Floor Statements

Mr. President, I will address the issue of the pending debt limit.

Although the President's most recent speech on this did not give me great cause for confidence, I still hope he will drop his insistence on the huge tax increase in return for making the meaningful spending cuts and reforms that we need. I hope, most of all, he will drop his opposition to putting our budget on a path to balance.

That is the big item I think we need in this debate. I think we ought to be willing to raise the debt limit, as I am, if in return for that we would have a commitment of the President to put us on a path to a balanced budget, as President Clinton committed to and he achieved with a Republican Congress back in 1995. I hope we will reach an agreement that solves the underlying problem prior to August 2.

I am here this afternoon because I think we all have to acknowledge that we are late in the process, and I think it is indisputable that there is at least a possibility that August 2 will arrive without having raised the debt ceiling, whatever our personal preferences might be about that.

In my view, since that is a possibility, it is essential that the Federal Government have a plan for what we will do if those circumstances arise. Specifically, what is going to have to happen is the government will have to spend some period of time--probably a very brief time, but a period of time nevertheless--operating exclusively on the ongoing tax revenues that will be coming in without the ability to go out and borrow additional money. That means necessarily that somebody is going to make decisions about prioritizing payments, by some criteria that somebody will come up with.

Rather than simply wait and stumble into this period and discover what somebody has come up with, I think we ought to lay out a plan. So that is what my recently introduced legislation is meant to do.

Some of us have made this argument for a long time. We saw this day coming, and we have known that we would face a difficult time raising this debt ceiling. It has always been possible that we would not do it by August 2. I have been arguing that we ought to have this plan.

Unfortunately, the administration has persisted in denying that it is even possible to prioritize. It is ridiculous. It is going to happen. They are predicting that we are going to default on our bonds if we go past August 2 without having raised the debt ceiling.

In a letter to Congress, Treasury Secretary Geithner said:

This would be an unprecedented event in American history. A

default would inflict catastrophic, far-reaching damage on

our Nation's economy.

President Obama said this in May of this year:

If investors around the world thought that the full faith

and credit of the United States

was not being backed up, if they thought that we might renege

on our IOUs, it could unravel the entire financial system.

These are scare tactics. These things need not happen. I am afraid they are meant to intimidate Members of Congress into voting for a debt limit increase without the underlying reforms and spending cuts that the President resists. I think its irresponsible to make these suggestions because it is entirely within the power of the administration to avoid a catastrophic default even if the debt limit is not raised.

Now we have published reports that Treasury officials are making private phone calls to senior executives at big banks informing them that the Treasury will not allow a default--will choose not to default on our bonds. I think they should not default on our bonds, but it is all well and good to tell the big banks this. How about ordinary Americans who wonder: What about our savings, and what about Social Security payments?

This is unacceptable. That is why we introduced a bill called Ensuring the Full Faith and Credit of the United States and Protecting America's Soldiers and Seniors Act. We have over 35 cosponsors.

Our bill would instruct the Treasury Secretary that in the event, however unlikely, that the debt ceiling is not raised prior to August 2, they make certain obligations and priorities so they will be paid in full, on time, and without delay. Those three priorities are: interest on our debt, so we will not default and plunge our country into economic chaos; No. 2, Social Security payments because millions of senior citizens, including my parents, depend on Social Security payments. They have earned that benefit by virtue of the payments they have made. We can and must honor that obligation. Next is payroll for Active-Duty military personnel because those risking their lives for us deserve this certainty.

The fact is, there are far more than enough resources for the administration to make these payments. As this chart illustrates, the green bar reflects total minimum revenue expected to come in in August. The combination of interest on our debt, Active-Duty military pay, and Social Security benefits would add up to less than half of the revenue that we are going to take in in August alone. These are not my numbers. They come from the Bipartisan Policy Center. They illustrate clearly that we have the ability to pay these items and many others.

Let me be very clear. I am not suggesting this is a desirable outcome. I am not suggesting this bill is the substitute for raising the debt ceiling.

Mr. President, this chart illustrates that there clearly are more than enough financial resources that will be coming into the Treasury day in and day out in the form of ongoing tax revenue to easily be able to afford interest on our debt to avoid a default, Social Security payments to seniors so that they can be assured of the income they deserve, and Active-Duty military pay, with a great deal left over.

These are not my numbers. They come independently verified by many organizations, including the Bipartisan Policy Center. This bill is not meant as a substitute for raising the debt limit. It is a mechanism for minimizing the disruption that might otherwise occur if the debt limit is not raised prior to August 2.

It is my hope that this legislation never needs to be implemented. But I believe it would be irresponsible for us to go into this period without having planned for how we will handle it in the event this happens.

I yield the floor.

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

Mr. President, I wanted to take this occasion to acknowledge a very important event that occurred last night. It occurred in the other body, where we had a vote for the first time since we have been deliberating and debating and wrestling with this challenge of what to do with our debt limit and the fact we have reached that debt limit. We have had a vote by one of the two bodies that have a say in this matter on this very issue, and the House voted yesterday by a significant margin, with a bipartisan vote--although it was mostly one-sided, there were Members of both parties--in favor of raising the debt limit. The House voted to raise the debt limit, in fact, by the full amount the President requested. The House voted to raise the debt limit by $2.4 trillion, which would completely eliminate this problem, this struggle we have had over this looming deadline we have been given.

However, the vote came with one condition. It came with the condition that the President join Congress in putting our Federal Government on a path to a balanced budget. That is the requirement. That is the contingency. The way the House bill achieves that is by establishing three parts: The first is cuts in spending, the second part is caps on spending, and the third is a balanced budget amendment to the Constitution. The colloquial name this approach has been given is the ``cut, cap, and balance'' approach.

This is a big deal because until last night, among the three parties to this debate--the House of Representatives, the Senate, and the President--nobody had previously laid out a case that said: Here is how we will raise this debt limit and deal with this problem. The House has now done so. They have passed this measure by a significant margin.

I would like to quickly walk through the three elements of it--the cuts, the caps, and the balance. They are really all different pieces designed to achieve one goal, which is to put our Federal budget on a path to balance.

The cut refers to cuts in spending in this next fiscal year, which begins soon. It begins on October 1. The cut is 3 percent from this year's spending level--3 percent. So under the House-passed plan, next year we would spend 97 percent of everything we are spending this year, but we would cut 3 percent. Now, anybody who has run a business, anybody who has run a household knows that if you have to, you can cut 3 percent from any big budget. I guarantee you, from the enormously bloated and oversized $3.7 trillion U.S. Government budget, 3 percent is not much, but that is the cut. That is the first part. That is the level of spending for next year--about 3 percent or $111 billion.

The next part is the caps. These are the statutory limits as to how much the Federal Government would be permitted to spend in each of the subsequent years for the next 10 years. These levels have spending growth every year. Some suggest these are Draconian, savage cuts in spending. Actually, it is increases, but it is increases in spending at a slower rate than we have had in the past and certainly slower than what others have proposed--what the President's budget proposed and what the Congressional Budget Office is expecting. Therein lies savings. Therein lies the opportunity to put us on a path to a balanced budget because I think we all acknowledge that, unfortunately, we are not going to be able to achieve a balanced budget overnight. Can't do it. We have dug too deep a hole. So we need a little time to get there. The spending caps provide that discipline as we move in that direction.

The final piece is a balanced budget amendment to the Constitution, which is something most Americans have strongly supported for a long time. If we achieve that, frankly, we would never have to worry about raising the debt limit anymore because we wouldn't run a deficit. We would be forbidden. Without a deficit, you don't need to issue a new debt, so the debt would never rise, and this problem would be permanently resolved, but much more important, we would have our Federal Government on a sustainable, strong, viable fiscal path, and that would create the opportunity for strong economic growth.

I am convinced that part of the reason we are having such a weak economy and such poor job growth is because of the uncertainty we have created not so much over whether we are going to raise the debt limit on August 1 or 2 or 3 or whenever it is but whether we are going to solve the big fiscal challenge we face, the problems dragging down Europe now, and the problems that loom for us.

The President and the Treasury Secretary have been extremely alarmed about the prospect that we might not raise the debt limit on August 2. To that very point, the Treasury Secretary said--and I quote from a May 13 letter he sent to Members of Congress:

This would be an unprecedented event in American history.

He is referring to a failure to raise the debt limit.

A default would inflict catastrophic, far-reaching damage

on our Nation's economy, significantly reducing growth, and

increasing unemployment.

President Obama had a similar message of great alarm, again referring to a scenario in which we did not raise the debt limit by August 2. He said:

If investors around the world thought that the full faith

and credit of the United States were not being backed up, if

they thought that we might renege on our IOUs, it could

unravel the entire financial system . . . We could have a

worse recession than we already had, a worse financial crisis

than we already had.

So this is how serious the President and the Treasury Secretary say their concern is that we raise the debt limit. Well, the House just did it. The House said: Mr. President, we hereby vote--and they did vote-- to raise the debt limit by $2.4 trillion, the full amount the President asked for. They have said this is the only condition: You, Mr. President, need to join us in putting our budget on a path to balance, taking care of this fiscal crisis, and giving us a sustainable fiscal footing so we can have strong economic growth.

So the question today before us is, Will the President join us? Will the President embrace this? The President, as I have just quoted, has indicated great alarm at the prospect of not getting the debt limit increase he has asked for. The House has just said: Here it is.

Actually, I think, if not every Republican Senator, a big majority of Republican Senators will support what the House has done. I hope there will be many Democrats who will support this as well because none of us wants to test the proposition of what happens if we don't raise the debt limit.

So the opportunity is here now. For the first time, we have a bill that has been passed in one of these two bodies that would do exactly what the President has asked for, with just this one condition.

Let me comment for a moment on one of the reasons I think it is so important that the President join us in putting our budget on a path to balance. We have heard from various rating agencies that several of them are considering downgrading the credit standing of the United States. This is an appalling thought.

I was involved in the bond market in my first career when I got out of college, and the United States stood above

ratings. We didn't talk about having a AAA rating because we were above even that. Our rating was so superior to anyone else's, the rating system didn't even really apply to the United States. Well, now, not only does it apply, but the danger is that we won't even qualify for the top rating.

Do you know what it is that would cause them to downgrade the debt of the United States? It is not a failure to raise the debt limit by August 2; it is the failure to address this fiscal imbalance, these massive, unsustainable deficits. That is what they have told us has to be corrected or else the downgrade follows, and a downgrade will be enormously problematic because it has all kinds of knock-on effects.

So we have heard about a lot of different ideas that have been floated, and I congratulate and commend everybody who has been involved in putting in a lot of effort. I don't agree with everything that everybody has talked about doing, but I think we have seen people from both parties make a good-faith effort to try to solve this problem one way or another. But the fact is there is only one proposal on the table that has passed either body, and there is only one proposal that actually solves our long-term fiscal challenge in the law that has already passed--the bill that has already been passed.

So my question now is, Will the President join us and put our government on a path to a balanced budget? We don't expect to get there overnight. By the way, the various levels of cuts and spending and the exact terms of the balanced budget amendment naturally would be subject to discussion. But will the President join us in this effort to restore fiscal sanity and give us the basis for strong economic growth? That is the question, and that is the opportunity for the President.

Now, I know the President has been dismissive of the idea of balancing our budget, but I certainly hope he is not so opposed to balancing our budget that he would reject the debt limit increase that he has said we desperately need. There is an opportunity here to solve two problems at once--to solve this problem over the looming date of August 2 by which he has said we absolutely must raise the debt limit, but the more important opportunity is to put our house in fiscal order.

The House took a very important step in that direction. The Senate will have a vote later this week. I hope my colleagues in the Senate will embrace this opportunity and the President will join us and will put our Federal Government on a path to balance.

With that, I yield the floor.

I thank the Senator for raising this issue because I do think this is a very important issue. Many of us wanted to be on the Budget Committee because we see what a critical moment our country is in. We see the very dire straits we have put ourselves in because of the fiscal irresponsibility of Washington, and some of us believe we do not have a lot of time to get this in order. So I was looking forward to the opportunity to serve on the committee that would design the blueprint for our entire fiscal policy for this year and hopefully beyond.

I think this is a fundamental responsibility, frankly, of any responsible organization, to have a budget. I ran a small business for years, my own little business. We always had a budget. The corner pizza shop has a budget. We are the biggest enterprise in the world, the U.S. Government. We spend $3.6 trillion, and for the majority party to choose--I have to say cynically--not to even write a budget, to abdicate that fundamental responsibility to lay out for the American people how much money they want to spend, on what they want to spend it, where the money is going to come from, to abdicate that responsibility is shocking.

To make matters worse, they have a statutory obligation to do this, so it is actually also illegal, and here we are without a budget. We are about to run out of this year's funding. When we come back from the August break, we are going to be passing some huge omnibus. Who knows what is in that. We have a broken-down process. I believe it has contributed to where we are today with this debt limit.

By the way, a brief aside, if I could, about this debt limit issue. We had a discussion today in the Banking Committee--Federal Reserve Board Chairman Bernanke was there to testify--and it was a useful discussion. Unfortunately, after I left the committee, I learned later Senator Schumer began to discuss some of my remarks with Chairman Bernanke, and in the process he grossly mischaracterized what I said. I am quite sure Senator Schumer would never intentionally mischaracterize the remarks of one of his colleagues. So what I wish to do is clarify what was actually said so that in the future it won't be mischaracterized. I had observed that the Treasury will have more than enough cash coming in in the form of tax receipts to pay the interest on our debt in the event that we didn't raise the debt ceiling on August 2. I immediately went on to say, and I will now quote myself, if you will allow. I said:

Now, I don't know of anybody that suggests that we can or

should go indefinitely without raising the debt ceiling, and

I have argued that we would certainly be much better off

reaching an agreement and raising the debt ceiling prior to

August 2.

That was characterized by Senator Schumer as follows and I will quote him. He said:

For a smart guy--

He was referring to me, believe it or not.

I mean, to say we can pay the obligations and not pay the

rest and that that is just fine. Wow, I'm sort of surprised

at it.

Well, obviously I never said it was fine. What I have said is we have a dire crisis on our hands and we need to do something about it, and I don't know we are going to get another opportunity than the opportunity over this question of whether and when and by how much we will raise the debt limit, but I am not going to sit by idly, and I am not going to go along with some deal that raises the debt limit without making the real cuts in spending we need and the real process reform.

As Senator Sessions knows, some of us have advocated that there be a simple deal, if you will, preferably one that we would discuss in public, one we would have a debate over, one we would have a vote on. The deal is simply this: We will agree to raise the debt limit by the full amount the President has requested, provided only that the President agree to put us on a path to a balanced budget. That is it. We call it cut, cap, and balance. It has some immediate cuts. It has spending caps that put us on the path to a balanced budget, and it calls for the adoption of a balanced budget amendment to the Constitution.

We had a Democratic President named William Clinton who, together with the Republican Congress in the 1990s, acknowledged the importance of reaching a balanced budget. None of us think we can do it overnight. None of us are calling for that. But back then in the 1990s they decided they would strive for it and, in fact, they achieved it. We reached a balanced budget and ran a modest surplus.

All I am asking today as we confront this issue and as we contemplate saddling ourselves and our kids and grandkids with a debt more than we have now, what I am suggesting is at the same time we take the measures necessary to get us out of this mess, to prevent us from going further down this unsustainable path and to get to the point where we don't continue running deficits, a path to a balanced budget. Cut spending now, statutory spending caps, and a balanced budget amendment. We now have a big majority of Republican Senators who cosponsored this bill that would raise the debt ceiling by $2.4 trillion, provided we get these changes. I am increasingly optimistic the House might very well pass a bill that would raise the debt limit contingent only on this path to a balanced budget.

While we are down here today, I think this is what we ought to be talking about. We should not go on to an appropriations bill that has no context because there has been no budget. We ought to be focused on getting this problem solved and then get back to the regular order of having a budget that defines the level of spending and where that money is going to come from and allows us to pursue the ordinary appropriation process so we can exercise our constitutional responsibility to control the purse strings of this Federal Government.

I thank Senator Sessions for raising this issue. This is a very important issue, and I agree with the Senator wholeheartedly that it is a travesty that we don't have a budget in this body. I certainly hope we don't go further down this path.

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

Mr. President, I think it is fair to say we have two really major problems we are grappling with here in this Congress. More importantly, the people all across our country are grappling with them.

First, there is an economy that is far too weak. It is growing far too slowly, if at all, and it is certainly producing far too few jobs. The latest data is particularly discouraging on the job-creation front. Until we turn this around and get strong growth, we are not going to produce nearly the number of jobs we need.

The second big problem that strikes me as very disturbing is the unsustainable level of Federal spending and corresponding deficits and debt that have mounted as a result of all that spending. Federal spending since the year 2000, from 2000 to 2010, has doubled from just a couple of years ago when spending was less than 20 percent of our total economic output. Today, it is nearly 25 percent of our total economy, and that is way too large and unsustainable.

All this spending has predictably led to huge deficits. We have been running annual deficits these last couple of years of nearly 10 percent of our entire economy--really staggering in size, $1.5 trillion for the last couple of years running. The deficits are covered by issuing debt, so we have been accumulating debt at this really breakneck pace.

Of course, all of this debt has caused us to crash into our debt limit, and we are now mired in this debate, in this discussion, in these ongoing, very difficult negotiations over what to do because we have reached the statutory ceiling of the amount of money the Federal Government is permitted by law to borrow--$14.3 trillion. That is a number which is very difficult to grasp because of its sheer enormity, but there we are. We are at the limit, and we have to decide what we are going to do about it.

I am not impressed with where the current negotiations seem to be and where they have been. I think we have yet to see a plan from the President that lays out exactly what he is willing to cut in spending to put us on a sustainable path.

The President proposed a budget. I sit on the Budget Committee. We looked at that budget, we had testimony about that budget, and what we learned was it is not a serious budget. It would continue with huge deficits and mounting debt. It did not address any of the fundamental problems. When that budget was on the Senate floor for a vote, the President's budget got zero votes. The President subsequently backed away from his own budget but has not proposed an alternative. Unfortunately, my colleagues in this Chamber on the other side have proposed no budget whatsoever.

So here we are, the world's largest enterprise, the U.S. Government, preparing to spend this year--as we did last year--something on the order of $3.7 trillion without so much as a blueprint for how we are going to spend that, rules that would govern how it gets allocated in different categories, guidelines for where the revenue is going to come from, how big the deficit will be--none of that. We are simply proceeding along without a budget. I have to say I think that is shockingly irresponsible. Now we go into these discussions about the debt limit. Frankly, it is not clear to me that we are any closer to a resolution today than we were several weeks ago.

Some of us have suggested a solution. We have suggested a way out of this impasse that I would like to describe today. The solution we are proposing is that we go ahead and raise the debt limit by the amount the President has asked. Many of us are not particularly enthusiastic about that, but we acknowledge that failure to do so will at some point in, presumably, early August result in a considerable disruption and a partial government shutdown. It will not result in a default on our debt, and there are many of our ongoing expenses we could continue to cover from ongoing tax revenue, but it would nevertheless be very disruptive, and it is my hope that we never get there and instead find a resolution.

The resolution some of us are proposing--specifically Senator Mike Lee from Utah, whom I credit a great deal for his leadership--Senator Lee and I have introduced a bill, together with a number of other colleagues--I think we have over 25 cosponsors in the Senate--based on the idea we call cut, cap, and balance. We would agree to raise the debt limit by $2.4 trillion, as the President has requested, provided that we get ourselves on a path to a balanced budget. By that, we see three pieces: cuts in immediate spending; statutory caps in spending over the next few years; and a balanced budget amendment to the Constitution, which we acknowledge would take several years to achieve. But the point is that the combined effect of these measures would clearly put us on a path to a balanced budget, end the practice of running deficits, and eventually end the need to raise debt limits because we would not be issuing new debt. We would, instead, as a government be living within our means.

If you ask me, this is very reasonable, to suggest that the Federal Government ought to live within its means. It is reasonable for families. Families do not have any choice; they live within their means. Businesses have to live within their means or they do not survive. And 49 of the 50 States have a requirement that they balance their budgets every year, and they find a way to do it.

This President would not be the first Democratic President to embrace this if he were to embrace this idea. President Clinton, working with a Republican-controlled Congress in the 1990s, first embraced the idea that we ought to strive for a balanced budget, that it was a worthwhile goal, that it was an achievable goal, and within a few years, in fact, they achieved it, two different parties working together--not always enjoying each other's company as much as one might like, but the fact is they got it done. I think we ought to consider using that model today.

As recently as 2007, we were actually quite close to a balanced budget. Our deficit was just over 1 percent of our total economy, as opposed to today, where it is nearly 10 percent of our total economy. I fully acknowledge that we cannot get there overnight, as much as many of us would like to. We have dug a deep hole. We are borrowing almost 40 cents of every dollar we spend. It would be too sudden and Draconian to think we could balance the budget overnight. So we suggested a path that might take 8 or 9 or 10 years to actually reach a balance, but it would surely put us on a path that would get us there, and that would be enormously constructive, not only in the sense that it would ensure the long-term fiscal viability of our country, which is in and of itself an absolutely vital goal, but it would also create some certainty in the market, reduce the risk of huge inflation and huge interest rates and the other dangers that accompany the irresponsibly large deficits, and in the process help to encourage stronger economic growth and job creation.

I think we ought to be flexible in how we get there. We have proposed one way. It is not the only way to do it, but it, importantly, is premised on this principle that we can reach a balance and we ought to do that. It is absolutely critical that we demonstrate that we have the political will and the ability to tackle this, arguably the biggest challenge we face.

We have seen what has been unfolding in Europe because they chose not to tackle these problems in recent years. I suggest we are not that far behind some of the countries in Europe that are in the middle of truly devastating sovereign debt crises. We are not quite there yet, but if we do not change the path we are on, that is the direction we are heading.

Let me walk through the particular items in this approach we are advocating in which we would cut, cap, and balance.

First is to cut spending. We are suggesting a cut from the 2011 levels of $142 billion. That is actually less than

4 percent of the amount of money the government spent last year--we are still in the current year, but the fiscal year of 2011. It would still spend more than we spent in 2010, so it is very hard to see how this could fairly be described as any kind of Draconian cut. It is a very modest cut in spending. By 2012, the levels will be almost $\1/2\ trillion more than the levels of spending in 2008. But that is the first step, to cut spending in the immediate future, in this next fiscal year.

The second is to cap spending over the next several years. To do this, we have established a set of caps, statutory limits on how much the government can spend each year based on the level of spending in the budget resolution I introduced on the Senate floor, which had almost all the Republicans' support. I wish we had some Democratic support, and I still hope we will get some. But the important thing about this budget resolution and these cap levels is they reach a balance--not overnight; it takes 9 years. But by controlling spending and adopting progrowth policies that encourage an expanding economy, we would, following these cap levels, be able to balance our budget. Then, finally, we are advocating that as part of this package, as part of an arrangement, we would agree to raise the debt ceiling. We would also pass in both the House and Senate a balanced budget amendment to the Constitution and send it off to the States.

We would not suggest the increase in the debt limit be contingent upon State option, but I am confident the States would, in fact, pass a balanced budget amendment to the Constitution if we in Congress would send it to them. It would have three big features and, again, the details ought to be a subject of discussion. One that would not be open for negotiation would be that the first outlays need to equal revenues. That is obviously the fundamental definition of a balance. We don't run deficits; we make sure we spend no more than we take in.

The second aspect some of us feel strongly about, and I am one of them, is we ought to limit spending as a percentage of our economy so the economy doesn't keep growing, which is what happens when the government occupies too large a segment of our economy.

Finally, we have advocated that we not create a mechanism that simply guarantees big tax increases in order to balance the budget, and to do that we would like--and we have included--a supermajority requirement to raise taxes so that a simple majority wouldn't be enough. It would require a supermajority which would only occur, presumably, in truly extraordinary circumstances.

I believe very strongly we can have strong economic growth and the job creation we need, but to get there we have to create an environment in Washington; we have to pass legislation and create an environment that encourages risk taking, encourages business formation, encourages new hiring, and we have not been doing such a good job. One of the ways to do that is to put us on a sustainable, viable fiscal path, and the cut, cap, and balance approach would do that.

We would raise the debt limit by the full amount that the President has asked for provided he agree with us to put this country on a path to a balanced budget. I do not think that is asking too much. I think that is a way to achieve long-term fiscal sustainability, and just as importantly it is a way to create an environment for the strong economic growth and job creation we need.

Madam President, I have an amendment at the desk, and I ask for its immediate consideration.

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

Madam President, I ask unanimous consent to add Senator Vitter as a cosponsor of this amendment.

I rise to offer an amendment to retain the Senate confirmation process for two positions: the position of Governor and Alternate Governor of the IMF and the International Bank for Reconstruction and Development.

The Board of Governors at the IMF is the highest level of governance of the IMF. Currently, the Governor and the Alternative Governor are both subject to Senate confirmation. This bill would change that. This bill would remove them from the Senate confirmation process.

I think I understand the rationale behind that thinking. It is probably because, by custom, the United States has appointed the Secretary of the Treasury as the Governor designate to the IMF and the Chairman of the Federal Reserve as the Alternate Governor. So since those folks have already been through a Senate confirmation process, no doubt the thought was that we did not need to have a separate one.

Here is the reason for my amendment; that is, the decision to appoint these two individuals to these two posts has been by custom, and there is nothing in statute or otherwise that requires the President to appoint these two individuals. The President--any future President-- could choose to nominate anyone he or she may like. I think it is very important in that event the Senate would continue to have the oversight that comes with the advice and consent that my amendment would retain.

The truth is, the United States is the largest lender to the IMF, and right now the IMF is in the process of using U.S. taxpayer dollars to bail out Greece and perhaps other countries. At a time when Greece and Europe are virtually drowning in debt, I do not think the Senate should be conceding its confirmation authority and potentially

thereby reducing its oversight over the key IMF officials responsible for overseeing tens of billions of U.S. taxpayer dollars.

I think we all know, the United States does not even have its own fiscal house in order.

Yet here we are giving over $100 billion to the IMF for them to, in turn, lend money to insolvent governments. That doesn't make sense to me. We are running a $1.5 trillion deficit, nearly 10 percent of our entire economy. Our debt is at 69 percent of our GDP and rising rapidly. It seems to me that American taxpayers should not be asked to bail out European governments that clearly haven't been able to get their act together. But recently, we actually expanded the liability U.S. taxpayers have to the IMF.

Let me comment for a minute specifically on this idea of bailing out Greece because I think it is a very bad idea. Greek debt exceeds 150 percent of their total economy now. The Brookings Institute estimates that bribery and corruption alone amount to 8 percent of GDP annually. The Greek workforce has a very low productivity rate. There is a very low percentage of their population engaged in the workforce. By any measure, this is an economy that is in a downward spiral.

Despite that and despite a $160 billion bailout last May, in 2011, the Greek Government decided to increase its total expenditures. While running this staggering and unsustainable government, their government's decision was to increase spending. The fact is, unfortunately, no loan, no matter how large, no matter from where it comes, is going to solve Greece's problems. It is not that Greece has a problem with liquidity; their problem is solvency. Greece is insolvent. It cannot, and therefore will not, repay all its debt.

The danger is going down this road and having the IMF and other multinationals lending money to Greece now, and we are effectively replacing the existing loans made by private banks--essentially European banks--with taxpayer dollars provided by these big institutions.

Essentially, the Greek Government is going to default on the debt. The only question is, Upon whose debt? Will it be that of the private banks that lent them the money, as I believe it ought to be--those are the people who made the imprudent decision when they extended money to a fundamentally insolvent government--or will it be taxpayer-funded institutions because those institutions have taken out the debt of the private banks?

I am afraid that is where we are heading, and that will include U.S. taxpayer dollars. I think it is a big mistake. It is also an unusual transaction for IMF, primarily for two reasons. It is unusual to lend money to developed economies. Usually, this kind of program goes to developing nations. But it is even more unusual in the magnitude, the sheer scale of this.

In 2010, the IMF bailout of Greece was more than 3,000 percent of Greece's IMF quota. Typically, the size of loans such as this is no more than 200 to 600 percent of a nation's quota. This was 3,000 percent.

One of the biggest problems with going down this road of having multinational institutions bailing out insolvent countries is the moral hazard. There are a number of countries around Europe that are in substantial trouble, with varying degrees of fiscal problems, and some are teetering on the edge of insolvency. What is the message we are sending to those governments if multinationals come in and bail out Greece? The message is: Don't make the tough decisions now and impose the kinds of austerity you need because someday somebody will come along and bail you out of this problem. That is a very bad policy.

Most of all, we ought not to be putting U.S. taxpayers in this position of taking on this liability, which I am afraid is not going to be repaid. The reality is, Congress has very limited oversight over IMF, by design--very limited authority. One of the few checks we do have is the ability to provide or to withhold our consent with respect to those who are nominated to that powerful governing board. I don't think, at a time when the IMF is going out putting tens of billions of U.S. taxpayer dollars at risk, bailing out irresponsible and insolvent foreign countries--at a time such as this, I don't think we should be doing anything to relinquish that authority we have, to diminish the opportunity we would have to provide that advice and consent.

With that, I yield the floor and suggest the absence of a quorum.

Madam President, I thank the Senator from Alabama for giving me the opportunity to speak on this extremely important issue. Let me follow up on the central point that Senator DeMint from South Carolina has been making.

When I go back to Pennsylvania and talk to my constituents about the fact that the Government of the United States, the world's biggest enterprise--an enterprise--is going to spend $3.6 trillion this year, and we are doing it without a budget, they look at me in shocked disbelief that this could even be possible. But it is possible because my colleagues in the Senate, my Democratic colleagues, refuse to produce a budget. It is an unbelievable abdication of responsibility.

My colleagues have asked the American people to elect them to the Senate, have asked the American people to be the majority party of the Senate, which they are, and their attitude is they have no responsibility to lay out a plan for how they want to spend the $3.6 trillion that they want to spend. They have no intention of laying out a plan of where the revenue is going to come from, how much is going to come

from which areas, and how this money should be spent--no overall blueprint, no guidelines, no architecture for spending this staggering sum of money. This is an extraordinary abandonment of a very fundamental responsibility.

I have to say, I have a hard time listening to the criticism of the House budget by people who have offered no budget as an alternative.

Let me speak about the House budget for just a minute. It has taken a great deal of criticism from my friends on the other side in particular because 10 years hence, in this budget, they recommend reforms to Medicare that save Medicare. I want to stress this point. The current policies being advocated--not in a budget but advocated elsewhere by my Democratic friends--they are currently in the process of crushing Medicare because that is what is happening.

Talk to your doctors back home, talk to your hospitals. We have small hospitals across Pennsylvania that are increasingly finding it so difficult to operate. Reimbursements are being gradually crushed down. We have this threat that doctors' reimbursements are going to be dramatically cut. We have created in the President's health care overhaul this Independent Payment Advisory Board, as it is called, the purpose of which is to find ways to ratchet down reimbursements for health care providers.

One of the things that breaks my heart is how often I have had the conversation with doctors who tell me, often choking up in the process, they are encouraging their kids to pursue some other line of work, some other profession other than health care, the profession to which they have dedicated their life. But this is the state of affairs that we have today because of where Medicare is and where it is heading.

So the House comes along and offers a plan that saves Medicare, puts it on a viable, sustainable footing for future generations, and they get attacked for it. Is it the perfect plan? Is it the only plan? I am sure it is not. But it would work.

One of the things that makes so much sense about what they are doing is they are altering the payments as a function of people's wealth and health. It makes a lot of sense. So when younger people reach retirement age, they get more financial help from the government if their income is lower and their health is worse, and they get less if they are wealthy and relatively healthy. This mechanism would put individuals in control of their own health care and put the government on a sustainable path.

Frankly, I think we ought to congratulate them for doing some very thoughtful work. I am going to vote for the House plan. The House plan addresses a very long term structural problem we have for our budget and does it in a very thoughtful and sensible way.

I am introducing an alternative budget because I wish to focus on the nearer term. My focus is these next 10 years, because I think we have a crisis staring us right in the face and we have to deal with it now. So I think we have to deal with it in next year's spending and in the immediate future.

A big part of my goal and what we have demonstrated in the budget I have introduced and that we will have a vote on in a little while is that we can balance this budget within 10 years. I think that is a very important goal. My budget accomplishes that with two elements: policies that generate strong economic growth which have all kinds of benefits, not the least of which is it generates more revenue for the Federal Government; and the other part of this is we have to tighten our belt. This government has been spending way too much money. My budget ratchets that back. The combination brings us to balance within 9 years and generates a modest surplus within 10 years. In the process, we dramatically reduce the amount of debt as a percentage of GDP.

We just saw the Senator from South Carolina present a comparison of what a dangerous position we are already in compared to that of other countries that have racked up too much debt as a percentage of their economies. We are following on this very dangerous path. My budget starts to reverse that curve. It starts to lower the debt as a percentage of GDP and, by bringing the budget into balance, it will actually stop growing the debt altogether, which I think is a very important goal. Part of that is through pro-growth tax policies.

No. 1, in this budget we would ask the relevant committees in the two bodies to enact reforms that would simplify the Tax Code dramatically and allow us to lower marginal rates. The combination of a simplified Tax Code and lower marginal rates is absolutely guaranteed to generate economic growth. I would do it on the corporate side as well as on the individual side and, on the corporate side, move to a territorial-based access system so we wouldn't continue to have the tremendous competitive disadvantage we have vis-a-vis our trading partners.

On health care, we take a different approach for Medicare. We are focused on these next 10 years. Over the next 10 years we do two things: One, we end the fiction that we are going to cut doctors by 30 percent, or end the threat, depending on how you choose to look at it. So the sustainable growth rate, as it is called around here--this notion that we have to massively cut reimbursements to doctors all of a sudden--that is done away with. We recognize that would be a very imprudent policy.

Another thing we do is adopt one of the recommendations from the Simpson-Bowles commission on medical malpractice liability. That helps to save some significant money across the board on health care, and certainly that includes Medicare.

On Medicaid, we adopt a very similar approach to that which is done in the House budget, which is to say this is completely unsustainable in its current form. Medicaid has been doubling every 8 years and it is a big driver of the deficit we have in Washington. It is also a big driver of huge deficits across the 50 States. It is a big problem, because the States have little or no flexibility in how they administer this program. They have a big financial burden that comes with it. What I think we ought to do is take these resources, block grant them to the States, and give the States the flexibility to figure out a better way to deliver health care services to low-income people. I think among our 50 States, I am very confident there will be many that will come up with better models and as they do, they will be adopted generally, and we can put this program on a sustainable path, which it is certainly not on today.

On some other areas of spending, on nondefense discretionary spending, we have to cut it. We have grown it too much. In fact, the big surge in the deficit in recent years has come from the discretionary side. So what we call for is lowering nondefense discretionary spending to the level it was in 2006 and then freezing that for 6 years, after which it would be indexed to the consumer price index. Other mandatory spending, aside from the big entitlement programs, would gradually be reduced to just over their 2007 level. I say gradually. We do this so people have a chance to adjust. Frankly, the economic growth we would get from the lower marginal tax rates would help facilitate this. It gets lowered to 2007 levels by 2014, after which it grows at CPI.

Our budget calls for no changes whatsoever to Social Security, and it calls for none of the structural changes to Medicare because those would occur after the 10-year window and we are focused on just these next 10 years.

I would strongly stress that we are staring at a full-blown crisis. We don't know whether it is a year from now or 2 years from now or 18 months or even nearer. That is impossible to know. But it is impossible to deny that we cannot continue on this course. We cannot continue running multitrillion-dollar deficits--deficits that are 10 percent of our entire economic output, that rack up this huge amount of debt as we have done in recent years. That is not sustainable.

My first career out of college was in finance. When I was working in finance, the idea of the Federal Government of the United States of America even having a credit rating was not something that was understood to be that way. The United States of America was above the credit rating system. It didn't apply to us. A triple A rating wasn't even relevant because we didn't even talk about the creditworthiness of the United States, except to refer to it as the risk-free interest rate, the risk-free security, the security for which

there was no risk of a failure because this was, after all, the Government of the United States of America.

Now we are in a position that is absolutely shocking to me. We very much are subject to a credit rating, but it is worse than that. We have S&P telling us they are actively contemplating the day on which they will lower our credit rating and we won't even be AAA. This is absolutely shocking to me and it has tremendously dire consequences.

Madam President, I close by saying we cannot kick this can down the road anymore. We need to do something now. I have a budget that balances within 10 years and I urge my colleagues to support it. I thank the Chair.

Mr. President, I wish to share a couple of thoughts on the budget process that is underway and where we are with the continuing resolution we voted on this afternoon.

First, with respect to the CR, that was a tough vote for me. It was a tough vote because this is no way to run the government. We are here now dealing with business that should have been done last year. Unfortunately, last year the Senate didn't get its work done, didn't even do a budget, didn't go through the normal appropriations process. They started kicking the spending can down the road last year, and we are still in the midst of that. I am not sure how many continuing resolutions we have had at this point--three, four, five, six; I am losing track--but this last one for this next 3 weeks, frankly, is the last one I will vote for. This one I could support because it does sustain the lower level of spending as passed by the House. There are some tough cuts in that bill, but it is very necessary that we get serious about getting our spending under control. This is a small step in that direction.

I really want to urge my colleagues to bring an end to these 2-week, 3-week, short-term CRs. It is just kicking the can down the road. Let's resolve this. Let's get a funding measure in place that will fund the government for the remainder of this fiscal year and be done with it. We have serious work to do. We have a budget resolution we need to govern the spending that will occur for next year. We have process reform that we badly need. There is an awful lot that needs to be addressed, and this really just needs to get done. So I hope we will do that soon.

As we discuss the level of spending we are going to have in this CR that will continue from when the current one ends--hopefully, there will be just one more that will take us through the remainder of this fiscal year--it is very important that we get that level of spending down to at least the level that was passed in the House, and I want to talk about why.

I have looked at some of the individual cuts, and they are tough. They are going to make things difficult in many cases. But it is very necessary that we do this for the sake of beginning to restore some sense of fiscal sanity to get us on a sustainable trajectory.

One of the arguments I have heard from some of my friends on the other side of the aisle who have real concerns and objections in some cases to adopting a spending measure that does reduce spending--I would argue modestly over all--is that this will cost jobs; that if the government doesn't spend more than what is contemplated in the House- passed continuing resolution, we will lose jobs; that if we cut government spending, we will have lower employment. I am here to suggest that is exactly backward. That is precisely wrong. In fact, it is the exact opposite.

At the point we are now, the more the government spends, the fewer jobs we will have. And the sooner and the more quickly we bring this government into some sense of fiscal stability, the more employment we are going to have and the more job creation we are going to have. I think for many people that is common sense, but it is not universally accepted here. I understand that. But consider this: If all we needed to do was have the government spend more money to create jobs, then recessions would always be a trivial matter because we would just crank up some government spending and everybody would be back to work and we would be fine. But we know that doesn't work. It has never worked. If that is what worked, frankly, the economy would be booming right now.

We have been spending on a scale we have never even contemplated before. As a percentage of GDP, deficit spending, total spending, by any measure--the spending is at a record high, and yet unemployment is persistently much, much higher than we had hoped it would be, much higher than it typically is at this stage in what should be an economic recovery.

It isn't just this experience we can look at. We can look around the world. Countries that have lived beyond their means and where the government occupies a big segment of the economy and spends a great deal, those are not the more successful economies. In fact, those are the least successful economies. They have persistently high unemployment, low economic growth, low job creation, and a low standard of living. I think this is all widely recognized but not entirely so here in Washington.

Of course, it is true that the government can always create a job. The government can have a program that instructs someone to go out and hire someone, give that person a wage and, bingo, they have created a job. Government can always do that. Of course, the problem is that in the process, the government destroys jobs in the private sector. That is because the money that is necessary to create that government job has to come from somewhere, and it always comes from the private sector unnecessarily.

When the money comes from out of the private sector and goes to the government for the government to create a job, that does several things. First of all, the government tends to allocate resources much less efficiently than free men and women do in the voluntary exchanges of the marketplace, so you get politically motivated allocation of resources rather than market-oriented allocation, and this is widely acknowledged to lead to lower investment returns, less efficient investment, and therefore less job creation.

This isn't just theory. There is plenty of empirical data on this issue. I wish to observe for my colleagues and talk

about one particular chart that I think is a very helpful illustration because this kind of goes to the heart of my point. My point is that the job creation we desperately need right now is only going to come from the private sector. The sustainable jobs that lead to solid economic growth, permanent jobs, wealth creation, and real opportunity are going to come from the private sector, and that is driven by private investment. The more government spends, the more it crowds out private investment and precludes the very engine of economic growth and job creation we need.

The chart behind me is a great illustration of this. It is provided by John Taylor, a very well regarded economist whose work is highly respected and widely circulated. In this chart, Mr. Taylor illustrates that the unemployment rate is inversely related to private investment.

So when the private sector is making investments--and this can be investments in new business or in capital, but when private money is being put to work by business, as the percentage of the economy, the amount of this investment declines as a percentage of our economy, we see the unemployment rate go up.

When we see private investment growing, as it did for a sustained period from the early 1990s until the early part of this decade, we see the steady upward trend, and it was driving down the unemployment rate. It is clear that as this line goes down--the private investment line-- the unemployment rate goes up. When it turns around and private investment as a percentage of our economy grows, the unemployment rate declines--not just for this period--and you can see the trend continues.

Again, we have another period after about 2000 of declining private investments as a percentage of GDP and a rising unemployment rate. Now that we have seen in recent years a long, pretty precipitous decline in private investment as a percentage of our economy, we see this huge increase in the unemployment rate.

These lines--at a quick glance, you can see it--are almost a mirror image of each other. This is a great illustration of a simple and well- known fact: It is private investment that drives job growth.

When the government gets too big, as ours is today, and when it spends too much money, as this one does, and when the deficit gets too big, it crowds out and precludes the private investment that drives job growth. That is why it is so important that we get spending under control. That is why it is so important that we pass a continuing resolution that will fund the government for the rest of the year, at the lowest possible level we can reach an agreement on, because lower spending is going to drive job growth.

There are several other aspects to this fact that lower spending will lead to greater job growth. Everybody knows that higher government spending eventually leads to higher taxes. We are at this point now where we have this huge shortfall in the revenue relative to the amount of money that is being spent. So any potential investor wonders, how much are taxes going to go up? When will they go up? Are they going to go up on me, or on my investment, or on my labor?

These are the uncertainties we in Washington have introduced into the economy. But everybody who is contemplating an investment has to wrestle with this question. Uncertainty is the enemy of private investment and job growth.

The other possibility is that instead of a tax increase, maybe there will be a debt crisis. We are borrowing money on such a huge scale, it is not at all clear that we can continue that. I guarantee we cannot continue this indefinitely. I don't know how much longer it can continue. That is a very dangerous thing to flirt with--ever higher levels of debt and the expectation that lenders will lend us money when there are such large percentages of our economy.

There is another variable in the mix, and that is the danger that the central bank, the monetary authority, will decide maybe the easiest way out of this mess is to print money.

This is a road that has been gone down many times before in many parts of the world. It always leads to a disaster. Monetizing the debt is the way many governments have chosen to deal with excessive spending. I am very worried now about the policy of the Fed, and QE2 is the policy by which they are currently monetizing more than half of the deficit we are running this year. That is a dangerous policy. Combine that with the beginnings of this fiscal imbalance and imprudent policy, together with this very accommodative monetary policy, and this is a very dangerous mix.

What we can do in the short run, and what we ought to be doing right now, is addressing the spending problem that is at the heart of all of it. It is driving this. In my view, that starts with the continuing resolution that will fund the government for the remainder of this year. We passed one that will fund the government for the next 3 weeks, but I wish it had been for the remainder of the year. We have no time to waste; we have to get this resolved and we have to move on to a budget that brings our spending and revenue into balance, without raising taxes and ruining economic growth.

This should be the big priority for this body. I hope when we get back from this recess, this is what we will be working on--the spending measure to close out this fiscal year, a budget that will put us back on a sustainable path, and progrowth policies that will lead to the job creation we need.

With that, I yield the floor.

Madam President, I rise this afternoon to express my very strong support for Senator Lee's amendment and the underlying constitutional amendment I hope this body will take up at some point soon. I commend Senator Lee for his leadership on this issue, for offering this amendment now.

I feel a tremendous sense of urgency. I do not think we have time to waste, time to wait, time to kick this can down the road anymore. We have done that too long.

The fact is, a balanced budget amendment to our Constitution would provide the kind of fiscal straitjacket this government clearly needs. If we operated the way many States did, if we operated the way all businesses did, if we operated the way families did and we lived within our means, then maybe this would not be necessary. But it has become obvious to anybody that we are not living within our means--not even close.

We are running a budget deficit this year of $1.6 trillion. That is 10 percent of the size of our entire economy--just this year alone. Last year, it was $1.5 trillion. If we do not do something very serious about this now--not soon, not in the next few years but now--if we do not do something about this now, this is already at unsustainable levels.

In 1988, the total debt as a percentage of our economy was about 40 percent. In 2008, the total debt as a percentage of our economy was about 40 percent. Today it is at about 63 percent, and by October it will be 72 percent. These numbers are staggering, and they are not sustainable. It is already costing us jobs because this huge level of debt and the ever-increasing debt from the ongoing deficits raise real doubts in the minds of investors and entrepreneurs and small business owners what kind of financial future is in store for us. The threat of serious inflation, high interest rates, even a financial disruption grows dramatically as we keep piling on this debt. This is not just speculation or theory. We have seen this with other countries that have gone down this road.

The good news is it is not quite too late; we can do this; we can get our spending under control. And I am absolutely convinced we can have tremendous prosperity and a tremendously robust recovery and the job creation we need if we follow some basic fundamental principles that have always led to prosperity wherever they have been tried.

There are several--I will not go through all of them--but one of the fundamental ones is a government that lives within its means. I would define ``means'' as keeping a budget that is balanced. This amendment today, of course, only expresses the will of the Senate that we ought to do this. I strongly hope all our colleagues will join Senator Lee in this very constructive amendment.

I yield the floor.

Mr. President, it is a great privilege and honor for me to be able to represent the big, wonderful, diverse Commonwealth of Pennsylvania in the Senate. Pennsylvania is a wonderful State. It has a terrific range of great attributes. It has big, bustling cities such as Philadelphia and Pittsburgh at opposite ends; has all throughout the Commonwealth beautiful, historical boroughs such as Emmaus and Gettysburg. We go from the banks of the Delaware all the way to the shores of Lake Erie.

In a State this big, of course, we have a wide range of very vital industries. We have old industries that we have had for a long time and are still very important employers: agriculture, coal, steel, and many others. We are a big manufacturing State, manufacturing goods of all kinds. We have a huge service sector, especially in the fields of education, medicine, finance, tourism, and many others. We have some relatively new and very exciting industries in our Commonwealth that I am very hopeful will lead to an acceleration of job growth soon. I am thinking in particular of the natural gas and the Marcellus shale. I am thinking of the life sciences, all across the Commonwealth, especially in greater Philadelphia and greater Pittsburgh as well as in points in between. The medical device sector and pharmaceutical industries are offering some of the most exciting opportunities for economic growth anywhere in the Commonwealth.

So when I think about the diversity and the strength of our Commonwealth, I am convinced that Pennsylvania's best days are ahead of us.

That said, despite all of the underlying strengths and advantages we have, we have an economy that is struggling. We have job creation that is far too slow. As I said repeatedly throughout my campaign for the Senate seat and as I have said since then, I think there are two vital priorities that we need to focus on first and foremost here in Washington. The first is economic growth and the job creation that comes with it, and the second is restoring fiscal discipline to a government that has lost all sense of fiscal discipline. These two, of course, are closely related. We will never have the kind of job growth we need and we deserve until we get our fiscal house in order.

But I look at them as separate issues. I think they should be at the top of our priority list. I am absolutely convinced we can have terrific economic growth, terrific job growth. We can have the prosperity we have been looking for.

In fact, it is actually inevitable if the Federal Government follows the right policies, remembering first and foremost that prosperity comes from the private sector, it does not come from government itself, but that government creates an environment in which the private sector can thrive and create the jobs we so badly need. I would argue that the government does that by doing four things and doing them well.

The first is to make sure we have a legal system that respects property rights, because the clear title and ownership and ability to use private property is the cornerstone of a free enterprise system.

It requires, second, that the government establish sensible regulations that are not excessive, because excessive regulation--and frankly we have seen a lot of excessive regulation recently--too much regulation always has unintended consequences that curb our ability to create the jobs we need.

A third thing a government always needs to do is provide a stable currency, sound money, because debasing one's currency is the way to ruin, not the way to prosperity.

Fourth, governments need to live within their means. They cannot be spending too much money and they cannot have taxes at too high a level.

It is so important that government spending remain limited and, frankly,

much less than we have today, for several reasons. One, of course, government spending is the political allocation of capital rather than the allocation of free people and a free economy. The political allocation is always less efficient than that of men and women engaging in free enterprise.

Secondly, the reason too much spending is problematic is because it ultimately always has to be paid for with higher taxes. Higher taxes clearly impede economic growth and prevent job creation. They do that in many ways, not the least of which is diminishing the incentives to make investments, to take risks, to launch new enterprises, to hire new workers.

I would argue that of these four priorities, the government is not doing such a great job. The failure is most egregious when it comes to the level of spending that has recently developed in this town. The recent surge in spending amounts to about a 25-percent increase in the size of the government virtually overnight.

The government is now spending--this Federal Government alone--fully 25 percent of our entire economic output. Frankly, this huge surge in spending has not worked. The unemployment rate has stayed near to 10 percent, our deficits are now over $1\1/2\ trillion in a single year. That is more than 10 percent of our entire economy.

Of course, when you run annual deficits where you are spending more than you bring in, that shortfall is made up for with new borrowings. So we have been adding to our debt at what I think is an alarming pace. I would argue that this mounting debt is already today costing us job growth. It is costing us jobs because it creates a tremendous uncertainty in our economic future when we are not on a sustainable fiscal path. That uncertainty itself discourages entrepreneurs and job creators from doing the kinds of things we need.

The risks are very real. History is replete with examples of countries that have accumulated too much debt. Frankly, it never ends well. Very often it leads to very high rates of inflation. It can lead to much higher interest rates, which can have a crippling effect on job growth. It can even lead to financial disruptions which can be very harmful, as we have recently seen.

With the recent acceleration in the size of our deficits and the increase in our debts, we are now rapidly closing in on the statutory limit to the amount of money that the Federal Government is permitted to borrow under law. That is an amount of over $14 trillion, but the truth is we are rapidly closing in on that limit. We will get there fairly soon.

The administration has suggested that we ought to, here in Congress, vote to raise that limit with no conditions attached. I have to tell you I think it is a very bad idea. This brings to mind the case of a family that is routinely living beyond their means. They routinely are spending more than their income and making up for the difference by running up to the limit on their credit cards. When this family reaches the limit on all of the credit cards they have, who thinks it is a good idea to give them another credit card?

I think most folks in Pennsylvania think it is probably time to reexamine the spending and look at the real problem that has gotten the family in this situation. I think that is where we are as a government. I think we need to fundamentally reexamine the spending we have been engaged in.

I will say clearly, I think failure to raise the debt limit promptly upon reaching it is not optimal and it would be very disruptive. I hope that does not come to pass. But I happen to think the most irresponsible thing we could do is simply raise this debt limit and run up even more debt without making changes to the problems that got us into this fix.

Specifically what I think we need to do is have real cuts in spending--now, not later, not at some distant hypothetical point in time in the future but now. That is one.

Second, I think we need real reform in the spending process, reform in the way Congress goes about its business, because the process is part of what has gotten us here.

I wish to see a balanced budget amendment, one with real teeth, one that requires our books to be balanced, one that limits the total spending to a reasonable percentage of our economy, and one that makes it harder to raise taxes. I think that would be a very good development. But that will take several years, at best, if we can get that implemented. Of course, all of the States have to agree.

In the meantime, I would hope we could have statutory spending caps, limits to how much the Federal Government can spend, and a mechanism that would redress the problem if for some reason we exceeded those limits.

As we have had this debate over whether we should attach these conditions to raising the debt limit, some have suggested this is a very dangerous discussion to have, because failure to immediately raise the debt limit, some have suggested, amounts to a default on our Treasury securities, on the borrowings we have already incurred.

That is not true. I think it is irresponsible to suggest that. The fact is the ongoing revenue from taxes that will be collected whether or not we immediately raise the debt limit--the ongoing revenue is more than 10 times all the money needed to stay current on our debt service. In fact, in the last 20 years, there have been four occasions when we have reached the debt limit without immediately raising it, and we never defaulted on our debt. This country never will. So I do not think we should have a discussion about something that is not going to happen. But since some in the administration have raised the specter of a default, I have introduced legislation that would clearly take that risk off the table entirely. My bill is called the Full Faith and Credit Act. It simply says, in the event we reach the debt limit without having raised it, it instructs the Treasury to make sure the debt service is the top priority. This guarantees that we would not default on our Treasuries, we would not create a financial crisis of any kind, and maybe, more importantly, it would be a great reassurance to the millions of Americans who have lent this government their money, the millions of Americans who hold Treasury bonds in their IRAs, their 401(k)s, their pension plans.

The retirees who live in Allentown, PA, who have lived modestly, saved money, and with their retirement savings have invested in the U.S. Treasury, I think those folks deserve the peace of mind of knowing that the first priority is going to make sure we honor the obligations and stay current on our debts.

I want to take a moment to thank Senator Vitter, because yesterday he came down to the floor and introduced my legislation as an amendment to the current patent reform bill. I hope we will be able to soon pass my amendment. I hope we will soon get to a vote here on the Senate floor. The real reason is, I want to remove this false specter of a default on our debt, so we can have an honest debate over how we are going to get spending under control--what kind of spending cuts we are going to have right now, and what kind of reforms we are going to make to the process going forward.

I do not think we can kick this can down the road anymore. We have been doing that for a long time. As I said earlier, it never ends well when governments continue taking on too much debt. Nobody here that I know wants to see a government shutdown. Nobody wants to see the disruption that would come from failing to raise the debt limit at some point. But nor can we proceed with business as usual.

All across Pennsylvania I hear every day when I am back home how important it is that this government learn to live within its means as Pennsylvania businesses and families have done.

Let me close by saying I still remain absolutely convinced we can have a terrific economic recovery. We can have a booming economic growth and the tremendous job creation that goes with it. It is overdue, but it can still arrive if we pass the kind of policies that create the right environment.

I am convinced the 21st century will be another great American century and Pennsylvania will be at the forefront.

I yield the floor.

Madam President, I thank my colleague for yielding. I would say that as soon as we can work out the specifics with the staff, that is exactly the intention that Senator Vitter and I came to. So a single vote on the merger of two amendments.

I would take a moment to thank Senator Vitter for his help. Senator Vitter was kind enough to offer the text of my legislation as an amendment to the patent reform bill. What he is adding is suggesting that the legislation should require the Treasury to prioritize not only the debt service so we can avoid under all circumstances a default by the U.S. Government, but also making sure Social Security payments get the priority they deserve.

The fact is, in the unlikely--and I would say certainly unfortunate-- event that we were to reach the debt limit without having raised it, the Federal Government would still take in more than enough revenue to pay all of the interest service on the debt and all Social Security benefits. It is entirely manageable from an operational and functional point of view. Total revenue to the government from taxes alone is on the order of 70 percent of all expected expenditures. Debt service is only about 6 percent.

I appreciate the help of the Senator from Louisiana. By combining this, what we do--if we can pass this legislation, which I hope we will--is take off the table the specter of a default. We can take off the table the specter of any senior citizen not getting their Social Security payment. What we can then do is have an honest discussion about how are we going to reform a process that has gotten us into this fix--gotten us to the point where we are running a deficit of 10 percent of GDP, where our total debt is screaming toward totally unsustainable levels.

I can tell my colleagues, the folks in Pennsylvania know very well we cannot continue living beyond our means as this government has been. I see this as a very constructive, important opportunity to begin to have this discussion about how we are going to get this process under control.

I appreciate the help from Senator Vitter, and I yield.

Madam President, I wish to thank Senator Vitter for yielding his time and for his help on this effort. I want to be very clear. First, I am not aware of anybody in this body or anybody I know who wants to see a government shutdown. I am not aware of anybody who wants to see the disruption that would result from failing to raise the debt ceiling at the appropriate time. But I also feel strongly it is critical we take this opportunity to begin to address the structural problems we have.

The fact is we have a burden of debt right now that is costing us jobs in this country today. The uncertainty it creates, the cost of financing this, the question of whether and for how long we can roll this over, the extent to which inflation becomes a problem, all of these risk factors are already weighing on our economy and our ability to create jobs now. For the future, it is an even bigger risk.

Senator Vitter and I have taken this step so we can have an honest discussion about how we are going to bring this spending under control and the process reforms we are going to make so we can hopefully get off this unsustainable path and get on a sustainable trajectory for the economic growth we need. That is ultimately what this measure is all about. It simply says that in the event we reach the debt limit without having raised it first--and let's face it, we have been there before. This has happened in the past. In the last 20 years, it has happened on several occasions. So it is entirely possible that, despite the best efforts of those of us who want to avoid it, it could happen again.

If it were to happen again, we want to make sure that we have no default on our debt, that interest is paid, and that Social Security checks go to the recipients as they should. There will be plenty of resources from ongoing tax revenue to make sure that happens, and anything less would be very irresponsible.

I urge my colleagues to vote in favor of this amendment.

Damages Language

Mr. President, if I can take the minute to rebut my colleague, first of all, it is true it would be very disruptive and there would be some chaos if we had a shutdown or if we eventually failed to raise the debt limit. This amendment, of course, does not cause that. This amendment, in fact, is designed precisely to prevent the kind of chaos that might otherwise ensue by simply ensuring that under no circumstances whatsoever would the United States Government default on its debt.

I think we all agree that the last thing we should ever tolerate would be a situation in which the United States Government would default on our debt. The chaos that would result from that would be devastating. So this is an amendment that says, in the event the debt limit is not raised when we reach it--and, by the way, we have been there before, so it is not inconceivable--that we would make sure we, under no circumstances, would default on the debt.

Because Senator Vitter offered a modification to this amendment, essentially the merger of these amendments ensures that Social Security payments would also go out. By the way, there is more than sufficient revenue from ongoing taxes to ensure that could be done. So in the interests of avoiding the chaos of an actual default, I think this absolutely should occur.

By the way, I think it is also important to note that a majority of all of the debt issued by this government is held by Americans. They are held by senior citizens who live in Allentown, PA, and who have saved their whole life and invested that savings in U.S. Treasury securities.

I think it is very important that we send the message to them that even if we are not able to get our work done and raise the debt limit, as I hope we will at the appropriate time, we certainly would not default on the debt they hold.

I yield the floor.

Vote on Amendment No. 112

Mr. Speaker, I thank the majority leader for yielding me time.

Mr. Speaker, I rise in strong support of the Marriage Protection Amendment. This amendment is about recognizing a simple, important, and fundamental truth, and that is just that the marriage of one man and one woman is a unique, special and, in fact, an indispensable relationship that deserves the special recognition we have given it for millennia.

We have got many kinds of important relationships in life. We all know those. Siblings, friends, cousins, in-laws, neighbors, there are lots of important relationships. But only one relationship, the marriage of one man and one woman, can provide the optimal environment for raising children. And that is why the family with a married husband and wife at the center has always been the most important building block of society. And that is why we are here today, to ensure that that unique and vital and important relationship be recognized, preserved, and protected.

Let me reaffirm something that the majority leader said earlier. The fact is the definition of marriage is going to be written at the Federal level. The question here today is whether that is going to be done by nine men and women wearing black robes or whether it is going to be done by the American people through their elected Representatives in Congress and the 50 States through a very democratic process. Put me squarely on the side of those who believe that the American people should make this decision.

We in Congress have stood by and watched the courts usurp more and more power from the American people for decades, and I think we have abrogated our responsibility to the American people by tolerating judicial activists for too long. It is finally time to draw the line and let the American people affirm the definition of marriage by passing this amendment.

Mr. Chairman, I thank the chairman for yielding me this time and commend him and the subcommittee chairman for their work on this legislation, as well as my colleagues on the other side of the aisle.

But I wanted to continue this discussion that we have had in committee, that I have had with the gentleman from California about this issue.

See, I do not think that the best argument for having zero as our volatility number is actually a plausible argument, that valuing these options is inherently a very difficult task and assigning the appropriate volatility is very difficult.

I prefer the argument that we should not be expensing these at all. See, I think what some of my colleagues are confusing here is the difference between value and expense. Nobody is disputing that a stock option has value, but what I would dispute very vigorously is that issuing an option is equal to an expense on the part of the company issuing it.

Let us look at what happens. You grant an option to an employee. There is no cash outlay, and in fact, if that option expires worthless, there never will be a cash outlay. And, yet, if this amendment were to be adopted and became law, you would have to show an expense on an income statement in which no expense ever is incurred. And it is not just the options that expire worthless; in most cases, options that expire in the money are not bought out by the company. If they are, then current law requires that that cash event be represented on the income statement as it should be. But in fact, that expiration, most options that expire in the money are dealt with by a company issuing new shares. Again, there is no expense. There is no cash event. It never happens. There is a dilution in earnings, and that needs to be represented.

But what the gentleman is proposing in this amendment is to make a difficult situation worse.

I respect the compromise that is in this bill. If I could write it, I would write it differently, but I think it makes much more sense than what FASB is proposing and much more sense than what this amendment suggests, because this amendment suggests that we knowingly and systematically list an expense on an income statement even when it is not going to be incurred, and we never correct for that. So I would urge my colleagues to vote ``no'' on this amendment.

Mr. Chairman, I thank the gentleman for yielding.

I would just make one brief further point, and that is, I think what accounting is supposed to be all about is providing the most accurate information, and by ``accurate,'' I think we mean information that either immediately or at least in time converges with economic reality. We do not want corporations to be showing income or expenses that never occur. That is common sense, but that is the reality we are dealing with here.

And what this amendment does is it moves us away from that convergence to economic reality, and I think the underlying bill does a better job of capturing that economic reality, which ultimately in the case of stock options, I believe, should be primarily captured by showing the dilution that occurs in the form of new stock that is issued.

Mr. Chairman, let me just suggest to the gentleman from Maryland who raised the question about 1997, there is a big difference between imposing PAYGO on the revenue side in 1997 versus doing so today, and the big difference is doing it in 1997 did not result necessarily in a big tax increase. Doing it today, as the minority party would like to do, would absolutely result in a huge tax increase because of the provisions in the Senate. That is a big difference. A huge tax increase versus not having a huge tax increase is a big difference.

Let me just say, I congratulate our chairman and the members of the committee who got this bill to this point on the floor. It is so important that we find a way to control and limit the growth in spending for a number of reasons, as this bill does, but I think that one of the main reasons is it is just so fundamentally important and incumbent upon us to be adopting policies that allow the American people to maximize economic growth and prosperity, opportunity for themselves, for their wages to grow and their standard of living to improve. That is what we ought to be all about.

Well, the empirical evidence is very clear that one of the greatest threats to that kind of prosperity comes from excessive government intervention in the economy. The government intervenes and threatens economic growth in lots of ways, but the two biggest ways that the government does that is through excessive government spending and excessive taxes.

On the spending side, I think we ought to acknowledge that on the margin, excessive growth spending results in less economic growth. That is what happens. It is because the government essentially misallocates capital.

Let us face it. When we are here in Washington spending money, what we are doing is allocating capital based on political needs. Members of Congress tend to vote to spend money on that which they think will help them get reelected. That does not make us bad people. That is the natural tendency of a represented body. That is what governments do. But what it means, this political self-preservation, what it ends up meaning is that the excess spending of other people's money, by the way, might maximize incumbent retention, but it certainly does not maximize economic growth. And I think that is what we ought to be all about here.

In fact, the tendency is forever more government spending. We see that now we are spending over 20 percent of GDP; whereas, just 3 years ago it was only 18 percent. We have got larger deficits now. The government is growing faster than the economy. All the things point in the same direction. We need some limits on spending growth. That is what this is all about.

Let us keep in mind that the caps that we have on discretionary spending in this bill, the PAYGO provision that we have on mandatory spending, there is no spending cuts. Nothing is cut. Frankly, I would like to cut some spending. I wish there were, but there is not.

And we all know that there is no guarantee that the caps will even hold. If we could get them passed and signed into law, you know, Congress usually has a way of busting the caps, but what they do and the important role that they can play is they help on the margin to provide a break on the rate of growth of spending, and that is what is so important.

I mentioned the other big way in which government intervention harms economic growth, and that is excessive taxes. And there is just no question. The evidence is overwhelming. And the good news is that when we have taken the measures of lowering the tax burden as we did, if we can make those tax cuts permanent, we can continue to enjoy the tremendous economic growth that is underway right now.

So I urge my colleagues to reject the Democratic substitute and support this underlying bill.

Mr. Chairman, I thank the gentleman from Texas for yielding me this time, and I commend him for this amendment.

If we are serious about getting spending under control, we simply have to address the mandatory side. It is as simple as that. In 1963 mandatory spending was 25 percent of the Federal budget. Today it is over 60 percent; and it is on its way up in absolute terms, as a percentage term. It is growing faster than any reasonable measure. And to allow, as this amendment does, for it to grow at the sum of the rate of growth of the population and inflation, allows us to maintain the level of benefits. It just puts a break on the out-of-control spending.

Mr. Chairman, I thank the gentleman for yielding me time.

Mr. Chairman, this is, I think, just a matter of responsible government. This is a very good amendment. It is responsible because the status quo is not. It is not responsible to have the threat of a government shutdown looming over this process. It is not responsible to have the American people wondering whether or not government services are going to be suspended, whether or not important functions are going to be disrupted. That is what is irresponsible.

What is responsible is to say if we are unable to come to a resolution and pass a new appropriation bill, then we will, by an act of Congress, continue under the previously enacted appropriation bill.

Contrary to my good friend and a colleague I respect, the gentleman from Florida, I do not see any constitutional problem with this whatsoever. It still is an exercise in Congressional authority in establishing the level of appropriations, but it happens to do so at the previous year's level. There is nothing in the Constitution that says we have to change the level of spending from one year to the next, so I tend to disagree with that.

The other problem I have with the status quo and the reason that I like this amendment so much is that in the absence of an automatic continuing CR, let us face it, we know what happens. There is a big game of political chicken that happens.

If we do not have an agreement, there is a big tension, a big question about which side is going to get the blame if there is a government shutdown. If one side thinks there is political gain to be had from precipitating a shutdown, it has an incentive to precipitate one, to cause it. That goes back to the issue of responsible government. That is not the way we ought to be running this place. So that is a second thing.

Here is a third reason why I think this makes a lot of sense, and some of my colleagues do not like this reason. But the fact is sometimes we have operated for months on end with a continuing resolution, continuing spending at the previous year's level. And do you know what we discovered? No huge outcry. No great catastrophe. American society did not collapse, it was not the end of the world. We discovered that basically freezing spending at the previous year's level in many areas was no big deal.

Now, if you are interested in more spending, that is a problem. But if you are interested in getting spending under control, this is a very good amendment, and I urge my colleagues to support it.

Mr. Chairman, this is really a simple idea. And I think I am understanding the gentleman from South Carolina to say that he agrees with the concept, the concept being that if you identify a specific item that appears to one of the Members here as wasteful and he prevails in his vote on the floor, that that money should not be spent somewhere else. It is not that complicated. And, God knows, we got a lot of items that fit this description. The last omnibus spending bill we allocated $4 million to study fruit flies in France, $2 million to teach kids to play golf in Florida, and, yes, $50 million to build an indoor tropical rain forest in Iowa.

The gentleman from South Carolina, if I understand correctly, seems to be objecting to the amendment on the grounds that it is difficult to draft this in a way that really works. And I am the first to say it is tricky. But we got a lot of very bright people in this town. If this is not the absolute perfect way to draft it, although it might be, I appreciate my colleague conceding that the gentleman from Wisconsin (Mr. Ryan) has done an excellent job, maybe the best job yet on this, I would say let us support the amendment and let us work on refining it and improving it and let us dedicate both sides' staffs to figuring out how to get this done.

But the concept of saying if a certain amount of spending is going to be withheld on this floor, that that money is not available to be spent anywhere else, that is not that hard. I am convinced we can do it.

So I would urge my colleagues to reconsider and to support this amendment and work together to find the language that achieves the objective that apparently we all agree with.

Mr. Chairman, we have talked about a number of individual items that we have found questionable in past omnibus bills, including, in particular, a tropical rain forest that, by the way, was not in the district of the Committee on the Budget chairman.

One of the points that I want to make about the beauties of this particular amendment is that often, this is going to be shocking to people listening to this debate, but often we have an appropriation bill, especially when it is an omnibus appropriation bill, that can be thousands and thousands of pages long, and who knows how many tens of thousands of lines in this. And sometimes we have had all of several hours to go through every single line in these thousands and thousands of pages. The stack is usually here somewhere, set up here. If one can get here and they are the first person there, then they can get it and they can look through and they can discover the $4 million for fruit flies in France or whatever else it might be. And they could raise their objection and deal with that. But sometimes you might not get the opportunity to go through this whole thing. In fact, as a practical matter, none of us do. We discover later on what all has been inserted in this bill.

What this mechanism does is it provides an opportunity after the bill, and many of us do not want to vote against veterans funding or important programs that are also in these bills, ends up passing; but what this amendment does, it gives the President an opportunity to say, okay, hold on a second here, we got a little out of hand, let us take the following handful of items and let us rethink that on an up-or-down vote just these items.

This is just common sense, responsible budgeting and appropriating. So I would urge my colleagues to support this amendment.

Mr. Chairman, I thank the chairman for the time, and I would like to stress there are two big problems with this approach and reasons that I oppose this amendment.

First of all, with respect to the discretionary spending caps, I commend the gentleman from South Carolina for extending them longer than we have in our bill. I think it is a constructive idea. Unfortunately, he starts off with caps at higher levels so we end up spending considerably more money, not only in the first couple of years, but thereafter as well, and so I have to strongly disagree with that approach on the discretionary spending caps side.

I also want to talk about the change that the gentleman from South Carolina proposes with regards to the PAYGO provisions and specifically the idea that we ought to apply this PAYGO provision to the tax cuts, as well as to the mandatory spending increases, which is what we have in the majority bill.

Now, obviously the superficial appeal of this idea is that both an increase in mandatory spending or a decrease in taxes appear to have the same directional effect on the size of the deficit in the short run. With respect to the government's budget, that is, of course, true, but there is something I think much more important here. The fact is that increasing spending and cutting taxes are not equivalent to the American people because the former, increasing mandatory spending, which we try to control, that slows down economic growth, and it reduces personal freedom, but the latter, cutting taxes, that accelerates economic growth and it expands personal freedom. The difference is just night and day.

In addition to that, the former, which is to say increasing mandatory spending, which we control in our bill, in the absence of that constraint which we impose, then we definitely increase the size of the structural deficit. That is clearly a problem that we are trying to rein in.

On the other hand, as we have seen time and time again, when you lower the tax burden, essentially you do it right by lowering marginal tax rates. You, in fact, improve the deficit picture over the long run as accelerating economic growth and enhancing revenue.

So I would urge my colleagues to reject this amendment and support the underlying bill.

Mr. Chairman, I move to strike the requisite number of words.

Mr. Chairman, I would just rise in opposition to this amendment. I want to preface that by making it very clear that those of us who oppose this, most of us are big fans of the arts, big fans. I am a fan of all kinds of arts, visual performance; and I fully recognize and I think most Members, probably everybody in this House, recognizes the vitally important role that the arts play as an expression of understanding a perception, a point of view of who we are and what humanity is about, the unique insights into the human experience that only the arts can provide; and I do not think any of us dispute the vitally important role that the arts play.

I think the big question is who should pay for it. I think that is what we really are going to be debating here, and the question specifically becomes should it be paid for by taxpayers who are forced to pay for it through government taking their money from them and spending it on the arts or should it be paid for by the people who benefit most directly from it, people who enjoy the arts, people who are supporters themselves of the arts. In fact, the vast majority of the arts in America of all kinds, as we all know, the vast overwhelming majority are, in fact, paid for and supported by the people who most directly benefit from it and by philanthropists, by wealthy individuals who have the means and the inclination to support these arts, and I fully commend them for doing that.

So the reason for my objection is no reservations about the arts per se; it is about whether or not we ought to compel taxpayers to foot this bill.

We are running over a $400 billion deficit this year. That is because for many recent years, spending in this town has been out of control. We are told, in some cases by many of the same people who support this amendment, we are told that we cannot afford tax cuts. The tax cuts that we have engaged in, which frankly have generated a tremendous economic expansion which is underway, we are told we cannot afford them. By that they really mean government cannot afford them. As a matter of fact, we are told we cannot even afford to make the existing tax law permanent. That would be a bad thing, according to many of the Members who support this amendment. Instead we ought to have the tax rates jump back up.

Well, I think if we cannot afford to try to reduce the burden on the American taxpayer because the deficit is too large, then we cannot afford to be funding this kind of amendment either. I know they will say, wait a minute, this money is being transferred. It is from the administration of other areas to this program. It is not net new money. But if there is money that is not needed for the administration of these other programs, and it is available to be taken from them and added to funding for NEA and the National Endowment for the Humanities, if that money is available, it should simply be cut from those budgets so we can reduce the size of our budget deficit and get to the point where hopefully some of my colleagues on this side will agree that we can, in fact, and should, in fact, make the existing tax law permanent and get on with further reducing the tax burden for the American people.

For these reasons and despite my great appreciation for the arts themselves, I would urge a ``no'' vote on this amendment.