an economic benefit during that period, there is no doubt. They didn't predict a lot--not nearly as much as a lot of people said it would do--but they predicted some benefit. But do you know what they said? They said over 10 years that this economic spending, this borrowing to spend, would actually weaken the economy and the total growth over 10 years would be less than if we did not pass the stimulus package at all. It does appear if they were in error, their error was that we did not get as much growth as they predicted in the short run. But when you spend $800 billion, surely you are going to get some benefit--some, economically. But we have not gotten what we need. It was not crafted in that way.

It was a bill that said it was going to fix crumbling infrastructure, and what happened? We spent less than 4 percent of this money on bridges and roads. We spent it mostly on social spending, we spent it on State aid, we spent it on a lot of different things. But at least when you build a road you have a highway that is there and it will be there for another 50 or 100 years, making the Nation more productive and efficient. But this other kind of spending has produced so little for us. I express my concern about that.

All of this is where we are. The point is simply this. The spending track we are on is unsustainable because in 2008 our total public debt was $5.8 trillion. It is more than that if you consider the gross debt, the internal debt, but this is what is held by private investors from around the world and in the United States--$5.8 trillion. By 2013 it will double to $l1.8 trillion; by 2019 it will be $17.3 trillion, and there is no plan to pay it down. But in 2019, 2020, we are talking about deficits of almost another $1 trillion a year. So we are not even close to moving to a balanced

budget, much less paying down this debt.

Where does the money come from? As I said, we borrow that. This chart shows what the borrowing costs are. When you borrow money, people pay interest, you pay them interest on the money they give you. They loan you money, you pay them rent on the money. They do not give you money for no good reason.

In 2009 we paid $187 billion in interest that 1 year. Remember, Alabama's general fund budget is $2 billion; the Federal highway bill a year or so ago was $40 billion. We spent $187 billion, almost five times the highway bill. But look what happens in 2020 after we spent all this money and run up our debt--$840 billion in interest payments in 1 year. That exceeds the Defense bill, it exceeds any other bill in our budget. It is a stunning number. These are Congressional Budget Office numbers based on the President's budget. Surely something will intervene. We will elect somebody, somewhere--in this Senate, probably--who is going to say no to this because the American people are getting hot about it. Some people are going to be wondering why they are no longer here, if they keep up with this kind of stuff.

They say don't worry about this, it is just $18 billion, and after the $800 billion, $18 billion may look small. But let me show you what I demonstrated previously with $18 billion when you cheat, or you add it and bust the budget by one $18 billion expenditure.

In 2010 we slipped another $18 billion on the Defense appropriations bill, and added it to the debt. People said don't worry, it is just $18 billion. But it goes into the baseline. It goes into your basic funding of the government. So what happens next year when you say OK, we are not going to spend this $18 billion. They say: You are cutting spending. We cannot do that. You can't cut spending. Besides, we need an increase in spending--inflation was 2 percent. We need at least 2 percent.

The State Department got a 30-percent increase in funding this past year. The Environmental Protection Agency got a 30-percent increase in funding.

Look at that. What if you do it another year? You come up with another $18 billion. You got around the budget, you declared it an emergency event and you spent another $18 billion. It is not just $18 billion because you have $18 billion in the first baseline, you add another to it and that year it has cost the taxpayers $36 billion. Let's say the next year, 2013, now you are adding $18 billion to $36 billion and it is $54 billion in your baseline. You have another budget gimmick to add $18 billion and you end up with $72 billion that year.

This is how we get out of control. And you end up, that $18 billion, when it goes into the baseline and we do not understand how it occurred, increases our spending to a degree that we should not do. So that ends up, if you add it up, to $990 billion from an $18-billion-a- year gimmick, manipulation, violation of the budget.

What I want to say is this bill before us today violates the budget. It is for unemployment compensation, it is for other things that are not emergencies. They are part of our governmental operation that needs to be paid for. Luckily, we have some money to pay for it. We have it in an unspent stimulus package. We have some opportunities that our Democratic colleagues have said they could take money from in the past. If we put all those together we could pay for this, fund this bill without having to borrow it all.

I am at a point where I am not inclined to go along with this anymore. I think the American people are of the same mind. What we have to do is we have to lead and we have to be responsible like our Governors. They are having to face challenges. Our mayors are having to face challenges. They are making tough decisions. But not us. We spend more, not less. We are spending more. I believe we have done enough. We have gone beyond what is logical and reasonable. We are in the realm of reckless and dangerous and it is time for us to begin having a national discussion in this country and in this Congress about how much we can borrow to spend today to make our life better today and then shift that debt to the future.

The reason CBO said that the $800 billion would not advance the economy over 10 years, it actually would hurt the economy over 10 years, is that you crowd out investment. If the government borrows $800 billion, it is not available for private people who need to go out and borrow money. It has already been loaned to the government. It crowds out, the economists said, private borrowing.

Also, we have an interest on it that we have to carry and pay every year that is a burden on every generation. Every young person after us will carry that interest burden. It hurts them and makes them less able to prosper and to have economic growth. So it is a moral question: How much can we afford to benefit ourselves this very day and shift it to our children and to what extent do we need to be responsible? I think it is time to get responsible, so reluctantly I feel an obligation to vote no to this legislation.

I yield the floor.

Mr. President, Brannon Woodham was one of the finest people I have ever known. He combined a deep and mature Christian faith, a love of family that constantly showed itself in his conversations and actions, a rich appreciation of the exceptional nature of his country which he had faithfully served for so many years, and a loyalty to his friends and church.

We were in the same Sunday School class for over 30 years. Ever positive and welcoming, he was one of the constants--a rock really-- that set the class's tone and direction. This fellowship and spiritual journey meant much to him and enriched his classmates.

That on this day Brannon would want no pomp and circumstance, there can be no doubt. But, if it were done, he would say better it be done quickly, and, importantly, honestly because he was indeed an honest man. In fact, I think he would want me to express his love to all of you and to note--what we already know--that if his honesty had offended anyone, he would ask pardon, shaking his head ruefully saying he couldn't help it, that was just the way he was made.

In Sunday School class, he was a wise and perceptive participant. He had great spiritual depth, Scriptural knowledge, and mature beliefs. He did not speak too often but when he had something to say, he said it-- in plain words. Often his wit brought a burst of laughter--usually because he had hit the nail on the head. As Jesus might say, ``You are close to the kingdom, brother.'' Importantly, those beliefs that he stated, he lived.

Mary and I were honored to be among his friends and were always pleased to have his invitation to his home in the woods when he hosted his storied church supper club. That was a special time of food and fellowship, on his bridge, getting a tour of his workshop--to be at ``his place,'' which he had shared with his beloved Ursula, his partner for 48 years, and to have a direct look into the heart of a great man who lived a good life.

Mary and I often enjoyed lunch with Brannon after church at the Whistle Stop or some such place. In those conversations, his principles shone through and he would talk with pride and joy of his children, grandchildren, the baseball games, going to Auburn, working together. They had a unique bond.

Brannon believed in honesty and hard work--the Protestant ethic, if you will, for which he made no apology.

Politically, he was not a party man, following, I suppose, the best traditions of good civil servants. But he was an encourager to me. He wanted me to be a ``statesman,'' not a politician. I would indeed feel very badly if I had failed him in this regard.

You may not know that he was an excellent writer. He wrote me many handwritten letters--long ones--that I cherish. They were filled with wisdom, good values, sound policy ideas, and what he was hearing from the community. A year or so ago, he gave me a copy of a plan he helped write some 40 years ago as part of a committee for the development of Mobile. He was proud of their work, and indeed their concepts and vision are still valid today.

His accomplishments are many. One of his most important was the critical role he played in the 'growth and character of Ashland Place United Methodist Church for four decades.

As a Southeastern Conference champion wrestler at Auburn, he demonstrated courage, strength, and discipline. There are just two in the ring and only one winner. He was a consistent winner.

I have come to understand the importance of our top civilian personnel at our military bases. Generals come and go but able civilians keep the bases running. Our civilian leaders are crucial to our military's success, and they are promoted on merit and on performance. At Robbins Air Force Base, Brannon led the avionics section that consisted of some 2,300 personnel. A place where errors are not allowed.

I visited him in the hospital, not long after his heart surgery. I thought he looked good, and he felt confident. But Brannon was no Polyanna. He was a realist. His words and manner conveyed that he well knew that he had had serious surgery, that nothing was guaranteed, and in the scheme of things life is short--``but a vapor'' the Scripture says.

Daughter Ursula says later on during his final illness, and as he weakened, he knew the end was near and he was at peace. Of that I have no doubt. See, he knew he had had a good life of family and friends. He had done his best to be true. He was confident in his salvation. He felt blessed. And right he was.

So we celebrate honestly this remarkable and good man: a champion and fearless wrestler; a great leader at one of our Nation's military bases; a

pillar of his church; a faithful and loving husband; an example to all in love of family; a man of principles and conviction; a man of courage, honesty, and honor; but humble, encouraging, and loving.

His values represent the highest and best of our faith, and of our Nation. His family has received a great legacy--which to their credit they fully recognize--and we, his friends, a true lesson in how to live a ``good'' life.

Well done, good friend.

Madam President, I appreciate the leadership Senator Coburn has shown. We need to focus on the seriousness of the issue and all that is at stake--why it is important and how it can be done. It's not impossible to pay for this bill and provide these benefits without adding to the debt of the country by containing other spending. There is no reason we can't do this. I thought last night we had reached an agreement that would actually have achieved that, but we were not able to.

Let me briefly restate the posture we are in. Senator Grassley offered an amendment a few days ago to extend unemployment insurance for 30 days. It also would include a doctors payment so they don't get cut for their Medicare work; COBRA benefits, FMAP benefits, and other things. He offered that measure, but our Democratic colleagues blocked it. Now, the amendment was paid for. He had an offset, which was I think mostly unspent stimulus money that still remains available to us to spend on this kind of activity. Then yesterday Senator McConnell reintroduced it. He sought to have the Grassley amendment come up for a vote that would have extended unemployment insurance and would have paid for it. That was voted down by our Democratic colleagues.

What I first wish to say to my colleagues who have been so vigorous-- almost excessively so--in attacking the Republican side for not dealing with this issue is that we have offered two proposals to do so and they have been blocked. So it is not fair to say Republicans don't want to do unemployment insurance. It is not fair to say that. To do it in an attacking fashion, and to attack those of us who are simply saying let's pay for it, as if we don't care about people who are unemployed, is offensive to me and I object.

I know what the deal is. Last night I thought we could reach an agreement on this but it fell apart. The Democratic leadership and Senator Reid decided they will let it lapse, and then they will attack and blame Republicans for it.

I just do not think that is fair.

Let's get back to the critical issues that are at stake.

Senator Chambliss mentioned that according to the Washington Times today, the Congressional Budget Office--the group we employ to help us understand these issues--says the publicly held debt of the United States will reach 90 percent of the gross domestic product by 2020. Why is that significant? First of all, it is above what Europe expects. They will not allow a country to enter the European Union if it has debt exceeding 60 percent of GDP.

More importantly, the Budget Committee had a professor testify from the University of Maryland who has written a book on this subject testify. She was asked by the Democratic chairman to provide expertise to the Budget Committee a couple of weeks ago. What she said is that when your debt reaches 90 percent of GDP, it impacts economic growth adversely. She said that with debt at 90 percent of GDP, the growth of our economy will be reduced by at least 1 percent. That is not a small amount.

As we know, 2-percent growth is not a bad thing to have. If you get 3 or 4 percent of GDP growth, you are moving along at a pretty good pace. In a mature economy you almost never get growth exceeding 3 or 4 percent of GDP on a sustained basis. If you are losing 1 percent of your growth, it could be 50 percent or 30 percent of the entire national growth that is being eliminated, pulled down. Why? Because we excessively spending money today, putting our debt off on our children and grandchildren into the future. That is going to make them less able to have a robust economy than they otherwise would have. People will pay. Nothing is created from nothing, as Julie Andrews taught us in that great song. Nothing comes from nothing, nothing ever could. Somebody is going to pay for this.

We are enjoying and celebrating today by spending money that is not ours. We do not have it in our bank account. We are having to go out and borrow. That is the problem that I believe is of great importance.

Get this, it has also been reported in the press that Berkshire Hathaway, Warren Buffett's company--I say to Senator LeMieux--can borrow money cheaper than the U.S. Government. The insurance, for those who want to insure the money they loan to the government in case the U.S. Government does not pay it back, has tripled. Our annual deficit, as a percentage of GDP, is about 9.9 percent. The Greeks are in great trouble. Theirs is 12.9 percent of their economy. We are moving too close to that level. Remember, there are people who, when they buy a U.S. Treasury bond, insure themselves against the U.S. Treasury's failure to pay. They are paying three times today what they were paying just a few years ago because the U.S. Government's debt is not sound. Moody's, the company that rates the debt, continues to suggest they may downgrade our debt. This is because we are borrowing too much. It is time for us to put a stop to this and bring it under control.

We have offered several amendments that would fix the unemployment insurance and pay for it. Last night, a series of offsets were provided--offsets being things you could do to get the money out of current resources and expenditures instead of borrowing it.

Also, it is well known that all the money has not been expended in the $800 billion stimulus plan. A lot of that money is not spent. The stimulus bill, when we passed it, was supposed to do a number of things. One was to deal with our crumbling bridges, our infrastructure, and one was unemployment insurance. That money has not been spent. Why don't we use it? If you don't use it, it allows that unspent money in the stimulus pot to be used as a slush fund to finance whatever other idea on which our leadership desires to spend it. That is what it is. Why won't we use it? Because they still want to use it on other things they have in their minds, of which I have not been fully informed.

I will say that I have a lot of county commissioners--and I assume the Senator from Florida has also--talking about roads and highways. I have to tell them how heartbroken I am that the stimulus legislation, which spent an incredible amount of money--$800 billion--only spent 3 or 4 percent on highways and bridges. They are not feeling any growth of a significant nature in their infrastructure improvements. The advantages of money being spent on infrastructure are twofold. It absolutely creates a certain number of jobs. Perhaps not a huge number, but a certain number of jobs are absolutely created to do the construction work, to replace a bridge, to pave a road, or to fix a water sewer system.

Those are real jobs. But, more important, when you do that, you have accomplished something. You have obtained a tangible asset that benefits the people in that community and makes that community more productive. It also helps make our Nation more competitive because we have either built new infrastructure we needed or restored infrastructure we were going to have to restore anyway to keep up our productivity. Having so little of the money in the stimulus

package go to that sort of thing is one reason we have not seen growth in jobs.

It is particularly disheartening to me to think of how little permanent benefit we have gotten from the bill.

I see my colleague from Florida, Senator LeMieux, is here. One of the things he and I have talked about a lot--and I think it has been a bit of a shock to him since he has been here--is the extent to which our Nation is increasing our debt. I know he deeply, as a citizen legislator, cares about this situation. In his conversations with me, he has shared with me that is what he thinks is the biggest threat to our country. I know he wants to do everything he can to help us right this ship that is going in the wrong direction.

I am pleased to yield the floor at this time to Senator LeMieux.

Madam President, President Obama made a promise to the American people that health care legislation would not provide benefits to those illegally in the country.

I would call up my amendment.

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

I would note that loopholes do remain in the health care legislation. My amendment would simply ensure that the promise that has been made to the American people would be kept. It sets up an effective eligibility verification system consistent with that for other Federal health-related programs.

The amendment maintains current law, which prohibits legal immigrants from becoming a public charge on the taxpayers. It also prohibits the Secretary from drafting any regulation that would amend or alter these principles, principles that the President, the Congress, and the American people have said they support. The amendment would reduce fraud and the financial burden of the legislation on the American taxpayers.

I reserve the remainder of my time.

Mr. President, reserving the right to object.

I thank the Senator from Louisiana for her concerns about this matter. I am not a member of the committee and am not personally familiar with the nomination. But I know it is controversial with some Members on our side. I think as to the question of why, it is because we agree with the Senator that the nomination is to an important position, and there is concern about whether this is the right person for it. Therefore, Mr. President, I object.