Floor Statements

Madam President, I see the chairman of the Banking Committee. If I have preempted him, I will be happy to delay my remarks.

Madam President, I was a member of the conference that dealt with the bill that is now before the Senate, and I wish to make a few remarks in favor of the conference report.

Iran poses an interesting threat to the United States and to our allies in the Middle East. The Iranian regime is arguably the most anti-American regime in the world. There may be some who would put forth North Korea or some other countries, and I won't debate with them where on the list they would be, but Iran is very much at the top of the list of regimes that hate America. Ironically, every indication is that the Iranian people do not support the position of their government and that the Iranian people, if they had a legitimate government; that is, one that was chosen by a legitimate election, would be strongly pro-America. So we have this very challenging dichotomy here of a regime that is bent on mischief or worse throughout the region, and a very clear hatred for America, presiding over a population that is strongly in favor of America.

I make that point because many people will say: Well, it is the people of Iran who will be punished if this sanctions bill goes forward.

I say it is the people of Iran who are desiring relief from their own government, and anything we can do to punish that government, make the situation more untenable, and ultimately help bring it down will be for the benefit of the people of Iran. So I am standing here as an advocate in favor of the Iranian population even as I have harsh things to say about the Iranian Government.

There are those who say: Well, the Iranians have every right to a nuclear capability. They are a sovereign nation. They have the right to build a nuclear plant within their borders so they can have the benefits of nuclear power. And you, Senator Bennett, are a supporter of nuclear energy, so why do you oppose the Iranian effort with respect to their nuclear program?

I do not oppose a program that would move toward peaceful exploitation of nuclear power. Indeed, I would welcome it and support it. In the world today, it is certainly possible, and, indeed, many countries do have nuclear capability without creating the capacity to produce a nuclear weapon. The two are not necessarily simultaneous and coterminous. A nuclear capacity to provide electricity, to provide power for the populous as a whole, is a good thing, a benign thing, and something I support.

The Iranians oppose any kind of effort to put limits on their plan, on their program. They say: We are doing this just for domestic power purposes. But they refuse to take the kinds of steps other nations have taken that will allow them to have all of the benefits of a domestic nuclear plant and none of the challenges that go with the creation of a nuclear weapon.

There was a time--the Cold War and shortly after the Second World War--when nuclear weapons were seen as a very viable part of the military arsenal. We have such an arsenal. The Soviet Union did. Some of our allies joined us, and nuclear weapons were seen in the classic power struggle between nation states. Today, however, the situation has changed, and a nuclear weapon is seen primarily as a blackmailing device for one nation to threaten another nation in a circumstance different from the kind of confrontation we had with the Soviet Union. If Iran got a nuclear weapon, they would use it as a destabilizing instrument throughout the Middle East, which is already one of the least stable portions of the world, and other countries all around Iran would say: Well, if they are going to have a nuclear weapon for blackmail purposes within foreign policy discussions, we will have to have one too. And if Iran is allowed to get a nuclear weapon, the proliferation of nuclear weapons in the region will be enormous.

As long as they just use it as a blackmail weapon and talk about it, one could say it is really not that big of a deal. Inevitably, the creation of such weapons, the proliferation of such weapons in an area as unstable as the Middle East runs a very high risk that one of those weapons will be used. Then we will see the opening of a nuclear holocaust the likes of which we have not seen before. The last time a nuclear weapon was used was when we were in the midst of a horrendous war where the projections were that if we stayed in a conventional pattern and invaded Japan in a conventional way, the casualties would be overwhelming on both sides. And by using a nuclear weapon to bring the Second World War to an end, we tragically cost tens of thousands of lives in Hiroshima and Nagasaki, but we saved millions of lives on the beaches and in the streets of Tokyo and in the other places that would have been lost if the war had continued with conventional weapons.

We cannot do anything that would encourage Iran with respect to its nuclear program, and that is why this act is so important.

People will say: Well, it is economic sanctions, it is financial sanctions, things of that kind. Yes, it is all of those things, but it is aimed primarily at and focused entirely on Iran's efforts with respect to the creation of a nuclear weapon.

Iran could get out from under these sanctions immediately if they would say: We will follow the pattern of other peaceful nations and pursue a nuclear domestic program for energy purposes in such a way that it will not lead to the creation of a capability for nuclear weapons. I stress again the division between the two: You can have nuclear power for energy and electricity without producing the kinds of things that are necessary to produce a nuclear weapon. Iran could go down that road if they choose to, and if the Iranian regime were to make that very wise decision--wise for themselves and their own ability to remain at the head of a country whose population hates them; wise for the region; wise for the world as a whole--I would be one of the first to stand and say that this bill of sanctions for Iran should be withdrawn. The initiative rests with them, not with us, as to what will happen in the Middle East.

All right. Some specifics about the legislation. If it is implemented, it would dramatically raise the price Iran will have to pay for their activities because it will increase the scope of sanctions already authorized under the Iranian sanctions act by imposing sanctions on foreign companies that sell Iran goods, services, or know-how that would assist in its nuclear sector. It includes a provision with respect to refined petroleum being exported to Iran.

It is interesting that Iran is one of the major sources of crude oil, but they do not have refined petroleum available to them in the quantities they need within their own shores.

So they import it and this sanctions act will seriously hamper the importation of refined products. The legislation mandates that in order to do business with the U.S. Government, a company must certify that it--or its subsidiaries--does not engage in sanctionable activities with respect to Iran.

Financial. The conference report imposes severe restrictions on foreign financial institutions that are doing business with key Iranian banks, and it bans U.S. banks from engaging in financial transactions with foreign banks doing business with the IRGC, the Islamic Revolutionary Guard Corps.

In effect, the act says to foreign banks doing business with the blacklisted Iranian entity that you have a stark choice: Cease your activities, or be denied access to the American financial system.

There are other provisions, which I will not take the time to outline. I close by making it clear, once again, that this is not a knee-jerk reaction on the part of Americans in a fit of pique with respect to the Iranians because the Iranian President says stupid things in international fora. This is a deadly serious attempt to see to it that a significant threat in the region does not go forward. In the end, this is an attempt to help free the Iranian people from the tyranny of one of the most repressive and difficult governments that any country is forced to abide by in the world.

I yield the floor.

Mr. President, I thank my colleague from South Dakota for the comments he has made and appreciate the time he put into this effort.

We are talking about jobs. That is the issue. The House bill, H.R. 4853, has to do with taxes that would supposedly increase the number of jobs. In that atmosphere, I wish to revisit the Main Street Revitalization Act of 2010 which I offered some time ago, which has to do with small business and tax activities with respect to small businesses.

Let me remind the Senate that small businesses are the economic engine of our economy. Historically, small businesses have been responsible for all of the net new job creation in the United States. At times when large businesses downsize, small businesses grow. Many times, small businesses are created by people who have lost their jobs with the large business and, in an effort to find someplace to find work, they create businesses of their own. I have had that experience. I have lost my job and said, somewhat facetiously but with more accuracy, I had to start my own business because nobody else would hire me. Many of the businesses I started or was involved with failed, but enough of them succeeded that we were able to create jobs, not only for me but for all of the other people who were involved with me.

When I was the CEO of a business that started out with four--I was the fifth employee hired--we took it ultimately to the New York Stock Exchange and hired 4,000 people. This was a demonstration of what could happen with small businesses. With that business I was able to overcome all of the financial losses that occurred in the businesses I started that didn't work.

As I pointed out before, we did that during what the New York Times has called the decade of greed, because that was the period when Ronald Reagan was President and the top marginal tax

rate was 28 percent. I understand the impact of a tax rate at 28 percent because we financed that business with internally generated funds. Yes, we had a line at the bank but we didn't sell stock--because I am not sure anybody would have bought it. We got to keep 72 cents out of every dollar we earned during the decade of greed. That is what allowed us to go from 4 jobs to 4,000 jobs over about that 10-year period.

Today the top marginal rate, when you add the additions that have been made with respect to the Medicare taxes, is over 40 percent, a very significant increase from the 28 percent we had during the time the New York Times was so scandalized by the fact that small businesses were not taxed enough. I can tell you they are not only taxed enough now, they are taxed too much. This recession has hit small businesses particularly hard.

One of the problems dealing with the challenge of creating a small business as you try to get capital is not just the higher tax rate but a lack of certainty in the capital marketplace. Unfortunately, this lack of certainty has been exacerbated by some of the activities of this administration.

My bill, the Main Street Revitalization Act, tries to address these issues and make a circumstance where a business can have a degree of certainty with respect to their tax position and an opportunity to grow the business in an atmosphere that will move a little closer to that atmosphere with which I was so familiar during the Reagan years. There are three targeted tax breaks in my bill that I wish to talk about in detail.

The first one provides a 10-year net operating loss carryback provision for qualifying businesses whose average gross incomes are $5 million or less. One of the things you learn when you start a small business is that the only thing slightly better, but still bad, for a small business is earning a profit. The worst thing, of course, is a loss. But as soon as you earn a profit the tax man shows up and says ``I want mine.'' I want my 28 percent, if you are in the Reagan years. I want my 42 percent now in the Obama years.

But I haven't got the cash, you say, if you are running a small business. I can't pay the taxes. That money I have shown on a profit and loss statement is tied up in inventory and accounts receivable.

No, says the tax man, I want it now and I want it in cash.

If you have a net operating loss carryback, you can say let me go back and take those years in which we were not earning a profit and apply them, average them in with this time when we have started to earn a profit and thereby avoid paying that tax at this crucial time when I need the cash to grow the business. That is the first thing. We provide a 10-year net operating loss carryback provision for qualifying businesses. It is only, as I say, for businesses with average gross income less than $5 million--genuinely a small business.

No. 2, the bill expands the definition of section 179 expensing to include structural changes to the physical property and it makes the current $250,000 deduction limit permanent. Again, you are starting the business. You have earned some money. You have had to put that money into a physical improvement on your property. But the tax man says I want it in cash. You can't do it, you can't make the business grow without investing it in your property. We expand the definition of this expensing so that you get a tax advantage there.

No. 3, there is, under current law, a startup cost deduction of $5,000. That is fine but it is not enough in today's world to make a difference for a business to survive. My bill would increase the current startup cost deduction from $5,000 to $20,000. This would encourage entrepreneurs to invest now rather than wait for the economy to improve. This says we will exempt this amount up to $20,000. It will produce a significant increase in the number of small businesses.

Nationally there are 5 million to 6 million small businesses that would qualify and benefit from this bill. In Utah we have done the examination. It would be about 70,000 small businesses. If the 70,000 small businesses that would benefit from this would each hire one additional person, that is 70,000 more jobs in the State of Utah. If they were to hire two additional persons, that would be 140,000 new jobs, which is more than the national increase in hiring that occurred last month. It is not a big deal, one employee per business, if we adopt this bill. It would be a very big deal for the impact on the economy as a whole.

Because it is for only businesses with revenues of $5 million or less, we can be sure this is not going to be something that big business is going to take advantage of. We can be sure that all of the concern about bailout of large corporations--it does not apply; my bill would not make any impact at all on that end of the economy.

I have a small business owner in Utah who wrote me a letter with respect to all of his challenges. Let me share with you some of the points he made in his letter that I think apply. He said:

I own a small business here in Utah . . . that had employed

20 people and now I am down to 4 people, as I cannot get

financing.

I have put close to $2 million into technology development

and we are ready to launch, but we have run out of funds and

can't find investor groups . . . willing to take a risk.

I would hire 25 to 30 new people if I could receive the

funding that I need to launch my product. Banks won't lend,

people are holding onto cash . . . and I don't want to

violate the SEC rules so raising funds is difficult.

I had hoped the government would have made Stimulus funds

easier to receive by those businesses that could make a

difference in the lives of so many looking for employment.

I have a lot of potential business . . . but may need to

shut the business down and layoff the rest of the workers,

due to lack of funding.

I believe the tax provisions that are in my bill would make it possible, or easier at least, for this particular small businessman to find the funding he needs and to hire those additional people he talks about. His business plan is sound but his financial circumstance is very difficult.

What this letter tells me, and my own observation elsewhere, is that the stimulus that was supposed to save our economy has not gotten down to small business one bit. This is exactly why I opposed the stimulus bill in the first place. Most of it has been spent in public arenas and has not hit the small business world. The Main Street Revitalization Act will help enable this company to quickly and efficiently access the capital they need to keep the business running, create new jobs, and eventually help them grow and expand.

Unanimous Consent Request--H.R. 4853

With that background in mind, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 4853, that all after the enacting clause be stricken and the text of S. 3083 be inserted; that the bill as amended be read a third time and passed, the motion to reconsider be laid upon the table.

Mr. President, I thank the Senator from Michigan for her spirit of cooperation. I am sorry she is required to object. I must confess, I am not particularly surprised. But I appreciate the opportunity to have this discussion and deal with this challenge. If I may close my presentation with, once again, making a comparison between what happened in the 1980s when we created the business that I described and what we are dealing with now.

I remember, in a business prior to the one I just talked about that I was running, during the Carter administration, I went to the bank begging--that is the operative word--begging for a loan, without which we could not meet payroll. I was overjoyed when the banker finally agreed to give us a loan at 21 percent interest.

That was the circumstance through which we were living in those times. We talk about the Great Depression of the 1930s. I remember, very vividly, the great inflation of the 1970s--21 percent interest so that I could meet payroll. That business, to use Abraham Lincoln's words for his store in New Salem, IL, winked out. We did repay the bank loan, but we could not keep the doors open. It was just a few years later that we started the other business during the Reagan administration when the tax circumstances had been changed dramatically.

The Reagan administration inherited the results of the great inflation from the Carter administration, much as the Obama administration has inherited the results of the great housing bubble from the days of the Bush administration. I will not make any attempt to put blame on a partisan basis, but those were the time lines. It was the Carter administration that was there during the time of great inflation; it was the Bush administration that was there when the housing bubble burst. So each President had a dilemma thrust upon it.

Ronald Reagan approached his economic challenge with tax cuts, and it produced the kind of job creation and ultimate economic growth that we are talking about. Reagan was very unpopular in the election that followed his election for President, and his party lost a considerable number of seats in that period. But 2 years later, the economy was roaring forward on such a strong basis, as a result of the Reagan tax cuts, that he was reelected in a landslide.

President Obama chose a different economic theory from that which Ronald Reagan embraced. President Obama followed the advice of the Keynesians and instead of trying to have tax policy that would stimulate the economy, he went to a spending policy to stimulate the economy.

The political pundits are saying President Obama will see losses in November the same way President Reagan did in the off-term election following his Presidential inauguration. My fear is that we will not see the recovery following that because of the Keynesian economics embraced by President Obama. My fear is this recovery will continue to be sluggish, and the unemployment rate will stay very close to double digits.

There are a lot of people who dismissed Ronald Reagan as something of an uneducated, almost simple-minded individual. I would point out Ronald Reagan was the only President we have ever had whose college degree, from his days in Illinois, was in classical economics, pre- Keynesian economics, back in the days when a college degree from any kind of college was something of a rarity. He brought that concept of classical economics into the Presidency and saw a reversal and an end of the great inflation and set off a period of great prosperity for a long time and is considered one of the pivotal Presidents of the last century.

I disagree with the economic policies of this President. I hope I am wrong and that the recession we are now in ends with the same kind of success story that Ronald Reagan had. But I am afraid I am right and we will see this recession drag on for a longer period of time.

With that little bit of nostalgia, I thank the Senators for their indulgence.

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

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

Mr. President, I rise to discuss the issue that is before the body and before the country right now with respect to control and regulation of the financial services industry. The President of the United States has given a number of speeches on this one. I understand the latest one was today, in which he attacked Republicans for listening to the big banks of Wall Street in our concern about the details of the bill that has been offered out of the Banking Committee by Chairman Dodd.

I am a member of the Banking Committee. I voted against the bill in the Banking Committee. It came out on a straight party-line vote. For that I am being castigated by the President and others for being a tool of Wall Street and the big banks.

I want to make it very clear that my opposition to parts of this bill have nothing whatsoever to do with Wall Street and the big banks. I have not been to Wall Street to discuss this with any executives of any of the big banks. I have been in Utah, and I have been discussing this with businesses in Utah, businesses that you normally would not think would have any interest whatsoever in regulation of financial services.

We think of financial services as insurance companies and brokerage houses and banks. What I have discovered, hearing from my constituents, is that the people who are the most worried about this are small business men and women who have nothing to do

with banking but who do have a program in their business to extend some degree of consumer credit.

I will give an example: a furniture store that sells furniture and advertises you buy the furniture now and payment is delayed for 90 days as a come-on to get people to come in. Mr. President, you have seen those ads in the paper in Washington. I have seen those ads. It is the kind of thing that goes on.

Businesses extend credit in one way or another. It is not the core of their business, it is just a way of trying to attract customers. Suddenly they discover, if this bill passes, they will be under the control of the Consumer Protection Agency that is being created for this, and Federal officers will have the right to show up on their premises and say: This is not a proper handling of this credit. We are going to treat you as if you were Citicorp or Goldman Sachs or whatever. We are going to come down with the heavy hand of the Federal Government to tell you how you can do your business and fine you or produce other kinds of barriers to your doing business.

The fellow says: Look, I just want to sell a sofa, and I just want to be able to sell it on credit to somebody who wants to buy it on credit. What is wrong with that?

No, under the terms of this bill, the Consumer Protection Agency of the Federal Government will be looking down your throat.

As I move around the State, I have one small business man or woman after another come up to me and say: What in the world are you people in Washington thinking about, the kinds of regulations you are going to put on me and my business? Some of them are saying they are afraid they are going to have to close their doors rather than deal with this significant challenge.

We are, in this bill, overreacting to the seriousness of the crisis that has put us in this recession. I have a friend who has been a Washington observer for many years, and he says whenever faced with a crisis, Congress always does one of two things: nothing or overreacts. This is a classic example of overreacting.

By creating a Consumer Protection Agency with the sole focus to protect the consumer, we run the risk of doing the kind of damage I have described to small business. I say to people, if safety is the only criterion by which you are going to judge an institution, the safest institution in which no one will lose any money is the one whose doors are closed, the one that offers no risk anywhere because all business is a risk. If you are going to say, no, you are going to protect the consumers absolutely, the way to protect the consumers absolutely so that they will never lose a dime is not allow them to make a purchase, not allow them to ever get a loan, not allow them to ever receive any credit.

If this bill passes in the form it came out of the House Banking Committee, that will be the impact of this bill. Across the board it will be to reduce credit, it will be to reduce opportunity, it will be to damage small businesses.

Again, I have not talked to the people on Wall Street. I have talked to the people on Center Street--I would say Main Street because every town in America has a Main Street, but in Utah, in addition to Main Street, we have Center Street in many of these small towns. That shows how close to the issue the people in Utah are.

There is another issue I feel strongly about, and that is the definition of ``too big to fail.'' This creates and solidifies the notion that some people, some institutions are too big to fail. I believe one of the lessons we have learned out of the crisis we went through starting in September of 2008 is that nobody should be deemed too big to fail; and, indeed, we should create a circumstance where the bankruptcy courts handle things and there is no Federal bailout in the fashion of saying: You are too big to fail and the government will protect you from failing.

I remember years ago when we had the first bailout with Chrysler at the time. Lee Iacocca made his reputation bringing Chrysler out of the bailout and repaying the government with interest. People point to that and say: The government kept Chrysler from going under. The money was repaid. It was just a loan guarantee. The government didn't lose any money.

I remember one observer, when asked about it, said: I am not worried about whether the bailout will save Chrysler. What I am worried about long term is that it will work.

There were people saying: What happens if it fails?

He said: I am not worried about it if it fails. I am worried about it if it works and the Federal Government gets the appetite to step in, in example after example, and always point to the Chrysler bailout and say: Well, we made money on that, so we can do it again.

By creating that kind of moral hazard of stating these institutions are too big to fail, we run the risk of seeing a repetition rather than avoidance of the crisis we had that created all of the difficulties in our economy today.

So, on the one hand, I speak for the small businessman and the small businesswoman who say this bill will be a disaster for them. On the other side, I say let's not create, in the name of protecting the customer, a circumstance where institutions are deemed as too big to fail and can be guaranteed, once again, a degree of government backing that the marketplace would not give them. I trust the marketplace. We have learned to do that as we go through the wreckage of what happened in the housing crisis.

I think we need to be very careful with this bill. Do we need financial reform? Yes, we do. Would I vote for a sensible bill? Yes, I would. Am I a supporter of the status quo? No, I am not. But I do not believe the bill that came out of the Banking Committee is an improvement.

I yield the floor.

I call up my amendment No. 3568.

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

Mr. President, with eight other cosponsors, we have offered a bill that would allow the people of the District of Columbia to exercise the same right that has been exercised by 31 States with respect to the issue of whether there would be gay marriage in their jurisdiction.

This bill does not take any position with respect to gay marriage, simply allows the District to hold a referendum. The Home Rule Charter, which is a constitution for the District, guarantees the people the right to challenge acts passed by the District Council by referendum, and the District Council has repeatedly ignored that right. It is in an effort to restore that that we offer this amendment.

Pursuant to section 904 of the Congressional Budget Act of 1974 and section 4(g)(3) of the statutory Pay-as-you-go Act of 2010, I move to waive all applicable sections of those acts and applicable budget resolutions for purposes of my amendment and ask for the yeas and nays.

Mr. President, I was saddened to learn that Kent M. Ronhovde of the Congressional Research Service died on February 19. Mr. Ronhovde devoted a 36-year career at CRS to serving both sides of the aisle and both sides of the Capitol, Senate and the House.

Mr. Ronhovde was a senior leader and an adviser to Director Daniel P. Mulhollan. For the last 7 years as Associate Director of the Office of Congressional Affairs and Counselor to the Director, he brought astute judgment and keen insight into some of the most sensitive issues facing the Service.

CRS provides members of Congress authoritative, objective and nonpartisan analysis. All of us appreciate CRS experts' solid advice untainted by advocacy, hidden agendas or personal biases. Kent Ronhovde was instrumental in preserving those core values of CRS.

Mr. Ronhovde was the primary liaison between CRS and its Senate and House oversight committees. He managed the CRS Review Office in which all CRS written work is judged for conformance with CRS policies.

Mr. Ronhovde was a native Washingtonian who received his JD at Georgetown University Law Center and served in Vietnam. He subsequently earned a master's in public administration while at CRS. CRS hired him in 1974 as an attorney and he rose progressively through the American Law Division and CRS senior management.

Some of us here today may remember Mr. Ronhovde's excellent work as a legislative attorney in the American Law Division in the 1970s and 80s. He served senators, committees and their staffs in such areas as criminal law, intelligence activities, gun control and terrorism. He wrote extensively on legal issues raised in connection with the reports of the Senate Select Committee to Study Government Operations with Respect to Intelligence Activities--Church Committee--and of the House Select Committee on Assassinations.

His distinguished performance led to his selection as section head in 1985 and assistant chief of the division in 1986. As assistant chief, he managed the Federal Law Update, a twice-yearly series of seminars on important issues of law and policy related to the legislative business of Congress. In 1996, he was promoted to a senior management position in CRS and in 2003 assumed the duties of associate director and counselor to the Director. Throughout this illustrious career, Mr. Ronhovde guarded and exemplified CRS's core values: authoritativeness, confidentiality and objectivity. He honored and respected CRS's role in serving the Congress and he ensured the role was undertaken judiciously and wisely. His astute counsel, sound judgment and devotion to the institutions of CRS and Congress will be sorely missed.

Mr. President, I extend my sincerest condolences to Mr. Ronhovde's wife Juliet, daughters Kristen and Brooke, their families, and to all his many friends and colleagues at CRS.

Mr. President, I yield the floor.

Mr. President, as I move around the State of Utah to talk to my constituents, I find, with all of the other specifics they are concerned about, the one thing just about everybody is concerned about is our long-term fiscal situation. They are worried about debt. They are worried about the deficit in this year that is adding to the debt. They say to me: What can we do about it? They listen to the pundits who talk on the air about this particular project or that particular project that sounds outrageous. Many times the projects are, in fact, legitimate, but they make good copy.

I say, if you add up all of these projects together--the good ones and the bad ones--and eliminated them all, you would reduce the Federal deficit by less than 1 percent. Let's talk about where the money lies. Let's talk about where the challenge is. So I present to my constituents a series of charts that I will present here that outline where the challenge is.

One of the things that becomes clear, as we go into this debate, is it is not just our financial situation that is in trouble. The pressures created by our debt are crossing over into the area of national security. We cannot maintain our military or our diplomatic initiatives with the kinds of pressures continually increasing.

So a little bit of history, which I share with my constituents and that I share here as the background for the bill I am introducing today.

This is a very simple pie chart that shows the components of Federal spending back in 1966. I ask my constituents: Why do I pick 1966 as the year to start? Some of them know the answer; some of them do not. But in 1966, mandatory spending constituted 26 percent of the budget, and interest on the national debt another 7 percent. You have to pay the interest on the bonds, so that is mandatory spending as well. So the government is committed for a third of the budget before the Congress ever gets around to appropriating any money.

In 1966, the biggest portion of mandatory spending was Social Security. The combination of Social Security and other mandatory programs, and the interest cost, was one-third of the budget. The other two-thirds was available to the Congress. Of that spending, defense spending was 44 percent of the total. Defense spending, obviously, dominated nondefense discretionary spending.

Where are we today? What has happened in the years since 1966 and today? Here are the components of Federal spending in fiscal 2008. I picked that year, before the tsunami hit us--the financial tsunami that caused the meltdown and all of the problems--as

perhaps a demonstration of what is happening structurally within the budget, not affected by any particular emergency.

Mandatory spending has now grown to 54 percent. Interest costs are from 7 to 8 percent. So the two of them constitute roughly two-thirds of the budget. From 1966 to 2008, mandatory spending now is twice as big in its proportion of the budget than it used to be. Defense spending has shrunk to a half of what it was back in the 1960s, and nondefense discretionary spending is about the same.

All right. Now back to the question: Why did I pick 1966 as the year to start with? Because that is the year the Federal Government got into the medical business and enacted Medicare. Since then, we have added Medicaid. So today, when you talk about mandatory spending, Social Security is no longer the dominant factor. It is a combination of Social Security, Medicare, and Medicaid.

I will leave aside the issue of the value of those programs. I am just talking about the money we are spending here. Today, as we argue over congressional spending, we only have a third of the budget to talk about, and half of that, roughly, is defense spending.

Let's go to fiscal year 2009. Mandatory spending has grown to 59 percent. The interest cost is 5 percent. Defense will have shrunk, nondefense will have shrunk. The reason the interest costs are shrinking is because we are borrowing money at a lower rate by virtue of the things that have happened with the financial tsunami.

But now let's go out 10 years to 2020 and see where we will be. In 10 years, mandatory spending will have grown to 58 percent. The interest costs will have grown to 13 percent, and defense and nondefense together will constitute only 30 percent. If defense is shrunk to 15 percent of the budget, it begins to bite very seriously into America's role in national security around the world.

One author I have looked at who has talked about America's role in the world in a very thoughtful way looks ahead to this, and he says the greatest threat to America's position in the world is not China, it is not India, it is not North Korea. It is Medicare. The greatest threat to America's ability to sustain itself and its national security is coming from the growth of mandatory spending.

If we spend all of our time arguing over those tiny things that make good copy in newspapers and on television and do not address this inexorable growth, we will discover that the Congress has become irrelevant. Three-fourths of the budget of Congress will already be spent before the Congress even meets, and only one-fourth will be left for us to talk about, and that one-fourth will have to include our spending for national security, and you will see how everything else will get squeezed out.

I had that hit me directly as we had the debate last year on the budget resolution for fiscal year 2010. Standing at this very place, I looked down at the bill that was presented and sitting here on a podium, and it projected Federal revenues for fiscal year 2010 at $2.2 trillion--down because of the challenges we had with the economic meltdown. Then on the next page it said: mandatory spending, $2.2 trillion. That meant everything we do in government in fiscal year 2010, other than mandatory spending--the Defense Department, the war in Afghanistan, the FAA which controls the airplanes, the national parks, our embassies overseas, the FBI, all of our law enforcement, the border security--everything, every single dime we spend in government, other than mandatory spending, in fiscal year 2010 had to be borrowed. We did not have a single dime of tax revenue available to pay for anything in government because it was all taken up in mandatory spending.

All right. What does this do to us long term as a nation?

People keep talking about the national debt and how it is growing and growing and growing. Actually, the national debt has not been growing and growing and growing over the years. Here is a chart that shows the national debt measured in the way it should be measured, as a percentage of the gross domestic product, the size of the national debt with respect to the size of the economy.

To illustrate why this is the way to do it--I have often used this example on the Senate floor--I ran a company before I came here. When I became the CEO of that company it was very small. It had a debt of $75,000. When I stepped down to retire prior to running for the Senate, the debt was $7.5 million. One might say: Well, Bob Bennett, you are not a very good manager if you ran the debt up from $75,000 to $7.5 million. Then you look at the debt the way you should look at it.

At the time I became the CEO of that company, they were doing under $300,000 a year in total revenue. They had no margin at all. Every dime they took in, in revenue, was eaten up with costs, and they could not make the payments on the $75,000 debt. The $75,000 debt threatened the survival of the company. When we had a $7.5 million debt, the company was doing over $80 million in business, and we had a 15-percent margin on sales. We were earning more per year than the whole debt we had, and the only reason we didn't pay it off is because we had some prepayment penalties built into the mortgages we had established. So I wasn't such a bad steward after all, if you make the measure totally on the basis of the size of the debt. I was a good steward if you make it on the measure of the debt in relationship to the size of the enterprise.

That is what this chart shows: the national debt as a percentage of the size of the enterprise, to use business terms; in this case, the size of the economy.

We see that just after the Second World War our national debt was well over 100 percent of GDP, and in the two decades after the Second World War, we come from 1945 to 1965, the debt had shrunk from over 100 percent of GDP to close to 30 percent of GDP. Even though it was going up in nominal dollars, it was coming down as a percentage because the economy was growing so rapidly. Then, once again, we add to our entitlement spending, we add Medicare, and we see this is the trough. It begins to grow and it begins to grow.

When we get to the end of the Cold War, it turns down again because of two things: No. 1, our defense spending goes down and the economy booms. We get tremendous growth as a result of the end of the Cold War. It was at 46.9 percent when Medicare and Medicaid got started, and not much different in 1989 by the end of the Cold War, 53.1 percent. This shows the historic level it has been.

OK. Now, this is the history, and the blue line shows the projections that the Obama administration has given us as to what will happen under their spending plan. One thing we know about projections is that they are always wrong. We don't know whether they are wrong on the high side or the low side, but we know they are always wrong. What usually happens is that the projections are always optimistic and circumstances come in with a result that is less than we had hoped for.

So if we take this as an optimistic projection, we are saying when we get to 2020, which is only a decade away--only 10 years away--the national debt will be back up very close to what it was at the end of the Second World War. That is unacceptable. Everyone in this Chamber knows that entitlement spending is the driving force behind all of this. Everyone in this Chamber knows shaving back a little on this program or cutting out a particular grant on another program will have no real impact on this if we don't have the courage to deal with entitlement spending.

So today I am introducing a bill to deal with entitlement spending. I have no illusions that it is going to pass in this Congress, but I wish to lay it down so we at least have a marker from which to begin. I have already done that with Social Security.

Several years ago, when I was chairman of the Joint Economic Committee, I held a series of hearings on Social Security and discovered that we can indeed solve the Social Security problem. We can move numbers around a little and say to everyone who is currently drawing Social Security: You will continue to draw Social Security throughout your lifetime, adjusted for inflation. Nothing will happen to it. Furthermore, your children can draw the same level of Social Security benefits that you draw adjusted for inflation through their lifetimes without any

danger to it, and their children can draw Social Security throughout their lifetimes at exactly the same level adjusted for inflation, without a tax increase.

How is that possible? The way it is possible is to say we are only going to allow Social Security benefits to grow as rapidly as inflation grows. We already have built into the program that we are going to pay Social Security plus inflation, plus a nice little kicker along the way. That nice little kicker along the way over 10 years, and then 20 years, then 30 years pretty soon gets us into the kind of trouble I have described. If we say, no, we will allow it to grow with respect to inflation, but we will not allow it to grow any more rapidly than that, then the kind of thing that happened here can happen again. As the economy grows more rapidly than the inflation rate, we will see the national debt begin to come down, we will see the pressure on national security begin to ease, and we will see the great concern that Americans have about the financial situation begin to be addressed in the way it was addressed in the years after the Second World War.

I am not saying we abolish entitlement programs. There are some of my constituents who say that is the thing to do: just abolish Medicare; abolish Social Security. I say, yes, we want to abolish these things but keep the taxes because that is what we would have to do if we are going to get the financial circumstance we like. No, over time, we can do this without abolishing these programs, but we have to see to it they do not grow.

So here is what my bill will do. It will control the growth of entitlement spending by reinstating spending limits and saying entitlement programs cannot grow at a rate faster than the inflation rate. That will mean to the future Congresses, if they adopt this bill: OK, we can still spend for Medicare, we can still spend for Medicaid, we can still do Social Security, but we can't add things to it in such a way that will cause it to grow more rapidly than inflation, No. 1. No. 2, do the same thing with all nondefense discretionary spending. We will allow it to grow each year in accordance with the inflation rate, but we will not allow increases in nondefense discretionary spending more rapidly than the inflation rate. Then, No. 3, enforce the spending caps with automatic spending reductions and budget points of order, the details of the kind of thing we get into around here all the time.

The bill is very simple, very straightforward, but it gives the kind of direction that many of the solutions that have been proposed around here don't do. Many of the solutions we have around here sound great, and they are very complicated--this point of order lies here, and that situation there--but, overall, we are turning our backs on two-thirds of the Federal spending. We say we would not address them because these programs are popular, and we don't want to offend the voters by saying something has to be done with the most popular programs in America.

I find the voters are saying we have to deal with this. We have to have the courage to deal with it, which means we have to have the courage to deal with entitlement spending and not just focus on nondefense discretionary spending.

The final thing my bill will do is to prohibit the creation of any new mandatory spending programs, which is, again, part of the problem we have had.

I close by repeating a question I ask my constituents as I am making this presentation to them. I say: How many of you know who Willie Sutton was? Most of my audience is young enough not to know the answer to that question, but there are a few who say Willie Sutton was a bank robber, and that is true. He wasn't a very good bank robber because he kept getting caught. Each time he would serve his sentence and then he would go out after he had been released from prison and he would rob another bank.

Finally, somebody said to him--and this is why we remember Willie Sutton, not for being a bad bank robber but for the comment he made. Somebody said: Willie, why do you keep robbing banks?

He said: Because that is where the money is.

We look at the national debt, we look at the problems we face, and we ask the question: Where is the money? We have to rein in the entitlement spending because that is where the money is. It is two- thirds of the budget now, three-fourths of the budget within 10 years. If we continue to ignore the growth of entitlement spending and focus entirely on the rest of it, that makes good press but not good policy. We will find our financial situation is up here, our national debt will be as high as it was with the percentage of GDP as it was after the Second World War, and our national security will be threatened to the point that our entire posture around the world will be changed, simply because we would not be able to afford it.

It is for that reason that I send to the desk an act that may be cited as the Economic Disaster Prevention Act of 2010 that deals with spending limits on entitlement programs as well as spending limits on discretionary spending, and the prohibition of any new mandatory spending programs.

Mr. President, as I move around the State of Utah to talk to my constituents, I find, with all of the other specifics they are concerned about, the one thing just about everybody is concerned about is our long-term fiscal situation. They are worried about debt. They are worried about the deficit in this year that is adding to the debt. They say to me: What can we do about it? They listen to the pundits who talk on the air about this particular project or that particular project that sounds outrageous. Many times the projects are, in fact, legitimate, but they make good copy.

I say, if you add up all of these projects together--the good ones and the bad ones--and eliminated them all, you would reduce the Federal deficit by less than 1 percent. Let's talk about where the money lies. Let's talk about where the challenge is. So I present to my constituents a series of charts that I will present here that outline where the challenge is.

One of the things that becomes clear, as we go into this debate, is it is not just our financial situation that is in trouble. The pressures created by our debt are crossing over into the area of national security. We cannot maintain our military or our diplomatic initiatives with the kinds of pressures continually increasing.

So a little bit of history, which I share with my constituents and that I share here as the background for the bill I am introducing today.

This is a very simple pie chart that shows the components of Federal spending back in 1966. I ask my constituents: Why do I pick 1966 as the year to start? Some of them know the answer; some of them do not. But in 1966, mandatory spending constituted 26 percent of the budget, and interest on the national debt another 7 percent. You have to pay the interest on the bonds, so that is mandatory spending as well. So the government is committed for a third of the budget before the Congress ever gets around to appropriating any money.

In 1966, the biggest portion of mandatory spending was Social Security. The combination of Social Security and other mandatory programs, and the interest cost, was one-third of the budget. The other two-thirds was available to the Congress. Of that spending, defense spending was 44 percent of the total. Defense spending, obviously, dominated nondefense discretionary spending.

Where are we today? What has happened in the years since 1966 and today? Here are the components of Federal spending in fiscal 2008. I picked that year, before the tsunami hit us--the financial tsunami that caused the meltdown and all of the problems--as

perhaps a demonstration of what is happening structurally within the budget, not affected by any particular emergency.

Mandatory spending has now grown to 54 percent. Interest costs are from 7 to 8 percent. So the two of them constitute roughly two-thirds of the budget. From 1966 to 2008, mandatory spending now is twice as big in its proportion of the budget than it used to be. Defense spending has shrunk to a half of what it was back in the 1960s, and nondefense discretionary spending is about the same.

All right. Now back to the question: Why did I pick 1966 as the year to start with? Because that is the year the Federal Government got into the medical business and enacted Medicare. Since then, we have added Medicaid. So today, when you talk about mandatory spending, Social Security is no longer the dominant factor. It is a combination of Social Security, Medicare, and Medicaid.

I will leave aside the issue of the value of those programs. I am just talking about the money we are spending here. Today, as we argue over congressional spending, we only have a third of the budget to talk about, and half of that, roughly, is defense spending.

Let's go to fiscal year 2009. Mandatory spending has grown to 59 percent. The interest cost is 5 percent. Defense will have shrunk, nondefense will have shrunk. The reason the interest costs are shrinking is because we are borrowing money at a lower rate by virtue of the things that have happened with the financial tsunami.

But now let's go out 10 years to 2020 and see where we will be. In 10 years, mandatory spending will have grown to 58 percent. The interest costs will have grown to 13 percent, and defense and nondefense together will constitute only 30 percent. If defense is shrunk to 15 percent of the budget, it begins to bite very seriously into America's role in national security around the world.

One author I have looked at who has talked about America's role in the world in a very thoughtful way looks ahead to this, and he says the greatest threat to America's position in the world is not China, it is not India, it is not North Korea. It is Medicare. The greatest threat to America's ability to sustain itself and its national security is coming from the growth of mandatory spending.

If we spend all of our time arguing over those tiny things that make good copy in newspapers and on television and do not address this inexorable growth, we will discover that the Congress has become irrelevant. Three-fourths of the budget of Congress will already be spent before the Congress even meets, and only one-fourth will be left for us to talk about, and that one-fourth will have to include our spending for national security, and you will see how everything else will get squeezed out.

I had that hit me directly as we had the debate last year on the budget resolution for fiscal year 2010. Standing at this very place, I looked down at the bill that was presented and sitting here on a podium, and it projected Federal revenues for fiscal year 2010 at $2.2 trillion--down because of the challenges we had with the economic meltdown. Then on the next page it said: mandatory spending, $2.2 trillion. That meant everything we do in government in fiscal year 2010, other than mandatory spending--the Defense Department, the war in Afghanistan, the FAA which controls the airplanes, the national parks, our embassies overseas, the FBI, all of our law enforcement, the border security--everything, every single dime we spend in government, other than mandatory spending, in fiscal year 2010 had to be borrowed. We did not have a single dime of tax revenue available to pay for anything in government because it was all taken up in mandatory spending.

All right. What does this do to us long term as a nation?

People keep talking about the national debt and how it is growing and growing and growing. Actually, the national debt has not been growing and growing and growing over the years. Here is a chart that shows the national debt measured in the way it should be measured, as a percentage of the gross domestic product, the size of the national debt with respect to the size of the economy.

To illustrate why this is the way to do it--I have often used this example on the Senate floor--I ran a company before I came here. When I became the CEO of that company it was very small. It had a debt of $75,000. When I stepped down to retire prior to running for the Senate, the debt was $7.5 million. One might say: Well, Bob Bennett, you are not a very good manager if you ran the debt up from $75,000 to $7.5 million. Then you look at the debt the way you should look at it.

At the time I became the CEO of that company, they were doing under $300,000 a year in total revenue. They had no margin at all. Every dime they took in, in revenue, was eaten up with costs, and they could not make the payments on the $75,000 debt. The $75,000 debt threatened the survival of the company. When we had a $7.5 million debt, the company was doing over $80 million in business, and we had a 15-percent margin on sales. We were earning more per year than the whole debt we had, and the only reason we didn't pay it off is because we had some prepayment penalties built into the mortgages we had established. So I wasn't such a bad steward after all, if you make the measure totally on the basis of the size of the debt. I was a good steward if you make it on the measure of the debt in relationship to the size of the enterprise.

That is what this chart shows: the national debt as a percentage of the size of the enterprise, to use business terms; in this case, the size of the economy.

We see that just after the Second World War our national debt was well over 100 percent of GDP, and in the two decades after the Second World War, we come from 1945 to 1965, the debt had shrunk from over 100 percent of GDP to close to 30 percent of GDP. Even though it was going up in nominal dollars, it was coming down as a percentage because the economy was growing so rapidly. Then, once again, we add to our entitlement spending, we add Medicare, and we see this is the trough. It begins to grow and it begins to grow.

When we get to the end of the Cold War, it turns down again because of two things: No. 1, our defense spending goes down and the economy booms. We get tremendous growth as a result of the end of the Cold War. It was at 46.9 percent when Medicare and Medicaid got started, and not much different in 1989 by the end of the Cold War, 53.1 percent. This shows the historic level it has been.

OK. Now, this is the history, and the blue line shows the projections that the Obama administration has given us as to what will happen under their spending plan. One thing we know about projections is that they are always wrong. We don't know whether they are wrong on the high side or the low side, but we know they are always wrong. What usually happens is that the projections are always optimistic and circumstances come in with a result that is less than we had hoped for.

So if we take this as an optimistic projection, we are saying when we get to 2020, which is only a decade away--only 10 years away--the national debt will be back up very close to what it was at the end of the Second World War. That is unacceptable. Everyone in this Chamber knows that entitlement spending is the driving force behind all of this. Everyone in this Chamber knows shaving back a little on this program or cutting out a particular grant on another program will have no real impact on this if we don't have the courage to deal with entitlement spending.

So today I am introducing a bill to deal with entitlement spending. I have no illusions that it is going to pass in this Congress, but I wish to lay it down so we at least have a marker from which to begin. I have already done that with Social Security.

Several years ago, when I was chairman of the Joint Economic Committee, I held a series of hearings on Social Security and discovered that we can indeed solve the Social Security problem. We can move numbers around a little and say to everyone who is currently drawing Social Security: You will continue to draw Social Security throughout your lifetime, adjusted for inflation. Nothing will happen to it. Furthermore, your children can draw the same level of Social Security benefits that you draw adjusted for inflation through their lifetimes without any

danger to it, and their children can draw Social Security throughout their lifetimes at exactly the same level adjusted for inflation, without a tax increase.

How is that possible? The way it is possible is to say we are only going to allow Social Security benefits to grow as rapidly as inflation grows. We already have built into the program that we are going to pay Social Security plus inflation, plus a nice little kicker along the way. That nice little kicker along the way over 10 years, and then 20 years, then 30 years pretty soon gets us into the kind of trouble I have described. If we say, no, we will allow it to grow with respect to inflation, but we will not allow it to grow any more rapidly than that, then the kind of thing that happened here can happen again. As the economy grows more rapidly than the inflation rate, we will see the national debt begin to come down, we will see the pressure on national security begin to ease, and we will see the great concern that Americans have about the financial situation begin to be addressed in the way it was addressed in the years after the Second World War.

I am not saying we abolish entitlement programs. There are some of my constituents who say that is the thing to do: just abolish Medicare; abolish Social Security. I say, yes, we want to abolish these things but keep the taxes because that is what we would have to do if we are going to get the financial circumstance we like. No, over time, we can do this without abolishing these programs, but we have to see to it they do not grow.

So here is what my bill will do. It will control the growth of entitlement spending by reinstating spending limits and saying entitlement programs cannot grow at a rate faster than the inflation rate. That will mean to the future Congresses, if they adopt this bill: OK, we can still spend for Medicare, we can still spend for Medicaid, we can still do Social Security, but we can't add things to it in such a way that will cause it to grow more rapidly than inflation, No. 1. No. 2, do the same thing with all nondefense discretionary spending. We will allow it to grow each year in accordance with the inflation rate, but we will not allow increases in nondefense discretionary spending more rapidly than the inflation rate. Then, No. 3, enforce the spending caps with automatic spending reductions and budget points of order, the details of the kind of thing we get into around here all the time.

The bill is very simple, very straightforward, but it gives the kind of direction that many of the solutions that have been proposed around here don't do. Many of the solutions we have around here sound great, and they are very complicated--this point of order lies here, and that situation there--but, overall, we are turning our backs on two-thirds of the Federal spending. We say we would not address them because these programs are popular, and we don't want to offend the voters by saying something has to be done with the most popular programs in America.

I find the voters are saying we have to deal with this. We have to have the courage to deal with it, which means we have to have the courage to deal with entitlement spending and not just focus on nondefense discretionary spending.

The final thing my bill will do is to prohibit the creation of any new mandatory spending programs, which is, again, part of the problem we have had.

I close by repeating a question I ask my constituents as I am making this presentation to them. I say: How many of you know who Willie Sutton was? Most of my audience is young enough not to know the answer to that question, but there are a few who say Willie Sutton was a bank robber, and that is true. He wasn't a very good bank robber because he kept getting caught. Each time he would serve his sentence and then he would go out after he had been released from prison and he would rob another bank.

Finally, somebody said to him--and this is why we remember Willie Sutton, not for being a bad bank robber but for the comment he made. Somebody said: Willie, why do you keep robbing banks?

He said: Because that is where the money is.

We look at the national debt, we look at the problems we face, and we ask the question: Where is the money? We have to rein in the entitlement spending because that is where the money is. It is two- thirds of the budget now, three-fourths of the budget within 10 years. If we continue to ignore the growth of entitlement spending and focus entirely on the rest of it, that makes good press but not good policy. We will find our financial situation is up here, our national debt will be as high as it was with the percentage of GDP as it was after the Second World War, and our national security will be threatened to the point that our entire posture around the world will be changed, simply because we would not be able to afford it.

It is for that reason that I send to the desk an act that may be cited as the Economic Disaster Prevention Act of 2010 that deals with spending limits on entitlement programs as well as spending limits on discretionary spending, and the prohibition of any new mandatory spending programs.

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

Mr. President, I ask unanimous consent that I be allowed to proceed as in morning business.

Thank you, Mr. President. I appreciate the courtesy.

(The remarks of Mr. Bennett and Mr. Sessions pertaining to the introduction of S. 3083 are printed in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. President, I yield the floor.

Mr. President, we got some numbers this morning. Unemployment seems stuck at 9.7 percent nationally. We lost more jobs. In my home State of Utah, unemployment is at a 23-year high at 6.8 percent. I know there are States represented by Senators here that would love to have 6.8 percent as their unemployment rate, but we in Utah do not like it.

I want to talk about one aspect of the unemployment rate that I think has been ignored in the debate we have had around the country. The President says we are out of the woods, not far out of the woods, to be sure, but that we have turned around, that the recession has started to fade, and we are starting to come back. He looks at macronumbers and makes that statement with respect to GDP and all of the rest of that. He is missing a very important fact I want to highlight here today in the introduction of this bill.

The economy is driven by a variety of forces. But the one thing we do know about economic activity is that jobs are created primarily by small businesses. When I say small, I mean really small. Over 7 million jobs have been lost since the beginning of the recession. We must ask, How many of those have been lost in small businesses? The answer is, over half of that number. Over 3.5 million of the jobs that have been lost have been lost in small businesses.

We hear and look at the reports that are in the newspaper about big companies that have had layoffs and big companies that have stopped hiring. But it is the small businesses in the United States that have been the engine of economic growth and the engine of hiring all the way through.

I have talked before about my own experiences as a small businessman, and I will revisit that here for a moment to put this in context.

I have been involved in the creation of a number of businesses. Most of them have failed. That is the norm for small businesses. People get an idea. People get excited. They get caught up in the idea of having their own business. They start their own business, and they find it is much harder than they thought. They find the challenge is much more difficult than they thought or they simply run into challenges that are beyond their control and they end up failing.

It is all summarized in a comment made by a woman who attended a meeting of Inc. magazine. Inc. magazine every year chooses the ``Entrepreneur of the Year'' across the country in the various States. I was honored enough to be chosen as the ``Entrepreneur of the Year'' when I was CEO of a business in Utah, and as a reward for that we went to this convention down in Miami Beach. A panel was being held of small businesspeople.

Just prior to the panel, they announced that after the panel was over there would be a wine and cheese tasting event to be held on the patio of this hotel. Then they turned to the panel, and one of the women on the panel said: Entrepreneurs do not drink wine. Entrepreneurs drink vodka, neat. We can't do with this gracious living stuff. We are caught up in the tremendous pressure of trying to keep our businesses open.

I do not drink wine or vodka, but I identified with her comments and her sentiments about how tough it is.

Well, the President may think the GDP numbers show we have turned the corner. The people in small business recognize that in their part of this economy, we have not. Let me quote from an article in the Wall Street Journal regarding the National Federation of Independent Business' small business optimism survey. It was in December of last year, and author noted:

Small-business owners grew even more pessimistic in the

final month of 2009, capping off what was a trying year for

their businesses. . . .

Regular borrowers--those accessing capital markets at least

once a quarter--also continued to report difficulties in

arranging credit at the highest frequency since 1983,

according to the report.

Mr. President, 1983, for those of us who remember, was the depth of the recession that followed the great inflation of the Jimmy Carter years, as President Reagan and the Congress were dealing with the dreaded double dip. We came out of the Jimmy Carter years with a recession, a recovery, and then another recession--the dreaded double dip or the ``W-shaped'' recession. Mr. President, 1983 was a very challenging year. I was running a small business at that time as well and I remember it very well. All right--the worst attitude with respect to their opportunities in small business since 1983, according to people who were on the firing line in small business.

So what do we need to try to help small business recover and start creating jobs again? Again, the point I made earlier: More than half of the jobs that are created in America are created with small business, and these are small businesses that are doing less than $5 million a year. As I say, I have been involved in creating many of these businesses. Many of them failed. Fortunately, the small businesses I was involved in creating that did not fail earned enough money to repay me for all that I lost in the ones that did and created enough jobs to overcome the loss of jobs in the ones that failed, and the small business we created for which I won the award at Inc. magazine ultimately went to the New York Stock Exchange and employed 4,000 people. Not bad for a small business that started in somebody's basement with originally four full-time employees. I was No. 5 in that business.

So I have seen it happen on both sides--the failure side and the success side--and I know what it takes. I can tell you, the kinds of things the President is talking about and we have been doing here in this Chamber are not the things small business needs to survive. Let me talk about some of those, and they are in the bill I am offering today.

One of the first things we have to recognize is that the worst thing that can happen to a small business financially is to earn a profit. You say: Now wait a minute, obviously you want to earn a profit. Yes, you want to earn a profit. But the worst thing that can happen to you is--as you are struggling on a cashflow basis to keep this business going and you cross the line into profits--the government shows up and says: We want half your profit immediately, and we want it in cash.

You want your profit invested in inventory. You want your profit invested in accounts receivable. You want your profit invested in the capital investments that will allow your business to survive, and the government says: No. You have earned a profit and we want it in taxes and we want it in cash, and we won't take a percentage of your inventory and hold it to let you make the business grow. You have to liquidate that inventory to pay your taxes in cash.

So the first thing that is in my bill will provide a 10-year net operating loss carryback provision for qualifying businesses whose average gross revenue per year is $5 million or less.

You struggle with the business; you lose money the first year. You struggle with the business; you lose money the second year. You struggle with the business; you lose money the third year. But you keep it afloat, and in the fourth year, you start to earn money. And there is the government saying: We want our share of your profits, and we don't care that you have been losing money while you have been building this business--you have been losing money on an accrual basis while you have been borrowing from your brother-in-law and your credit card and your bank, and whoever would give you money to cover those losses, and now you are finally at the point where you are making a little profit-- we won't give you any consideration for all of those losses you have put into building this business. We are going to take our tax bite out of this year's profits, and that can be enough to sink the business.

So this has a net operating loss carryback provision for qualifying businesses whose average gross revenues are $5 million or less.

This is not a break for American Airlines. This is not a break for General Motors. This is a break for the person who is trying to duplicate the success I was lucky enough to be involved in--where we start something in a basement or a garage and see it grow to the point where it can go to the New York Stock Exchange.

You could say: Well, Senator Bennett, you didn't need this net loss carryback provision when you did that business. That is true because we grew that business in what the New York Times and other publications called the decade of greed. It was the years of Ronald Reagan when the top marginal tax rate was 28 percent, which meant even paying taxes, we got to keep 72 cents out of every dollar we generated in profit. That was enough to allow us to fund the growth of that business. Today, the top marginal tax rate is over 40 percent. There is a great deal of difference. If we had had to try to grow that business in today's tax environment--and it went up to that level when Bill Clinton became President--we probably would not have been able to grow the business and we would not have created those jobs and we would not have been able to ultimately build a company big enough to go to the New York Stock Exchange.

All right. I can't deal with the marginal tax rate. We don't have enough votes to do that. If I could, I would like to get it back to the 28 percent it was with Ronald Reagan. If we are going to have the tax rate where it is, we need at least some kind of relief for small business. The 10-year net operating loss carryback provision is a way to give them some kind of relief in this time of great economic stress.

No. 2--and this gets a little technical--I want to expand the definition of section 179 expensing to include structural changes to the physical property and make the current $250,000 deduction limit permanent.

When you are making an investment in your business of a capital good that you need, whether it is a lathe in a machine shop or whether it is a warehouse and something that requires you to stockpile with material before you send it out to retailers, whatever it might be, you don't want to have to start paying taxes on the money you put into that capital good. You need the deduction for expensing that right now. That is another way to hold your taxes down.

This second provision is tied to the first. The first gives you the net operating loss carryback provision. This one says you can expense in a much better fashion the money you are putting in up front for your structural activity.

Then, No. 3: It sounds very minor, but to a business of the size we are talking about it can be significant. I want to increase the current startup cost deduction from $5,000 to $20,000. This will encourage entrepreneurs to invest right now rather than wait for the economy to improve.

These are the three primary things that will be in the bill I am sending to the desk and introducing today.

I wish to conclude with these comments. As I move around my State, and as I move around the country talking about the state of business-- back to the reference to the NFIB and their survey about optimism or pessimism among small business owners. I have

never seen a time of more pessimism than we have now. Even back in the 1980s when I described the businesses that I was involved in then and the dreaded ``double dip,'' businessmen were not as pessimistic as they are now. They still had hope we could come out of this. Now, even while the national GDP numbers are looking good to the people at the White House, to the people on Main Street it doesn't look so good.

This is what I hear: The venture capitalists tell me we are not making venture capitalist investments anymore. Why? Because the venture capitalist is there to capitalize and to finance the startup, and then the system is supposed to take over and finance the growth. We pick the entrepreneur who has the widget or the gadget, whatever it might be that is going to change the world.

We say: Yes, your widget is marvelous, and we are going to fund that so you can get that going. But once you get it going, the system takes over. The banks give you the tools you need for your capital investment. Other investors come in who are not taking as big a risk as we are because they see now that your widget really does work. So the level of risk is lower, the system takes over, and we can take our venture capital and go out and look for the other entrepreneur who has a new invention. That is how the whole thing works.

They tell me: We discover now the system doesn't take over. We discover now the money we have put into the widget, the entrepreneur, the inventor, isn't followed on by additional funding. If this investment we have put in is going to survive, we have to double down our bets.

Instead of our venture capital now going to the inventor and the entrepreneur, our venture capital is going to places where it has never been required before. As a result, we don't have any left over for the true venture capital, and the whole system is shutting down in terms of job creation. We are getting to a circumstance where new jobs are not coming as a result of venture capital activity. This job creation I talked about and these small businesses are being stifled. That is the first part of the pessimism.

The second part of the pessimism, of course, is that the stimulus money we have put into the system isn't getting down to small businesses at all. I received a letter from a small businessman in Utah. I identify with him because he has created a business of the same kind I have tried to create over my career before I came here.

He says: I am writing because I am frustrated. I own a small business here in Utah--he names it. We employed 20 people.

In the macro of the world, 20 people aren't very much, not enough to really worry about; except this fellow and his 20 people are representative of more than half of the job creation that is going on in this country historically.

He says:

I have a small business here in Utah that employs 20

people. Now I am down to 4 people as I can't get financing. I

put close to $2 million in technology development.

There is the venture capitalist side of it.

We are ready to launch our new system and services, but

have run out of funds and can't find investor groups that

would be willing to take a risk on technology at a relatively

new company. Why can't some of the stimulus money come to us?

I would hire 25 to 30 new people if I could receive funding

that I need to launch my product and services. Banks won't

lend, individuals are holding on to cash, VC groups are

looking for companies that have been around a few more years.

I don't want to violate SEC rules. Raising funds is

difficult.

I don't have a solution to everything he is saying, but I do believe the kinds of reforms that are in the bill I am introducing will create a better environment for small business and make it easier for him and others like him to go to investors and say: Look, if you put some money into our business, we would not have to pay taxes as soon as it turns the corner because we will have this net operating carryback for 10 years. We can expense some of the capital investments we make so we would not have to worry about paying taxes on it, and we have a current startup tax deduction that has gone to $20,000.

These are very modest kinds of proposals, but they are the kinds of proposals that are rooted in real experience in Main Street rather than Wall Street; from real people who are creating jobs, have created jobs, who are hurting the most in this economy, and upon whom we depend primarily for the new job creation.

As I said at the outset, we have bad numbers today. Unemployment has not come down in the Nation. More jobs have been lost. In my home State of Utah, we have hit a 23-year high in unemployment. We must look to where the jobs come from, and the answer to that is small business, and we must do everything we can to try to help small business get started and get going and get growing, and that is a way we will get out of this recession.

I will be happy to yield.

I thank the Senator from Alabama for his kind words. My own impression is that the stimulus package has created a few jobs with a very marginal kind of effect. Most of the money, it seems to me, has been spent in efforts aimed at research, which may or may not produce jobs 3 years, 4 years, 8 years, 10 years from now.

As a member of the Appropriations Committee we held a hearing just yesterday with the Department of Energy and looked at the amount of stimulus money that was going into fund research in the Department of Energy and pointed out to the Secretary of Energy that only 7 percent of the stimulus money had been spent. To get ready for the energy research they were going to do, they had to hire new people. It, perhaps, has created some government jobs to get ready to examine all of the grants and look at all of the proposals and so on. I am not opposed to research, but this is not an immediate creation of jobs in the middle of a recession to be spending stimulus money in this fashion.

I have also come to the conclusion that the jobs that have been created or saved, as this administration tries to add that word to it, have primarily been government jobs.

I don't object to people working for the government. We have many civil servants who provide great value added in the work they do for the government. But the long-term projection of jobs that will add to the economy create new jobs and create new wealth. I do not see that the stimulus has produced any significant difference in that arena.

I would say to the Senator that is the whole purpose of this. Let entrepreneurs who are taking the risks--drinking vodka neat, if you will--have the opportunity to create their businesses without the government showing up immediately and saying: By the tax law, we are going to punish you for getting your initial beginnings of success. Instead, we are going to delay the impact of the taxes on you until you have a sound financial footing under you. When you have that

financial footing under you, you can afford to pay the taxes and, more important, you can afford to hire more people who, as a result of their jobs, will also pay taxes.

We must understand a very large reason we are having this deficit is not just the spending, as important as that is; it is the drop in revenue, and the drop in revenue comes because the economy is so bad. We must understand around here that revenue does not come from the budget.

Revenue comes from the economy. We can budget any kind of revenue number we want, but if there are no profits and there are no jobs, that means there is no income, and the income tax, by definition, is dependent on income before it produces any revenue. We will not have the money we need to run the government because the economy will not be producing that revenue.

I learned in business you cannot cost-cut your way to profitability. Cost-cutting is important in a business, and you should make sure you are not doing stupid things--and there are businesses that can spend themselves into bankruptcy--but you cannot cost-cut your way into profitability. The top line, the sales, the growth of the company is what creates profitability.

The same principle applies to this economy. Yes, we must cut costs, we must cut spending in the Congress, but the way for a vital country is to grow the economy, and the biggest engine of growth in the economy has been and remains small business.

Mr. President, we got some numbers this morning. Unemployment seems stuck at 9.7 percent nationally. We lost more jobs. In my home State of Utah, unemployment is at a 23-year high at 6.8 percent. I know there are States represented by Senators here that would love to have 6.8 percent as their unemployment rate, but we in Utah do not like it.

I want to talk about one aspect of the unemployment rate that I think has been ignored in the debate we have had around the country. The President says we are out of the woods, not far out of the woods, to be sure, but that we have turned around, that the recession has started to fade, and we are starting to come back. He looks at macronumbers and makes that statement with respect to GDP and all of the rest of that. He is missing a very important fact I want to highlight here today in the introduction of this bill.

The economy is driven by a variety of forces. But the one thing we do know about economic activity is that jobs are created primarily by small businesses. When I say small, I mean really small. Over 7 million jobs have been lost since the beginning of the recession. We must ask, How many of those have been lost in small businesses? The answer is, over half of that number. Over 3.5 million of the jobs that have been lost have been lost in small businesses.

We hear and look at the reports that are in the newspaper about big companies that have had layoffs and big companies that have stopped hiring. But it is the small businesses in the United States that have been the engine of economic growth and the engine of hiring all the way through.

I have talked before about my own experiences as a small businessman, and I will revisit that here for a moment to put this in context.

I have been involved in the creation of a number of businesses. Most of them have failed. That is the norm for small businesses. People get an idea. People get excited. They get caught up in the idea of having their own business. They start their own business, and they find it is much harder than they thought. They find the challenge is much more difficult than they thought or they simply run into challenges that are beyond their control and they end up failing.

It is all summarized in a comment made by a woman who attended a meeting of Inc. magazine. Inc. magazine every year chooses the ``Entrepreneur of the Year'' across the country in the various States. I was honored enough to be chosen as the ``Entrepreneur of the Year'' when I was CEO of a business in Utah, and as a reward for that we went to this convention down in Miami Beach. A panel was being held of small businesspeople.

Just prior to the panel, they announced that after the panel was over there would be a wine and cheese tasting event to be held on the patio of this hotel. Then they turned to the panel, and one of the women on the panel said: Entrepreneurs do not drink wine. Entrepreneurs drink vodka, neat. We can't do with this gracious living stuff. We are caught up in the tremendous pressure of trying to keep our businesses open.

I do not drink wine or vodka, but I identified with her comments and her sentiments about how tough it is.

Well, the President may think the GDP numbers show we have turned the corner. The people in small business recognize that in their part of this economy, we have not. Let me quote from an article in the Wall Street Journal regarding the National Federation of Independent Business' small business optimism survey. It was in December of last year, and author noted:

Small-business owners grew even more pessimistic in the

final month of 2009, capping off what was a trying year for

their businesses. . . .

Regular borrowers--those accessing capital markets at least

once a quarter--also continued to report difficulties in

arranging credit at the highest frequency since 1983,

according to the report.

Mr. President, 1983, for those of us who remember, was the depth of the recession that followed the great inflation of the Jimmy Carter years, as President Reagan and the Congress were dealing with the dreaded double dip. We came out of the Jimmy Carter years with a recession, a recovery, and then another recession--the dreaded double dip or the ``W-shaped'' recession. Mr. President, 1983 was a very challenging year. I was running a small business at that time as well and I remember it very well. All right--the worst attitude with respect to their opportunities in small business since 1983, according to people who were on the firing line in small business.

So what do we need to try to help small business recover and start creating jobs again? Again, the point I made earlier: More than half of the jobs that are created in America are created with small business, and these are small businesses that are doing less than $5 million a year. As I say, I have been involved in creating many of these businesses. Many of them failed. Fortunately, the small businesses I was involved in creating that did not fail earned enough money to repay me for all that I lost in the ones that did and created enough jobs to overcome the loss of jobs in the ones that failed, and the small business we created for which I won the award at Inc. magazine ultimately went to the New York Stock Exchange and employed 4,000 people. Not bad for a small business that started in somebody's basement with originally four full-time employees. I was No. 5 in that business.

So I have seen it happen on both sides--the failure side and the success side--and I know what it takes. I can tell you, the kinds of things the President is talking about and we have been doing here in this Chamber are not the things small business needs to survive. Let me talk about some of those, and they are in the bill I am offering today.

One of the first things we have to recognize is that the worst thing that can happen to a small business financially is to earn a profit. You say: Now wait a minute, obviously you want to earn a profit. Yes, you want to earn a profit. But the worst thing that can happen to you is--as you are struggling on a cashflow basis to keep this business going and you cross the line into profits--the government shows up and says: We want half your profit immediately, and we want it in cash.

You want your profit invested in inventory. You want your profit invested in accounts receivable. You want your profit invested in the capital investments that will allow your business to survive, and the government says: No. You have earned a profit and we want it in taxes and we want it in cash, and we won't take a percentage of your inventory and hold it to let you make the business grow. You have to liquidate that inventory to pay your taxes in cash.

So the first thing that is in my bill will provide a 10-year net operating loss carryback provision for qualifying businesses whose average gross revenue per year is $5 million or less.

You struggle with the business; you lose money the first year. You struggle with the business; you lose money the second year. You struggle with the business; you lose money the third year. But you keep it afloat, and in the fourth year, you start to earn money. And there is the government saying: We want our share of your profits, and we don't care that you have been losing money while you have been building this business--you have been losing money on an accrual basis while you have been borrowing from your brother-in-law and your credit card and your bank, and whoever would give you money to cover those losses, and now you are finally at the point where you are making a little profit-- we won't give you any consideration for all of those losses you have put into building this business. We are going to take our tax bite out of this year's profits, and that can be enough to sink the business.

So this has a net operating loss carryback provision for qualifying businesses whose average gross revenues are $5 million or less.

This is not a break for American Airlines. This is not a break for General Motors. This is a break for the person who is trying to duplicate the success I was lucky enough to be involved in--where we start something in a basement or a garage and see it grow to the point where it can go to the New York Stock Exchange.

You could say: Well, Senator Bennett, you didn't need this net loss carryback provision when you did that business. That is true because we grew that business in what the New York Times and other publications called the decade of greed. It was the years of Ronald Reagan when the top marginal tax rate was 28 percent, which meant even paying taxes, we got to keep 72 cents out of every dollar we generated in profit. That was enough to allow us to fund the growth of that business. Today, the top marginal tax rate is over 40 percent. There is a great deal of difference. If we had had to try to grow that business in today's tax environment--and it went up to that level when Bill Clinton became President--we probably would not have been able to grow the business and we would not have created those jobs and we would not have been able to ultimately build a company big enough to go to the New York Stock Exchange.

All right. I can't deal with the marginal tax rate. We don't have enough votes to do that. If I could, I would like to get it back to the 28 percent it was with Ronald Reagan. If we are going to have the tax rate where it is, we need at least some kind of relief for small business. The 10-year net operating loss carryback provision is a way to give them some kind of relief in this time of great economic stress.

No. 2--and this gets a little technical--I want to expand the definition of section 179 expensing to include structural changes to the physical property and make the current $250,000 deduction limit permanent.

When you are making an investment in your business of a capital good that you need, whether it is a lathe in a machine shop or whether it is a warehouse and something that requires you to stockpile with material before you send it out to retailers, whatever it might be, you don't want to have to start paying taxes on the money you put into that capital good. You need the deduction for expensing that right now. That is another way to hold your taxes down.

This second provision is tied to the first. The first gives you the net operating loss carryback provision. This one says you can expense in a much better fashion the money you are putting in up front for your structural activity.

Then, No. 3: It sounds very minor, but to a business of the size we are talking about it can be significant. I want to increase the current startup cost deduction from $5,000 to $20,000. This will encourage entrepreneurs to invest right now rather than wait for the economy to improve.

These are the three primary things that will be in the bill I am sending to the desk and introducing today.

I wish to conclude with these comments. As I move around my State, and as I move around the country talking about the state of business-- back to the reference to the NFIB and their survey about optimism or pessimism among small business owners. I have

never seen a time of more pessimism than we have now. Even back in the 1980s when I described the businesses that I was involved in then and the dreaded ``double dip,'' businessmen were not as pessimistic as they are now. They still had hope we could come out of this. Now, even while the national GDP numbers are looking good to the people at the White House, to the people on Main Street it doesn't look so good.

This is what I hear: The venture capitalists tell me we are not making venture capitalist investments anymore. Why? Because the venture capitalist is there to capitalize and to finance the startup, and then the system is supposed to take over and finance the growth. We pick the entrepreneur who has the widget or the gadget, whatever it might be that is going to change the world.

We say: Yes, your widget is marvelous, and we are going to fund that so you can get that going. But once you get it going, the system takes over. The banks give you the tools you need for your capital investment. Other investors come in who are not taking as big a risk as we are because they see now that your widget really does work. So the level of risk is lower, the system takes over, and we can take our venture capital and go out and look for the other entrepreneur who has a new invention. That is how the whole thing works.

They tell me: We discover now the system doesn't take over. We discover now the money we have put into the widget, the entrepreneur, the inventor, isn't followed on by additional funding. If this investment we have put in is going to survive, we have to double down our bets.

Instead of our venture capital now going to the inventor and the entrepreneur, our venture capital is going to places where it has never been required before. As a result, we don't have any left over for the true venture capital, and the whole system is shutting down in terms of job creation. We are getting to a circumstance where new jobs are not coming as a result of venture capital activity. This job creation I talked about and these small businesses are being stifled. That is the first part of the pessimism.

The second part of the pessimism, of course, is that the stimulus money we have put into the system isn't getting down to small businesses at all. I received a letter from a small businessman in Utah. I identify with him because he has created a business of the same kind I have tried to create over my career before I came here.

He says: I am writing because I am frustrated. I own a small business here in Utah--he names it. We employed 20 people.

In the macro of the world, 20 people aren't very much, not enough to really worry about; except this fellow and his 20 people are representative of more than half of the job creation that is going on in this country historically.

He says:

I have a small business here in Utah that employs 20

people. Now I am down to 4 people as I can't get financing. I

put close to $2 million in technology development.

There is the venture capitalist side of it.

We are ready to launch our new system and services, but

have run out of funds and can't find investor groups that

would be willing to take a risk on technology at a relatively

new company. Why can't some of the stimulus money come to us?

I would hire 25 to 30 new people if I could receive funding

that I need to launch my product and services. Banks won't

lend, individuals are holding on to cash, VC groups are

looking for companies that have been around a few more years.

I don't want to violate SEC rules. Raising funds is

difficult.

I don't have a solution to everything he is saying, but I do believe the kinds of reforms that are in the bill I am introducing will create a better environment for small business and make it easier for him and others like him to go to investors and say: Look, if you put some money into our business, we would not have to pay taxes as soon as it turns the corner because we will have this net operating carryback for 10 years. We can expense some of the capital investments we make so we would not have to worry about paying taxes on it, and we have a current startup tax deduction that has gone to $20,000.

These are very modest kinds of proposals, but they are the kinds of proposals that are rooted in real experience in Main Street rather than Wall Street; from real people who are creating jobs, have created jobs, who are hurting the most in this economy, and upon whom we depend primarily for the new job creation.

As I said at the outset, we have bad numbers today. Unemployment has not come down in the Nation. More jobs have been lost. In my home State of Utah, we have hit a 23-year high in unemployment. We must look to where the jobs come from, and the answer to that is small business, and we must do everything we can to try to help small business get started and get going and get growing, and that is a way we will get out of this recession.

I will be happy to yield.

I thank the Senator from Alabama for his kind words. My own impression is that the stimulus package has created a few jobs with a very marginal kind of effect. Most of the money, it seems to me, has been spent in efforts aimed at research, which may or may not produce jobs 3 years, 4 years, 8 years, 10 years from now.

As a member of the Appropriations Committee we held a hearing just yesterday with the Department of Energy and looked at the amount of stimulus money that was going into fund research in the Department of Energy and pointed out to the Secretary of Energy that only 7 percent of the stimulus money had been spent. To get ready for the energy research they were going to do, they had to hire new people. It, perhaps, has created some government jobs to get ready to examine all of the grants and look at all of the proposals and so on. I am not opposed to research, but this is not an immediate creation of jobs in the middle of a recession to be spending stimulus money in this fashion.

I have also come to the conclusion that the jobs that have been created or saved, as this administration tries to add that word to it, have primarily been government jobs.

I don't object to people working for the government. We have many civil servants who provide great value added in the work they do for the government. But the long-term projection of jobs that will add to the economy create new jobs and create new wealth. I do not see that the stimulus has produced any significant difference in that arena.

I would say to the Senator that is the whole purpose of this. Let entrepreneurs who are taking the risks--drinking vodka neat, if you will--have the opportunity to create their businesses without the government showing up immediately and saying: By the tax law, we are going to punish you for getting your initial beginnings of success. Instead, we are going to delay the impact of the taxes on you until you have a sound financial footing under you. When you have that

financial footing under you, you can afford to pay the taxes and, more important, you can afford to hire more people who, as a result of their jobs, will also pay taxes.

We must understand a very large reason we are having this deficit is not just the spending, as important as that is; it is the drop in revenue, and the drop in revenue comes because the economy is so bad. We must understand around here that revenue does not come from the budget.

Revenue comes from the economy. We can budget any kind of revenue number we want, but if there are no profits and there are no jobs, that means there is no income, and the income tax, by definition, is dependent on income before it produces any revenue. We will not have the money we need to run the government because the economy will not be producing that revenue.

I learned in business you cannot cost-cut your way to profitability. Cost-cutting is important in a business, and you should make sure you are not doing stupid things--and there are businesses that can spend themselves into bankruptcy--but you cannot cost-cut your way into profitability. The top line, the sales, the growth of the company is what creates profitability.

The same principle applies to this economy. Yes, we must cut costs, we must cut spending in the Congress, but the way for a vital country is to grow the economy, and the biggest engine of growth in the economy has been and remains small business.

Mr. President, today I wish to recognize my constituent, Sylvia Prothro Hebert, who has been selected as a 2009 Great Comebacks Recipient for the West Region. This program honors individuals who are living with intestinal diseases or recovering from ostomy surgeries, procedures that reconstruct bowel and bladder function through the use of a specially fitted medical prosthesis. Sylvia is one of over 700,000 Americans, from young children to senior citizens, who have an ostomy. The Great Comeback Awards celebrate the spirit and courage with which a patient embraces life after ostomy surgery. Sylvia and the other Great Comebacks Awardees are Americans who live life to the fullest despite the daily challenges presented by their respective conditions.

At age 9, Sylvia was diagnosed with Crohn's disease. She managed her symptoms with medication, but experienced constant flare-ups during college. At age 21, her intestines were punctured during a colonoscopy and she underwent ostomy surgery. Following this surgery, Sylvia was emotionally distraught; however, she entered counseling and learned how to cope with her stoma. Sylvia has since triumphed over her illness, and achieved her dream of becoming a flight attendant. By her records, she's the first Delta SkyTeam flight attendant with an ileostomy. Additionally, Sylvia joined the Delta Ski and Snowboard team and has earned ribbons in many competitions. Sylvia has also completed two half-marathons and a triathlon.

Today, Sylvia lives in Park City, UT, with her husband Paul and their children, Reese, Garrett, and Renee. I commend Sylvia and the other Great Comebacks Regional Award Recipients. Their personal stories are inspirational and will raise awareness about the great comebacks being made by those living with intestinal diseases or recovering from ostomy surgery.

Madam President, I thank the chairman of the Finance Committee for his courtesy. He has always been most accommodating, even to those of us who disagree with him. That contributes to a sense of comity in the Senate. I am grateful to him.

I am in favor of the Thune amendment, which will be voted on sometime this afternoon. I do not come to this brand new. This is an amendment I cosponsored with Senator Thune back in October 2009. It has to do with the question of the survival or continuation of TARP. My constituents are often confused as to what TARP is. There is an attempt many times to wrap the whole question of bailout together in any vote that has to do with the expenditure of Federal funds, in the face of the financial crisis we faced last year, as being called a bailout. So I explain to my constituents that there is a significant difference between TARP and stimulus funds or bailout funds that were spent outside TARP and take them back to the definition of what TARP stands for. We use so many acronyms around here that we sometimes confuse voters. Since I was part of the negotiations that produced the bill known as TARP, I wish to lay that predicate for a moment. TARP stands for Troubled Asset Relief Program. We were focusing, at the time that bill was passed, on the impact of troubled assets on the financial system.

Those who were present when Chairman Bernanke and Treasury Secretary Paulson spoke to us will remember that they came to the Congress and said: We are facing a crisis, and we have 4 days before there is an entire meltdown worldwide. One of my colleagues made the comment: I feel as though I am in a ``James Bond'' movie with this kind of threat hanging over us.

So a group of us who were members of the Banking Committee met under the leadership of Chairman Dodd and began the discussion. I will make it clear, the discussion was completely bipartisan. There was no attempt on the part of anybody, with maybe one or two exceptions, to do any kind of partisan gamesmanship. It was, we are focusing on the problem and what we have to do to deal with it. The proposal was made by the Secretary of the Treasury that he had to be equipped with the authority to stand before the entire world and say: I have authority from the Treasury to spend $700 billion to deal with this problem of troubled assets.

I called an economist whose judgment I trust before I entered into those activities and said: Tell me if this is going to work.

His first comment was: I am afraid $700 billion may not be enough. Because the crisis is so serious and the challenge to the confidence of the banking system so deep, we do need something very dramatic, and $700 billion might not be dramatic enough.

But then he made a comment which I found very useful: But, in fact, Senator, the Treasury Department cannot shovel $700 billion out the door in any kind of rapid pattern. So this is more of a public relations kind of statement than it is a practical matter.

I said: OK, how fast could the Treasury spend the money in an effort to start acquiring these troubled assets and deal with this problem?

He said: $50 billion a month is probably the fastest people could spend the money, actually disburse the money.

So when we got into the meeting and started discussing what became TARP, I made the proposal, instead of giving them $700 billion, since they can only disburse $50 billion a month, why don't we give them $250 billion, which is 5 months' worth, and see if it works. The response that came back from Secretary Paulson's office was: $250 billion will not satisfy the marketplace as a whole that we are serious.

I went back to the comment, again, of my economist friend who said even $700 billion might not be enough.

Without going into any further details, we went through the situation and came up with a solution that was accepted in a bipartisan fashion. I said: All right. We will give Secretary Paulson his $700 billion headline. We will allow him to say the Congress has authorized the Treasury Department to spend $700 billion dealing with this problem of troubled assets. However, the fine print makes it clear, they are only going to have authority for $350 billion without coming back to Congress to get approval for the second $350 billion. So the headline was there. Secretary Paulson was able to get on the telephone and call all the central bankers all over the world and say: The Congress is going to approve $700 billion of authority. But the fine print said: You are going to break it up into two tranches, the first 350 for immediate disbursal--and, again, that will take months to do--and then come back for the second 350 after you see how it works.

In the Senate, we approved that by a large margin and it went forward. I voted for that first tranche of 350 because I was convinced the challenge was there and the crisis was real.

Looking back on it and having testimony from a wide range of economists and observers before the Banking Committee, I am convinced that first vote was the right vote. The crisis was there, and the $700 billion headline did indeed avert the crisis.

Then, the administration came back and said: We need the authority for the second $350 billion. At that point, I felt the crisis had passed, and I looked at the way the administration had handled the first 350, which was different than what we were told, and I said: I am not going to vote to approve the second 350. I don't think you can make a case for the second 350, in the face of the facts we have before us, that is, in any way, as compelling as the case for the first 350. So I voted against the second 350.

Then, we saw this start to be used in ways that were never, ever discussed when we adopted that first tranche of 350. We saw it used for the auto bailout after the Congress refused to appropriate money for the auto bailout. We said: OK. These are not necessarily troubled assets of the kind that TARP was supposed to address, but it is something we are going to do. As a result of that, the auto companies got $25 billion and the U.S. Treasury got stock in two bankrupt companies--not my idea of a good deal for the taxpayers. Then we have seen stimulus packages and other bailout packages and other activities and the TARP money being used in a variety of different ways contrary to what we were told at the time we made the first decision.

One of the issues that was important to understand about that first decision was, we were going to acquire assets and that when the crisis passed, those assets could be liquidated and money would come back into the Treasury. Yes, money would go out to the tune of $350 billion, but as the crisis passed,

money would come back, we hoped, to the tune of $350 billion and maybe even more because there was interest to be paid on those areas where there were loans. There were warrants that were established on those areas where there were investments. The assets themselves were assumed to have more value than they might have when we acquired them. There were economic studies at the time that said the taxpayers will make money off TARP. We will get the money back with interest, with additional revenue.

That has started to come to pass. At least of that first tranche of TARP, the money has started to come back. Over $100 billion has come back for a variety of reasons. In some cases, because the firms are capable now of paying it back; in some cases, because the firms want to get out from under the control of the Treasury, the control that goes with having a Treasury investment, the money is coming back in.

In that meeting where we decided we would do the 350 rather than the full 700, we made another decision. It was very clear to all Senators in that meeting and who drafted that bill--and I was not one of the ones who drafted it; I am not a lawyer; that was handed over to others--when the money comes back, it can be used for only one purpose. That purpose is to pay down the national debt. If we are going to raise the national debt by $350 billion, when we get the $350 billion back, it should go solely to retire the debt that was created when the money went out. Everyone agreed to that. I believed that was written into the bill. So it came as a great surprise to me, as the money started to come back, that Secretary Geithner said: We are going to recycle it. We are going to use it for other kinds of rescues, other kinds of financial circumstances.

Along with many of my colleagues who were privy to the original discussion, I said: Wait a minute. That is not what the law says. The law says, as it comes back, it has to go to pay down the national debt.

No, said Secretary Geithner in the hearing, that is not the way our lawyers interpret it. Our lawyers look at this and say: You in the Congress gave us the authority to recycle this and spend it on other things, in addition to the original crisis.

It is for that reason, among others, that I joined with Senator Thune in offering an amendment earlier last year, earlier in this Congress, saying, no, we are going to end TARP on December 31, which was the original date we set for this. We were unsuccessful in that amendment. Now we are going to try again. We are going to offer the amendment that says: All right. We feel there has been a bait and switch. We feel this administration has changed the rules from the way we thought we wrote them. There may even, indeed, be a lawsuit here, because if the law says what we believe it said, the administration is breaking the law. But let's deal with this in a congressional way. Let's simply end TARP right now, making it clear that the money, as it comes back, cannot be used for any other purpose.

The underlying resolution to which this amendment is being offered is one to raise the national debt. This amendment is one that will take steps to lower the national debt. I think it is consistent with the history. It is certainly consistent with the history I have had on this issue trying to deal with the TARP problem right from the very beginning. I think it is the right thing to do.

I am grateful to Senator Thune for offering this amendment. I am happy to be one of the lead cosponsors, as I was previously when we tried to sunset TARP on December 31. I will do everything I can to try to convince my colleagues that while the recession clearly continues, the crisis that spawned TARP is over. There is no international financial crisis of confidence in the banking system anymore. The crisis of the toxic assets that had us worried about having only 4 days to act has passed. Yet the instrument that was created to deal with that crisis lives on under a new heading being used for new purposes. It is, indeed, an example of bait and switch.

For that reason, I urge my colleagues to get behind the Thune amendment, which we will vote on later today, recognize that a promise made to the taxpayers a little more than a year ago is a promise we need to keep. Responsible government says, when we are debating increasing the debt limit, a step that will reduce the national debt is clearly one we ought to take.

I yield the floor.

Mr. President, I have been interested in the conversation that has gone on this afternoon and this evening. I have heard, once again, the statement made on the floor about the number of people who die every year because they don't have insurance and how that is an absolutely essential reason why we have to pass this bill and indeed pass it now; we have to pass it before Christmas; we have to pass it immediately because there are tens of thousands of people who are dying because they don't have insurance; we have to pass this bill so it will provide insurance for them in January of 2014; we have to pass this bill because people are dying right now, but we are not going to have any of the things that will take care of them available for 4 years. So we can't take an extra week--we can't take an extra 10 days-- because people are dying. But we can take an extra 4 years before we give them anything. I have had a very hard time understanding that logic. The mathematics do not add up for me. Delaying everything for 4 years--why?

We know why. The reason they are delaying the implementation of this bill for 4 years has nothing whatever to do with people's health or the fact that some people are dying. The reason the implementation date of this bill is delayed 4 years is entirely due to the computers in the Congressional Budget Office which say, if you started this program immediately, it would bankrupt the United States. It would blow the budget right out of the water. How do we make it look as if this bill is budget neutral? The way we make it look as if the bill is budget neutral is tell the computers--which cannot think, they can only add-- we will start the revenue in this bill, the taxes in this bill, the increased premiums in this bill right away. But we don't start spending on any of the things we are giving the people to save their lives for 4 years. So the computers will say: All right, you will accumulate revenue for 4 years and that will be a big pot of money. Then, in the remaining 6 years of the 10-year term, which is all the computers are allowed to look at, you will have enough money over a 10-year period to pay for 6 years' worth of benefits. I will grant that. Actually, it isn't 6 years' worth of benefits because the money coming in will not be enough. So in order to make it look even better, they will project. The computers--which don't think, just add--say: Yes, this is right. We will project taking roughly $\1/2\ trillion out of Medicare and putting it into the same pot of money that is coming in, in the 4-year period, when nothing is going out.

But wait a minute. If we have 4 years of money coming in and nothing going out and we take $\1/2\ trillion out of Medicare and put it in the same pot of money, the unthinking computers can add that very well. They can come up and say: You know, this is going to be revenue neutral. Anybody who thinks this is going to be revenue neutral does not understand reality, certainly does not understand history.

Let's look at the CBO record of projecting health care costs. I remember when the Congress passed Medicare. There were very firm costs associated with Medicare. It was going to cost so much. We look back on Medicare, it has cost 20 times what was projected. In the first year, it cost more than was projected. This is in constant dollars, not in inflation-adjusted dollars. In constant dollars, Medicare costs 20 times what we were told. I remember during the debate in 1994, Joe Califano, the father of Medicare, the member of the White House staff who wrote the bill, wrote an op-ed piece in the Washington Post. He said: Congress, pay attention to our experience with Medicare. He said: We put Medicare together, but we got the cost projections. We put the whole thing together. We knew within months after it had passed we were wrong. We knew within months the costs were going to go way out of sight. We went to the Congress and told them and at that point it was too late. This thing had taken root. It had its followers. It had people who were solidly behind it. It was too late to fix it. It has ended up costing us 20 times.

Let's look ahead and see what we are doing if we pass this bill. No. 1, we are doing nothing for people who need coverage for 4 years. But we are locking into the Federal budget situation a brandnew entitlement. That is a word we use in Washington. Many of my constituents don't understand what it means. Let me do my very best to try to help people understand. First, as the word implies, the people who are receiving the money under an entitlement are entitled to it, whether we have the money to give it to them or

not. They are entitled to it whether they need it or not. They are entitled to it whether it makes any sense for them to get it or not. It is an entitlement that they will receive this money.

When Medicare was passed, the only entitlement we had was Social Security. Now we have Social Security, Medicare, and Medicaid. Along with the other entitlements built into the Federal budget, how much of the Federal budget goes out in entitlements? If we look at the budget for 2010, here is the cautionary lesson. The budget in 2010 on which we voted--I didn't vote for it--listed the projections out of the Congressional Budget Office as to how much revenue the Federal Government was going to have in 2010. The answer was $2.2 trillion. That is a lot of money. Then it said, next line, entitlement spending or mandatory spending, $2.2 trillion, which meant that in 2010, with the economy on its back and the revenue coming down as a result, every single dime we received out of the economy in 2010 was already committed.

So people would say: Senator, why don't you balance the budget? I would say: How am I going to balance the budget? How am I going to balance the budget with every dime that is coming in already committed and going out as an entitlement and outside the appropriations process?

Vote against an earmark.

Pardon me. The entire government, all the Embassies overseas, the Defense Department, Transportation, Education, national parks, name it, whatever it is, every dime to keep the government going had to be borrowed, not because we didn't have any revenue. We had $2.2 trillion worth of revenue which, by itself, would have covered the cost of keeping the government open. But we couldn't touch a single dime of that $2.2 trillion because all of it was tied up with entitlements. So what are we doing in the face of that experience? We are creating a new entitlement to add to those we already have.

The realities of Federal budgeting are these, and they are not unlike the realities of running a business. I have run a business. I understand how the very best projections, the very best forecasts can go awry. You have a new product. You think it is going to do well and you forecast X millions of dollars in revenue from this new product. You look at what the product is going to cost you and you forecast that cost and you put the two together and you say: All right, we will have X in revenue and we will have Y in costs. As a result, we are going to have Z in profit. So you go out and you build the product. You commit for the raw materials. You pay the people in your factory to produce it, and you put it on the shelves. Now you are at the mercy of the customer, because if the customer decides he doesn't like the product, your projections of the amount of revenue will not save you from the enormous loss that will come.

Yes, you are right on the Y you are spending, but you were wrong on the X you thought you would get in. Instead of having the Z you planned to have as profit, you have a huge loss on your hands. Conversely, I have this happen, too. I have done my forecasting. I have laid down the plan for how much of the product we are going to produce. I have done my forecasting of how many will sell, and the product went crazy. It jumped off the shelves. All of a sudden, I was stuck with empty shelves and had to scramble to produce more and more and more in order to meet demand.

In the Federal Government, we don't have a product but we have expenses, just the same as doing a manufacturing operation. We don't have sales, but we have taxes. Our taxes are dependent upon the viability of the economy. The one fundamental lesson we all should learn is this: We can accurately predict the expenditures that are going out, just like in the business I could predict what it would cost me to produce the product, but we cannot accurately predict the revenue that will come in, just like I can't accurately be sure what the sales will be. We did a spending pattern based on revenue when the economy was strong. Suddenly, the economy turned weak and the revenue dropped off to $2.2 trillion. We were stuck.

Does this make any sense in the face of that reality? We can determine the spending, but we can't determine the revenue. Does it make any sense in the face of that reality to build in increased spending in the form of another entitlement in the hope that the revenue will be there? The only way the majority leader is able to make this bill look as if the revenue will be there is with a series of budget gimmicks the likes of which I have never seen, some of which I have already discussed.

The first budget gimmick is to say the revenue will be there because we will have 10 years of it and only 6 years of expenditure. The revenue will be there because we will be able to find $\1/2\ trillion worth of waste, fraud, and abuse in Medicare. I will stipulate there is probably $\1/2\ trillion worth of waste, fraud, and abuse in Medicare over the period of time we are discussing in this bill. We have been looking for it for more than 10 years and have been unable to find it. This bill, instead of trying to take a scalpel to Medicare and cut out the areas of waste, fraud, and abuse, uses a sledgehammer to smash Medicare and say we are going to knock $\1/2\ trillion out of it and hope that in the process of doing so, we will hit the waste, fraud, and abuse without hitting anything else.

We have 4 years on the timetable laid down by the majority in which to get this right. The majority has decided that if, indeed, people are dying because they don't have health care, they can continue to die because they don't have health care for 4 more years. I think in the face of the smoke and mirrors we are seeing with respect to this budget, we can afford, during that 4-year period, at the front end of that 4-year period, to take a few more weeks to do this right. That is why I am here and that is why my Republican colleagues are here, not because we don't say there is a problem, not because we don't have any ideas as to how to deal with the problem, not because we don't want to join hands with our friends across the aisle to solve the problem but because we know this bill is the wrong solution. Our constituents are pleading with us. They know this bill is the wrong solution. Every poll shows that. They are pleading with us: Don't let it happen. Don't let it happen. No matter what you have to do, don't let it happen.

It may well be that all our efforts are in vain. It may be we are washed aside in a tide of 60 votes. But we will not be washed aside by complacency or the desire to get along because the stakes are too high.

I conclude with this one last analogy. There was another very large organization that handed out a large series of entitlements to people with whom it was connected. These entitlements were not directly involved with the business of that organization, but they got bigger and bigger and bigger, and, ultimately, this organization suddenly discovered it could not function because of the financial drain of the entitlements it faced. The organization is now owned by the Federal Government. It is called General Motors. They discovered they could no longer be a car company because they were buried by the kind of entitlements they had built into their own situation.

Let us take a lesson from General Motors. We do not want the Federal Government to go bankrupt the way that company did. If we do, there is no other organization to bail us out the way the U.S. Government ultimately felt forced to bail out General Motors. It is a cautionary tale we all need to heed.