Floor Statements

The following Senators are necessarily absent: the Senator from Illinois (Mr. Kirk) and the Senator from Louisiana (Mr. Vitter).

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, today I would like to address some of the recent press chatter that attempts to paint Republicans as closet Keynesians because we oppose the massive defense cuts that are contained in the Budget Control Act--the automatic sequestration or across-the-board cuts that occur unless Congress acts to avoid that before the end of this year.

The implication is that if we make economic arguments against these automatic cuts; namely, that they will result in massive job losses, we undercut our arguments against the President's stimulus spending, which is ostensibly created in order to stimulate consumer demand and therefore increase spending, which is supposed to get us out of the economic doldrums we are in. I wish to make two points in response.

First, of course, eliminating more than 1 million defense-related jobs, which is what will happen if the automatic sequestration occurs, will obviously hurt the economy. It will obviously result in job losses, and many people will suffer. That is what a George Mason University study said this $492 billion in cuts will contribute to. In fact, the same point was made in a CBO study that was released a couple of weeks ago. How could such massive job losses not do economic harm? A million jobs--jobs in both the private and public sectors--comprise a substantial part of our economy. In fact,

just in my State of Arizona, there are about 33,200 private-sector jobs at risk if these automatic defense cuts were to take place.

But--and this is my second point--most Federal spending, certainly including defense spending, is for purposes other than stimulating the economy. I support spending for national security because it is necessary for the Nation, not because it also happens to provide jobs. And that is the way it is with a lot of Federal spending. We support the programs because they satisfy a need, and certainly the No.1 need of those of us in the Congress and the President is to provide for the national defense. So we spend what we think is necessary each year to provide for the national defense. The fact that also can create some jobs is a side benefit, if you will, in an economic sense, but it is not the reason we do the spending in the first place. If that spending is cut way back, however, there is no question that jobs will be lost, and I think that is worth pointing out in the context of a discussion about economic recovery.

What I would not do is support unnecessary spending on defense or anything else just to create more government-supported jobs, just for the sake of stimulating the economy. The taxpayers don't have enough money to contribute to the Federal Government for that purpose. We should spend what is necessary and no more. So supporting existing defense jobs is very different from supporting redistributionist government stimulus spending for jobs there is no demand for and on government payments for things such as food stamps and other transfer payments that don't necessarily translate to new jobs but simply move money around. The difference, really, is how you spend the money.

Just to reiterate, Republicans support defense jobs because they produce something essential to our national security and the things they relate to--intelligence and making equipment and weapons and so on. The jobs that produces are incidental to the primary reason we support those jobs.

Keynesians support redistributionist government stimulus spending because they think government spending boosts jobs and economic growth by increasing consumer demand, as I said. But this zero-sum thinking may result in the redistribution of resources from one group of Americans to another but doesn't necessarily result in any net new production or economic growth.

It is said, for example, that we could pay people to dig holes and then fill them up again and we would have created jobs but we wouldn't have created any productivity or growth for the economy per se. Unfortunately, very often the group left paying the bill is the very group of people we rely upon to create the new jobs--in this case, the taxpayers, especially small business folks, whom we call upon to create the jobs coming out of the recession. The real trade-off is between government jobs and jobs created in the private sector. Leaving more money with the job creators in the private sector enables them to create those jobs. Taking more of it away and sending it to Washington for Washington to redistribute takes away from job creation.

As I have noted many times, the last 3-plus years have shown we can't spend our way to economic growth and prosperity; that is, we--the Federal Government--can't spend our way to growth and prosperity because the money we spend either has to come from taxpayers or be borrowed and eventually be paid back by taxpayers. The stimulus was supposed to keep unemployment below 8 percent, but we have just marked the 40th straight month of unemployment higher than 8 percent--above 8 percent. I think such outcomes demonstrate why Republicans oppose these Keynesian spending policies. They simply don't work. If they did, we would be rolling in dough right now after four consecutive trillion- dollar deficit spending sprees.

To set the record straight, Republicans are not arguing that the Department of Defense is a jobs program. It is necessary for our national defense. That is why we spend the money. We are not saying we are going to fix the economy by undoing the defense cuts under the sequestration. We are not even saying defense-related jobs are the most important sequester-related issue. What we are saying is that defense cuts are very dangerous for our national security, and if they go through, not only is our safety jeopardized, but we may have more than 1 million newly unemployed Americans. That is not a desirable outcome, and that is worth talking about. That is something we must keep in mind as this debate goes forward.

In conclusion, I renew my call to my Democratic colleagues and to our House colleagues to get together--Republicans and Democrats, House and Senate--to do something we all know is in the best interest of the country: avoid the automatic sequestration, half of which applies to defense--we are all for a strong national defense--and half of which applies to all the other discretionary spending programs. All those things will suffer if we don't reprioritize our spending and our reductions in spending as opposed to allowing this to happen across the board.

We do that by finding offsets we can agree upon in a way that will, as I said, set the priorities and enable the departments of government that have to plan for the future to do so in an intelligent way rather than simply knowing at the end of the year they are all going to have to have an across-the-board cut that isn't in anyone's best interest.

It is not as if we are suggesting doing away with the savings that would result from sequestration, which is $109 billion for next year. Well, believe me, there is $109 billion in the $3-plus trillion spending we will be doing here. There certainly is $109 billion in savings we can achieve, and there have been several proposals already as to how that can be done. And it can be done without losing Federal jobs, it can be done without negatively impacting the economy, and it needs to be done under the law because Congress promised that we would save that $109 billion next year. It is just a matter of whether we will do so intelligently, making the decisions we can make--and that our constituents expect us to make--in an intelligent way, setting priorities, or whether we will simply succumb to the notion that we can't make a decision, so we will let it happen across the board.

Just to give an illustration, how would you like to be a Navy admiral who hears the words: Here is your 80 percent of a submarine, admiral. It doesn't work that way. If we need the submarine, we need to pay for 100 percent of the submarine and cut somewhere else. That is all we are suggesting. We need to do that while the planning can be done for next year; otherwise, we are going to have a very inefficient and Draconian cut coming up that is not going to benefit anyone.

Again, I urge my colleagues, let's find a way to get together, find those savings, and get that done before we get toward the end of the year, when the departments can do the planning we will be asking them to do.

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

The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from Georgia (Mr. Chambliss), the Senator from Indiana (Mr. Coats), the Senator from South Carolina (Mr. DeMint), the Senator from Nevada (Mr. Heller), the Senator from Illinois (Mr. Kirk), the Senator from Ohio (Mr. Portman), and the Senator from Florida (Mr. Rubio).

Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay.''

Mr. President, I will speak about two amendments that we will vote on later.

Amendment No. 2111

First is the Bingaman amendment. I urge my colleagues to oppose it. It ignores fundamental economic realities of pharmaceutical patent litigation, and it would ultimately result in fewer generic drugs being brought to market and delays in the launch of many of the generic drugs that do go to market.

Under current law, a generic drug company that is the first to file an abbreviated new drug application for an

existing patented drug is entitled to 180 days of market exclusivity once the generic drug is approved. In other words, they have the exclusive market on it for half a year. This creates a powerful incentive for drug companies to bring generic drugs to market.

The present amendment would dilute this right of 180 days of exclusivity and potentially require the exclusivity period to be shared with another drug company's product. Under the amendment, the only way a generic drug company that files the first ANDA could be assured of getting 180 days of market exclusivity is by litigating a challenge to the validity of the branded drug's patent all the way to a final judgment.

This is not a sound approach. First of all, patent litigation is very expensive. Full litigation of a drug patent suit typically costs between $3 million and $5 million. Second, most drug patents are ultimately found by the courts to be not invalid; that is, most validity challenges to these patents fail.

Generic drug companies, as everyone else, have limited litigation budgets. As a practical matter, if we force them to litigate every patent case to a final judgment in order to preserve their exclusivity rights, they will pursue fewer abbreviated new drug applications, and fewer ANDAs means fewer generic drugs and higher costs for consumers.

Finally, it is often the case that part way into a drug patent lawsuit, the generic drug company comes to the conclusion that the brand's patent is strong and that the challenge to the patent is likely to lose. In such a situation, everyone is better off if the suit is settled. Typically, such settlements allow the generic drug to go to market somewhat earlier but still preserve the bulk of the patent term. Obviously if the generic drug company is forced to litigate this all the way to judgment in order to potentially receive exclusivity and they lose, the full patent term will run and there will be no early generic market entry. This hurts both the generic drug companies and, more importantly, the consumers.

For these reasons, I urge my colleagues to oppose the Bingaman amendment.

Amendment No. 2109

Second, I urge my colleagues to oppose the Sanders amendment. This amendment would undermine the government's ability to fight fraud and will harm patients and U.S. competitiveness by eviscerating existing incentives to invest in medical innovation.

The Sanders amendment would result in the automatic revocation of any remaining regulatory exclusivity on a product when a company is convicted or even enters into a settlement agreement for certain violations of the Food, Drug, and Cosmetic Act, or any violations of the False Claims Act or several other listed statutes.

There are several reasons why this is the wrong approach. First and foremost, the amendment will result in less lifesaving drugs ever getting to patients. Obviously, we should be fighting for lifesaving drugs getting to patients even faster. We provide these periods for exclusivity, as I mentioned earlier, for a reason: to enable companies to recoup the significant investments they make--as high as $1.2 billion per drug--to develop new medicines. Some of the exclusivities the amendment would revoke are those we enacted to encourage companies to ensure the safe use of pharmaceuticals in children or to find a cure for rare diseases that affect a very small number of people.

Indeed, orphan drug exclusivity is a great example of how these exclusivity periods benefit patients. Since 1983, the year the Orphan Drug Act was signed into law, more than 350 medicines have been approved to treat rare diseases, compared to fewer than 10 in the 1970s. Why would we want to jeopardize such a great success story?

Second, reduced investment in U.S. drug development is not only bad for patients but for the economy. Because the Sanders amendment would create a disincentive to invest in drug development, the National Venture Capital Association has already expressed concerns, stating that the amendment has ``the potential to inadvertently undermine innovation and undermine decades of policies enacted by Congress with the goal of fostering medical innovation.'' Defined periods of exclusivity provide some small measure of predictability in what is otherwise a risky process, and companies and venture capitalists rely on these periods of exclusivity to make development and investment decisions.

By threatening the elimination of exclusivities for conduct that is likely many years removed from the development process, the Sanders amendment would introduce even greater uncertainty into the R&D process.

Let me restate that we need to reconsider the overall favorability of the environment for innovation in the United States. Yet here we are considering an amendment that, if enacted, would make the U.S. investment climate far less attractive for these companies, even as other countries are actively courting the biopharmaceutical industry.

Third, while the amendment purports to fight fraud, in reality it would actually undermine the ability of the government to fight fraud by undermining its ability to settle cases. The Sanders amendment would revoke exclusivity not only upon conviction--even if that conviction is later overturned on appeal--but also upon settlement. This is a huge problem because it creates a disincentive for companies to ever settle, as it would make more sense to drag out the district court litigation while any relevant exclusivity period is still running for the company.

Fourth, and finally, the amendment is not even necessary because the outcome called for by the Sanders amendment can already be achieved under current law in appropriate cases, because the government can, and does, have the power to negotiate the relinquishment of exclusivity as a condition of settlement. It can already do this. For example, this past January, the Department of Justice negotiated the relinquishment of a company's 180-day exclusivity as part of a settlement for violations of the Food, Drug, and Cosmetic Act. Mandating this serious outcome in every case undermines the government's ability to use it as leverage to negotiate settlements.

Large penalties already apply for violations of the statutes listed in the Sanders amendment. The world of drug manufacturing and marketing is very heavily regulated, and noncompliance is subject to considerable penalties under current law. This amendment is not necessary. Rather than being outraged by settlements that occur, perhaps we ought to take them as an indicator that the government is doing a good job of using existing authority to go after those who seek to defraud the health care system.

I urge my colleagues to oppose the Sanders amendment.

The following Senators are necessarily absent: the Senator from Idaho (Mr. Crapo), the Senator from Texas (Mrs. Hutchison), and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Idaho (Mr. Crapo), the Senator from Texas (Mrs. Hutchison), and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Nevada (Mr. Heller), the Senator from Texas (Mrs. Hutchison), and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Illinois (Mr. Kirk).

Madam President, today I would like to add a little context to the discussion of the fiscal cliff our Nation approaches, a reference to the combination of the largest tax increase in history, new taxes under ObamaCare, sequestration, and the expiration of the payroll tax holiday, all of which take effect in January of 2013 unless the President and the Congress act.

This is a key discussion to have because how we view this so-called fiscal cliff defines our perspective on how an economy grows and prospers. Edward Lazear, who is a former Chairman of the President's Council of Economic Advisers, recently wrote an op-ep that outlines the various perspectives. I will focus on the two most prominent: the Keynesian view and the view of supply-side economics.

The Keynesian theory holds that spending is the key to growth-- government spending. Keynesians believe that in recessionary times, increased government spending can take the place of private sector activity. That is why they present a false choice between government spending cuts--in other words, austerity--and growth. Their perspective holds that growth is contingent on government spending.

This was the thinking behind the President's 2009 stimulus spending package, the so-called Cash for Clunkers, and a litany of other recent government spending programs, transfer payments, and temporary tax credits. I believe the administration's insistence on enacting these temporary Keynesian spending policies to stimulate consumption is misguided and the evidence reveals has failed. Remember, the stimulus was sold as a measure to keep unemployment from topping 8 percent. But, in fact, unemployment has not dipped below 8 percent for 39 months, and growth is very anemic. We are experiencing a recovery in name only. So there is not much evidence that spending can revitalize a sagging economy; that is to say, government spending, and even if government spending could be a boost, as Lazear points out, the costs would be massive. Here is what he writes:

Even if a fiscal stimulus has some benefit, the cost of

fiscal policy is likely to be very large. In order to

stimulate the economy, growth in--not high levels of--

government spending is required. To provide a stimulus

comparable to the 2009 legislation, we would need to increase

government spending by $250 billion.

He goes on:

The Keynesian view implies that keeping spending constant

at the higher level in 2014 would generate no simulative

growth for 2014 . . . because there is no increase in

spending over the 2013 level. . . . If we want to delay our

day of reckoning, we must keep spending at a higher level for

each year that we want to postpone the negative consequences

for growth.

Supply-side economics, on the other hand, holds a different perspective on growth: that government spending does not increase prosperity, that tax hikes hurt the economy and stifle growth.

We believe that economic growth stems from combining three inputs: labor, capital, and technology. These three factors of production result in output that we can then consume. Without labor, capital, and technology, there can be no consumption. Focusing on policies that stimulate consumption targets the wrong side of the equation. In order to get the economy going, we need to focus on the inputs--labor, capital, and technology. We also believe government spending cuts are beneficial because they free up private capital and help align revenues with government spending.

Lazear argues that supply-siders stand on the firmest ground when it comes to fiscal policy's effect on economic growth. Here is what he writes:

On the tax side, there is strong evidence that supports the

supply-siders.

And he cites, for example, research from Christina Romer. By the way, Christina Romer was President Obama's first Chair of his Council of Economic Advisers. Her research shows that raising taxes by 1 percent of GDP--raising taxes, which is what the administration proposes-- lowers our gross domestic product by nearly 3 percent. So increase taxes by 1 percent, you lose 3 percent of gross domestic product.

I recently joined 40 of my Republican colleagues in sending a letter to Leader Reid to make this point, that tax increases will have a deleterious effect on economic growth. The letter asks that he join us in working to take the tax threat off the table before the election in order to create more economic certainty. We know that so-called ``taxmageddon'' is coming. There is no good reason not to act. The election is not an acceptable excuse. In fact, I would posit that politicians could be rewarded for acting to avert the catastrophic effect of this huge tax increase.

In addition to acting to prevent tax hikes, Congress should also pursue spending cuts to help unleash private capital, boost growth, and reduce our nearly $16 trillion national debt in the process. To be clear, cutting government spending does not mean the government should take a sledge hammer approach and cut indiscriminately. We should be careful where we cut. We should prioritize. For example, I oppose the defense cuts on national security grounds, not Keynesian grounds. In other words, while it is true that cuts in defense spending will result in job losses, big job losses under sequestration, our national security is even more important. The automatic spending cuts under sequestration mean that across-the-board spending to the Department of Defense will, in the words of the Secretary of Defense, devastate our national security.

Allowing the sequester to begin as planned would cut 10 percent from defense in fiscal year 2013 alone and dramatically shrink the size and capabilities of our military. To avoid this, the Senate should follow the lead of the House of Representatives, which recently passed legislation to replace the sequester with other spending reductions. The legislation will cut $315 billion in spending and will reduce the deficit by over $242 billion. It is not a perfect bill, but I do believe it is a good place to start.

My overarching point is this: We should not shy away from prudent spending cuts for fear that they will hurt growth. It should not be difficult to find cuts in our $3.7 trillion budget. These cuts certainly will not derail economic growth if they are done the right way.

The choice, in other words, between spending cuts and growth is a false choice. If the President is not truly concerned about boosting growth and reversing the trends of the last 3\1/2\ years, he should stop presenting this false choice, as he did, for example, at the G8 summit last weekend, where he actually encouraged German Chancellor Angela Merkel and other leaders to embrace what he called a ``growth package'' modeled in part after his own budget-busting stimulus spending. I hope Chancellor Merkel and other leaders around the world take a very close look at whether the Obama growth package is something they wish to bring home after observing the American economy for the last 4 years.

Preventing tax increases and reducing out-of-control spending is a better approach to long-term prosperity.

I ask unanimous consent that at the conclusion of my remarks, the op- ed I referred to by Edward Lazear in the Wall Street Journal of May 21 be printed in the Record.

Mr. President, I ask unanimous consent to speak as in morning business.

Mr. President, what I would like to talk about this afternoon is a bit about the President's economic record. I am sure Americans have noticed the President barely mentions this economic record when he is out on the campaign trail, and I can well understand why. It is not a very impressive record, especially if you are a taxpayer or a business owner.

Our national debt creeps closer to $16 trillion each day. It is now more than $5 trillion more than it was when the President took office. It now adds up to about $50,000 per person in the United States, and that is exclusive of interest payments. By way of contrast, the median yearly household income--in other words, all the people in the house-- is less than $50,000. It is $49,445.

Unemployment recently dropped, but it did so for the simple reason that fewer people are searching for work.

The President's signature legislative items--the stimulus bill, ObamaCare, and Dodd-Frank--have not only been unhelpful in boosting growth, but they have left a trail of crushing debt, uncertainty, and new regulations in their wake. I want to make a few points about each of those bills because I think they paint a fair picture of the President's economic record.

First, let me talk about the stimulus. We have not forgotten about the stimulus, even though I suspect the President might like to--$1.2 trillion. It, obviously, failed to achieve the promised results. An Associated Press reporter wrote shortly before it was signed into law:

They call it ``stimulus'' legislation, but the economic

measures racing through Congress would devote tens of

billions of dollars to causes that have little to do with

jolting the country out of recession.

Of course, that is exactly what happened. It seemed more designed to shower taxpayer dollars on certain favored constituencies and pet interests than to actually jump-start the economy. Much of it was simply wasteful Washington spending. Many investors must have asked themselves why they should put their money to risk on new job-creating ventures when they have to compete with well-connected firms that can simply wring taxpayer-provided stimulus dollars out of Congress or the Obama administration.

A Washington Post poll released just last week showed that 48 percent of Americans have an unfavorable view of the stimulus--and this was, after all, the President's signature effort to spur the economy.

Indeed, as Jeffrey Anderson notes in a recent issue of the Weekly Standard magazine, the administration does seem to be downplaying the law. Not only has the stimulus failed to create robust growth, the costs have become more outrageous. He writes:

It has now been five months since the Administration last

put out a report card on [the stimulus.]. . . . the December

report marked the sixth straight quarterly report showing

that stimulus's cost per job is rising: In reports spanning

January 2010 to December 2011, the stimulus's cost per job

more than doubled, rising from $146,000 (in January 2010) to

$317,000 (in December 2011). With each passing quarter, the

stimulus has become an even worse deal for taxpayers.

So this is the administration's own report card on the stimulus, concluding in the last report, $317,000 per job. Think about that for a moment. To create each job, the taxpayers shell out $317,000.

Numbers like these remind me of a quip from writer Christopher Buckley. He said writing political satire these days can be difficult because it has to compete with reality--$317,000 for one job under the President's stimulus.

Well, second, ObamaCare. The $2.6 trillion bill is not aging very well. Since its passage, the act has imposed an estimated $14.9 billion in private sector burdens, approximately $7 billion in costs to the States, and 58.6 million annual paperwork hours, according to a weekly regulatory report.

The April Kaiser health tracking poll showed that more Americans have an unfavorable view of the law than favorable. It is 43 to 42 percent. More than half of Americans oppose its central provision, the so-called individual mandate. All told, the new taxes in ObamaCare would add up to $\1/2\ trillion over 10 years. Many of these taxes will coincide with the biggest tax increase in history--the one scheduled for the end of this year. So at the very time the income tax rates are scheduled to go up, the new taxes from ObamaCare will hit--$\1/2\ trillion worth of new taxes over the next 10 years.

Finally, there is the Dodd-Frank financial regulatory reform bill. When it comes to financial regulatory reform, I think most Americans believe there should be two simple goals: preventing new crises from happening and making sure the taxpayers are not on the hook for Wall Street's mistakes.

Well, the Dodd-Frank bill did not achieve either goal. It is a complex web of regulations that institutionalized ``too big to fail'' and has served to increase uncertainty, increase moral hazard, and increase economic distortions, all the while adding 52.9 million paperwork hours since its passage.

So, as I said, President Obama does not seem to be running for reelection on this record of the stimulus package, ObamaCare, or Dodd- Frank regulatory reform. Instead, he is going to be sending--or maybe he has already sent it--to Congress a to-do list, things he would like for Congress to do, most of which are tax credits and other very short- term proposals that are not likely to have a big effect on jobs or growth because the business sector is not impressed with a one-time- only, short-term proposition. It wants to know that when it invests money, that investment is going to be for the long term. Apparently, he is going to campaign on this most recent list when he goes out to Iowa later this week.

Well, this happens to be Small Business Week, and one would think the President would turn to something that businesses have actually said they would like to do; that is, to prevent this tax tsunami coming at the end of this year--as I mentioned, the biggest tax increase in the history of the country, which automatically would take effect on January 1 of next year, unless Congress does something about it and the President can sign the legislation.

The NFIB, the National Federation of Independent Business, recently released a list of the top five uncertainties in the Tax Code that they say would harm small businesses. Let me just mention three of these uncertainties.

One is the pending increase in marginal tax rates, which will devastate the estimated 75 percent of small businesses that file as individuals. Every one of the five tax rates in the IRS Code will be increased as of January 1. Since most of the businesses now pay-- especially small businesses--as individuals--so-called passthrough entities--these rate increases directly will impact small businesses.

Secondly, they are concerned about the death tax. That is going to ensnare 900 times more small business owners and 2,200 times more family farmers if the rate increases to 55 percent and the exemption falls to $1 million, as is scheduled to occur on January 1.

Third is the alternative minimum tax which will hit 27 million more

Americans--including many small businesses--if it is not patched or repealed. Well, small business cannot afford this, what has been called ``taxmageddon'' and its devastating consequences.

I would hope, instead of this to-do list the President is sending us, he would take up the cause of preventing this big tax increase at the end of the year and help the small businesses and families that need that help.

Finally, I ask unanimous consent to have printed in the Record at the conclusion of my remarks a piece in National Review Online by Larry Kudlow dated May 17 called ``Extend the Bush Tax Cuts Now.''

In this piece, Larry Kudlow, a noted economist, notes that with respect to this ``taxmageddon''--the increase in everybody's taxes at the end of this year--it is the uncertainty of it all that is preventing the investment by business which would create the jobs we would all like to see. I would just like to quote three paragraphs and a couple sentences in a fourth. He says:

The uncertainty over the Bush tax cuts already has caused a

number of business leaders to threaten a hiring freeze and a

dampening of investment until they can figure out the after-

tax cost of capital and rate of return on investment. Hiring

has slowed noticeably in recent months. And a number of Wall

Street economists are marking down the anemic recovery even

more, suggesting that the 3 percent growth at the end of last

year, which faltered to 2 percent growth in the first

quarter, could be even less in the period ahead.

Then he goes on to say:

A bunch of CEOs have even formed their own march on

Washington. Eighteen of them just wrote to Treasury man

Timothy Geithner, begging him to oppose tax-rate hikes on

dividends--

Which would go from 15 to 45 percent--

and capital gains (from 15 to near 30 percent. . . .)

``Equity capital is the life blood of investment and job

creation for U.S. companies.''

That is what these CEOs wrote in the letter to Treasury Secretary Geithner.

Kudlow goes on to say:

And they argued that the administration's tax-hike plans

would do great harm to American competitiveness and capital

formation.

Then he quotes the Ernst & Young firm to say this:

. . . the top U.S. integrated tax rate on corporate profits

and dividends is on course to hit 68.6 percent, significantly

higher than all other OECD countries--

Those are the developed countries of the world--

as well as Brazil, Russia, India, and China. Capital gains

would rise to 56.7 percent.

In other words, he is pointing out that not only would these higher tax rates hurt the small businesses and the families because of the individual tax rate, marginal rate increases, but raising the dividends and capital gains taxes would be even more detrimental because we are asking companies in America to compete with firms all over the world, and their rate would be much higher with this tax increase than the rate in all of the other developed countries, as well as countries such as Brazil, Russia, India, and China. How can American businesses compete in that situation?

Then, finally, Kudlow notes the effect of all of this uncertainty on what matters most to most Americans; that is, the fact that they cannot get work. He says:

Bizarrely, some 25 million people have vanished from the

labor force--from unemployment, underemployment, or simply

dropping out all together. And half of U.S. households are

now on some form of federal-transfer-payment assistance. So

as we pay so many people not to work, we're sapping the

vitality of the economy.

This is absolutely true. With half of the people in the country on some form of Federal assistance, with 25 million people having just vanished from the labor force not even looking for work anymore, businesses sitting on the sidelines because they cannot calculate what kind of return on investment they could get because of the potential for the huge tax increase that is going to occur on January 1, it is no wonder we cannot move forward with an economic recovery.

So I would just say to President Obama that providing long-term tax rate certainty would go a long way toward establishing a sound economy in this country, putting Americans back to work, and, ironically, establishing a better record on which the President could run. A year and a half ago, the President actually proposed--and I think Congress was very happy to go along with--a continuation of the existing tax rates because, as he said at the time, not to do so would be very damaging to the economy. I would submit it is equally damaging for that to happen at the end of this year.

So I would ask the President, help give the American people and American businesses the certainty they need to invest, to create jobs, to advance our economic growth, and create prosperity for our future.

Exhibit 1

[From National Review, May 17, 2012]

Extend the Bush Tax Cuts Now

(By Larry Kudlow)

House Speaker John Boehner is playing a heroic role right

now. In his efforts to prevent the Bush tax cuts from

expiring, Boehner is aggressively taking on President Obama's

leadership ineptitude on the economy. In essence, Boehner is

pushing a Republican policy to wrap up a debt-limitation bill

and extend the Bush tax cuts in one fell swoop before the

election--and before all the last-minute, crisis-oriented,

political machinations that would come in a lame-duck

Congress, threatening another credit downgrade and leading to

a business-hiring freeze and plunging stock market, all of

which happened last year.

Tax-cut certainty is so vital right now because the anemic

economic recovery may be moving towards deflation. That's the

message of a gold price that has collapsed by near 20

percent, falling from around $1,900 an ounce to the mid-

$1,500s. With a risk-averse economy at home, and with the

Greek and European financial crises abroad, the demand for

dollars seems to exceed the dollar supply printed by the Fed.

This could be solved by more quantitative easing. But a

better approach for a system already oversupplied with unused

liquidity would be the extension of tax-rate growth

incentives, not more monetary pump-priming.

The uncertainty over the Bush tax cuts already has caused a

number of business leaders to threaten a hiring freeze and a

dampening of investment until they can figure out the after-

tax cost of capital and rate of return on investment. Hiring

has slowed noticeably in recent months. And a number of Wall

Street economists are marking down the anemic recovery even

more, suggesting that the 3 percent growth at the end of last

year, which faltered to 2 percent growth in the first

quarter, could be even less in the period ahead.

A bunch of CEOs have even formed their own march on

Washington. Eighteen of them just wrote to Treasury man

Timothy Geithner, begging him to oppose tax-rate hikes on

dividends (from 15 to 45 percent) and capital gains (from 15

to near 30 percent, taking the ``Buffett Rule'' into

account). ``Equity capital is the life blood of investment

and job creation for U.S. companies,'' they wrote. And they

argued that the administration's tax-hike plans would do

great harm to American competitiveness and capital formation.

According to accounting firm Ernst & Young, the top U.S.

integrated tax rate on corporate profits and dividends is on

course to hit 68.6 percent, significantly higher than all

other OECD countries, as well as Brazil, Russia, India, and

China. Capital gains would rise to 56.7 percent.

And Speaker Boehner knows this. So he's begun a valiant

fight to get supply-side tax reform at the top of the

congressional agenda well before the election. Similarly,

House budget chairman Paul Ryan is suggesting at least a six-

month extension of the Bush tax cuts, so as not to disrupt

business. (By the way, the Ryan tax-and-spending-reform

budget got 41 votes in the Senate, while Obama's budget got

none.)

In a recent interview, former top Obama economic adviser

Larry Summers told me the U.S. recovery is going ``ahead of

schedule.'' Really? But former Obama economist Austan

Goolsbee gives a more realistic assessment by referring to a

subpar 2 percent forecast that is way too slow to spark

faster job creation.

Bizarrely, some 25 million people have vanished from the

labor force--from unemployment, underemployment, or simply

dropping out all together. And half of U.S. households are

now on some form of federal-transfer-payment assistance. So

as we pay so many people not to work, we're sapping the

vitality of the economy.

Mitt Romney recently gave a fine speech, blasting Obama's

profligate spend-and-borrow policies. He described ``a

prairie fire of debt sweeping across Iowa and the nation,''

and he tied our newfound debt to the ``tepid recovery.''

But lower spending alone, while important, is not going to

solve the economic-growth problem. Yes, moving spending to 20

percent of GDP from 24 percent will free up private

resources. But lower tax-rate incentives on the extra dollar

earned and invested is a more powerful economic-growth tool.

Romney should push his 20 percent tax-rate-reduction plan.

That would add liquidity to fight deflation, and would

provide new economic-growth incentives.

As for John Boehner's goal of an early extension of the

Bush tax cuts, it's going to be an uphill climb. Democrats

want to raise taxes, not cut them. But at least the GOP will

have a coherent growth-and-jobs message. They can tell the

public how important it is to avoid falling off the massive

tax cliff which looms ahead. Deflationary fears can ease. And

they can make it plain to voters that the GOP has a growth

message in these perilous economic times, while the Obama

Democrats do not.

The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint), the Senator from Nevada (Mr. Heller), the Senator from Illinois (Mr. Kirk), and the Senator from Louisiana (Mr. Vitter).

Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay.''

The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Illinois (Mr. Kirk).

The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Illinois (Mr. Kirk).

Madam President, reserving the right to object, I would just note that this is a matter--and I appreciate the majority leader's desire to bring this to conclusion. It has been worked on now for quite some time. Unfortunately, the language that has just been presented to our side has not been widely shared. I have not actually read it yet. It was apparently brought over at 10:38 this morning. When I came to the floor, it was described to me. As described, it would be weaker than President Obama's policy.

Given the fact that this is a matter on which Democrats and Republicans and the administration and the Senate have been in pretty close accord in dealing with the country of Iran and its nuclear ambitions, I would hope we could ensure that the language is agreed to by all. There seems to be an important piece missing, and we certainly need the time to talk to folks to see why that is so, whether it can be put back in or, if it cannot, then to be able to discuss it because we certainly do not want something that is weaker than the administration's current policy.

So I would hope we could have some time over the weekend and perhaps on Monday, when enough of the Members can be apprised of what has actually been proposed here, and see if our colleagues on the other side would be willing to make the accommodation that we may need to have made here.

Mr. President, for the reasons noted, I would hope we could work with our colleagues to fix the problem. Until we do, I would have to object.

The PRESIDING OFFICER (Mr. Manchin.) Objection is heard.

Mr. President, the Federal Government now pays for more than half of all health care costs in this country, and that number is likely to grow with the rapidly aging U.S. population. Indeed, Medicare will face a nearly \1/3\ enrollment increase in the coming decade. We have promised health care benefits to these seniors; to keep that promise, we must ensure there are enough physicians to treat them. Unfortunately, the medical workforce is shrinking: estimates show that we may experience a shortage of up to 159,000 physicians by 2025.

In light of these sobering statistics, the government has a strong interest in doing more to encourage the training of physicians who can deliver quality care to our Nation's seniors. Even if we continue funding medical education at current levels, we will soon face a severe crisis in access to medical care. Cutting this medical education funding would be counter-intuitive at best; dangerous at worst. In recent years, however, there have been several proposals to do just that.

It is true that there is a lack of transparency and accountability around this funding--mainly because we do not require hospitals to report on how money is spent, and because we have not set workforce goals for hospitals to meet. But that does not necessarily mean that the money is spent poorly, or that it is an area ripe for funding reductions.

Rather than simply slash funding, we should work to remedy this lack of

transparency and encourage hospitals to meet certain quality metrics. The Graduate Medical Education Reform Act offers one promising avenue to do so. Under this bill, if a teaching hospital produces quality residents as measured by certain consensus-based metrics, it can get up to a 3 percent increase in indirect medical education funding. Conversely, a hospital that fails to meet the metrics can be penalized by up to 3 percent.

This is one common-sense approach that maintains overall current funding levels while encouraging quality teaching programs. I urge my colleagues to join Senator Reed and me in supporting this measure.

Mr. President, the Federal Government now pays for more than half of all health care costs in this country, and that number is likely to grow with the rapidly aging U.S. population. Indeed, Medicare will face a nearly \1/3\ enrollment increase in the coming decade. We have promised health care benefits to these seniors; to keep that promise, we must ensure there are enough physicians to treat them. Unfortunately, the medical workforce is shrinking: estimates show that we may experience a shortage of up to 159,000 physicians by 2025.

In light of these sobering statistics, the government has a strong interest in doing more to encourage the training of physicians who can deliver quality care to our Nation's seniors. Even if we continue funding medical education at current levels, we will soon face a severe crisis in access to medical care. Cutting this medical education funding would be counter-intuitive at best; dangerous at worst. In recent years, however, there have been several proposals to do just that.

It is true that there is a lack of transparency and accountability around this funding--mainly because we do not require hospitals to report on how money is spent, and because we have not set workforce goals for hospitals to meet. But that does not necessarily mean that the money is spent poorly, or that it is an area ripe for funding reductions.

Rather than simply slash funding, we should work to remedy this lack of

transparency and encourage hospitals to meet certain quality metrics. The Graduate Medical Education Reform Act offers one promising avenue to do so. Under this bill, if a teaching hospital produces quality residents as measured by certain consensus-based metrics, it can get up to a 3 percent increase in indirect medical education funding. Conversely, a hospital that fails to meet the metrics can be penalized by up to 3 percent.

This is one common-sense approach that maintains overall current funding levels while encouraging quality teaching programs. I urge my colleagues to join Senator Reed and me in supporting this measure.

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. President, I say to my colleague, first of all, I will repeat what Senator Isakson said. As a Governor, you had to balance the budget. You know how to do it. You understand the importance of it. I appreciate the Senator's work on this colloquy today in that regard.

I would note that my own State of Arizona just concluded its work on a budget. It was hard. The Governor had her proposals. The State legislature did its work. It was hard slogging because they had to make tough decisions, but they did. Just last week, they finished the budget in the legislative session.

Families have to do it, States have to do it, but here in the Congress now, under the Democratic control of the Senate, for 3 straight years there has not been a budget.

As the Senator knows, however, the President submits a budget each year. Last year, his budget was, frankly, met with derision from pundits, from experts, and from economists who said it was not a serious proposal. I looked up the number. Last year his budget was rejected 97 to 0 in the Senate.

So what about this year? Well, the same thing. It was not a serious effort. It was a political document. Everybody could see it. So they put it to a vote in the House of Representatives. It was defeated 414 to 0. Not a single Democrat voted for the President's budget. They understood it was not serious.

Well, we will have an opportunity to vote on the President's budget again

this afternoon, and I expect the same fate. Why? Well, three quick points.

First of all, it accelerates our path to national bankruptcy. It fails to address entitlement spending. It has a slew of job-killing tax hikes. And it does nothing to effectuate even the President's own deficit reduction committee plan for reducing the deficit.

Just a couple of numbers: It contains a whopping $1.8 trillion tax hike on individuals, small businesses, investment, and family-owned farms. Think about the job-killing nature, the wet blanket that puts over our economy--a $1.8 trillion tax hike. This comes on top of the tax hikes that are already embedded in ObamaCare, which will extract an additional $4 trillion from the private sector by 2035 according to the Joint Economic Committee. Even with this tax hike, the President's budget would increase deficits by nearly $6.4 trillion over the next decade.

Now, you stop and think: Wait. Aren't the tax hikes supposed to be there in order to balance the budget? Well, you would think so. But under the President's budget, notwithstanding all of the new revenue from taxes, it increases the deficit by nearly $6.4 trillion, and it would spend a staggering $45.4 trillion during the period of the budget, which is $1.2 trillion higher than the Congressional Budget Office baseline from last March.

I know these statistics are mind boggling, and I hate to cite them. But you do need to back up what you are saying with the actual data. That is the point. The President's budget is a job killer, it increases taxes, and it still never balances.

I would point out that under his budget, while spending would reach 23.5 percent of the economy this year, and never get below 22 percent of GDP over the next decade, the historical average is much lower: 20.8 percent of GDP.

So bottom line, the President's budget would lock in the fourth straight year of deficits above $1 trillion, and even though the President--and here is what the President said--he promised to ``cut the deficit in half by the end of my first term. . . . ''

Well, the President's budget would never balance notwithstanding the huge tax increases. That is what is wrong with the President's budget. It is why it is not going to pass today. It is why it did not pass last year.

If I could add one other item to what my colleague said, we all know the big problem is spending on entitlements, the so-called mandatory spending. Well, the only thing mandatory about it is that it has to be spent unless we say something different. But we do not have the courage around here to reform our entitlement programs to the point that they are going to be available for at least our kids by the time they retire, and in some cases they may not even be available for some of us.

The other thing I would want to say about the President's budget is it continues this glidepath to insolvency for Medicare, which the recent Trustees Report says has an unfunded liability of $26.4 trillion. So in addition to spending too much, taxing too much, and borrowing too much, it does not do anything about the biggest problem we have, which is the broken entitlement programs that are not going to work for the people who are currently anticipating they will be there for them when they retire.