Floor Statements

Madam President, we are going to be foregoing a July 4 break to go back home to visit with our constituents in order to stay here, ostensibly, to work on the problem of the accumulating budget deficit and huge debt that the United States has taken on and the need to do something about that, in conjunction with the President's request that we raise the national debt ceiling.

What I would like to briefly address today is what seems to me to be an obsession on the part of the President to raise taxes. In fact, he is so fixed on this, it is so important to him to raise taxes, that he is willing to risk an economic crisis knowing that Congress will not raise taxes as part of this debt ceiling increase. And we should not. Not because we are trying to protect somebody but because higher taxes on an already weak economy would just make things worse.

Now, we can point to a lot of what the President has done since he took office that has made things worse, but I do not know of a single economist who believes that American businesses will be more likely to hire people, will be more likely to create jobs, if they are faced with paying higher taxes.

They will not. Everyone knows that. So when the President talks about raising taxes, he is talking about killing jobs, and I would like to speak about the three specific taxes that he has talked about. I know because I was the Senate Republican delegate in the meetings with the Vice President at which this was discussed.

I am not going to break the commitment that we all made to each other to not discuss things that the President has not already made public. So I will not discuss the many things the Democrats took off the table. They talk about Republicans taking things off the table, I think they have already made it clear that, for example, they took any changes in ObamaCare off the table. I will not get into that. I will not discuss other things that were a part of our conversations.

But since yesterday the administration's spokesman and the President specifically identified three of the things they did put on the table and wanted to discuss with us, I believe I might as well explain to you why we are not willing to raise these kinds of taxes. They are all job- killing taxes. They would all inhibit growth, which is exactly the opposite of what we should be doing.

What are these job-killing tax increases on small businesses and American families and other businesses? It is not, first of all, just on millionaires and billionaires and corporate jets. President Obama and our colleagues on the other side of the aisle are obviously using poll-tested rhetoric about only raising taxes on millionaires and billionaires and corporate jets. That sounds good. They want ordinary Americans to believe they will not be affected by the President's tax increase proposals. But the truth is, the provisions they put forward during the debt limit meetings with Vice President Biden would target small businesses and other job creators and many Americans who are far from being millionaires or billionaires.

I should mention right off the top that they never discussed with us in these meetings anything having to do with corporate jets. So I have not gone to look to see how many American workers are employed in the general aviation business.

I note that it was on a list that they gave us, but they never checked--I suspect that is more in the realm of political rhetoric since it does not, even under their proposal I have seen, raise very much money. But in any event, what have they actually discussed with us?

Well, the first thing they discussed was repealing something called LIFO. LIFO is a term--last in, first out--that is used by accountants as one of the methods of inventory accounting. For years there has been a question--and more than one-third of American businesses use this particular method of accounting. It is perfectly appropriate and legal and so on. But there has been some talk: Well, should we have everybody use the same standardized method of accounting? There have been proposals to do that in the past.

The problem is, what the Obama administration wants to do is not just to conform everyone to the same type of accounting but to actually go back and retroactively tax the businesses that have been using this accounting practice, which is perfectly legal, totally recognized by the IRS, and nothing is wrong with it. But they are going to go back and say: Because we are interested in rasing revenue, we are going to put a retroactive tax on all of you who have been using this method of accounting.

They are more interested in getting money than in tax fairness, and that is why we are opposed to this. It would represent a retroactive tax increase on the 36 percent of American businesses that use this perfectly legal method of accounting.

Now, who uses it? Mostly it is people in retail businesses and manufacturers, many of whom are small businesses, I might add. To show what the impact of this would be--by the way, we first talk about creating jobs in the retail sector where consumers come in and buy things and in the manufacturing sector where they are made. These are the very folks who use this method of accounting.

Here is the effect that it would have on small businesses. In September 2009, the Small Business Administration's Office of Advocacy--which is under the Obama administration--wrote to the Tax Reform Subcommittee of the President's own Economic Recovery Advisory Board that repealing LIFO ``would result in a tax increase for small businesses that could ultimately force many small businesses to close.''

Why on Earth would we impose a tax retroactively on folks who probably--at least according to the President's own Small Business Administration--would ultimately have to close their business as a result of the imposition of this tax? Why would we do that? Should that not at least be taken into account before you propose something such as this or are you so obsessed with finding somebody to raise taxes on or getting revenue that it does not matter?

With unemployment at 9.1 percent, we should not raise taxes on America's job creators.

Here is the second one they discussed: capping itemized deductions. They proposed capping itemized deductions for upper income taxpayers either at the 28 or 35 percent level. Obviously, this reduces the ability of taxpayers to buy homes, to make gifts to charity, to pay medical expenses, all of the things for which deductions are taken.

As the Wall Street Journal editorialized on June 29:

The political point of this exercise is to raise marginal tax rates without appearing to do so.

That is exactly what would happen. That editorial points out that President George H.W. Bush agreed to a similar proposal as part of his 1990 budget agreement that broke his ``read my lips'' promise not to raise taxes. But the fact is, half of all small business income falls into the top two brackets. So the ability of small businesses to grow and create jobs would obviously be harmed by this proposal.

The fact is, most high-income taxpayers--individual taxpayers-- already lose the benefit of tax deductions and credits at their income level because of what is called the alternative minimum tax. Each year we eliminate the effect of the alternative minimum tax except on those making, I believe it is above $250,000. So the very people who would be capped are already capped under the AMT. Who would get hurt?

Well, we know 50 percent of the taxes paid by small businesses are paid by these two upper brackets because they pay individually. It is those folks who cannot take this that would get hit by this because they have to take the deductions as part of their businesses. They would end up having their deductions capped and be unable, therefore, to invest that in hiring more people. Moreover, the tax increase would hit a much larger segment of American families than just millionaires and billionaires.

According to the IRS, in 2008, the last year for which we have numbers, only 319,000 tax returns showed income of $1 million or more. But in that same year, the number of returns falling in the 33- and 35- percent brackets, which are the brackets most affected by this proposal, numbered more than 3.6 million. In other words, more than 10 times the number of filers would be hit if only millionaires and billionaires were affected.

So while the President likes to claim he only wants to tax millionaires and billionaires, the fact is his proposal would hit small businesses and millions of Americans who are not millionaires. But as I said, most importantly, it affects job creation because the people who would be hit by this are the people who are small business entrepreneurs, who pay their taxes under these provisions, and would no longer be able to deduct their business job expenses.

Why, with economic growth at just 1.9 percent in the last quarter, would Congress want to raise taxes on small businesses and on American families? It just does not make sense.

Finally, oil and gas. It is always popular to talk about attacking Big Oil. Of course, millions of Americans and retired Americans own stock in oil companies, and raising taxes would have the effect of both reducing what they get in their pensions and so on, as well as undoubtedly result in higher gasoline prices because most of these kinds of taxes are passed right on through to the consumer.

So they want to raise taxes on U.S.-based oil and gas companies--not foreign-owned companies--U.S.-based oil and gas companies. Obviously, this tax could result in higher gas prices which contradicts the reason for releasing oil from the Strategic Oil Reserve. Why do that if it is going to get canceled out by imposing a new tax?

It could, obviously, hurt job creation because this industry supports over 9.2 million American jobs. It does not just target oil companies because they get some kind of special benefit. What these provisions do is eliminate a tax provision applicable to all businesses--any manufacturing business, for example, has the benefit of these particular three tax provisions.

So why single out one particular group of taxpayers, only about five in number, who would no longer be able to take advantage of provisions that every other American business can take advantage of? They are broadly available to American businesses in one form or another. They are three specific things: First, the so-called section 199 deduction available to all manufacturers. Second, the U.S.-based businesses are generally able to prevent double taxation. When they have to pay taxes abroad, those taxes are then credited against their American tax burden. Third, most businesses can expense their research and development costs.

These are the three things that would be taken away just from oil companies, the folks who find American oil so that we can drive our cars and conduct our businesses. So raising the cost of producing American oil would help our foreign competitors and make us more dependent on them, ship high-paying jobs offshore, increase our dependance on foreign oil, cause gas prices to rise, and hurt American families already suffering with high food and energy costs.

Why would we want to do this except to demagogue a political issue? Because it sounds good to punish success. America has never been about punishing success. America has been all about creating opportunities, and this President's ideas of raising taxes as the sine qua non of an agreement to achieve an increase in the debt ceiling, as he has proposed, would be absolutely contrary to what we are all trying to do right now--which is to help our economy get healthy so that it can create more jobs, so we can reduce this

tremendously high unemployment rate that we have right now, put Americans back to work, and help our families ironically, by getting healthier economically, making more money, and producing more revenue for the Federal Government to tax under our existing taxes. So if we want economic growth, improvement in the economy, the last thing we should be doing when our economy is ailing now is imposing a higher tax burden on it.

Why the President is so obsessed with this, I do not know. But I will tell you one thing: Republicans will resist these job-killing tax increases, not because we are trying to protect somebody--except the American people--but because we know that it is bad for our economy, for our families, for our businesses, and for job creation.

I ask unanimous consent that the Wall Street Journal editorial to which I referred be printed in the Record.

I yield the floor.

The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from Oklahoma (Mr. Inhofe), and the Senator from Kansas (Mr. Moran).

The following Senator is necessarily absent: the Senator from Oklahoma (Mr. Inhofe).

The following Senator is necessarily absent: the Senator from Oklahoma (Mr. Inhofe).

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

Madam President, I ask unanimous consent that I be allowed to speak as in morning business for up to 7 minutes.

Madam President, I just wish to bring to my colleagues' attention a very well-written but disturbing op-ed in today's Wall Street Journal by one of our country's foremost economists, a person whose calculations and prognostications we should not lightly lay aside, Larry Lindsey.

In this piece, entitled ``The Deficit Is Worse Than We Think,'' he posits three reasons why we need to get serious about deficit reduction. I will just mention the three reasons, put this op-ed in the Record, and make a comment or two about it.

First, he says, if interest rates in this country go back to their historic levels, we would have annual interest expenses on our debt roughly $420 billion higher in 2014 and $700 billion higher in

2020, and the 10-year rise in interest rates would be about $4.9 trillion higher than under the current cost of borrowing. That would obviously wipe out any savings, and then some, that we are trying to achieve in our deficit reduction discussions.

The second problem is, the official forecasts for growth are probably far too rosy considering the current circumstances. If we were to grow at a rate that he believes is much more realistic than those projected by the President's budget, we will miss the President's budget number by a cumulative 5.2 percentage points and incur an additional debt of $4 trillion, which is the equivalent to all the 10-year savings in the budget that passed the House of Representatives.

Third, the cost estimates for what we call ObamaCare are going to be well off the mark, unfortunately, on the low end, that the prognostications by people who have surveyed the businesses that will either keep their insurance or turn that cost over to the government will result in an extra bill for the taxpayers of roughly $74 billion in 2014, rising to $85 billion in 2019 because of the subsidies that the government will have to pay into that.

His conclusion is:

Only serious long-term spending reduction in the

entitlement area can begin to address the nation's deficit

and debt problems.

Because that is where the bulk of the money we spend goes. I think he is absolutely correct. But if he is correct about these projections, then we are not even close to achieving the savings we need to have in order to avoid a cataclysmic future for our country.

Also, as noted today in an article from the Arizona Republic, the growth rate for the first quarter of this year was 1.9 percent. The Associated Press is forecasting that for the next quarter it will be 2.3 percent. That is way lower than any of us would like. It is too anemic to even keep up with our population in terms of job growth. This article notes:

The economy has to grow 3 percent a year just to hold the

unemployment rate steady and keep up with population growth.

And it has to average about 5 percent growth for a year to

lower the unemployment rate by a full percentage point. It is

9.1 percent today.

So we can see we are growing at less than half the rate needed to begin to make a dent in unemployment. This bodes very badly for our future.

Finally, in a National Review Online piece today by Andrew Stiles, there is this reference to a Harvard economist, Alberto Alesina. I will quote from this article.

Alberto Alesina, a Harvard economist who has analyzed the

ways in which various countries responded to large fiscal

crises, concludes that spending cuts are ``much more

effective'' than tax increases in stabilizing the debt

without harming the economy. ``In fact, in several episodes,

spending cuts adopted to reduce deficits have been associated

with economic expansions rather than recessions,'' Alesina

writes. These findings were echoed in a report from Goldman

Sachs analysts Ben Broadbent and Kevin Day, which examined

``every major fiscal correction in the OECD since 1975.''

The point of all these things is the projections about economic growth, about increases in interest rates and expenditures by the Federal Government all point to the need for us to reduce our expenses at the Federal Government level and that spending cuts are a much more effective way to stabilize the debt and not hurt the economy than tax increases.

I say all this because, as everyone by now knows, the negotiations that were being conducted under the auspices of Vice President Biden have broken down over the issue of whether tax cuts have to be a part of the resolution of the issue. The point is--the point we have been making is--tax increases in times such as these, when we are trying to come out of a recession and we need economic growth, would be the wrong medicine for this ailing economy, that the better way to do it is by spending reductions. It is obvious from Larry Lindsey's piece that the spending reductions we have been talking about, far from being Draconian, are actually not nearly enough in order to achieve the result we have to have to avoid the kind of interest rate increases and increased costs at the Federal Government level that he predicts.

I hope my colleagues will think again as to the sort of ideological commitment they have to raising taxes. In the context of today's issue, that should not be part of our discussion. That will only hurt the economy, inhibit job creation and economic growth, and delay the day when we begin to recover from this economic downturn. Instead, we need to focus on the kind of spending reductions that were embodied in the budget that the House of Representatives passed and that those of us on this side of the aisle have been trying to put forward as a condition for increasing the debt ceiling.

Madam President, I ask unanimous consent to have printed in the Record the Wall Street Journal op-ed by Lawrence Lindsey.

Madam President, I suggest the absence of a quorum.

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

Mr. President, I ask unanimous consent that I may speak for up to a half an hour in morning business.

Mr. President, last week, three events conjoined to elevate the subject of the U.S. debt crisis in this country and should energize us in the Senate and our colleagues in the House to redouble our efforts to find a solution to this serious problem.

I wish to briefly mention those three events and then talk about the problem from my perspective, some of the potential solutions, and put an item in the Congressional Record for my colleagues' review.

The first of what occurred was a new report by the Congressional Budget Office which was a new projection about U.S. debt as a percentage of our economy. One of the things they said was that our debt could almost double by the year 2035--far larger than they thought it would be as a percent of our economy or the GDP--and they said it is going to exceed 100 percent by the year 2021. Actually, it could get to that point sooner than that. It is approaching 100 percent right now. Greece is a little bit over 100 percent. Countries that get to that 100-percent level of public debt as a percent of GDP have a very hard time ever recovering. As a result, the time is now for the U.S. Government to act on our huge and growing debt.

Secondly, we had reports by the Labor Department, the Commerce Department, and others that confirm what we already know about the state of our economy and the state of joblessness in this country.

Applications for unemployment benefits rose. It was the biggest jump in a month. We are over 9 percent unemployment now. New home sales fell in May. The values of our homes in this country have decreased more than they did during the Great Depression. That has been a horrible factor for millions of American families. Stocks fell last

week. The Federal Reserve Board lowered its outlook for growth, which in the last quarter was less than 2 percent--it was 1.9 percent--and this is unacceptable. It is much lower than ordinarily recovery is coming out of a recession. Confidence is slipping among small businesses and households. There are higher gas prices, higher food prices.

All of this simply confirms what most of us have heard from our constituencies; namely, this recovery is not much of a recovery and we need to do everything we can to try to improve it.

Third, of course, is the news that negotiations with the White House over extending the debt ceiling had broken down. Actually, as a member of the group negotiating that, I would not say they had broken down. I think the Vice President is correct that they have moved on to a new phase; namely, the phase where the President himself, the Speaker of the House, and the two leaders here in the Senate are going to have to try to resolve some of the largest issues--the kinds of issues that the negotiators in the so-called Biden talks were simply not able to resolve because it would go against instructions from our principals.

The primary problem there was the insistence by the Democratic negotiators that Republicans agree to tax hikes--something which we think would be inimical to economic growth, the very problem of the slow recovery in the economy would be exacerbated by, if we were to increase our tax rates. You do not add new taxes to an already struggling economy. So the White House's insistence that had to be a condition to approving the reductions in spending we had been talking about made it impossible for us to go forward at that time.

There is an old saying that there is a difference between a pessimist and an optimist. I usually think of myself as optimistic. The saying is: The pessimist says things are so bad they can't get any worse. The optimist says, sure they can. And they could. If the Congressional Budget Office is correct about its projections here, we could be in a far worse debt situation tomorrow or the year after that than we are today--a situation which would make it extremely difficult for us to ever recover and essentially relegate our children and our grandchildren to a standard of living far below that which we have all been accustomed to, and which they deserve.

Looking at some of the other factors that should frame the problem for us, we have over a $14 trillion debt--and growing every day. We are going to need $2.4 trillion in increased debt ceiling authority to get us through the end of next year. You cannot tax your way out of it. You cannot borrow your way out of it.

We have to reduce the level of spending, which is now approaching 25 percent of our gross domestic product. The average is around 20 percent, and that is where we were before President Obama took office. We have to borrow now 40 cents of every $1 we spend. So when we talk about spending more money in a new stimulus package--another new idea to come out of the Democratic Congress last week--we are talking about having to borrow 40 cents of all of that money that would be spent. Think of it now: For every program we have here at the Federal Government level, we have to borrow more than 40 cents of the money we are then going to spend. That takes money out of the private sector that is needed to produce jobs and provide for investment in the private sector.

I mentioned before unemployment is over 9 percent now and according to the CBO projection is not going to go down by very much over the course of the next year, if at all.

So what is the solution? A lot of our Democratic friends have said we need to have a new stimulus program, we need to spend even more, notwithstanding we do not have the money, and we should be raising taxes. As I mentioned, that is the reason why we terminated the discussion with Vice President Biden last week, because of the insistence on the part of our Democratic colleagues that the only way they were willing to move forward was if we committed to raising taxes, and I mean by a substantial amount. There was $400 billion in revenue raisers on the table, put there by our Democratic colleagues. That simply will not pass the House of Representatives. But, more importantly, it would be the worst medicine possible for an ailing economy.

We cannot afford more spending. Even if we could, it would not put Americans back to work. Jobs are created by private businesses, and the more the government taxes or borrows, the less there is available for businesses to invest and hire. So the answer here is less government spending, not more taxation and more borrowing.

We put forth a budget. The Republicans passed it in the House of Representatives. We voted on it here in the Senate, and it did not pass because Democrats in the Senate would not support it. But it is a legitimate effort to allow job creation, economic recovery, and eventually get our budget balanced at the Federal Government level back here in Washington.

People have said it is a radical budget. It is not. Even under the so-called Ryan budget, we would go another $5 trillion in debt. You cannot call that radically slashing spending if over the next 10 years we add another $5 trillion to our national debt. That shows you how hard it is to reduce spending. People say: Well, you can't cut this program, you can't cut that program. You cut them in a way that still adds $5 trillion in debt over 10 years, and they say it is radical, you are slashing spending.

The Obama budget, by contrast, would add $12 trillion in debt. So both of them would add to our debt. But at least under the Ryan budget that was passed by the House of Representatives, over time we would get back into balance. In fact, it would be in primary balance by the year 2014, meaning except for interest payments it would be a balanced budget, and we would reduce Federal spending from 25 percent of our economy back down to a little over 20 percent, which is the historic average. Excuse me, it would be a little under 20 percent, which would be close to our historic average of spending as a percent of the gross domestic product.

One of the best ways for us to ensure we are in balance is to adopt a balanced budget amendment to the Constitution. All 47 Senate Republicans have cosponsored the balanced budget amendment. It is carefully written so that even though it requires balance in the budget, it does not easily allow Congress to raise taxes as a way of achieving balance. That would require a two-thirds vote. It also contains a very important spending limitation as a percent of the gross domestic product. So we would achieve balance, but we would achieve balance by reducing our appetite for Washington spending here and, as a result, could achieve the kind of balance that would promote economic growth.

You could spend more money if we had more economic growth because spending would be tied to the gross domestic product. So it is a perfect solution for Republicans and Democrats alike. If you like to spend more money, there is a perfectly good way to get to spend more money: Do that which would enhance the recovery of our economy--because the bigger our economy got, the higher the percentage of money Washington could spend. The incentives are aligned properly. We propose to promote economic growth. So this balanced budget amendment would accomplish that. For those who like to spend money, the more growth, the more money you would get to spend.

We hope that balanced budget amendment will come to the Senate floor in the next week or two or three. We certainly look forward to the opportunity to debate it and getting a vote on it.

But when you look at the alternative that has been proposed by a lot of our colleagues on the other side--a new stimulus program and increased taxes--you have to wonder: How serious are they about actually helping our economy recover? Everything so far that the other side has tried under the leadership of the President has failed to work. In fact, it has actually made things worse.

We are all familiar with the stimulus that did not help, did not bring unemployment down as the President promised. It made things worse. That is why I have this chart here in the Chamber that shows the Obama economic record has not made things better. It has made things worse.

Look at a few of the things that are afflicting our economy today, the indicia of what is wrong. You start with the Inauguration Day for President Obama, where we are today, and what the change has been.

If you look at unemployment, unemployment has gone up by 1.9 million Americans. The unemployment rate has gone up 17 percent since the President took office. This is not like the situation where he said: Well, I inherited a bad economy, but I am gradually making it better. He is making it worse.

Gas prices have gone up 101 percent under President Obama. He will not approve the leases that would allow our oil companies to explore for more oil and gas, thus bringing the prices down.

The Federal debt has gone up 35 percent since the President took office.

The debt per person has increased by $11,311. It has gone up from $34,000 to over $46,000. That is the debt each one of us has.

So it has increased that much in just 1 year. By the way, health insurance premiums have gone up 19 percent, notwithstanding the passage of the so-called ObamaCare.

Getting back to this matter of debt, just to put it in perspective, if we took all of the Presidents of the United States from George Washington all the way through the Presidency of George W. Bush, if we took all of those Presidents and added up all of the debt--the debt from the Civil War, the debt from World War I, World War II, Vietnam, all of the debt that all of the Presidents of the United States accumulated--in one budget, President Obama will double that debt.

Each one of the years he has been President we have had a deficit of over $1 trillion, closer to $1.5 trillion. So at the end of 5 years, he will have doubled the debt. At the end of 10 years, he will have tripled the debt that all of the other Presidents of the United States combined accumulated. Now, I say the Presidents. Obviously, it takes a Congress to do this as well.

What the Members of the House of Representatives are saying to the Obama budget is, no. Even the President decided not to pursue his budget. When that was offered on the Senate floor, not a single Member of the Senate, Democrat or Republican, voted for the Obama budget because it takes us in the wrong direction. It would make things even worse than they are today.

At least with the Republican budget we have an effort to begin to solve the problem, even though a lot of people say it is not enough in the way of cuts, and they have proposed alternatives to reduce spending even more. I am all for reducing spending even more. The bottom line is, however, we have to get something passed. That is going to take Democrats and Republicans working together. So I am happy to work with my colleagues on the other side of the aisle, but we have to have some cooperation to reduce spending and not insist on tax increases.

What we have said as a part of these negotiations to increase the budget deficit is, some of us might be willing to increase the debt ceiling if we do not have to keep doing it. We need reforms that will enable us to not have to keep raising the debt ceiling, or at least not so much. The way we achieve those reforms is, first of all, to identify savings that can be made. There is an enormous amount of wasteful Washington spending. We have identified it is closer to $500 billion. The Vice President has said more than $1 trillion. The money is certainly out there to be saved. We need to save that kind of money on the front end as a downpayment to let the markets know and to let the American people know we are serious. That is savings that we can pass that can be locked in.

By the way, there is a little bit of revenues involved in that. It is not just all savings. There are some fee increases. There are user fees. There are some means testing of various Federal programs that can actually result in some increased revenue.

So when our Democratic friends say, well, there has to be revenue on the table, there is revenue on the table, but it is not tax increases. So if you are so ideological that you have to insist on tax increases in order to cut spending, unfortunately, you have taken yourself out of the game.

The bottom line is, there is somewhere between at least $500 billion and $1 trillion, probably more, in various kinds of mandatory savings that we could achieve. Then we have discretionary spending. We need to set a budget number since the Senate has not passed a budget in over 700 days now--I forget the exact number. We have not had a budget, so we do not have a number that the Appropriations Committee can deal with to appropriate funds for the discretionary part of our spending in this country.

We need to set that number. The Ryan budget set that number, and we were negotiating with the White House as to what that number would be. But we need to set that number. Then we need to make sure in the ensuing years Congress will actually live with that number. The tendency around here has been to set a budget number, then we have an emergency here, and we need to waive it there. The next thing we know, we are way over the number that we all agreed to in the beginning.

So we need something that will constrain both discretionary and mandatory spending over the course of the next 10 years and, hopefully, beyond. A lot of us believe the best constraint is the balanced budget amendment. But for colleagues who say: No, we are never going to agree to that--and, of course, we would have to get 20 colleagues in the Senate to agree in order pass it; it takes a two-thirds majority--then at least agree with us to put handcuffs on the Congress and the President, some kind of straitjacket so we do not spend beyond the number we agree on for next year and the year after that.

We can save well over $1 trillion, somewhere between $1 trillion and even more than $1.5 trillion in discretionary spending over the next 10 years if we would agree to these so-called section 302(a) top-line budget numbers, and then constrain ourselves to sticking with those numbers over time.

The reason? It is kind of like compound interest. Let's say we reduce spending in next year's budget by $30 billion over the previous year. That is not a huge amount of money. But over a course of 10 years, when we set a new baseline, that translates into hundreds of billions of dollars if we really do it.

The bipartisan Congressional Budget Office says: We are not sure we want to score that as real savings because we are not sure you will really do it. But if we are able to pass some kind of constraint--such as the old Gramm-Rudman bill, for example--then I think the Congressional Budget Office will give us some credit for those constraints.

The best proposal I have seen is one proposed by Senator Corker and Senator McCaskill. It is bipartisan, a Republican and a Democrat, and they have Republican and Democrat cosponsors for the same proposal in the House of Representatives. It is called the CAP Act, to cap spending. So once the level is determined--they do it as a percentage of GDP.

I think that is the smartest way because that is an incentive for everybody to help the economy grow more. The more it grows, then the more, as a percentage, the spending can be. Over 10 years, we save a lot of money that way. It is enforced by the simple mechanism that if we do not achieve the savings that is called for, then there is an automatic sequester where all of the accounts of the government-- defense spending, nondefense spending, mandatory spending--would all have to save a little bit. They would not be able to spend quite as much money so that we could make up the difference between the target or the goal and what the law called for.

There are other ways to do it as well. We were discussing different alternatives in the conversations with Vice President Biden. But the point is, we cannot allow waivers. We cannot have exemptions and emergencies and all of that--at least not without a supermajority vote, such as a three-fourths vote or a two-thirds vote--or else it is going to be too easy for Congress to do what it has done in the past, which is to simply say: This is too uncomfortable for us to comply with. We are going to declare this an emergency, vote for it by a majority vote, and then it is done.

If we mean it, we would have to be willing to abide by it. So we have to have a meaningful downpayment. We can do that. We have already identified substantial savings. We need to have a 302(a) budget number for at least the next couple of years and a mechanism

for enforcing that over the next decade and beyond.

Finally, we need to have a way to help the markets actually believe we are serious about entitlement reforms so the biggest part of our budget--representing two-thirds of all of the money we spend; namely, the entitlements--is actually beginning to grow at a slower pace.

We are not talking about drastic cuts, but we are talking about slowing the pace of growth. We can do that without having huge benefit cuts or without slashing payments to the providers. I mean, the last thing we want to do for Medicare--for example, I am concerned about my mother. We can use any of our mothers or dads or grandparents on Medicare. The last thing we want to do is say we have a great Medicare Program except for one thing: there is no doctor or hospital to take care of people because they will not because we are not paying them enough. So we need to be able to pay the people we rely upon for the medical treatment we have promised. We cannot do that by slashing payments to providers. Too many physicians have already said they cannot afford this program anymore and therefore are not going to take any more new Medicare patients--we have all had that experience--nor should we do it by slashing benefits. But we do not have to do either of those two things to have reforms.

I mentioned in these negotiations we have been discussing a lot of waste, fraud, and abuse-type reforms. Those of us in the Senate and the House kind of smiled because we always talk about the amount of money that can be saved because of the amount of waste, fraud, and abuse in the system. But the reality is, there is a lot of waste, fraud, and abuse and we can save a lot of money if we put our minds to it.

But what that means is, for example, we have to enforce the law. I will pick a hypothetical program because we are not going to be talking about the specifics with our negotiations. I am assuming we will get back to those negotiations at some point.

But we have eligibility standards to receive a certain Federal benefit, let's say. But 20 percent of the benefits that are being paid out are being paid out erroneously to people who do not qualify. They are not supposed to get the benefit. So we have to enforce the law.

We say: Sorry, you do not qualify for this benefit. This is a benefit for the elderly or this is a benefit for poorer Americans or for whatever. If we just enforce the law, we can save a lot of money, and that is not cutting benefits for anyone.

We can also do means testing. Republicans, for years, have said-- well, I will use a couple of names because they both said we do not need the benefits of all of these Medicare Programs. People such as Warren Buffett, for example, have made it clear, and Bill Gates. They have both made it clear they do not need to have the government take care of their medical requirements when they are age 65 or older.

There are a lot of Americans who are in the position to be able to afford a lot more of their own care, and they do not have to rely exclusively on the Federal Government. So through means testing we can either provide that their benefits will not be as generous as for people who are less fortunate economically or that they will pay a little bit more in the way of a copay or a deductible or maybe even a premium.

The bottom line, there are ways to ensure the future success of a program such as Medicare without affecting people who cannot afford to have big benefit cuts. One idea that has not been discussed--but I have heard it discussed--is to simply conform Medicare benefits to the same age eligibility as Social Security. That would save a great deal of money. It would represent a slowing in the time when people are eligible for the benefit.

Maybe some people believe, therefore, that it should not be considered. My point is that there are a lot of ways the entitlement programs can be reformed so they will be there when people need them. If we do not, if we say we do not want to touch them, here is what is going to happen. I will give one program as an example: Medicare Part A, the hospital part.

The Medicare trustees say by the year 2021, Medicare Part A will begin to run out of money. There will not be as much money in the trust fund, and it could well therefore happen in the following years if people need to go to the hospital, the hospital is not there anymore. If one lives in a small town, and it is the only hospital there and they cannot afford to stay open, they are going to close. So someone thinks they have Medicine Part A benefits, but the hospital either is not there or it cannot take care of them because it does not have the money to do so because it is not being reimbursed by the Federal Government.

So the choice is not to do something or to do nothing. If we do nothing, the benefits will not be there--the benefits we have promised to senior citizens will not be there. Doing nothing is not an option. We have to do something. So instead of demagoguing the issue politically, some politicians need to be responsible, get in the game and say: Let's figure out a way to save these programs so they will be there when we want them.

I also wanted to mention--this is a little bit off point, but it just shows how some of these things work. I mentioned high gas prices before. Ironically, one of the things the President has said we want to do is to tax the oil companies.

Well, of course, if we tax the oil companies more, then gas prices are going to be higher. The President just released some of the petroleum from the National Petroleum Reserve to try to bring gas prices down. It will bring them down a little bit temporarily. But why would we then want to have those prices go right back up again by taxing the oil companies, which everyone knows will flow through to the consumer? It does not make sense.

There is something else, however, that does make sense, and this has had an impact on gas prices. The Federal Reserve Board has been buying bonds under a program called QE2--buying Treasury bonds. The purchase of those Treasury bonds has made our dollar less valuable. That means it takes more dollars to buy the same amount of gasoline. So, ironically, this effort by the Fed to put more money into the economy has had the pernicious effect of raising gas prices, raising food prices, and raising other prices because the dollar is not as valuable as it used to be, and to buy some commodities, especially commodities that are bought and sold on the world market such as gas, we have to have more dollars to pay for the same amount. So gas prices are increased. This QE2 program is going to come to an end at the end of this month. The Federal Reserve has already announced that. What will happen as a result is that the value of the dollar will not be cut by the amount of this selling of bonds, and so the expiration of the program lets the dollar strengthen, causing oil to return to levels we saw in the beginning of the year. That will have the result of having more purchasing power with the dollar you have, so you can buy the same amount of gasoline for fewer dollars or, to put it another way, the same amount of dollars you have will buy you more gasoline. That is one positive effect as a result of that change in policy by the U.S. Government.

The key is to allow our economy to work without too much government interference. That is a good example of government interference that displaces or reduces the value of the dollar and therefore hurts the consumer.

I heard our colleague from Florida, Senator Rubio, say the other day--this is reported on June 14--in his first speech on the Senate floor:

There is nothing wrong with our people. Americans haven't

forgotten how to start a business. They haven't run out of

good ideas. Americans are as great as we have ever been. But

our government is broken. And a broken government is keeping

us from doing what we have done better than anyone in the

world for over a century: create jobs.

He is right. If the government will get out of the way and not insist on burdening our economy with new taxes and let Americans do what they have always been able to do well, I think we will be able to come out of this economic downturn and come back to life as an economy, helping families, small businesses and, ironically, by making more money and paying taxes at the same tax rate, the Federal Government will have the benefit of our increase in salaries, profits, and so on, and will have more money to spend as well.

Spending more money, taxing more, having the government try to stimulate the economy has never worked. I want to put into the Record a quotation from the Wall Street Journal of today, June 27, which is as follows:

With spending at 24 percent and debt held by the public at

70 percent of GDP--both modern records--the U.S. needs

drastic spending cuts to head off a downward future spiral of

tax increases and unaffordable interest payments. As Milton

Friedman taught, spending is the real measure of government's

burden on the private economy, and reducing it leaves more

resources for private actors to spend and invest.

I ask unanimous consent to have this printed in the Record at the conclusion of my remarks.

Mr. President, the point they are trying to make is, government spending is a pretty good indicator of what is left over for the private sector to invest and spend, for example, on new jobs. When the government spends more, inevitably, it has to borrow more--40 cents on every $1--or increase taxes--either way, reducing what is available for the private sector to invest and hire.

We should be focused, as a result, as the editorial notes, on reducing wasteful Washington spending and allowing the genius of the American people to do what Senator Rubio has made very clear: We have always had the capability of creating jobs, unfettered by too much government taxation and regulation. So we need to do away with those policies, such as the Federal policy that reduced the value of the dollar, we need to try to eliminate as many regulations that burden the American people as possible, and we need to avoid raising taxes.

Bear in mind, we are not talking about cutting taxes. We are not talking about cutting taxes for the wealthy or cutting taxes for business or cutting taxes for people, generally. Leave them alone, don't raise them, is all we are saying. When you hear some politicians say you want to cut taxes for the wealthy or give oil companies big tax breaks--no, leave it alone. Don't touch it. Let businesses and families and small businesses do what they have always done best. If you want to mess up the economic growth, to use the colloquialism, follow what the administration has been doing. We will have higher unemployment, higher gas prices, higher Federal debt, higher debt per person, and higher health insurance premiums, not to mention other pernicious effects. Those policies have made it worse, not better.

That is why Republicans have said don't force us to raise taxes as part of this increase in the debt ceiling. Let's reduce spending, and let's enforce that through a balanced budget amendment and other kinds of spending constraints. We are not talking about drastic cuts, as I said. Think about this again.

The Ryan budget that passed in the House, and that most of us on the Republican side voted for over here, adds $5 trillion to the debt over the next 10 years. That is $500 billion a year. That is higher than any other budget deficit in history, until President Obama came into office. We talked about the Bush budget deficits. It is a lot higher than any deficit under President Bush--$500 billion a year for 10 years. That is another $5 trillion. You can't say that is drastically cutting spending. The alternative, though, is the Obama budget, which would add $12 trillion. At least the Ryan budget gets us on a path where we can get back into balance and back to the standard or the normal historical average of spending, as a percent of our GDP, around 20 percent.

If you don't like that budget, then produce one that you think will get us to the same place. We have laid that challenge down. Our Democratic colleagues have not produced a budget. It is pretty obvious they are not going to do so. That is why we have had to have these discussions with the Vice President. At least, perhaps as a conclusion to those discussions that the President is now involved in, we can make a big downpayment on spending reductions, set the budget levels for the next several years that represent a real reduction. It doesn't have to be huge. Even a $30 billion reduction over last year will save a huge amount of money in the outyears. We need to ensure that those reductions will be enforced, that we will not return to our wayward spending ways, and we need to deal with the two-thirds of the budget that represents the big money; namely, entitlements.

There are ways to do so that don't represent big benefit cuts and that don't represent slashing payments to providers, although we would not have any more doctors to take care of them. We can effectuate reforms that will send the right signal to our constituents and also to the markets, which will have a lot to say about interest rates in the future and whether they believe in the recovery we would like to achieve.

I hope my colleagues will be very open to the consideration of a balanced budget amendment when we bring that up. I wish the President and the leaders of the House and Senate all the best in their discussions now on how to deal with this problem. The President will have to make a decision: Is raising taxes more important than trying to get our budget back into balance and reduce spending? He will find there is support on both sides for the latter. There would not be much support for the former. By getting together and achieving those goals within the next 4 weeks or so, we can both meet the deadline of August 7 that he has set for a debt ceiling increase and also get our country on a more sound fiscal path. We can do that to give confidence to the markets and to the American people. We owe our constituents, our children, and our grandchildren nothing less.

Exhibit 1

[From the Wall Street Journal, June 27, 2011]

Spending His Way to Austerity--President Obama's Latest Economics

Lesson

President Obama enters the debt-ceiling talks today when he

meets with members of both parties, and in his Saturday

weekly radio address he unveiled a new line of argument

against significant spending cuts: ``We can't simply cut our

way to prosperity.''

That's a nifty rhetorical riff, a play off the old Ronald

Reagan line that we can't tax our way to prosperity. The

argument is that if we cut too much spending on too many good

things--like education, ``clean energy'' and ``advanced

manufacturing,'' to name three examples highlighted by the

President--the economy will suffer.

Too bad it won't fly. It's a truism that budget cuts alone

will not guarantee faster economic growth, but at the current

moment they will get us closer to it. With spending at 24%

and debt held by the public at 70% of GDP--both modern

records--the U.S. needs drastic spending cuts to head off a

downward future spiral of tax increases and unaffordable

interest payments. As Milton Friedman taught, spending is the

real measure of government's burden on the private economy,

and reducing it leaves more resources for private actors to

spend and invest.

It is also true that some government spending can be

economically useful--to the extent that it enhances

productivity more than it would have in the private economy.

But the irony is that it is precisely the spending priorities

that Mr. Obama mentions that will be crowded out because of

his refusal to cooperate in reforming entitlements like

Medicare and Social Security. By trying to protect all

federal spending except defense, liberals are guaranteeing

that many of their most cherished plans will be squeezed.

They're the ones who are spending us into austerity.

I suggest the absence of a quorum.

The following Senators are necessarily absent: the Senator from Arkansas (Mr. Boozman) and the Senator from Kansas (Mr. Moran).

The following Senators are necessarily absent: the Senator from Arkansas (Mr. Boozman) and the Senator from Kansas (Mr. Moran).

The following Senator is necessarily absent: the Senator from New Hampshire (Ms. Ayotte).

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

Mr. President, as you know, there is a great deal of discussion going on right now in different forums on whether to increase our debt limit and, as a part of that, how we can reduce this government's spending practices so that we won't have to keep extending the debt ceiling in the future. Those conversations include a lot of focus on reducing spending in the near term and finding ways to reform some of the entitlement programs so that spending will also be reduced over the long term because I think everyone agrees that the current way we spend money--40 cents of every dollar has to be borrowed--is literally going to result in bankruptcy if we don't bring it under control.

There are those who say: Well, actually, the answer to the problem is to increase revenues--meaning raise taxes. The problem with that is we didn't get into this problem because we didn't tax enough; we got into this problem because we have been spending too much.

The simplest way to think about it is that historically we spend about 20 percent of the gross domestic product. Under the Obama budgets, we are going to be spending--and we almost spend this much now--25 percent of the gross domestic product, and that is a spending increase that is not sustainable.

Even under the largest of deficits, when President Bush was President, it was less than $\1/2\ trillion. But under the Obama budget, it is $1.5 trillion almost exactly for every year for the last 3 years and on into the future. The result is that under this President we will have doubled all of the debt this country has accumulated from the time George Washington was President all the way through the time George Bush was President. We will double that under the Obama administration.

The problem is spending; it is not taxes. Evidence of that was presented last Thursday in an op-ed piece in the Wall Street Journal. At the conclusion of my remarks, I am going to ask unanimous consent to have the article printed in the Record because I think it makes the point. I will quote from it or at least discuss some of the arguments in this piece right now.

It was put together by a Cato Institute senior fellow Alan Reynolds, who has written on this subject in the past and is a real student of the effect of tax rates on economic growth and on revenues for the country. One of the points he discusses in this op-ed is what happens when you raise tax rates, as some of our friends--particularly on the other side of the aisle--want to do as part of this deficit reduction exercise. Do you necessarily increase revenues if you raise tax rates? What are the impacts on the economy? What happens, on the other hand, if you are able to reduce tax rates?

Now, there is no plan on the table to actually reduce tax rates, but I think the arguments he presents make it clear that lower rates do not necessarily produce less revenue and, in fact, can have a salutary impact on economic growth and therefore job creation, which is, of course, what we are trying to be all about here.

He has studied tax rates for the last six decades, and here is some of the factual information he comes out with. The conclusion is this: Higher tax rates do not necessarily lead to more revenue. In fact, recent history has often shown the opposite. Here are some specific examples.

Back when the highest tax rate in this country was 91 percent--if you can just think about that, a 91-percent tax rate. Why would anyone work to make that last $1 when 91 cents of the $1 you earn goes to Uncle Sam? That was the highest tax rate. The lowest tax rate was 20 percent. Today, the lowest tax rate is zero and the next one is 10 percent and then 15 percent and so on. So this was a much more progressive Tax Code. Individual income tax revenues during that time were 7.7 percent of the gross domestic product.

President Kennedy came along and proposed cutting both the highest and the lowest rates. So they went from 91 down to 70 and from 20 down to 14 percent. What happened to the 7.7-percent revenues? They rose to 8 percent of gross domestic product. So the rates were reduced, but the revenue to the Treasury was increased.

What happened a few years later when that was done, when President Reagan first cut the top rate from 70 percent down to 50 percent? Did revenues fall? No. Revenues to the government increased to 8.3 percent of the gross domestic product.

Third example, 1986, when the top rate was slashed again from 50 percent down to 28 percent, almost in half. You would think revenues would decline. No. They remained almost exactly the same, from 8.3 to 8.1 percent.

So his research clearly demonstrates that the link between lower rates and lower revenues is very weak, if not actually a converse relationship. The relationship between higher taxes and economic difficulty could not be more clear.

Let's talk about what happens when you have increases in the tax rates. In the early 1990s, the top rate was increased to 31 percent-- which, by the way, is more comparable to about 35 percent in today's dollars because of hidden taxes--the country fell into a recession and revenues actually dropped to just 7.8 percent of GDP. So you think you are going to raise more revenue and reduce the deficit by raising tax rates? Wrong. We raised taxes, revenues actually dropped, and the country went into a recession.

When the top two tax rates were raised later to 36 and 39.6 percent and taxes on Social Security increased as a part of the Clinton tax hikes, revenues again barely moved to 8 percent--so from 7.8 to 8 percent. The government actually collected more tax revenue when the top rate was just 28 percent.

It is simply not true that you can raise tax rates and therefore get more revenue to the Treasury and therefore reduce the debt and the deficit. It is especially not true if you are only talking about doing that for the very highest tax earners because they don't make enough to produce the kind of revenue that would be required to reduce the deficit that much.

To be sure, there are always fluctuations, and there is not a very specific causal relationship in all cases between rates and revenues collected. For example, during the technology bubble of the 1990s, revenues rose above 9 percent. We were on a roll. People made more money. The government made more money as a result. But, interestingly enough, this was only after capital gains taxes were cut from 28 percent down to 20. There is almost an inverse relationship between the capital gains tax rate and revenues collected. As that rate goes up, less revenue is collected. As the rate comes down, more revenue is collected because it is a tax on economic activity. The lower the tax, the more economic activity you have and therefore the more the Federal Government receives in revenues, even though the rate is lower.

Reynolds found a similar correlation between rates and revenues with capital gains as he identified with ordinary income taxes.

Just a couple of other statistics. When the capital gains rate was 28 percent, revenues were 2.5 percent of the GDP. After the rate was cut down to 20 percent, capital gains revenues rose to 4.6 percent of GDP. So when you cut the tax rate, then the revenues almost doubled.

As I said, capital gains are the most sensitive to rate reductions or rate increases of all our tax rates. Nonetheless, it is an impressive figure to demonstrate that at least you don't want to be raising tax rates even if you are not willing to reduce them.

In summary, after both ordinary income and capital gains tax rates were cut to 35 and 15 percent respectively in 2003, individual income tax revenues were 8.1 percent of GDP, which was higher than the period when the ordinary income tax rate was 39.6 and the capital gains rate was 28 percent. So almost no matter how you look at it, you can see this relationship, and it is almost an inverse relationship.

Again, I am not claiming that all tax cuts pay for themselves or that in all cases this is exactly the way it works out. But to assume we can solve part of our problem by raising tax rates and especially raising them on the people who are most able to move income around to avoid paying taxes or minimize their tax rates and who are the most susceptible to the capital gains rates and who are the people most able to invest in business and therefore help to create jobs--to suggest that increasing their tax rates is a good idea is obviously not true based upon the research Mr. Reynolds has done.

The bottom line, lower tax rates do not necessarily mean less revenue, higher rates do not always mean more revenue, and the facts frequently point to the opposite.

There is obviously more to consider than just how much revenue will be raised. Unfortunately, higher tax rates also have a very pernicious effect on economic growth and job creation, and Reynolds' research in this area is very clear as well. When surtaxes were imposed in our economy back in 1969 and 1970, our economy fell into one of the deepest recessions we have had until the one we are in right now.

During the bracket creep of the 1980 to 1981 period, when inflation forced taxpayers to pay higher rates, until that was fixed later, the economy again fell into a recession, and following the rate increases of 1990, the economy fell into a recession. So it is pretty clear higher taxes are the last thing you need to do or want to do during a time of persistently high unemployment and a struggling economy, as we have today. Yet, as I said, there are some Members of Congress and the administration who have proposed raising tax rates as a way to address the deficit.

I even read that an academic proposed a 70-percent rate. One witness before the Senate Finance Committee, believe it or not, even suggested that a tax rate of 90 percent would maximize revenue.

To show you how counterintuitive that is, let me just ask the question. What two tax rates produce zero revenue? Well, the answer is zero, of course, and 100 percent. If you are going to tax 100 percent of what somebody makes, he is not going to bother to make the money. It doesn't do him any good, and it doesn't do him much good if he only gets to save a dime out of a dollar that he makes if the government takes 90 percent. So it is not true that sticking the rich with a very high tax rate is going to bring in more revenue to the government. Those people don't have to make the money. They can shift it around so they can minimize their tax burden. Eventually, what that does is put an even greater burden on middle-income Americans who aren't that wealthy, who can't move their money around, who have to take it and spend it to support their families, send their kids to school or for health costs or whatever it might be. That is why you cannot solve this problem by raising taxes. You have to focus on the side where all the growth has been, which is increased spending.

At the end of the day, the American people believe wasteful Washington spending has to stop. That is why they are saying to many of us, don't raise the debt ceiling, at least until you have made sure we are not going to have to keep doing this in the future because spending keeps going up. Let's have a downpayment on significant savings now. Let's set the budget numbers for the next 10 years so they actually represent a reduction in spending, not an increase. Let's have entitlement reform that shows that, even after that 10 years, the expenses will continue to, if not fall, at least rise less quickly so our economic growth can manage any increase in costs. Let's do that in such a way that we absolutely put constraints on Congress and the President. We put ourselves in a straitjacket, so to speak, so we can't create exceptions and waivers and get around it in other ways.

Unless we do those things, I don't think most of the people on my side of the aisle are going to have an appetite for increasing the debt ceiling. I know I am not. I am going to look at the historical evidence that people such as Alan Reynolds point out to us, the evidence that clearly shows that higher tax rates do not necessarily translate into higher revenues; in fact, in many of the cases, it is precisely the opposite. It is why, beyond the obvious economic costs, it is foolish to propose higher rates as a solution to our fiscal crisis.

Mr. President, I ask unanimous consent to have printed in the Record the Wall Street Journal op-ed I mentioned.

I note the absence of a quorum.

Mr. President, I am going to talk about the basic underlying bill we are debating, not the amendment my colleagues have just been talking about. As a way of framing the discussion about this bill, I will cite some statistics that I think will help us understand the nature of the problem our country faces right now and why, in my opinion, this particular legislation does not solve that problem.

According to official statistics, the unemployment rate in the U.S. has risen from 6.8 percent when President Obama was elected in November of 2008 to 9.1 percent in May of 2011. Between the end of 2008 and the year 2010, America experienced a net job loss in the nonfarm sector of almost 7 million jobs. So just since the end of 2008 through 2010, 7 million jobs lost. In that same time, the unemployment rate peaked at 10.1 percent--that was in October of 2009. It averaged 9.3 percent during 2009, 9.6 percent during 2010, and the 5-month average for 2011 so far is 9.1 percent, where we are right now.

We are not making progress. In short, since President Obama's stimulus was enacted, unemployment has averaged more than 9 percent a year, and that is up from 6.8 percent when he took office. This is not progress.

The May unemployment figures show that the U.S. economy added only 54,000 jobs--far fewer than the 150,000 needed just to keep pace with population growth, let alone to help dig us out of the recession. So we only had about one-third of the jobs created that we need just to stay even. We are getting deeper in the hole. In fact, the number of unemployed totals now almost 14 million Americans, and the long-term unemployed increased to 6.2 million.

Real growth in our economy, the GDP growth from the end of the recession in mid-2009 has been only about half as strong as it was during each of the previous nine recessions since World War II. So unlike previous times, we are not recovering as fast as we recovered from those earlier recessions.

On the TV program ``Meet the Press'' this weekend, the host, David Gregory, asked the chair of the Democratic National Committee, Representative Debbie Wasserman-Schultz:

Why should Americans trust Democratic governance right now

on the economy, and particularly the president's?

Amazingly, the head of the Democratic National Committee answered:

Because we were able to, under President Obama's

leadership, turn this economy around.

Well, the economy has not turned around. The unemployment statistics I just cited demonstrate that it is getting worse.

Most observers recognize that the steps the President took to try to revive the economy have not worked. I think it is time we admit that our massive debt and deficit, which were exacerbated by the 2009 stimulus spending bill, have hurt our economy. It has made things worse.

Republicans are not recommending reductions in government spending just for the sake of austerity. We are pushing for the government to get its fiscal house in order so that the job creators in the private sector will have the confidence to begin hiring and expanding their operations. Right now, uncertain of their future tax liability, worried about the general fiscal path of this country and the increasing regulatory burdens imposed upon them, job creators are sitting on the sidelines. We need to cut government spending to keep our tax burden low, approve pending free-trade agreements, and make a serious effort to reduce red tape so our economy can begin growing again. In other words, we need to realize that the government does not create private sector jobs. What we can do in Washington is to create the environment where the private sector is free to grow and create jobs.

This bill we are talking about right now, the Economic Development Revitalization Act of 2011, is touted by some of its proponents as being a job creator. The bill is not a jobs bill. Calling it that doesn't make it so. The bill has 21 sections. The truth is, many of these provisions would have zero effect on facilitating the creation of American jobs. For example, section 16 moves the State of Montana from the Denver office to the Seattle office. That doesn't create any jobs. Most of the provisions of the bill don't have anything to do with creating jobs. There are only four that even mildly could be called related to job creation.

The central component is a reauthorization of the bill's amount of spending, and it would reauthorize it at $500 million a year--$\1/2\ billion a year. Remember that almost half of that has to be borrowed. We don't have the money to spend $\1/2\ billion a year, so we will have to go out and borrow the money from someone in order to be able to spend it.

Given the fiscal constraints facing our Nation today, we can't afford that. Ironically, even the White House is not shy about admitting the fact that this EDA bill is too expensive. Specifically, the President's budget for 2012 requested only $324.9 million for EDA, not $500 million. Additionally, the administration's Statement of Administration Policy declared:

The bill would authorize spending levels higher than those

requested by the President's budget, and the administration

believes that the need for smart investments that help

America win the future must be balanced with the need to

control spending and reduce the deficit.

Well, this is one thing on which I agree with the administration. This bill would spend too much money. Hopefully, we will get a chance to vote on amendments, including one by the ranking Republican on the committee, Mr. Inhofe, to reduce this level to a more reasonable and realistic one.

The rest of the bill includes provisions, as I noted, that are of little importance. Section 11, for example, creates a $5 million-per- year grant program related to renewable energy and brownfields sites. Section 12 relates to energy and water efficiency and decreasing foreign oil competition. These are part of a green jobs fad and are not really going to provide significant job creation for our country. If we really want to decrease the consumption of foreign oil, of course, and create U.S. jobs, we should develop more of our own resources. I mentioned another meaningless provision--just moving one State from the jurisdiction of the Denver office to the Seattle office.

Again, these are things that are not going to produce jobs in our country. So it seems to me, rather than spending time on bills such as this EDA bill, which will not actually create jobs, we should actually be focusing on the big cliff we are heading for and begin preparing for the debt ceiling debate. This is where we can insist on a very large down payment of reduced spending, reform entitlements, and put a straitjacket on future congressional budgets--all of which will give businesses and markets greater certainty about our fiscal future. As a start, we should have a thorough debate and a vote on a constitutional balanced budget amendment, which would get us on the right path to a sound fiscal future.

In the long run, the only way for our economy to create jobs is for the government to spend, borrow, and tax less, thus freeing America's enterprises to do what they do best. I suggest we not wait any longer. It is time to begin this debate. Let's have a vote on a constitutional amendment, find ways to reduce spending, ensure we do not increase taxes, and create the climate in which America's businesses can get back to work and put their fellow Americans back to work.

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

Mr. President, I ask unanimous consent that the following letter be printed in the Record.

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

Mr. President, I ask unanimous consent that I be allowed to speak as in morning business for up to 15 minutes.

Mr. President, I would like to talk about two subjects briefly this afternoon. The first is the relatively bad news about unemployment in the country; the fact that the latest numbers are out and the country has not produced as many jobs as had been hoped for.

In fact, it added only 54,000 payroll jobs in May and thereby fell short of the 130,000 to 150,000 which are needed each month just to keep pace with population growth. So we lost ground. As a result, the unemployment rate has now gone back up to 9.1 percent.

It is not just the lack of jobs but also other economic news. Factory orders were down 1.2 percent in April, so we are not growing there. Interestingly, the Home Price Index, which is something very important in my State, the S&P Case-Schiller Home Price Index edged down .2 percent in March and is now 3.5 percent from this time a year ago.

All of these and other pieces of the news present a very bleak picture for economic recovery. One of the interesting commentators on this is Michael Barone, who is well known to most of us involved in political work. He had an interesting op-ed today in the Washington Examiner with the unfortunate title, ``Obama Tunes Out, and Business Goes on Hiring Strike.'' The problem is, there is some information to back up the title of his piece. He is reflecting on government policies the last couple of years such as growing government spending as a percent of GDP, which has gone up from 21 percent to 25 percent.

So we have been expanding government borrowing and spending at the same time as the economy is depressed. That included the time in which the failed stimulus plan was supposed to have provided economic growth and job creation. It also included the time of the health care entitlement, the Dodd-Frank financial regulation bill, and so on. So let me quote from the piece. He said:

It is hard to avoid the conclusion that the threat of tax

increases and increased regulatory burdens have produced

something in the nature of a hiring strike.

In relation to the President's speech at George Washington University, where the President had sort of repackaged his Federal budget, Barone says:

The message to job creators was clear. Hire at your own

risk. Higher taxes, more burdensome regulation, and crony

capitalism may be here for some time to come.

I ask unanimous consent to have the article by Michael Barone dated June 6, 2011, printed in the Record at the conclusion of my remarks.

The other subject I would like to address today is news on a totally different front, but it is a subject that will be familiar to us from last December when the Senate argued the New START treaty and ultimately passed it. I am going to speak primarily about questions of missile defense cooperation with Russia, which was a big part of that discussion.

I wanted to first call attention to the fact that the Department of State released a fact sheet last Wednesday. It was entitled ``New START Treaty Aggregate Numbers of Strategic Offense Arms''--a long title. But the statement from the State Department confirmed what we had argued during the time of this START debate and what I thought was pretty widely understood at the time, despite administration protestations to the contrary; namely that the New START treaty is perhaps the first bilateral treaty that resulted in U.S. unilateral reductions in nuclear forces.

As this fact sheet makes clear, Russia was already below the deployed strategic forces and deployed delivery vehicle limits of the treaty when we ratified the treaty. This is something we tried to point out. We said this is not a two-way street. Russia has already reduced its weapons below the levels called for in the treaty. The only country that will have to reduce levels from what currently exists is the United States. Now this information is confirmed by the State Department. Even the Arms Control Association recognized this when it posted on its blog recently, on June 1:

Why has Russia already met its obligations? Because Moscow

was in the process of retiring older strategic missiles while

the treaty was under negotiation.

Exactly correct. This fact should not be overlooked, especially not as the administration undertakes a review of the nuclear deployment guidance and targeting and deterrence doctrines, which are designed, or so the administration claims, to be ``preparations for the next round of nuclear reductions.'' That is according to the President's National Security Adviser.

I worry that the next round may also be a unilateral round where the United States makes all of the concessions, as occurred under the New START treaty.

According to Gary Samore of the national security staff, at an Arms Control Association Conference, he said

these may be ``unilateral steps that the U.S. could take.''

Obviously, that is something we would be concerned about if we are making unilateral concessions while the Russians make none. He made one other point at the Arms Control Association. He said:

We've reached the level in our forces where further

reductions will raise questions about whether we retain the

triad or whether we go to a system that is only a dyad. Those

are important considerations. Reductions below the level that

we have now are going to require some more fundamental

questions about force structure.

When we speak of the triad or the dyad, remember the triad is the system we have had all throughout the Cold War that relies on a combination of ICBMs on land, submarine-based missiles at sea, and a bomber force that can deliver weapons from the air.

As Mr. Samore points out, if we reduce our weapons levels even further, we will probably reach a point where instead of all three systems, we will only have two. So I think it is clear we have reached a breaking point where further reductions will require significant changes to the U.S. nuclear deterrent and could presumably alter the commitments that the administration made to the Senate as to the modernization of deterrent.

During our debate on the START treaty, there were a lot of promises made about how we were going to retain the triad, and we were not going to eliminate further strategic weapons. Now those matters seem to be in doubt, and this is why, one of the reasons why, 41 Senators wrote to the President on March 22 and asked that the Senate be consulted about any further changes that the administration may choose to embark upon. And I want to be clear, it is a choice. There is no compelling justification to change the current U.S. nuclear posture. So this would be something the administration would be doing on its own.

But I am concerned that in the National Security Adviser's letter-- responding to ours--on May 31 there was no reference to how the administration intended to keep the Senate involved as this process goes forward. I think it makes all the more clear the need to pass S. 1097, the New START Implementation Act, which provides, as one of its provisions, for the Congress to be consulted before any changes are made to the nuclear guidance.

I also look forward to an opportunity to discuss these matters with the President's nominee for Secretary of Defense, Mr. Leon Panetta. I will be curious to learn if he agrees with the 10-year commitments made to the Senate last year regarding the modernization of the nuclear deterrent, if he agrees with General Chilton who told the Senate that current levels of nuclear forces are exactly what is needed for deterrence, and also whether he agrees with Secretary Gates' recent comments at the American Enterprise Institute that nuclear modernization programs are absolutely critical.

So it was on the basis of the administration's commitments to our nuclear modernization program that some Senators agreed to support or to ratify the New START treaty.

Let me turn now to the question of missile defense. During the consideration of the New START treaty, many of us made the fundamental point that with respect to missile defense, there was no meeting of the minds between Russia and the United States.

While the administration insisted that there were no restrictions on missile defense, either legal or otherwise, the Russian side believed that ``the linkage to missile defense is clearly spelled out in the accord and is legally binding.'' That was noted by Russian Foreign Minister Lavrov on April 6 of last year.

Of course, the administration was never willing to share with the Senate the negotiating record that the Russian negotiators obviously were aware of. Sharing the record with us might have cleared up just what understandings the Russians think they received during the negotiation of the treaty.

In order to secure Russian support for the New START treaty and assuage their misplaced concern about U.S. missile defense activities, the administration initiated talks with Russia to find common ground on missile defense cooperation, and it cancelled a third site deployment in Poland and the Czech Republic.

Or, as Under Secretary of State Ellen Tauscher characterized the purpose of missile defense cooperation in a speech of May 19, 2010: ``to turn what has been an irritant to U.S.-Russian relations into a shared interest.''

Although administration officials might deny this, I believe Russian officials were under the impression that in return for Russian support for New START, the United States would provide Russia not only the opportunity for missile defense technical cooperation, but that Russia would also play a role in defining future U.S. and NATO missile defense plans. Thus, President Medvedev told the Russian General Assembly in December 2010:

I'd like to speak plainly about the choice we face in the

next ten years: either we reach an agreement on missile

defense and create a meaningful joint mechanism for

cooperation, or if we fail to do so, a new round of the arms

race will begin and we will have to make decisions on the

deployment of new strike weapons.

As it turns out, we didn't have long to wait until the Russians threatened this ``choice.'' In response to the recently concluded U.S. and Romanian agreement to base SM-3 block TB missiles in Romania in 2015, President Medvedev has again threatened the U.S. and NATO with an arms race if these planned deployments go forward.

On May 18, 2011, President Medvedev told a gathering of journalists in Moscow that ``if we don't [forge a missile defense cooperation model], we will have to take retaliatory measures, which we do not want to have to do. This will mean forcing the development of our strike nuclear potential.

Medvedev went on to reiterate a warning issued by the Foreign Ministry that Moscow may pull out of the new START disarmament agreement in response to the United States' position on missile defense.

This is precisely what many of us predicted would happen if we ratified the New START treaty in December. I didn't think it would happen quite so quickly.

This point was reiterated by President Medvedev following the recent G-8 summit in Deauville, France when he said, ``We're wasting time . . . if we do not reach agreement by 2020, a new arms race will begin . . . I would like my partners to bear this in mind constantly.''

The Russians are of one point of mind at the top of their leadership. They are threatening a new arms race. What they mean by that is, the United States reduces our capability to defend against missiles that could theoretically come from Russia.

Is this the reset in relationships the administration promised? Did they manage to reset our relationship right back to the dark days of the Cold War?

It appears from the comments of the President of the Russian Federation that this is precisely what happened.

The Russian Foreign Minister has further said Russia needed ``legal assurances,'' that the proposed U.S. missile defense deployments were not aimed at Russian territory.

Presumably, even the administration would agree no such ``legal assurance'' can be made.

But, then again, could the administration include such an assurance in the Missile Defense Cooperation Agreement, MDCA, or the Defense Technology Cooperation Agreement, DTCA, the administration is discussing with the Russian Federation?

Again, no Senator nor Senate staffer has been able to see the document that the administration has shared with Russian counterparts. So, we are left to wonder.

Here we are, and the Senate, being part of the American Government, isn't even privy to what our administration is talking to the Russians about--matters on which eventually the administration is likely to seek our consent to. Remember, the Constitution provides for Senate advice and consent. What I have said before is if the Senate is to give its consent, we need an opportunity to provide some advice before the administration negotiates its agreements with Russia.

Why not share these documents with the Senate--and the House--and remove any cause for concern, if, in fact, there is none?

I also note Russian President Medvedev has sent a letter to the

NATO-Russia Counsel outlining Moscow's position on a common missile defense system--which differs significantly from NATO's conception of two independently operated missile defense systems sharing some form of early warning data. These are two very different things.

And, it is not as if Members of Congress have been ambiguous about our concerns.

Following a 14 April letter to the President signed by 39 Senators, 4 Senators met with Senior Defense and State Department officials on May 15 to again express our concerns about sharing sensitive missile defense technical and sensor data with the Russians, and to better understand the content and legal authority of the draft Defense Technology Cooperation Agreement and Missile Defense Cooperation Agreement being discussed with the Russians.

Moreover, the House Armed Services Committee just incorporated the New START Implementation Act into its version of the National Defense Authorization Act for Fiscal Year 2012, as well as the amendment offered by Representative Brooks that will prohibit the sharing of sensitive missile defense technology and data.

How will the United States and NATO respond to this latest Russian intimidation?

Will NATO alter its plans to accommodate the Russian objective of a ``sectoral'' defense system?

Will the United States and NATO curtail deployment of phases III and IV of the European Phased Adaptive Approach? Phase IV is, of course, still just a paper missile, not something we developed, but it is part of our ultimate plan.

Will the United States agree to share sensitive information or technology with Russia for the sake of a missile defense agreement?

The administration informs us that these Russian threats are mere rhetoric, associated more with the upcoming presidential elections in Russia than with any true threats. And that Russia will not pull out of New START or begin a new arms race in response to U.S. missile defense plans. The administration assures us the United States will not alter its missile defense plans to accommodate Russian concerns.

Nevertheless, the Congress needs better insight into administration plans for missile defense cooperation and missile defense talks with Russia than has thus far been the case.

At the very outset, the administration created a separate venue from New START to discuss missile defense cooperation with Russia--this was the so-called Tauscher-Ryabkov track; despite repeated inquiries from Congress, the administration still refuses to provide meaningful details about the nature of these discussions.

Likewise, we are interested to know where the administration will recommend basing a new missile defense early-warning radar, called a TPY-2 radar. Will it put the radar in the Caucasus, as the Bush administration planned to do, or will it seek instead to base the radar in a location less advantageous to the missile defense of the United States homeland, but more acceptable to the Russians--even if that means that an ally like Israel will be denied access to the data generated, by the radar, as Turkey has said it requires?

To this end, and as I referenced earlier, 39 Senators sent a letter to the President on April 14 to inquire whether, contrary to the President's December 18, 2010 letter, we will make our missile defense decisions ``regardless of Russia's actions.''

The letter expresses serious concerns about reports the administration may provide Russia with access to sensitive satellite data and U.S. hit-to-kill missile defense technology, and urges the administration to share with Congress the materials on U.S. missile defense cooperation that have been provided, or will shortly be provided, to the Russian government. We still await these materials.

Lastly, the administration owes Senators information about what national security staff member Michael McFaul, whom I understand has been recently nominated by the President to be the U.S. Ambassador to Russia, meant when he briefed the press on May 26 that ``we got a new signal on missile defense cooperation that as soon as I'm done here I'll be engaging on that with the rest of the U.S. government.''

I am concerned that my staff asked the National Security staff about this almost a week ago and have heard nothing back.

I hope to hear back from the administration soon, especially if the administration expects the Senate to act promptly on Mr. McFaul's nomination.

Mr. President I am deeply skeptical about the course the United States and Russia are on concerning missile defense.

I think it should be abundantly clear that Senators and House Members will be paying very close attention to the development and deployment of the European phased adaptive approach to make sure it is done in a manner consistent with the security of the United States, without consideration to Russian ``understanding'' of what they think has been agreed to between the United States and Russia.

I will be working with my House colleagues to ensure that it is very clear that the United States will accept no limitations on its missile defenses. But I note, as I said at the outset, it is interesting that things that were told to us at the time the Senate was debating the New START agreement have turned out not to be true, just as many of us predicted, starting with the proposition that the United States would be drawing our weapons down while Russia would not. It turns out that is what happened because the Russians were already at the level they negotiated us down to.

So the question is, What did we get for our unilateral concessions? It appears to me that the only thing we got is an understanding by Russia that they are also going to be able to talk us down from our missile defense plans that could protect both the United States and allies in Europe or that as an alternative Russians would be part of a cooperative missile defense program which would, of necessity, require the sharing of economic data that would be inimical to the U.S. national interests.

I express these concerns in the hope that we can receive information from the administration that might allay our concerns, persuade us that it is not involved right now in negotiations, in effect, behind the Senate's back, and the best way to assure us is to share the information with us that we requested in letters we sent previously. I hope the administration will, next time it asks for our consent, be able to say it had already asked for our advice because I am afraid, if it does not, the Senate is much less likely to provide its consent to any agreements that might be submitted.

Exhibit 1

[From RealClearPolitics.com, June 6, 2011]

Obama Tunes Out, and Business Goes on Hiring Strike

(By Michael Barone)

Last week, I noted that various forms of the word

``unexpected'' almost inevitably appeared in news stories

about unfavorable economic developments.

You can find them again in stories about Friday's shocking

news, that only 54,000 net new jobs were created in the month

of May and that unemployment rose to 9.1 percent.

But with news that bad, maybe bad economic numbers will no

longer be ``unexpected.'' You can only expect a robust

economic recovery for so long before you figure out, as

Herbert Hoover eventually did, that it is not around the

corner.

Exogenous factors explain some part of the current economic

stagnation. The earthquake and tsunami in Japan caused a

slowdown in manufacturing. Horrendous tornados did not help.

Nor did bad weather, though only a few still bitterly cling

to the theory that it's caused by manmade global warming.

But poor public policy is surely one reason why the

American economy has not rebounded from recession as it has

in the past. And political posturing has also played a major

role.

Barack Obama and the Democratic congressional

supermajorities of 2009-10 raised federal spending from 21

percent to 25 percent of gross domestic product. Their

stimulus package stopped layoffs of public employees for a

while, even as private sector payrolls plummeted.

And the Obama Democrats piled further burdens on would-be

employers in the private sector. Obamacare and the Dodd-Frank

financial regulation bill are scheduled to be followed by

thousands of regulations that will impose impossible-to-

estimate costs on the economy.

That seems to have led to a hiring freeze. The Obama

Democrats can reasonably claim not to be responsible for the

huge number of layoffs that occurred in the months following

the financial crisis of fall 2008. And

Treasury Secretary Timothy Geithner and Federal Reserve

Chairman Ben Bernanke did manage to help stabilize financial

markets.

But while the number of layoffs is now vastly less than in

the first half of 2009, the number of new hires has not

increased appreciably. Many more people have been unemployed

for longer periods than in previous recessions, and many more

have stopped looking for work altogether.

It's hard to avoid the conclusion that the threat of tax

increases and increased regulatory burdens have produced

something in the nature of a hiring strike.

And then there is the political posturing. On April 13,

Barack Obama delivered a ballyhooed speech at George

Washington University. The man who conservatives as well as

liberal pundits told us was a combination of Edmund Burke and

Reinhold Niebuhr was widely expected to present a serious

plan to address the budget deficits and entitlement spending.

Instead, the man who can call on talented career

professionals at the Office of Management and Budget to

produce detailed blueprints gave us something in the nature

of a few numbers scrawled on a paper napkin.

The man depicted as pragmatic and free of ideological cant

indulged in cheap political rhetoric, accusing Republicans,

including House Budget Committee Chairman Paul Ryan, who was

in the audience, of pushing old ladies in wheelchairs down

the hill and starving autistic children.

The signal was clear. Obama had already ignored his own

deficit reduction commission in preparing his annual budget,

which was later rejected 97-0 in the Senate. Now he was

signaling that the time for governing was over and that he

was entering campaign mode 19 months before the November 2012

election.

People took notice, especially those people who decide

whether to hire or not. Goldman Sachs' Current Activity

Indicator stood at 4.2 percent in March. In April--in the

middle of which came Obama's GW speech--it was 1.6 percent.

For May, it is 1.0 percent.

``That is a major drop in no time at all,'' wrote Business

Insider's Joe Weisenthal.

After April 13, Obama Democrats went into campaign mode.

They staged a poll-driven Senate vote to increase taxes on

oil companies.

They launched a Mediscare campaign against Ryan's budget

resolution that all but four House Republicans had voted for.

That seemed to pay off with a special election victory in the

New York 26th congressional district.

The message to job creators was clear. Hire at your own

risk. Higher taxes, more burdensome regulation and crony

capitalism may be here for some time to come.

One possible upside is that economic bad news may no longer

be ``unexpected.'' Another is that voters may figure out what

is going on.

I suggest the absence of a quorum.