Floor Statements

Mr. President, last week, along with a number of my colleagues, I went up into the room on the fourth floor in the Capitol where the Defense Department, the State Department, and the CIA come to brief us on classified information. I sat in a darkened room where we saw a slide show of the photographs that had been taken of Americans inflicting abuse on Iraqi prisoners. The pictures were revolting, they were disgusting, and they left us all with a sense of outrage that this had gone on, outrage that Americans had been involved in anything such as this.

I did not look forward to the experience. Indeed, I made the initial decision not to go. Then I decided: No, if I am going to be involved in examining what is here, I have to see the evidence, as revolting as it may be.

The sense of outrage that I and my colleagues felt about this was shared by all Americans, but in one sector of American society it seems to be even greater than anyplace else. There are some in this society who might not be able to guess what that sector is. But I would say the outrage that has been the strongest has come from those who serve in the American military.

Duty, honor, country--these are the watch words of the American military, and they were violated by those who took those actions in the prison in Baghdad. They did not do their duty. They dishonored the uniforms they wore as they abused those prisoners, and they brought disgrace on the country whose Constitution they had taken an oath to uphold and defend.

The sense of outrage is nationwide, but it is particularly focused among those who have sworn to uphold duty, honor, and country and saw their fellows in uniform violate those principles.

I rise to discuss this today because today is the first court-martial coming as a result of the investigations that have been conducted into this activity. This morning in Baghdad, Army SPC Jeremy Sivits pled guilty, was convicted, and sentenced to a 1-year imprisonment, reduction in rank, and a bad conduct discharge.

Now, there are those in our society who have less faith in the military, who say: These courts-martial are a part of a coverup; this is an attempt to gloss over what has happened; one cannot trust the military to investigate themselves; and we need a whole series of investigations by outside groups.

I believe the facts are that we will find out more what happened from the courts-martial than we would find out from any degree of investigation conducted elsewhere. I offer as a demonstration of the fact that the military can be trusted to act in matters of this kind the following chronology of what has happened with respect to this incident.

We now know that the abuse of the prisoners took place in the last quarter of 2003. We do not know the exact dates, but sometime toward the end of that year the alleged detainee abuse occurred. On January 13, 2004, SPC Joseph Darby opened an e-mail thinking he was going to see pictures that he described as a travelogue; a history of the performance of a particular unit. Instead, what had been downloaded on his computer were the photographs that my colleagues and I saw in room 407 of this building.

Specialist Darby was absolutely stunned. What did he do? Here were his fellow soldiers engaged in activity that was clearly in violation of everything he had been taught, people he wanted to feel close with and identified with, people who, perhaps, were his friends. What would he do? He did his duty, and he provided a CD of the abuse photos to the Army Criminal Investigation Command, or the CID, on January 13, 2004. On January 14, the CID began its investigation--no attempt to cover up. No attempt to hide or turn away from the fact that there was a potential difficulty. They began the next day, and they notified people up the chain of command of what they were doing.

On January 16, just 2 days later, Brigadier General Kimmitt announced that there would be an investigation by

Central Command. It had gone up all that way, that quickly. In just 3 days they were at the top levels of Central Command.

Two days after that, BG Janis Karpinski, who was the commander at Abu Ghraib prison, was admonished and suspended from her command. She was relieved just 2 days after this reached the attention of Central Command.

Additionally, the Abu Ghraib chain of command was suspended, from the battalion commander, a lieutenant colonel, all the way down. Just 2 days after this was brought to the attention of Central Command, the entire group was relieved.

Now, on January 19, a combined joint task force requested that Central Command appoint an investigating officer, and on January 31, Major General Taguba was appointed to conduct the investigation.

On February 10, the Secretary of the Army tasks the inspector general to conduct an analysis of the internment detention policies, practices, and procedures. It goes beyond just the prison: Look at the whole Army and our procedures to see what can be done to prevent this from happening again.

On March 12, General Taguba completed his investigation and briefed the commander of joint task force 7, Lieutenant General Sanchez. Also on March 12, Lieutenant General Helmly, who was the commander of the U.S. Army Reserve Command, directed that Command's inspector general to conduct an assessment of training for Reserve personnel on the issues of detainee treatment, ethics, and leadership to see if the training had broken down in a way that would cause this to happen. All of this was going on--the military acting on its own.

On March 20, the first charges were preferred against six accused and announced by Brigadier General Kimmitt at a press conference. This is not something that got discovered by some investigative reporter digging in behind the scenes. This was something that was announced by the military after they had done a careful examination and moved in a way to protect the rights of every individual.

At that announcement, no names or units were identified so that they would not compromise the due process of those who were being accused.

On April 15, Major General Fay, the Army Deputy Chief of Staff for Intelligence, appointed an investigative officer to examine the circumstances with respect to the 205th Military Intelligence Brigade. That is the group where the commander was relieved within 2 days of discovering that there was an allegation of a problem.

On May 1, Lieutenant General Sanchez issued a memorandum of reprimand to six general officers and one letter of admonition to a member of the 800th Military Police Brigade as recommended by Major General Taguba. This is not something that they passed off to the GIs, the sergeants, the corporals, and the privates. This is something they took care of at the general officer level. Six general officers received a memorandum of reprimand. That is a career-ending experience for a general officer.

Then on May 7, Secretary Rumsfeld announced the independent review panel headed by former Defense Secretary Jim Schlessinger, including retired Air Force General Chuck Horner, former Representative Tillie Fowler, and former Defense Secretary Harold Brown. And then, today, on May 19, the first court-martial has taken place and Specialist Sivits was found guilty and sentenced.

The lesson that comes from this list of actions is a lesson that the world should heed. The lesson for Iraqis and other nations is that this is how democracies handle their problems. This is how Americans face the difficulties that arise when there is a breakdown that occurs within our military. We do not hide it. We do not pretend it did not happen. We do not strive to find excuses. We act in the way consistent with the rule of law.

I hope everyone in the world would recognize the difference between the way we have responded to this and the way al-Qaida has responded to this. We have responded to it by exercising the rule of law and seeking those responsible. They have responded by taking an innocent American civilian, who had nothing whatever to do with any of this, and cutting off his head, live and in color on international television. That is the difference between Americans and al-Qaida when faced with a problem.

So that is the first lesson I hope the world will take from the way we are handling this. The lesson that the military should take from this is that the rules are there to be obeyed. The lesson that should go forward from Specialist Sivits' court-martial, from the six general officers who got the memorandum of reprimand and from the investigations that are still going forward is that if the rules are broken, you end up in Fort Leavenworth. That is the lesson that should come out of this for the American military, and I believe it is being received there.

The lesson for the commanders, those who are now responsible and who have taken over to replace those who were relieved, is this. It comes from a statement by General Eisenhower, who knew something about military discipline. He said: ``Areas that are not inspected deteriorate.''

Let's go back to Specialist Sivits for a moment and find out from his statements relating to his court-martial what really happened. I am quoting now from the Washington Post:

Sivits told investigators that the abuse would not have

happened had higher-ranking members been present. ``Our

command would have slammed us,'' he said. ``They believe in

doing the right thing. If they saw what was going on, there

would be hell to pay.''

That statement echoes testimony given by one of the initial

investigators on the case. During a session similar to a

grand jury proceeding, Tyler Pieron, an Army criminal

investigator, said the abuses occurred, ``after the chain of

command had changed shifts and gone home.''

* * * * *

Sivits said he did not report the abuse to his commanders

because [he was told not to by a friend] ``and I try to be

friends with everyone. I see now where trying to be friends

with everyone can cost you.''

I spoke with Secretary Rumsfeld this morning about this lesson, the lesson of command. It is fine to change the command, but we must examine what caused the problem and change the procedures. Even though the rules were there, the procedures broke down. There was not a duty officer on duty. We have been told that this abuse took place between 2 and 4 in the morning when no one was around. I raised with Secretary Rumsfeld the importance of seeing to it from now on that the new commanders of the prison make sure there is a duty officer there all night long.

Back to Eisenhower's dictum, there should be snap, surprise inspections. People in the prisons should never know when someone might drop in, unexpected and unannounced, to see what is going on. Secretary Rumsfeld concurred. I believe that is the lesson that command should receive from this experience, and I believe it is the lesson they will learn and they will follow.

As sorry as this chapter is in our proud military history and as deep as this stain has become upon America's honor, it is not the first time we have seen such chapters. It is not the first time we have endured such stains. I wish I could say it is the last time this will happen, but even in this morning's news we are hearing that there are more pictures, that it may have been more widespread than we thought. With human beings as imperfect as they are, it is inevitable that at some point in the future someone else will break the rules, violate his oath, and take actions that will cause all Americans to mourn, as we do over these actions.

Given that history, that it has happened before and perhaps will happen again, we should remember what we did as a nation when it happened before and what we are doing now. We dealt with it. We went after those who were responsible, discovered who they were, gave them their full due process, but when they were convicted, they were punished. They were dealt with. Then we made the changes that were necessary to see to it that it wouldn't happen again. Then we got past it.

We have not allowed those past chapters in our history to deter us from our destiny as a nation. We should do the same thing now. We are in the process of discovering who the guilty are. We are in the process of conducting courts- martial. Specialist Sivits is just the first. Charges have been proffered against others and additional courts-

martial will be forthcoming. We are in the process of making the changes--not just the change of command but the change in procedures to see to it that this will not happen again.

As we have done in the past, we must get through this and not let it deter us from our overall goal of why we are in Iraq. We must not fixate on this stain on our honor to the point that we become so muscle-bound that we cannot proceed forward in our mission.

What is our mission? Speakers who have addressed this before me have made that clear. Our mission is to provide freedom and security for the people of Iraq. I believe that means freedom and security for the Middle East generally. I believe that means transforming the world in which Americans live and an increase of freedom and security for our Nation as well. These are worthy, indeed noble goals, and we must not be deterred from seeking them by preoccupation with this particular outrage.

I close with a conversation I had over the weekend. Like many of us over the weekend, I went home to Utah and I participated in Armed Forces Day. It was a poignant Armed Forces Day for a variety of reasons, because many of the people who were there were families of those in the military who were there without their family member--that is, children, husbands, wives, mothers and fathers of Utahns who are serving in this war and who are not home with their families to enjoy the delightful spring day at Murray City Park where everyone was having a picnic and a good time. Set up in that area was a series of flags, one flag for each individual who had fallen in either Iraq or Afghanistan. Of course, the majority of flags were American flags, but I was struck by the number of British flags, Italian flags, Polish flags, Spanish flags--one I did not recognize, an Ukrainian flag, an Estonian flag. We are providing the leadership, but many countries in the world are responding to us as we launch on this mission.

On Armed Forces Day I sat next to a colonel. He was not a Utahn; he had come to participate in the activities. We visited over lunch. With the Army, he has been in Kosovo, he has been in Bosnia, he has been in Afghanistan, he has been in Iraq, and he was on his way back to Iraq.

I said to him: Colonel, tell me what it is like. You have been there, you have been on the ground. Tell me what it is like. He gave me an answer we hear a lot. Indeed, it was the first sentence out of his mouth that comes out the same as many others. He said: Well, things are not nearly as bad as the U.S. press would have you believe. Things are really going fairly well in many parts of the country. But we have problems.

We talked about some of the problems. He made this observation that I think should keep us thoughtful as we address our mission in Iraq. He said: You know, whether it is Bosnia, Kosovo, Afghanistan, or Iraq, the same thing is true: Those people are just like us in that all they want is to have their children be able to walk out of the door and be safe on the street, to be able to go to school without intimidation and learn what they need to learn to get a decent job and live a decent life. That is all they want in Kosovo, Bosnia, Afghanistan, or Iraq-- just like us. That is what we want in America. To bring that to Iraq and give the people of Iraq that opportunity, with their wives and their children and their grandchildren, unfortunately requires force of arms. Americans, British, Italians, Poles, Spaniards, Ukrainians, Estonians, are willing to risk their lives to bring about that goal. We must never lose sight of the importance of that mission or of the sacrifice that has gone into achieving it. We must never turn back simply because there are those who have put a stain on American honor by the way they have behaved.

I pay tribute to the Armed Forces. I pay tribute to the chain of command that is dealing with these challenges. I pay tribute to those who are willing to face the problems and not back away from them or cover them up. We must support them in their efforts. We must not smear the entire establishment because of the actions of a few.

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

Mr. President, what is the time situation?

Mr. President, I will claim such portion of that time as I may consume up to the 30 minutes.

Mr. President, a recent poll within the last couple of days had a fact I found truly extraordinary which I want to talk about. It says a very large percentage--maybe even a majority--of the people of America believe we are still in a recession. I find that extraordinary because the evidence in every area is highly to the contrary. The economy, if you will, is firing on all cylinders. Let me repeat some of the statistics I have given here before.

In the first quarter of this year, the economy grew at a 4.2 percent annual rate. Added to the growth in the 2 previous quarters, this means it has grown over 5 percent in the last 3 quarters, which is the best performance in 20 years.

Some say, Where are the jobs? We may have gross domestic product growth, but we don't have any jobs, so we are still in a recession.

How can we say that in view of the facts which are overwhelming? Within the last 8 months, we have increased 1.1 million jobs according to the payroll survey, and 1.3 million jobs according to the household survey. Every indication is the jobs are coming back, and they are coming back very strongly.

In a recession, you have layoffs. When you have layoffs, you have people who apply for unemployment compensation. Those are jobless claims. The level of jobless claims is at its lowest level in 20 years. How can we be in a recession when the jobless claim level is so up? How can people come to this conclusion?

We have a constant drumbeat in the media about how terrible things are.

I have inquired why certain media figures continue to ignore the actual figures, the facts. I am told with a shrug by some of the leaders in the media, it is all about ratings. They get better ratings on television programs if they rant about American jobs going overseas and about the economy being in terrible shape. If they scare people, for some reason, people seem to stay tuned in and they get higher ratings and a bigger audience.

We have a responsibility in this Chamber not to scare people. We have a responsibility to tell the truth. The truth about the economy is that it is doing well.

Let me review some charts I have presented before to reemphasize the facts, not to make any new argument. Apparently, the arguments made before are being ignored. So let's make it again until people understand the facts. Here is the historical perspective of economic growth. On the chart, the green line above the line represents quarters of activity. Naturally, there are four quarters for each year. The red lines below the line represent quarters when the economy shrank. By definition, a recession is when there are two successive quarters in red.

If we look back over history--and this goes back into the years of Jimmy Carter's Presidency--we see a lot of red in this period. There was a recession at the end of Jimmy Carter's Presidency and then another recession in the first years of Ronald Reagan's Presidency--the dreaded double dip that people talk about. We go into recession, we get

some recovery, and we are right back into recession. That was one of the most difficult economic periods of our history. We survived it, we came through it, and we had a period following it of tremendous economic growth.

During this period we added to the size of the U.S. economy the equivalent of Germany. If we were talking companies, it would be as if the United States, a corporation, acquired Germany; all of it, and all of its profit and economic activity. We grew enough to add the total of Germany to the American economy in this period.

We cannot repeal the business cycle. Inevitably, no matter how well managers try to manage their affairs, something will happen, things will taper off, and we will have a correction. That is what recessions are; recessions are corrections of the excesses that preceded them. Plus, there can always be a recession from an external problem such as the oil shock that hit in the early 1970s. September 11 is something that could cause a recession and other factors. One can never anticipate that the upward trend will continue without a correction somewhere along the way. That hit in the middle of the Presidency of the first President Bush. By comparison to the earlier recession, it was mild. But it was not mild for people who lost their jobs. It was not mild for people who lost their homes or who had difficulties. But otherwise, by comparison, the amount of red below the line was nowhere near the amount of red that preceded it in a decade.

When we recovered from that recession--and the recovery began in the Presidency of the first President Bush--we began another period of prosperity. Overall, it was probably not as big as the prosperity that preceded it, but why quibble about small amounts. It was a period of good prosperity. We heard in the 2000 election it was the greatest economy in history. In fact, the red had shown up in the third quarter of 2000. The signal that this period of prosperity was over, that another recession was on its way, was already given before the election took place. The signal was correct.

After the election, we slipped into a recession that occurred in the last three quarters of 2001. However, we came out of it in the fourth quarter of 2001, and we have been in recovery ever since.

It is amazing to me that polls show that Americans think we are in a recession, when we are in this green period. This green demonstrates that we are going to do at least as well, if not better, than we did in this period--maybe even as well as we did in this period following this recession. This recession, by historic comparison, has been the shortest and the mildest that we have ever had in America.

For political reasons, it is being talked up as a disaster. I have heard in the Senate statements that this is the worst economy in 50 years. I have heard in the Senate that unemployment is the worst it has been since the days of Herbert Hoover. That is almost laughable. Unemployment in the Great Depression went over 25 percent. Unemployment in this recession and recovery topped out at 6.3.

Let's put that in historic perspective for a minute. Let me show what the unemployment rate has been in previous recessions. Here is the dreaded double dip we were talking about. Unemployment hit 10.8 percent, still less than half of what it was in the Great Depression, but it was tremendously difficult. I remember how difficult that was. Then it came down. We got the next recession, and unemployment peaked at 7.8 percent. Now, the peak of unemployment occurred during the recovery, not during the recession. The shaded period on the chart is the period of recession. Here it peaks as the recession ended, and here it peaked during the recovery. Now we came down and we had this recession once again; unemployment peaked during the recovery, but it peaked at 6.3 percent. If you put 6.3 percent across the chart and compare it to where it was in the previous recession, you say: Not bad, not bad at all.

But we are being told, again, this is the worst economy in 50 years because, where are the jobs? Now it is coming down. It is down to 5.6 percent. As I say, the jobs are coming back at the rate of a million in the last 8 months. So project the next 8 months, there is another million jobs. If they come back faster, they come back at the same level as they have been coming, we will have another million jobs in less than 8 months. I don't know what will happen, but I am pretty confident this will continue to come down.

The question is, Why does it take so long for the unemployment rate to come down once the recession is over? The answer is very clear. The business man or woman wants to be absolutely sure his or her business is, in fact, in recovery before he or she goes out and starts to hire. They are delaying hiring permanent workers until they are sure the recovery is in place. They use temporary workers. They use overtime on their existing workers until they are absolutely sure the recovery is in place. Then they start a permanent hiring. That has happened and the statistics are there and the facts are overwhelming. We are in recovery; the recovery is strong. It is robust; it has traction.

I can only assume it is for political reasons that people stand in the Senate and say: No, no, no, we are in the worst economy in 50 years. That simply is not true. It cannot be sustained.

As I listened to the rest of the rhetoric--and I will not repeat all of the statistics I have used in previous speeches because I want to talk about the philosophical basis, but let me make this point. There are those who believe the economy is a sum-zero game. By that I mean they believe that in order for one person to win, the other person must lose an equal amount.

Now, marbles is a sum-zero game. If we play marbles, and you win three, that means I will lose three; and we add your plus three to my minus three and we get zero. But in the economy, just because Adam gets a job, does not mean Benjamin has to lose his. In the economy, just because Charles gets rich, does not mean that Daniel had to be made poor. In the economy, it is possible for both to grow simultaneously. In the economy, just because jobs are growing in India does not mean they are shrinking in America. They can be growing both places. Indeed, that is what is going on.

I see my colleague from Texas wants to speak, and I will be happy to yield the floor and give her such time as she needs. But I want to leave with this one point, once again: In economic analysis, understand that the economy is not static. It is not an either/or. It is not a sum-zero game, a plus and a minus. The economy is constantly fluid. People are moving up and down the income ladder all the time.

We hear statistics about all the people at the bottom and how rich the people are at the top. If I may, in my own case, in my lifetime, I have been at the bottom and I have been at the top and I have gone back to the bottom and struggled back to the top. Statistically, there is no way to reflect that fact. Statistically, they look how rich the people at the top are getting, and look how poor the people at the bottom are, as if they are going to stay there all their lives.

This economy is strong. This recovery is real. No amount of political rhetoric to the contrary can change those facts.

With that, Mr. President, I yield the floor, but I plan to address this overall question of the fact that the economy is not a sum-zero game at some length in the future.

Mr. President, I thank my colleague for his presentation on the economy. I intend to continue in the same vein.

I begin with a headline that appears in this morning's Washington Post on the front page of the business section. I believe it belongs on the front page, period. The headline reads:

Federal Deficit Likely to Narrow By $100 Billion. Tax

Receipts Pare Borrowing.

It goes on to describe how the amount of tax receipts coming into the Government are so much higher than those anticipated, that the present expectation is that this year's deficit will be $100 billion less than the amount that we were told when the year began.

To me, that does not come as a surprise. Yes, I am a little surprised that the number is as high as it is. But the one thing I have said over and over again on this floor, and will continue to say because it seems nobody understands it, is that all of the numbers we have with respect to our projections around here are always wrong. I can't tell you whether they are wrong on the high side or the low side in advance, but the one thing I can always say with absolute certainty is that they are wrong.

Why? Because we are talking about an $11 trillion economy. In an $11 trillion economy, even the slightest percentage change in our estimate produces a big number, in terms of dollars. One hundred billion is not that much money when you talk about $11 trillion. It is 1 percent. And 1 percent, to use a term with which all politicians are familiar, is within the margin of error.

But the fundamental truth that comes out of this headline and the predictions that preceded it is this: Worry less about the numbers than you do about the principal position of the economy that underlies those numbers. If our policy is correct and the economy is thriving and growing, the numbers will take care of themselves. But if our policy is wrong and the economy is shrinking, then it doesn't matter what the projections say that the income of the Federal Government might be. We are going to be in trouble.

I want to put this all in historical perspective so, if you will, I will display a few charts. This first one, ``Historical Perspective on Economic Growth'' goes back to the 1970s. The green bars above the line represent quarters in which our economy grew. The red bars below the line represent quarters in which our economy shrank. As you can see, we had a very serious economic problem in the late 1970s and early 1980s, as the red bars went down below the line repeatedly and very deeply. This was the response to what some economists call the ``great inflation.'' We hear talk about the Great Depression, but we sometimes forget that in the 1970s we had the great inflation during the Carter years. And we had two quarters successive of red down below. Then it burst, and then an additional problem, as the economy went through the dreaded double dip; that is, we went into recession, recovered briefly, and then fell back into it again. Those were some of the worst economic times that I can remember. But to listen to the rhetoric around the Senate floor no one else remembers it because we are now being told our present economy is the worst in 50 years.

Look at the historic perspective. You see when we came out of that double dip, Ronald Reagan was President and Paul Volcker was Chairman of the Federal Reserve and we established fiscal policy and monetary policy that caused the economy to start to grow in dramatic fashion. We had a period of nearly a decade where we had nothing but green above the line. But as always happens--we cannot repeal the business cycle-- mistakes are made, decisions are taken on the assumption that the future will be different than it really is, and the economy slipped once more into recession in the middle of the Presidency of the first President Bush, and we had two successive quarters of red ink.

By comparison to what happened in the early 1980s, this was a happy time. But, of course, for those who lost their jobs and those who saw the economy shrink, it was not a happy time. It is never a happy time when we are in recession.

We came out of that recession and President Bush saw the balance of his Presidency a time of solid growth. It slipped for one quarter and then resumed again, and we had another period of green above the line. We didn't really get into a robust recovery until about 1995. That triggers all kinds of political debates. The Democrats said the reason for the recovery was because Bill Clinton was elected President in 1993. The Republicans say, no, the reason for the recovery is because Newt Gingrich was elected Speaker in 1995. Frankly, I don't think either one of those had that much to do with it. I think the economy, on its own, with its own strength, created this period of great prosperity.

But as the Senator from Minnesota has noticed, as we got toward the end of this period, we had the dot-com bubble, we had 9/11, we had the corporate scandals, we had geopolitical uncertainty, and the economy was shaken and slipped back again into the red. But, once again, if you notice, in a historic fashion the amount of red below the line in the recent recession was nowhere near as serious as the amount of red below the line in the 1990s, and not even close to the amount that occurred in the late 1970s and early 1980s. So that is the historic perspective of where we are. The economy is strong, it is resilient, and it is now poised for a significant period of growth that we hope will challenge if not exceed the periods that preceded it.

Let's go to the next chart that focuses entirely on the recent years, in the period where we are now. This shows the quarters that constituted the last recession, and then the quarters since then. You can see that since the last recession, the recovery, while initially fairly weak, has now become strong and robust and continues to grow.

In discussing that with Chairman Greenspan and the Federal Reserve, I talked to him about how weak the recovery was, and he said one of the reasons the recovery has been weak compared to previous recoveries is because the recession was so mild. You don't have a strong booming recovery unless you are coming back from a period of great and serious difficulty. Because the recession was so comparatively mild, the recovery was comparatively mild. But now it appears, starting in mid- 2003, that it has truly taken hold.

The jobless claims peaked during the recession, stayed high for the first part of the recovery, and then began to get optimistic and strong. That is the case here.

Let us look at the payroll jobs and how they are playing out, again in the historic pattern I have described.

This is the beginning of January 2003. Payroll jobs are being lost, but the amount of loss keeps getting smaller and smaller as the recovery takes hold. In August of 2003, the trend turns positive and the jobs start to come back. Now you have 7 months in which jobs have been created--every month, with the strong figure, of course, occurring last month of 308,000 jobs.

Once again, this follows the standard historic pattern; job are slow to come back in a recovery--every recovery regardless of who is President. People are slow to hire until they are sure the recovery is taking hold. Now the recovery has taken hold and the jobs are coming back.

The next chart shows us why this recession was as mild as it has been. It gives us an indication of what we can look forward to. It is a little hard because the colors are not as contrasting as they should be for television, but the green bars are consumer spending.

One of the interesting characteristics about this recession--it is unique indeed of any recession we have followed--is consumer spending stayed positive throughout the entire recession and then turns more positive, of course, during the recovery. That would indicate no recession at all. But, of course, there was a recession. What caused it? Go to the dark blue bars. This is business investment. We can see the response to the dot.com bubble. The bursting of that bubble was that businesses decided they had overinvested in a number of areas during that bubble. You see that in the very strong dark bars that are up here in 2000. In the middle of 2000, business investment starts to drop.

That was the signal. This was the beginning of the recession, the middle of 2000, and they slip into strong negative territory in 2000, stayed there during 2001, and do not come back to positive territory for nine quarters.

That is why we had a recession and that is why the recovery was sluggish.

Consumers were still buying but businesses were not investing partly because they had overinvested and thereby overspent during the period leading up to the recession, partly because they didn't have the incentives that were created for business investment by the tax cuts that we passed in Congress.

But, in late 2002, the trend turned. Business investment started to go up and became very strong and remained in strong territory, which is why the recovery remains strong.

But let us look at the area we have so much spoken about on the floor with respect to manufacturing. Once again, putting it in a historic perspective, going back to 1999, manufacturing spending was up and started down in 2000.

I keep emphasizing the fact that this started down in 2000, because during the election of 2000 we were told this was the strongest economy anybody could ever imagine, and if one only kept the incumbent party in power in the White House this would continue. In fact, during that period while President Clinton was in the White House and Vice President Gore was campaigning, it had already started down.

Economic activity is not that responsive to political activity; it has a life of its own.

It started down during 2000, slipped below the line that indicates whether it is growing or shrinking in the middle of 2000, it hits bottom in 2001, and then, while it comes up briefly, stays in a period and an attitude of difficulty until you get to the middle of 2003.

Again, the red arrow shows when it was going down, the green arrow shows when it is starting up, and the manufacturing activity has now come up very strong--stronger than it was before the recession started, and every indication is that it will continue.

On the floor yesterday, the senior Senator from Massachusetts talked about wages and how terrible wages are. His colleague who is running for President has said: Well, maybe the economy is coming back but we are in a wage recession and wages are terribly low.

Once again, putting this in historic perspective, we find that the present situation is not without precedent and not without indication as to what will happen in the future. Hourly earnings figures, which the two Senators from Massachusetts used to make their claim, do not include benefit costs. That is a component of compensation that every business man and woman knows you have to include.

I have run a business. I have realized, as every businessman does, that you cannot just compute the amount of money that an employee receives on his W-2 form as the cost that employee represents to you. You have to add to that the cost of his health insurance, the cost of his retirement benefits, the cost of any other benefits you give him in order to come up with the total amount he is going to cost you. If he cannot return to your company enough economic value to cover that total cost, you can't afford it.

To those who say, well, let us ignore the total cost and just talk about the wages, I say you are ignoring economic reality. If you look at the total benefits and wages combined in total cost to an enterprise, you realize we are not in a wage recession. We are in a situation that has very careful precedent very close to what has happened in the past recessions.

When Alan Greenspan appeared before the Joint Economic Committee, I asked the question: Are we in a wage recession? He said no.

I close the way I began. It is the economy that produces money--not the budget. It is the economy that determines how well we will do and not necessarily our laws.

I go back to the headline that I held up at the beginning of my presentation in today's paper, the Washington Post. On the front page of the business section, it says ``Federal deficit likely to narrow by $100 billion.''

Do you know what it would take for us to create a $100 billion reduction this year in spending in order to get that kind of an impact? There it is--an additional $100 billion into the Treasury by virtue of the strength of the economy rather than anything we do.

It is very important for us politicians to understand that and realize that our first responsibility is to adopt policies that will keep the economy strong and growing. I believe this administration and Congress have done that. The information that is now flowing in to us from the economic world demonstrates that our policies are the correct ones.

I yield the remainder of my time and I yield the floor.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I have listened with interest to my colleague from Iowa in his presentation. I rise to disagree with the positions he has taken. I will do my best to do it in a manner that is not disagreeable either to him or to others who are in support of this amendment.

Let us understand, of course, the Fair Labor Standards Act is one of the most important protections American workers have. We all agree on that. But these provisions have not been updated, some for as long as 50 years. Some kind of clear updating is essential. In the process of updating regulations that go back as long as 50 years, some explanation was, of course, necessary which results in the number of pages my friend from Iowa has referred to.

My problem with the Senator's amendment is with a very broad brush and strong ax he cuts out a large chunk of the pages that have been made and says those things that are in place are going to stay in place. We are not going to allow any changes in these areas. His amendment is relatively short but very powerful in its impact on the overall bill.

In an effort to understand this--because I am not an expert in these areas--my staff and I have reached out to HR directors throughout the State

of Utah to get their reactions to the new proposal, and at the same time ask them what their response would be to what we understood the Harkin amendment to be. The reactions have been unanimous--No. 1, that the action of the Department of the Labor Department is long overdue and very welcome.

One of the things I had not known until we got into this particular subject was the trial lawyers, whom we hear so much about in the Senate, have found a bonanza in class action lawsuits dealing with the Fair Labor Standards Act. Indeed, the bonanza has been primarily for the trial lawyers and not for the workers in whose name they bring these class action cases. This should not come as a surprise. We have seen other examples where this goes on.

To quote from the Texas lawyer: Overtime litigation is attractive to trial lawyers because of the ``astonishingly'' high amount of money at stake.

And Lawyers Weekly USA says: Boom in overtime suits, a danger for employers but a gold mine for plaintiffs' lawyers.

In the opinion of the HR directors we have spoken to on this issue, this boom for trial lawyers would not go away if the Harkin amendment were passed. Indeed, in their opinion, if the Harkin amendment were passed, it would mean more ambiguity, more uncertainty, and more opportunities for trial lawyers to file class action lawsuits. The reason for that is by freezing certain classifications that are in the current regulations forever forward as a result of the Harkin amendment and allowing other classifications to remain as they are in the new regulations, you could very well end up with two employees doing absolutely identical work, but because one of them was in place when the Harkin amendment was passed and the other was hired after this legislation was passed, they would have different classifications. A trial lawyer would come along and have a great deal of fun with that, perhaps win a judgment of some kind, tremendous fees for himself and not that much for the workers.

Everyone we have spoken to on this issue has said over and over again: The Harkin amendment would make things much more difficult; the Harkin amendment would create an administrative nightmare to try to work our way through; the Harkin amendment should be opposed.

They are all unanimous in saying the proposal by the Department of Labor is a good proposal. It will make their lives a whole lot easier because it will bring the regulations up to date, bring the regulations that are 50 years old into the 21st century, and allow people to begin to deal with these challenges in ways that are consonant with today's labor market.

My friend from Iowa talks about the jobless recovery. I recommend he spend a little time looking at the jobless claims that are being filed. The number of jobless claims being filed keeps going down week after week. People are no longer being laid off in the degree they were during the recession. As we saw in the month of March, 308,000 new jobs were created. We are waiting for the April figures. The expectation is it will be over 100,000 new jobs created in April. The effects of the recession and the recovery period are wearing off, the jobs are coming back, the labor market is tightening up, and the Federal Reserve is talking about raising the overnight rate because they say the economy is coming back. They have not given a date for that. Economists have been expecting that to happen in September. After Chairman Greenspan's appearance before the House Banking Committee, some thought it would happen as early as July. I do not have a crystal ball on that and do not pretend to know. As chairman of the Joint Economic Committee, I do know that virtually every economic indicator we have is up and pointing up. The economy is coming back very strongly.

I hope the rhetoric about the terrible economic conditions in which we are currently operating will begin to change in light of the current economic information that contradicts it and says the economy is coming on very strongly. In that kind of economy, in that kind of situation where we are looking to the 21st century workforce, it only makes sense to upgrade, revamp, and modernize those portions of the Fair Labor Standards Act that are, in fact, 50 years old and have been languishing for a long time. There are definitions in that act of jobs that no longer exist. There are circumstances described in that act that are clearly out of touch with today's economic reality and today's labor marketplace.

I congratulate Secretary Chao and the Department of Labor in the very careful way in which they have approached this issue. As nearly as I can tell, the only people who have any reason to fear these new regulations, the only people who have any reason to fear their incomes might go down as a result of these regulations are the trial lawyers who have taken advantage of the anachronisms in the existing regulation and filed all of these class action suits I have talked about.

I have some examples of how the class action suits have muddied the water, based on the current regulations, many of which would be frozen in place by the Harkin amendment. Courts have interpreted the confusing regulations differently. In the Virginia court, a designer of electric equipment gets overtime; but in a New York court, a designer of electric systems does not get overtime as they have tried to determine a different meaning of these phrases. This would be cleared up by the new regulations proposed by the Department of Labor. In a Louisiana court, purchasing agents are entitled to overtime; but in an Oregon court, log merchandise buyers--to me, that is a purchasing agent--are not entitled to overtime. This is because these definitions are in the old regulations, the existing regulations. These definitions are anachronistic, they are uncertain, and they are being brought up to date, brought up to standard by Secretary Chao and her associates at the Department of Labor.

But the Harkin amendment says, no, we will freeze these changes in place to make sure the past pattern does not change. Quite frankly, I want the past pattern to change. People who are involved, caught up in the difficulties of trying to handle the past pattern want them to change. They want modernization. They want these things to be updated. It is not being done in an effort to try to deny anybody overtime. If that had been the case, the administration would have left the number at 8,000 instead of raising it close to 24,000 as the threshold by which people could be reclassified.

No, this is not an attempt to deny overtime to anyone. This is simply an attempt to bring the Fair Labor Standards Act regulations into the 21st century, bring them up to date with current economic reality, make them available and understandable to the HR directors in the various firms that deal with these challenges, and remove from the lives of those HR directors the tremendous ambiguity, uncertainty, and, frankly, stupidity that comes from regulations that are half a century old.

I say to my colleagues, if there are portions of the work that the Labor Department has done that Members think you can improve upon, let us hear your arguments, let us look at your amendments. I am willing to do that. But to take a whole section of the bill and lock it in place in the way the Harkin amendment does, in my view, cuts against the whole purpose of this revision. It says we are going to keep in the law anachronistic positions that are 50 years old just because we are afraid something might happen. In a dynamic economy, something is always happening. Yes, sometimes it can be very painful.

I know what it is to be looking for a job. I know what it is to be laid off. I know what it is to go without health insurance. I know what it is to dig into one's savings and then see those disappear and slip into debt in an effort to keep things going. I have founded businesses, some of which have failed. And I do not get unemployment compensation when I am the boss and my business fails. I know how difficult this can be.

So it is not a matter of not having appropriate sympathy or appropriate experience with those who are caught in economic changes. But at the same time, I recognize the genius of the American economic system is its ability to grow under all circumstances, as we traditionally have. We have had fewer recessions and more shallow recessions than our friends around the

world who have attempted, through government, to monitor the economy and keep it under some kind of governmental control.

Yes, it can be painful. But ultimately it produces more jobs, more wealth, more opportunity, and more security for more Americans if you allow the free market to work better.

The regulations that are being proposed by the Department of Labor, in my view, meet that criteria. They provide a change in the situation that will allow the economy to be more responsive to today's economic opportunities and challenges in a worldwide, borderless economy. I believe they should be adopted, as proposed, without the encumbrance of the Harkin amendment.

I yield the floor.

Mr. President, on the 5th of April, the senior Senator from Massachusetts, Senator Kennedy, appearing before the Brookings Institute, delivered what Larry King described as a blistering attack on the Bush administration. Last night, Larry King and Senator Kennedy had a conversation about the speech and Senator Kennedy's comments that is worthy of comment and reaction in the Senate.

First, let me make this observation. Senator Kennedy earlier in this campaign made personal attacks on the President which I felt compelled to respond to in the Senate.

I am happy to report in his conversations with Larry King, Senator Kennedy backed away from that degree of personal attack on the President, and I salute him for that. I think it important for us to recognize how much we can get carried away with election-year rhetoric and how personal we can get in our attacks sometimes. I salute Senator Kennedy, in spite of the vigorousness of his attack on the administration, for his decision to back away from personal attacks on the President. I would hope other members of his party would follow his lead.

We have seen the former Vice President of the United States attack the President of the United States in language reminiscent of that which Joe McCarthy used to use to attack Harry Truman. We should back away from that kind of personal hatred, even though historically it has been part of our election tradition.

There has probably not been a President more personally hated than Franklin Roosevelt in my lifetime. I remember the things that were said about him. I remember the things that were said about Harry Truman. I remember some of the things that were said about Richard Nixon, about Bill Clinton. We should back away from those kinds of personal attacks. Unfortunately, this election year has seen them come back to the point where one could almost say the basis of the campaign against the President is, in fact, personal hatred.

Former Governor Dean certainly went into that direction in his attacks against the President. We have seen Senator Kerry, in an unguarded moment, refer to his opponents as a bunch of lying crooks. I would hope we could back down from hatred as the primary theme of this campaign.

But there is another theme in this campaign which did come out in Senator Kennedy's speech I would like to respond to and comment on. It is the theme of fear. There is an underlying sense of fear that pervades the rhetoric of the President's opponents here. It is interesting to me, because the founder of the modern Democratic Party, Franklin D. Roosevelt, is perhaps best remembered for his statement in his first inaugural when he said: We have nothing to fear but fear itself.

It would seem in this campaign there are those who have nothing to offer but fear itself--fear and its handmaiden, indeed, its standard derivative, which is pessimism. We have great fear, and we are convinced nothing is going to work. That, if I may, Mr. President, is what pervaded Senator Kennedy's speech before the Brookings Institute, a conviction that nothing is going to work, that nothing is going to save this country except the personal replacement of the President. But none of the policies the President has put in place can possibly work, and we are in such a terrible morass and difficulty that we live in fear.

I was tempted to go through Senator Kennedy's speech point by point and rebut it one at a time. I believe I could do that. It would take a great deal of time, and it would probably bore everybody. It is the kind of thing lawyers do in courtrooms where it is essential to build a record. But, as you know, Mr. President, I am unburdened with a legal education. I would like to step back from the point-by-point kind of refutation that would be called for in a courtroom and have an overall view of what Senator Kennedy was saying. I refer to him personally, but I think this speech, in fact, is a distillation of the position the Democratic Party will take in the upcoming election. So I think we should step back from the point-by-point situation and look at the overall message of what they are trying to tell us. That is what I would like to address today.

Basically, as I say, it is rooted in fear and its derivative, pessimism. That is what they are offering the American people: fear and pessimism. This is the fundamental position Senator Kennedy's speech takes: If it is bad, and it happened on President Bush's watch, he is responsible for it. If it is good, and it happened on President Bush's watch, it was coincidence or anybody could have done it, and he does not deserve any of the credit.

Let's go down the history of what has happened on President Bush's watch and see if, in fact, that pattern I have just described did play itself out.

Turn to today's headline where we have a Commission examining what happened prior to 9/11 in the year 2001. Well, we are being told repeatedly it was Bush's fault. He is responsible for 9/11 because he did not do enough to prevent it. 9/11 was his fault. Then the Commission goes on to detail what he did. Basically what he did was what the Clinton administration did. They kept track of al-Qaida. They monitored what was happening. They did their best to find out what was happening, but they did not do enough. In other words, they did not invade Afghanistan.

It is interesting to me that the people who are now saying President Bush did not do enough prior to 9/11 are the same people who are saying he did too much in Iraq. He acted before Iraq became a threat. That is in Senator Kennedy's speech--he should have waited until Iraq became a threat. But, of course, the same critics are saying he should have acted before al-Qaida became a threat. You cannot have it both ways. Either he was prudent in doing what the Clinton administration did prior to 9/11, and watched the situation carefully to see how it would play out, or he was too timid. And if he was too timid and should have taken more forceful action prior to 9/11, he learned that lesson and took more forceful action with respect to Iraq. You cannot attack him for doing the one in the one situation and then the other in the other; you must be consistent. But the President's critics are not.

As I say, he is responsible for 9/11, according to his critics, because he did basically what the Clinton administration did, but he should have seen it coming and done more. Then when he did do more-- that is, when the President led us into Afghanistan--the President's critics were outraged. What did we hear over and over again? Maybe the media has short memories, but I do not. We heard lessons from history: The British went into Afghanistan, they got bogged down, and they

could not accomplish anything. The Soviets went into Afghanistan; they got bogged down and ultimately humiliated. We are going to get bogged down, and we are going to get humiliated. And going into Afghanistan is a terrible mistake.

Then suddenly the battlefield situation changed, and now we hear the President's actions in Afghanistan were brilliantly planned and brilliantly executed. We see Afghanistan on the verge of a new constitution. We see women back in the Afghanistan economy, women going to school, women now being allowed rights they did not have under the Taliban. But we do not give President Bush any credit for that. No. As I say, the mantra is: If it is bad, and it happened on Bush's watch, he is responsible. But if something good comes out of what happened on President Bush's watch, that was coincidence, and he has no right to claim any credit for it.

I am interested in a comment Senator Kennedy did make in his speech, and I will go to the speech for this one. He said, referring to our decision to go to war in Iraq:

. . . President Bush gave al Qaeda two years--two whole

years--to regroup and recover in the border regions of

Afghanistan.

I find that an incredible statement--incredible in the true meaning of that word: incredible, not credible, not to be accepted.

Afghanistan, prior to the time we went in--Afghanistan, during the period of the Clinton administration--was a haven for al-Qaida. It was a training ground for al-Qaida. President Clinton ordered the lobbing of cruise missiles into some of those training grounds but did nothing more.

Now, in response to 9/11, President Bush led the world into cleaning out the al-Qaida training camps in Afghanistan. The al-Qaida leadership has been disrupted. A large percentage of their leadership has been either killed or arrested. Assets, totaling in the tens if not hundreds of millions of dollars, of al-Qaida have been discovered and frozen, and yet the Senator says: ``President Bush gave al Qaeda two years . . . to regroup and recover in the border regions of Afghanistan.''

Al-Qaida has been on the run. Al-Qaida has been disrupted. Al-Qaida has seen its assets destroyed in the 2 years we have been at war with al-Qaida and Afghanistan has been freed. Those are solid accomplishments for which the President's enemies give him no credit whatsoever.

Let's talk about Iraq. That is the core of most of the criticism of the President. There are those who suggest Iraq was created by George W. Bush; that is, the crisis was created by George W. Bush. There are those who suggest--and Senator Kennedy comes very close to it--that George W. Bush was the first one to indicate there might have been weapons of mass destruction in Iraq. Again, the media may not have any memory on these issues, but I have a clear memory. Sitting in this body, I remember who it was who first convinced me al-Qaida had weapons of mass destruction. That was Madeleine Albright, President Clinton's Secretary of State.

We all went to 407, the room in the Capitol where we receive briefings on confidential and top secret information, classified information. Madeleine Albright laid out in chilling fashion all of the evidence to tell us there were weapons of mass destruction in Iraq. In response to that evidence, President Clinton went to war against Iraq. We forget that. We pretend that never happened. President Clinton, using his powers as Commander in Chief and acting under the authority of the U.N. resolutions that had condemned Iraq following the first gulf war, launched a heavy bombing attack upon Iraq for the sole purpose of destroying their weapons of mass destruction. And to his credit, during the current political debate, President Clinton has made it clear we did not know whether or not that bombing attack destroyed all of Iraq's weapons of mass destruction. President Clinton has made it clear we had no way of knowing how successful that bombing attack was.

Yes, the difference between President Bush and President Clinton is President Clinton bombed. He carried on the war from the air. President Bush decided to carry on the war at ground level. I do not suggest that is a trivial difference. It is a very significant difference. But if we are going to talk about who went to war in Iraq over the issue of weapons of mass destruction, we have to say the answer is President Clinton. If we are going to talk about Secretaries of State who informed the Congress about Iraq's program of weapons of mass destruction, we have to say the first one who did it was Madeleine Albright.

I am one who believed Madeleine Albright. I am one who believed and supported President Clinton. I find it a little disheartening to have those who agreed with us then now suggesting it was President Bush who first brought up the issue of weapons of mass destruction, and it was President Bush who first said we had to deal with those weapons by acts of war. Memories should be longer than that.

When President Bush decided to go ahead in Iraq, what did his critics have to say? It will never work--fear, pessimism; we can't succeed. On the floor of this Senate, we heard over and over again: There will be thousands and thousands of body bags coming back as Saddam Hussein uses chemical weapons against our troops. We cannot send our troops there to be exposed to these weapons.

These are the same voices now who are saying: There were no weapons. But certainly they believed there were, as they warned us that our troops would be gassed, that they would be killed with chemical weapons, and we could not run that risk.

Then when the action started, these same voices said: Bogged down on the road; held down by the resistance of the Iraqis. We are in a quagmire; we will never succeed.

Then when Baghdad fell within a matter of weeks from those prophesies and predictions, now we are being told: Anybody could have done it. No big deal. We can't give Bush any credit for having gone into Iraq and winning the war. It was a piece of cake.

Before the fact, fear and pessimism; after the fact, blame, no credit for success, determination that it is not going to work in the long term.

I could go on about Iraq in that regard, but there will be many more debates. Let me go into the other substance of Senator Kennedy's speech and demonstrate the same pattern: fear and pessimism.

The Senator talks about education, talks about No Child Left Behind. He takes credit for having helped write No Child Left Behind, appropriately. One of the reasons I voted against No Child Left Behind is because I thought the things the Senator from Massachusetts succeeded in getting into that bill would be too heavy handed in terms of the Federal pressure on State boards of education. In that, I feel vindicated because State board after State board has complained that this represents entirely too much Federal control on education.

Now Senator Kennedy says: No money for education; lots of promises out of the administration but no money.

The facts are that under President Bush's leadership, this Congress has increased Federal spending on education to higher actual levels and at a higher percentage increase than any other administration in history. This administration has spent more on education than the Clinton administration did and has accelerated that spending at a higher rate than the Clinton administration did.

Yet we are being told: No, they are holding back on education spending. They are being too stingy on education spending--as they spend more than any other administration and Congress in history.

In advance, can't work; after the fact, pessimism that we can't get there--fear and pessimism.

The Senator talks about cost estimates with respect to the Medicare bill. Here we have to get into a little inside baseball so people can understand exactly what happened. Senator Kennedy quotes the fact that we used the figure in the Senate of $400 billion as the cost of this bill and that an official in the Department of Health and Human Services said it is going to be closer to 500, that it is going to be over 500. And he was told not to make that estimate public. Senator Kennedy berates the administration for selling the $400 billion number when it knew $500 billion was the correct one.

Now let's get into the facts. A number of us on this side of the aisle were

equally disturbed by this gap between numbers. We assaulted the chairman of the Budget Committee, Senator Nickles, to ask him: How did this happen? How did we get trapped with a low estimate when there was a higher estimate out there?

He pointed out this fact that doesn't get into the public consciousness and that the media does not take the time to understand and explain: By law, we in the Congress, as we are adopting a budget, can use only one source for our estimate of costs. By law we have to take the estimate or score--to use the word we all understand around here--of the Congressional Budget Office.

As Senator Nickles pointed out to us, during the debate, the Congressional Budget Office said: This will cost $400 billion.

That is where it was scored. After the estimate came out of the administration that it was going to be higher, the Congressional Budget Office said: The number is still $400 billion, according to our estimates.

By law, we could not have used the higher estimate in writing the budget because it came from a source outside of the Congressional Budget Office. Now, the one thing I know about the $400 billion number offered by the CBO and the $500 billion-plus number offered by OMB is that both of them are wrong. I cannot tell you whether either one of them are too high or too low. I can only make my own estimate.

But stop and think about it for a moment. We are talking about a program, spread over 5 years, that is not working yet, and we are making guesses as to what it would cost. You feed into your computer certain assumptions and you get a number; you change the assumptions in the computer and it will give you another number. The question is not, Is the number correct? The question is, Are the assumptions correct? The answer is, all of the assumptions are guesses--whether CBO is making the guess or whether HHS is making the guess or whether it is OMB. Everybody is making the guess.

But in terms of the debate on the floor of the Senate, we had no choice but to accept the CBO number as the controlling number. That is the law. So Senator Kennedy is attacking the Republicans and the decisions in this Senate with respect to the budget for following the law. He is attacking us for not accepting estimates which, by law, we cannot use. I think it is important to understand that as we go through this debate, and talk about what is going to happen in the election.

In summary, as we look ahead to the election, I think we should pay attention to the details, but we should also understand the overall thrust of the two campaigns. I do believe that the campaign mounted on the Democratic side of the aisle has begun out of personal hatred of President Bush, and now more into a litany of fear and pessimism. They are afraid the economy is not coming back. They tell us pessimistically that we are never going to get any jobs.

Once again, before this last Friday, we were told, well, the unemployment rate might be coming down, but that isn't the rate we should look at; we should look at the number of jobs created. On Friday, it was announced that 308,000 jobs were created in March. Now we are told, no, don't look at that, look at the unemployment figure; it is not coming down fast enough. Don't pay attention to the number of jobs created.

We are told this is the worst economy in 50 years. I have heard that rhetoric on the floor. According to the blue-chip economists who are looking at this recovery, they are projecting for 2004--another guess, I make that clear--the highest growth rates in 40 years. If that is the example of the kind of economy we are getting from George W. Bush, I say give us more. The highest growth rate in 40 years is what the experts on Wall Street are projecting.

And the pessimists are complaining about that. The pessimists are telling us we cannot get there. Look at Iraq. Of course, things are bad in the Sunni Triangle in Iraq. The deaths of Americans and the deaths of Iraqis are tragic, and we should mourn them and do everything we can to try to prevent them, but let us not focus solely on those deaths.

Let us look at the fact that Iraq is on its way--however haltingly or however slowly, and with whatever difficulty--toward establishing a constitution and, one hopes, a democracy. The pessimists say we can never get there. The pessimists are filled with fear and are saying we will fail and when we fail al-Qaida will destroy our cities. But George W. Bush is not a pessimist. He is an optimist and he does not peddle fear.

I ask unanimous consent that I be allowed to continue for an additional 4 minutes.

That is the core of this election. Do we face the future with fear and pessimism and a conviction that we cannot do it or do we face the future with a clear, realistic understanding of how difficult it will be, but with a confidence and an optimism that we can do it, that we can succeed in implanting a democracy in Iraq, in bringing freedom into that part of the world in a way that it has never known before?

We see signs that we are succeeding already. We see India and Pakistan, two nuclear powers that have been on the verge of war, now looking out over the world of George W. Bush and American resolve and saying maybe we should talk and try to resolve our differences short of war. We see Qadhafi in Libya saying: Maybe it is not a good idea to have weapons of mass destruction and I will voluntarily surrender them and dismantle them in this new situation that George W. Bush has created.

I believe the American people will respond more actively to hope and optimism than they will to fear and pessimism. For that reason, I look forward to this election season with some relish about debating the details of the issues raised by the Senator from Massachusetts and, at the same time, some confidence in the wisdom of the American people and their willingness to embrace hope and optimism and put aside the fears and pessimism that are being peddled by the President's opponents.

Mr. President, it is my understanding there is a unanimous consent agreement in place as to who might speak. I ask unanimous consent that I be recognized for 5 minutes ahead of those in queue.

I thank the Chair.

Mr. President, I listened with interest to my friend Senator Conrad. And he is my friend. We use that term around here loosely, but he is in fact a good friend. I differ with him very fundamentally.

I have learned in the superheated atmosphere of the Senate that I must make this disclaimer: I do not challenge his patriotism, but I challenge his accuracy and his conclusions.

I think we should also understand that as we differ on this, we are not attacking someone's patriotism. That canard has been thrown across the aisle at those of us who stand to defend the President and differ with our colleagues.

I will return to the floor at a later time for more extensive comments on Senator Conrad's speech. But I want to make these points which I think get neglected over and over and were neglected in his presentation.

He quoted David Kay, the President's arms inspector, as saying they are admitting now there are no weapons of mass destruction in Iraq. What he failed to quote from David Kay was the statement that after concluding his inspection in Iraq, David Kay came to the conclusion that Saddam Hussein was in fact more dangerous than we thought he was when we launched the war. I think that is the point that keeps being ignored and must be emphasized again.

Senator Conrad says we didn't invade Russia when they had weapons of mass destruction; that we didn't invade China when they had weapons of mass destruction; and, why, therefore, did we invade Iraq when it turns out they didn't have them? We did it because we thought he had the weapons of mass destruction, and we thought that made him dangerous. It is not the possession of the weapons that is the problem. It is the danger that is the problem.

Great Britain has weapons of mass destruction, but they are in no sense dangerous. We thought Saddam Hussein was.

It is unfair to quote David Kay as saying there were no weapons and then not finish the quotation with his statement that even without weapons Saddam Hussein was more dangerous than we thought when we entered the war.

If you are going to use David Kay as your authority, you must use David Kay's entire conclusion. Saddam Hussein was, according to David Kay, more dangerous than we thought. Yet somehow he is being cited as to the source to say we should not have gone ahead.

This next major thrust of his statement was: Well, because we got distracted with Iraq, we have not dealt with al-Qaida and terrorism. That is the subject which I will address at some length when the Senator from Tennessee is finished.

The fact is, you cannot single out al-Qaida as a terrorist group as if it operates in a vacuum. I remember my high school history teacher saying, over and over to us: You cannot cut a seamless web of history. You cannot divide the threat of terror into neat little sections and say, we can deal with the one and the others do not really matter.

I will be discussing and presenting on the floor here at a relatively close future time the statement that appeared this morning in the Wall Street Journal that is a summary of the Kissinger lecture, given at the Library of Congress, by George Shultz. I had the privilege and honor of hearing George Shultz present that lecture. In it he makes the clear point that the war on terror, the threat from terror, goes all the way back to his experience in the Reagan administration, when he was Secretary of State. And it manifests itself in a variety of places and in a variety of ways.

There is no distraction in the war on terror by virtue of what we are doing in Iraq. Saddam Hussein financed terror. Saddam Hussein countenanced terror. Saddam Hussein provided sanctuary for terrorists. If we were going to launch a war on terror, and said we were going to rule out Iraq as part of that war, we would have been irresponsible.

Yes, the first attack went against al-Qaida and al-Qaida's sanctuary in Afghanistan. But al-Qaida fled and sought sanctuary elsewhere. And one of the main places where terror found sanctuary and finance was in Iraq. And we thought Iraq was dangerous enough to invade, in fulfillment--as George Shultz points out--of the clear United Nations mandate that went back decades. We acted in accordance with that mandate. We enforced the United Nations resolutions in full compliance with United Nations procedure and the vote of both Chambers of this Congress.

It was not a distraction. It was part of the overall recognition on the part of the Bush administration that this was not a law enforcement problem where we needed to identify the criminal, arrest him, and prosecute him. This was, indeed, a true war, across a wide spectrum of challenge, where we had to deal with dangerous problems, the most dangerous of which, again, according to David Kay--who has been quoted by those who are attacking the administration--was Saddam Hussein: more dangerous than we thought when we launched the war.

I think we should keep that in mind as we go forward in this debate.

I yield the floor.

It is an insight, and the question is whether or not the Senator wanted a ride in a car that throughout its history has a 53.1 miles-per-gallon history.

Mr. President, I have listened to the debate that has been swirling around the country with respect to Iraq. The debate comes up again with respect to the commission which is currently meeting.

I cannot respond to all of the specifics that come along. I am tempted to, but I will not because I want to spend the time that is allotted to me by setting the total record before those who might be listening so we can understand that many of the original statements or original positions with respect to Iraq that are being repeated over and over again are, in fact, false.

I remember our colleague across the aisle, the late Senator Moynihan from New York, one of my dear friends and one of the Senators for whom I have the highest regard, quoted something. He probably didn't think of it himself, but it was more or less his mantra, as he said to me: ``Everyone is entitled to his own opinion but not to his own facts.''

We keep hearing things said over and over again with respect to the war in Iraq as if they were fact. It is time to set the overall record straight.

We heard one statement that there was absolutely no connection between 9/11 and Iraq. The other one we hear over and over again is the reason we went into Iraq is because we thought Saddam Hussein had weapons of mass destruction. Some make it a little more stark than that.

There was a group that marched on the Utah State Legislature wearing T-shirts that said, ``Bush Lied To Us. There Were No WMDs,'' as if the President of the United States George W. Bush himself alone was the only authority for the notion that there were weapons of mass destruction; and, once again repeating the false position that the only reason we went into Iraq is because we believed they had weapons of mass destruction.

To quote another individual not nearly as well known as Pat Moynihan but my high school history teacher, she would always say to us, ``You cannot cut the seamless web of history.'' I want to take this opportunity to lay out the whole seamless web of the history of terrorism and do our best to understand it so we can realize the first statement that there was no connection between Iraq and 9/11 and the second statement that the only reason we went in is because Bush lied to us about weapons there, are not true. And I hope we can get the dialog back to the facts.

I am distressed at what has happened to the dialog on this issue. I must comment. On television was the former Vice President of the United States with his hand with a clenched fist raised, the blood vessels standing out on his neck, screaming at the top of his voice, speaking of the President, ``He has betrayed this country.''

To say the President has betrayed his country is to accuse him of treason, which is one of the crimes specifically listed in the Constitution as an impeachable offense. We have not heard that kind of rhetoric from a politician as highly placed as Al Gore since the 1950s. And the politician who used to speak like that was a member of this Chamber. His name was Joe McCarthy, and the President whom he accused of treason was Harry Truman.

Let us step away from that kind of rhetoric in this debate and review the facts.

I had the opportunity of attending the Kissinger Lecture at the Library of Congress which was given by George Shultz, former Secretary of State. It was one of the most cogent and lucid statements of where we are with respect to the war on terror I have ever heard. An update of that appeared in today's Wall Street Journal. I would like to quote from that those points which address the issues I have talked about, and ask unanimous consent that the entire piece be printed in the Record following my remarks.

Mr. President, former Secretary of State George Shultz begins with this comment:

We have struggled with terrorism for a long time. In the

Reagan administration, I was a hawk on the subject. I said

terrorism is a big problem, a different problem and we have

to take forceful action against it. Fortunately, Ronald

Reagan agreed with me but not many others did. [Don Rumsfeld

was an outspoken exception.]

Twenty-five years ago, it was on the radar screen of an American administration--in this case one headed by Ronald Reagan--that terrorism was a problem.

Secretary Shultz goes on to discuss this and then makes this comment:

Today, looking back on the past quarter century of

terrorism, we can see that it is the method of choice of an

extensive, internationally connected ideological movement

dedicated to the destruction of our international system of

cooperation and progress. We can see that the 1981

assassination of President Anwar Sadat, the 1993 bombing of

the World Trade Center, the 2001 destruction of the Twin

Towers, the bombs on the trains in Madrid, and scores of

other terrorist attacks in between and in many countries,

were carried out by one part or another of this movement. And

the movement is connected to states that develop awesome

weaponry, with some of it, or with expertise, for sale.

Let me emphasize that last sentence again. Speaking of international terrorism that was involved in all of these things, going back to the assassination of Sadat in 1981, he says:

And the movement is connected to states that develop

awesome weaponry, with some of it, or with expertise, for

sale.

All right. Do we have an example of such a state that has developed awesome weaponry that may be for sale? Yes.

Quoting again from Secretary Shultz, he speaks directly of Saddam Hussein and Iraq. He adds to this Kim Jong Il of North Korea, and then says:

They seize control of state power and use that power to

enhance their wealth, consolidate their rule and develop

their weaponry. As they do this, and as they violate the laws

and principles of the international system, they at the same

time claim its privileges and immunities, such as the

principle of non-intervention into the internal affairs of a

legitimate sovereign state. For decades these thugs have

gotten away with it. And the leading nations of the world

have let them get away with it.

Yes, we have heard much on this floor about America must not invade another sovereign state. That is precisely what Secretary Shultz is talking about when he says, these states that develop awesome weaponry and cooperate with terrorism for the purpose of

upsetting the international order, then claim the immunities of the international order for themselves--as he says: ``such as the principle of non-intervention into the internal affairs of a legitimate sovereign state.''

He goes on to summarize all that happened in Iraq. And again, those who will read the entire piece as it appears following my statement can get all of those details. But after he recites the details of what Saddam Hussein has done, he turns to David Kay, the man who is quoted again and again as the authority for the statement on the T-shirt that says: ``Bush Lied To Us.''

Well, let's see what David Kay really said. I said in my previous statement David Kay told this Congress, testifying before the Armed Services Committee, that Saddam Hussein was, in fact, more dangerous than we thought when we started the war. But these are the portions of David Kay's position Secretary Shultz chooses to highlight, and I think they are the right ones to bring out.

Quoting again:

As Dr. David Kay put it in a Feb. 1 interview with Chris

Wallace, ``We know there were terrorist groups in state still

seeking WMD capability. Iraq, although I found no weapons,

had tremendous capabilities in this area. A marketplace

phenomena was about to occur, if it did not occur; sellers

meeting buyers. And I think that would have been very

dangerous if the war had not intervened.''

Sellers of what? Buyers of what? Who would the sellers be? Who would the buyers be? The sellers, obviously, would be the Iraqis. The buyers would be the terrorists. And what are we talking about?

Back to Secretary Shultz:

When asked by Mr. Wallace what the sellers could have sold

if they didn't have actual weapons, Mr. Kay said: ``The

knowledge of how to make them, the knowledge of how to make

small amounts, which is, after all, mostly what terrorists

want. They don't want battlefield amounts of weapons. No,

Iraq remained a very dangerous place in terms of WMD

capabilities, even though we found no large stockpiles of

weapons.''

Just think about that for a second: the knowledge to make them.

If I could give a very homely example, last week my wife and I were celebrity chefs at the March of Dimes gala, and we won a prize, and people all said: Is this an old family recipe? We had to admit, no, we called a chef in Salt Lake City at one of the finest restaurants there, who happens to work as a judge at these kinds of celebrity cook-ins, and he gave us a recipe he thought would win. We have been celebrity chefs four times. We have called him all four times. We have won three out of four.

The capacity to tell somebody how to make something will produce that something just as much as having that something yourself. This chef did not participate, but his recipes participated, and his recipes won. All we had to do was be the willing buyers in the case; and he was the willing seller. I will add, just for the record, no money changed hands with respect to the recipe. But the example is there, and that is what David Kay is talking about.

Going back to Secretary Shultz, he says:

. . . in the long run, the most important aspect of the Iraq

war will be what it means for the integrity of the

international system and for the effort to deal effectively

with terrorism. The stakes are huge and the terrorists know

that as well as we do. That is the reason for their tactic of

violence in Iraq. And that is why, for us and for our allies,

failure is not an option. The message is that the U.S. and

others in the world who recognize the need to sustain our

international system will no longer quietly acquiesce in the

take-over of states by lawless dictators who then carry on

their depredations--including the development of awesome

weapons for threats, use, or sale--behind the shield of

protection that statehood provides. If you are one of these

criminals in charge of a state, you no longer should expect

to be allowed to be inside the system at the same time that

you are a deadly enemy of it.

Secretary Shultz concludes his piece with this comment:

If we put this in terms of World War II, we are now

sometime around 1937. In the 1930s, the world failed to do

what it needed to do to head off a world war. Appeasement

never works. Today we are in action. We must not flinch. With

a powerful interplay of strength and diplomacy, we can win

this war.

Put it in context, put it in the historic pattern, and we realize this is all connected and that the action with respect to Iraq was a very proper, significant, indeed, essential part of the overall war on terrorism. If we had not moved ahead, we would have been irresponsible.

The summary is in the callout that is put in the paper that says:

The U.S. had no choice: We had to oust Saddam Hussein, or

face the gravest threat.

Mr. President, may I ask how much time I have remaining?

If I might use that 4\1/2\ minutes, then, to address the fundamental question of the future nobody talks about. We are spending all of this time rehashing the past. Here is the fundamental question of the future: What happened to Saddam Hussein's weapons of mass destruction? The assumption raised by the statement that ``Bush lied to us about the weapons'' is that the weapons never existed.

Well, the first person to convince me the weapons existed was Madeleine Albright. The first President to tell me the weapons existed was William Jefferson Clinton.

The first group that insisted weapons were there was working for the United Nations. This was not a partisan thing put together by George W. Bush. The weapons were clearly in Iraq, and the question is not why didn't Bush tell us the truth about them; the question is, what happened to them? That is the question we need to address. That is the question of the future we are ignoring in all of this debate about who said what at what point in the past.

As I see it, there are four possibilities of what happened to the weapons Saddam Hussein had. No. 1, we got them all in the bombing in 1998. We must remember, as we try to truncate the history, the war in Iraq began in 1991. The U.N. resolution that called for the war was never suspended. It was renewed with acts of war in 1998. A heavy 4-day period of solid bombing is an act of war. President Clinton carried that out with the approval of this Congress. So the first possibility is that bombing destroyed all of the weapons of mass destruction.

The second possibility, Saddam Hussein himself dismantled his stockpiles of weapons of mass destruction in an effort to convince the U.N. inspectors they were not there so the inspectors would leave him alone and he could go back to building them after the inspectors were gone. There is some suggestion that was in fact what happened, that he did not intend to disarm, as U.N. Resolution 1441 required he do. All he intended to do was deceive, and that is where the weapons went.

Possibility No. 3, they were trucked over the border. Some of them got into Syria or other places and into the hands of others who still have them.

And possibility No. 4, they are still in Iraq and we simply have not found them. When people ask me, which of these four possibilities do you think is the most likely, I say: All of the above. I believe we destroyed a good portion of his weapons in the 1998 bombing. I believe he himself dismantled others in a deliberate attempt to deceive the U.N. inspectors. I believe some of them did get out of the country and are in the hands of other bad actors somewhere. And I believe there are probably still some hidden away somewhere in the desert in Iraq.

Unless the first answer is the only one that is correct and they were all destroyed in the bombing, they are still around somewhere. The capacity to build them was still around, as David Kay pointed out, before we went in and removed that.

If there are some of them still around, why aren't we looking for them? Why aren't we paying attention to where they might be? I believe the American military is still on the alert for them. I believe the American intelligence community is still looking to where they might be. But in the debate we have here on the Senate floor, this question is never raised. It is never given any attention. Instead we spend all of our time looking backward and trying to assign blame instead of looking forward and trying to solve problems.

I commend Secretary Shultz's presentation to all. It is a clear historic perspective over a quarter century from one of our senior statesmen that makes it clear the rhetoric surrounding this issue has been inappropriate and focused on the wrong thing.

I yield the floor.

Exhibit 1

[From the Asian Wall Street Journal, Mar. 29, 2004]

An Essential War

(By George P. Shultz)

We have struggled with terrorism for a long time. In the

Reagan administration, I was a hawk on the subject. I said

terrorism is a big problem, a different problem, and we have

to take forceful action against it. Fortunately, Ronald

Reagan agreed with me, but not many others did. (Don Rumsfeld

was an outspoken exception).

In those days we focused on how to defend against

terrorism. We reinforced our embassies and increased out

intelligence effort. We thought we made some progress. We

established the legal basis for holding states responsible

for using terrorists to attack Americans anywhere. Through

intelligence, we did abort many potential terrorist acts. But

we didn't really understand what motivated the terrorists or

what they were out to do.

In the 1990s, the problem began to appear even more

menacing. Osama bin Laden and al Qaeda were well known, but

the nature of the terror threat was not yet comprehended and

our efforts to combat it were ineffective. Diplomacy without

much force was tried. Terrorism was regarded as a law

enforcement problem and terrorists as criminals. Some were

arrested and put on trial. Early last year, a judge finally

allowed the verdict to stand for one of those convicted in

the 1993 World Trade Center bombing. Ten years! Terrorism is

not a matter that can be left to law enforcement, with its

deliberative process, built-in delays, and safeguards that

may let the prisoner go free on procedural grounds.

Today, looking back on the past quarter century of

terrorism, we can see that it is the method of choice of an

extensive, internationally connected ideological movement

dedicated to the destruction of our international system of

cooperation and progress. We can see that the 1981

assassination of President Anwar Sadat, the 1993 bombing of

the World Trade Center, the 2001 destruction of the Twin

Towers, the bombs on the trains in Madrid, and scores of

other terrorist attacks in between and in many countries,

were carried out by one part or another of this movement. And

the movement is connected to states that develop awesome

weaponry, with some of it, or with expertise, for sale.

What should we do? First and foremost, shore up the state

system.

The world has worked for three centuries with the sovereign

state as the basic operating entity, presumably accountable

to its citizens and responsible for their well-being. In this

system, states also interact with each other--bilaterlly or

multilaterally--to accomplish ends that transcend their

borders. They create international organizations to serve

their ends, not govern them.

Increasingly, the state system has been eroding. Terrorists

have exploited this weakness by burrowing into the state

system in order to attack it. While the state system weakens,

no replacement is in sight that can perform the essential

functions of establishing an orderly and lawful society,

protecting essential freedoms, providing a framework for

fruitful economic activity, contributing to effective

international cooperation, and providing for the common

defense.

I see our great task as restoring the vitality of the state

system within the framework of a world of opportunity, and

with aspirations for a world of states that recognize

accountability for human freedom and dignity.

All established states should stands up to their

responsibilities in the fight against our common enemy,

terror; be a helpful partner in economic and political

development; and take care that international organizations

work for their member states, not the other way around. When

they do, they deserve respect and help to make them work

successfully.

The civilized world has a common stake in defeating the

terrorists. We now call this what it is: a War on Terrorism.

In war, you have to act on both offense and defense. You have

to hit the enemy before the enemy hits you. The diplomacy of

incentives, containment, deterrence and prevention are all

made more effective by the demonstrated possibility of

forceful preemption. Strength and diplomacy go together. They

are not alternatives; they are complements. You work

diplomacy and strength together on a grand and strategic

scale and on an operational and tactical level. But if you

deny yourself the option of forceful preemption, you

diminish the effectiveness of your diplomatic moves. And,

with the consequences of a terrorist attack as hideous as

they are--witness what just happened in Madrid--the U.S.

must be ready to preempt identified threats. And not at

the last moment, when an attack is imminent and more

difficult to stop, but before the terrorist gets in

position to do irreparable harm.

Over the last decade we have seen large areas of the world

where there is no longer any state authority at all, an ideal

environment for terrorists to plan and train. In the early

1990s we came to realize the significance of a ``failed

state.'' Earlier, people allowed themselves to think that,

for example, an African colony could gain its independence,

be admitted to the U.N. as a member state, and thereafter

remain a sovereign state. Then came Somalia. All government

disappeared. No more sovereignty, no more state. The same was

true in Afghanistan. And who took over? Islamic extremists.

They soon made it clear that they regarded the concept of the

state as an abomination. To them, the very idea of ``the

state'' was un-Islamic. They talked about reviving

traditional forms of pan-Islamic rule with no place for the

state. They were fundamentally, and violently, opposed to the

way the world works, to the international state system.

The United States launched a military campaign to eliminate

the Taliban and al Qaeda's rule over Afghanistan. Now we and

our allies are trying to help Afghanistan become a real state

again and a viable member of the international state system.

Yet there are many other parts of the world where state

authority has collapsed or, within some states, large areas

where the state's authority does not run.

That's one area of danger: places where the state has

vanished. A second area of danger is found in places where

the state has been taken over by criminals or warlords.

Saddam Hussein was one example. Kim Jong Il of North Korea is

another.

They seize control of state power and use that power to

enhance their wealth, consolidate their rule and develop

their weaponry. As they do this, and as they violate the laws

and principles of the international system, they at the same

time claim its privileges and immunities, such as the

principle of non-intervention into the internal affairs of a

legitimate sovereign state. For decades these thugs have

gotten away with it. And the leading nations of the world

have let them get away with it.

This is why the case of Saddam Hussein and Iraq is so

significant. After Saddam Hussein consolidated power, he

started a war against one of his neighbors, Iran, and in the

course of that war he committed war crimes including the use

of chemical weapons, even against his own people.

About 10 years later he started another war against another

one of his neighbors, Kuwait. In the course of doing so he

committed war crimes. He took hostages. He launched missiles

against a third and then a fourth country in the region.

That war was unique in modern times because Saddam totally

eradicated another state, and turned it into ``Province 19''

of Iraq. The aggressors in wars might typically seize some

territory, or occupy the defeated country, or install a

puppet regime; but Saddam sought to wipe out the defeated

state, to erase Kuwait from the map of the world.

That got the world's attention. That's why, at the U.N.,

the votes were wholly in favor of a U.S.-led military

operation--Desert Storm--to throw Saddam out of Kuwait and to

restore Kuwait to its place as a legitimate state in the

international system. There was virtually universal

recognition that those responsible for the international

system of states could not let a state simply be rubbed out.

When Saddam was defeated, in 1991, a cease-fire was put in

place. Then the U.N. Security Council decided that, in order

to prevent him from continuing to start wars and commit

crimes against his own people, he must give up his arsenal of

``weapons of mass destruction.''

Recall the way it was to work. If Saddam cooperated with

U.N. inspectors and produced and facilitated their

destruction, then the cease-fire would be transformed into a

peace agreement ending the state of war between the

international system and Iraq. But if Saddam did not

cooperate, and materially breached his obligations regarding

his weapons of mass destruction, then the original U.N.

Security Council authorization for the use of ``all necessary

force'' against Iraq--an authorization that at the end of

Desert Storm had been suspended but not cancelled--would be

reactivated and Saddam would face another round of the U.S.-

led military action against him. Saddam agreed to this

arrangement.

In the early 1990s, U.N. inspectors found plenty of

materials in the category of weapons of mass destruction and

they dismantled a lot of it. They kept on finding such

weapons, but as the presence of force declined, Saddam's

cooperation declined. He began to play games and to obstruct

the inspection effort.

By 1998 the situation was untenable. Saddam had made

inspections impossible. President Clinton, in February 1998,

declared that Saddam would have to comply with the U.N.

resolutions or face American military force. Kofi Annan flew

to Baghdad and returned with a new promise of cooperation

from Saddam. But Saddam did not cooperate. Congress then

passed the Iraq Liberation Act by a vote of 360 to 38 in the

House of Representatives; the Senate gave its unanimous

consent. Signed into law on October 31, it supported the

renewed use of force against Saddam with the objective of

changing the regime. By this time, he had openly and utterly

rejected the inspections and the U.N. resolutions.

In November 1998, the Security Council passed a resolution

declaring Saddam to be in ``flagrant violation'' of all

resolutions going back to 1991. That meant that the cease-

fire was terminated and the original authorization for the

use of force against Saddam was reactivated. President

Clinton ordered American forces into action in December 1998.

But the U.S. military operation was called off after only

four days--apparently because President Clinton did not feel

able to lead the country in war at a time when he was facing

impeachment.

So inspections stopped. The U.S. ceased to take the lead.

But the inspectors reported

that as of the end of 1998 Saddam possessed major quantities

of WMDs across a range of categories, and particularly in

chemical and biological weapons and the means of delivering

them by missiles. All the intelligence services of the world

agreed on this.

From that time until late last year, Saddam was left

undisturbed to do what he wished with this arsenal of

weapons. The international system had given up its ability to

monitor and deal with this threat. All through the years

between 1998 and 2002 Saddam continued to act and speak and

to rule Iraq as a rogue state.

President Bush made it clear by 2002, and against the

background of 9/11, that Saddam must be brought into

compliance. It was obvious that the world could not leave

this situation as it was. The U.S. made the decision to

continue to work within the scope of the Security Council

resolutions--a long line of them--to deal with Saddam. After

an extended and excruciating diplomatic effort, the Security

Council late in 2002 passed Resolution 1441, which gave

Saddam one final chance to comply or face military force.

When on December 8, 2002, Iraq produced its required report,

it was clear that Saddam was continuing to play games and to

reject his obligations under international law. His report,

thousands of pages long, did not in any way account for the

remaining weapons of mass destruction that the U.N.

inspectors had reported to be in existence as of the end of

1998. That assessment was widely agreed upon.

That should have been that. But the debate at the U.N. went

on--and on. And as it went on it deteriorated. Instead of the

focus being kept on Iraq and Saddam, France induced others to

regard the problem as one of restraining the U.S.--a position

that seemed to emerge from France's aspirations for greater

influence in Europe and elsewhere. By March of 2003 it was

clear that French diplomacy had resulted in splitting NATO,

the European Union, and the Security Council . . . and

probably convincing Saddam that he would not face the use of

force. The French position, in effect, was to say that Saddam

had begun to show signs of cooperation with the U.N.

resolutions because more than 200,000 American troops were

poised on Iraq's borders ready to strike him; so the U.S.

should just keep its troops poised there for an indeterminate

time to come, until presumably France would instruct us that

we could either withdraw or go into action. This of course

was impossible militarily, politically, and financially.

Where do we stand now? These key points need to be

understood:

There as never been a clearer case of a rogue state using

its privileges of statehood to advance its dictator's

interest in ways that defy and endanger the international

state system.

The international legal case against Saddam--17

resolutions--was unprecedented.

The intelligence services of all involved nations and the

U.N. inspectors over more than a decade all agreed that

Saddam possessed weapons of mass destruction that posed a

threat to international peace and security.

Saddam had four undisturbed years to augment, conceal,

disperse, otherwise deal with his arsenal.

He used every means to avoid cooperating or explaining what

he has done with them. This refusal in itself was, under the

U.N. resolutions, adequate grounds for resuming the military

operation against him that had been put in abeyance in 1991

pending his compliance.

President Bush, in ordering U.S. forces into action, stated

that we were doing so under U.N. Security Council Resolutions

678 and 687, the original basis for military action against

Saddam Hussein in 1991. Those who criticize the U.S. for

unilateralism should recognize that no nation in the history

of the United Nations has ever engaged in such a sustained

and committed multilateral diplomatic effort to adhere to the

principles of international law and international

organization with the international system. In the end, it

was the U.S. that upheld and acted in accordance with the

U.N. resolutions on Iraq, not those on the Security Council

who tried to stop us.

The question of weapons of mass destruction is just that: a

question that remains to be answered, a mystery that must be

solved. Just as we also must solve the mystery of how Libya

and Iran developed menacing nuclear capability without

detection, of how we were caught unaware of a large and

flourishing black market in nuclear material, and of how we

discovered these developments before they got completely out

of hand and have put in place promising corrective processes.

The question of Iraq's presumed stockpile of weapons will be

answered, but that answer, however it comes out, will not

affect the fully justifiable and necessary action that the

coalition has undertaken to bring an end to Saddam Hussein's

rule over Iraq. As David Kay put it in a February 1 interview

with Chris Wallace, ``We know there were terrorist groups in

state still seeking WMD capability. Iraq, although I found no

weapons, had tremendous capabilities in this area. A

marketplace phenomena was about to occur, if it did not

occur; sellers meeting buyers. And I think that would have

been very dangerous if the war had not intervened.''

When asked by Mr. Wallace what the sellers could have sold

if they didn't have actual weapons, Mr. Kay said: ``The

knowledge of how to make them, the knowledge of how to make

small accounts, which is, after all, mostly what terrorists

want. They don't want battlefield amounts of weapons. No,

Iraq remained a very dangerous place in terms of WMD

capabilities, even though we found no large stockpiles of

weapons.''

Above all, and in the long run, the most important aspect

of the Iraq war will be what it means for the integrity of

the internationals system and for the effort to deal

effectively with terrorism. The stakes are huge and the

terrorists know that as well as we do. That is the reason for

their tactic of violence in Iraq. And that is why, for us and

for our allies, failure is not an option. The message is that

the U.S. and others in the world who recognize the need to

sustain our international system will no longer quietly

acquiesce in the take-over of states by lawless dictators who

then carry on their depredations--including the development

of awesome weapons for threats, use, or sale--behind the

shield of protection that statehood provides. If you are one

of these criminals in charge of a state, you no longer should

expect to be allowed to be inside the system at the same time

that you are a deadly enemy of it.

September 11 forced us to comprehend the extent and danger

of the challenge. We began to act before our enemy was able

to extend and consolidate his network.

If we put this in terms of World War II, we are now

sometime around 1937. In the 1930s, the world failed to do

what it needed to do to head off a world war. Appeasement

never works. Today we are in action. We must not flinch. With

a powerful interplay of strength and diplomacy, we can win

this war.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I am happy to yield to the Senator from Kentucky if he wants to lay an amendment down. Does the Senator from Kentucky wish to speak? I have anticipated speaking on behalf of the Joint Economic Committee. The ranking member of the Joint Economic Committee, Senator Reed, is also prepared to speak. We are here under the Budget Act to make a presentation to the Senate in the middle of the budget discussion. I don't know if that has ever been done, but we are going to do it. It is for that purpose I sought recognition, but I don't want to hold up the Senator from Kentucky if he has an amendment.

Mr. President, if the Senator from Kentucky has a question, I will yield for a question.

I am happy to yield for a question.

Mr. President, I would be happy to yield to the Senator from Kentucky if he would tell me how long he intends to talk.

Mr. President, under the circumstances, then, having made arrangements with Senator Reed for this time, I will proceed and suggest to the Senator from Kentucky he respond when we finish.

The debate has been an interesting one since the beginning of the budget period. There has been a great deal said about the economy and a great deal said about the state of the economy. Much that has been said, in my opinion, has more to do with the fact this is an election year than it does with the situation facing the economy.

In response to the requirement of the act creating the congressional budget process that says the Joint Economic Committee is to make a report to the Senate during the Budget Committee deliberations, I have asked for and received this time for myself and Senator Reed to address the Senate.

I do not wish to address the specifics of the budget resolution because I think it is more important we lay down the background of the economy and what is really happening in the economy. I will do my best to keep it out of the realm of politics, keep it out of the realm of the rhetoric of this election, and stay as close as I can to statistics and facts so we can understand exactly what is happening in the economy and where the economy is headed. The basis and sources I have used in this situation have in every case been from outside groups. This is not the Republican Policy Committee or any other partisan group that has come up with these statistics. I will share them with the Senate tonight in the hope it will help the Senate and anyone who is watching understand exactly where the economy is.

We begin, if we can, by reviewing exactly what happened with respect to the recession and the recovery. There has been a lot of rhetoric about this. I have heard on the Senate floor this is the worst recession in 50 years, the worst economy we have ever had.

On this chart, we go back to the year 2000 and through the year 2003. The first quarter of 2004 is not in yet, so this goes back to the beginning of the softening of the economy through the recession and the recovery.

These bars are by quarters. The first quarter of 2000 was a very weak quarter. This is measuring the growth of the economy in terms of the gross domestic product, the GDP. These data come from the government agency that tracks economic performance. These data are always available only after the fact. It is almost impossible to be sure of the data at the time it is happening, but after the fact the Bureau of Economic Analysis goes back and reconstructs what happens and makes whatever changes have to be made in order to make sure the data are correct. This is their current reading of what has happened in the last 4 years.

In 2000, in the first quarter, very weak quarter, only 1 percent growth; second quarter, very high. Some will say that is because of weather. Very often, there is bad weather in the first quarter which causes sales to go down. They are delayed. They show up in the second quarter. But in the third quarter, we spilt into negative territory; that is, instead of expanding, the gross domestic product contracted one-half of 1 percent.

The definition, according to many observers, of a recession is two successive quarters of contraction, and we did not have that. We came up with a relatively weak fourth quarter in 2000.

I will point out in that period of time there were those who were suggesting the economy was in fact weakening. They were attacked as having made partisan political statements trying to talk the economy down for political purposes. We now know in fact they were correct, the economy was in fact weakening. In the first quarter of 2001, once again, the economy contracted rather than expanded. Then in the second quarter, it contracted even more.

The common definition of a recession was therefore met with two successive quarters of contraction, and then you have a third quarter where the economy contracted 1.3 percent. This, of course, was the quarter in which September 11 occurred.

We have the three successive quarters of contraction. There are some who say this quarter, the fourth quarter of 2000, will be revised to show contraction rather than expansion as the data are further reviewed. As of now, these are the data the Bureau of Economic Analysis has given us.

The fourth quarter of 2001 was positive, up 2 percent. Not robust growth, but at least positive. By definition, that is the beginning of the recovery. The first quarter of 2002 was strong and then we went back to anemic growth and kept that pretty much through 2002.

In 2003, the growth starts to pick up and becomes very robust. The entire year showed growth of 4.3 percent which, by historic terms, is higher than the average growth of all of the years of the 1990s. If we can sustain 4.3 percent growth, we can be very happy indeed. We can see the economy is starting to recover, the recovery is getting traction and it is getting hold in 2003.

Let's go back over the same time period and look at some of the spending patterns that came through the same situation. In green, the bars are the same quarters on the previous chart and they show consumer spending. A very unusual thing happened during this period of recession and recovery. Consumer spending remained positive in every single quarter. It got a little weak in the first quarter of 2001, but it remained positive, above the line, in every single quarter. That has never happened before. In recessions consumer spending goes negative, but in this one the consumers had enough confidence they stayed positive all the way through. That is one of the things that kept this recession from being deeper and more long lasting than it might otherwise have been.

The blue bars, however, show a very different story and give us the reasons why this recession occurred. The blue bars are business investment. Business investment in the first and second quarters of 2000 was very strong. A weak third quarter followed, and a very weak fourth quarter, and into negative territory we fell in the first quarter of 2001, staying there for one, two, three, four, five, six, seven, eight, nine successive quarters, with business investment down. It is not until we get to the second quarter of 2003 that business investment becomes positive again and very strong.

This was an investment recession. It was not a consumer recession. It was an investment recession, as businesses felt they were overextended and cut back on their investment. After nine quarters--a long period of time--business investment finally began to be robust again. This again is from the Bureau of Economic Analysis. When this starts to happen, we assume we will start to get jobs because business investment has the biggest impact on jobs, not consumer spending.

From the Department of Labor we have statistics on jobless claims. This shaded period on the chart is the period of the recession--that is, the three quarters when there was negative gross domestic production growth. The jobless claims heading into the recessionary period are going up. They reach their peak during the recessionary period. Then when the recession ends and the recovery takes place, the jobless claims start coming down somewhat, until you get that strong business investment that we saw on the previous chart. Then the jobless claims start coming down much more dramatically, indicating the jobs are on their way back.

We have heard a lot about manufacturing. The Institute for Supply Management provides a composite index on manufacturing activity. In 1999, manufacturing was up. And manufacturing follows the same pattern. It starts down in the second half of 2000 and comes down during the recession and stays down for longer than the recession itself. It is down in negative territory below this line, through all of 2001, gets up a little bit in 2002 but comes back down and again down, finally.

When business investment starts up in 2003, the manufacturing activity comes up strongly. So it goes down, stays down, but when the business investment comes back, the manufacturing activity comes back very strongly.

What about jobs, then? Where are the jobs? If this activity is coming back, why aren't we seeing the jobs? If there is investment activity, why aren't we seeing the jobs? What we are seeing is something we have not seen before, and that is the surveys done by the Bureau of Labor Statistics as to jobs--and there are two of them, one known as the establishment survey or payroll survey and one known as the household survey--have diverged in ways they have never diverged before in history.

Before, they pretty well track each other. The difference is the payroll survey or establishment survey gets its sample entirely from firms and other employers, whereas the household survey does its sample by checking households to see who has jobs and who does not. The household survey picks up agricultural jobs. The household survey picks up self-employed and, to the degree they impact the statistics, the household survey would pick up illegal aliens who for one reason or another do not show up on the payroll survey.

Everyone says the payroll survey is the more reliable. I will stipulate that everyone says that, but I ask this same ``everyone,'' if that is the case, how can you explain the sudden discrepancy between the two, a discrepancy that has come in this recession and this recovery? The discrepancy is not minor. If you take the entire period we are talking about, the payroll survey shows a loss of 2.3 million jobs while the household survey shows a gain of 614,000. That is a discrepancy of three million jobs.

I don't have the answer as to what is causing that discrepancy. We have tried to do studies in the JEC staff to get the answer. I have asked the Commissioner of the Bureau of Labor Statistics if she will do some studies to find the answer. I have discussed this with Chairman Greenspan, and he says the Federal Reserve people are concerned about this and are trying to find the answer.

If we take the period since November of 2001--this is the recovery period, as opposed to the entire period that included the recession--in this recovery period, even while we are in recovery, the payroll survey says we have lost 718,000 jobs; the household survey says during the recovery we have added 1.895 million jobs. That is a very wide margin.

If we look at just the past six months, the period of the strongest recovery, the period when we are getting the strongest activity, the payroll survey says yes, we have finally started to add jobs. In the last 6 months, the payroll survey says 364,000 new jobs, while the household survey says 981,000. I am not saying the household survey is right and the payroll survey is wrong, I want to make clear. I am saying something is happening in the economy that has not happened before for which we do not have an accurate gauge. What is important is that our statistics be accurate so when we throw them around in a political debate, we know we are telling the truth.

It is very clear to me the payroll survey needs to be adjusted upward. How far upward, I do not know. It is probable the household survey needs to be adjusted downward. How far downward, I do not know.

Commissioner Utgoff, the head of the Bureau of Labor Statistics, has said the real number is probably somewhere in between the number shown by both surveys. But she does not know. This is one of the things we are pursuing in the Joint Economic Committee, to do what we can to get accurate data so we can make accurate analysis of what is happening in the economy.

All right. Let's look at the unemployment rate. The unemployment rate is figured on the basis of the household survey.

As shown on this chart, the shaded areas show the recession. In this case I have gone beyond the time period of the first chart. In this case we go back to the recession that occurred during the time Ronald Reagan was President, and you will see two shaded areas because Ronald Reagan suffered the double dip; that is, we went into a recession, had two quarters of negative growth or of contraction of the economy, came out, and went back in for an even longer period of time.

This is the worst recession in memory. Unemployment hit a high of 10.8 percent at that time. When it spiked up and came back down, there were a lot of people, with unemployment at that level, who said: Well, we are in good shape now. The jobs are coming back. Notice that level was about 7 percent unemployment, but it came down further as the prosperity of the late Reagan years took hold, and it was down until the next recession hit. As is always the case--it was the case, as shown on this chart here and here--it happened here. As soon as the recession hit, the unemployment went up and spiked up even during the recovery. This is the period of time when we talked about the jobless recovery. I had just come to the Senate, and I remember everybody saying: Well, if we are in recovery, where are the jobs? Unemployment spiked several quarters after the recession was over at 7.8 percent-- not nearly as bad as the 10.8 percent of the previous peak, but still pretty bad.

All right. Then it started coming down slowly. We did not get down to the prerecession level for 4 years. It took 4 years for the economy to generate enough jobs to bring us down to the prerecession level of unemployment, which was just under 6 percent.

Incidentally, that is the level where we are right now, because in this recession we saw exactly the same reaction. The unemployment rate came up dramatically during the recession, just as it did here several quarters after the recovery started. The unemployment rate was still going up. It peaked a little later than this one did, but a lot lower than this one did. The unemployment rate peaked at 6.3 percent and then started coming down, and it is now down to a level which in previous recessions would be considered very good.

In the debate on the floor about the extension of unemployment insurance, we noted that extended benefits were allowed to run out at a level of unemployment that was well below the corresponding level at which such benefits

expired during the Clinton administration.

I share all of this information to make this point: This recession is different. It is not different because it happened on George W. Bush's watch or because it happened in a Republican-controlled Congress. As Paul Samuelson has pointed out, if Presidents knew how to create jobs, every President would have a 3.5 percent unemployment number going into his reelection. If Congress could control jobs, every Congress would see to it in every October, as we were running for reelection, the unemployment rate would be at 3.2 percent. But unemployment is a reflection of what is happening in the economy. What this information shows us is what is happening in technology with this recession and this recovery is different from that which has happened in previous recessions.

Let me give you my personal view of what is happening here. I believe the recession we have just gone through and the recovery we are now in represent the first recession and recovery of the information age, as opposed to the previous recessions and recoveries, which were the last recessions and recoveries of the industrial age.

When I took economics, I was told recessions basically were a series of inventory buildups, and recoveries were inventory selloffs.

For example, you got excited about how well things were going in the automobile industry, and you built more cars. Suddenly, the vice president of marketing looks out on the back lot and says: Good heavens, there are 40 acres covered with Chryslers we haven't been able to sell. Send everybody home. Lay them all off until we sell off all the back acres full of cars. And after some time, suddenly he looks out the back window and says: There aren't any cars. Quick, get everybody on the phone and tell them to come back to work so we can build up again. That is the classic, vastly oversimplified definition of an industrial age recession and recovery.

It is clear from the data I have displayed here that this recession was different. This recession was an investment recession. This recession came at a time when productivity, by virtue of the information age and the application of high technology, was higher than it has ever been. This was a recession where productivity stayed positive and in high territory all the way through the recession, and productivity has stayed high during the recovery.

In the hearing we held last Friday, I asked Commissioner Utgoff: What was productivity growth in 2003? She said: 4.4 percent. I asked: What was GDP growth in 2003? She said: 4.3 percent. In other words, productivity grew faster than GDP, even though GDP grew at a rate higher than the average of the 1990s. When productivity goes up faster than economic growth, you lose jobs.

I asked: How many jobs did we lose in 2003, again according to the payroll survey, which is the survey she uses for this kind of calculation. She said: We lost 60,000 jobs in 2003. I asked: Is that about the right number with productivity at 4.4 percent and GDP at 4.3 percent? She said: Yes, that is about the right number. If productivity is growing more than GDP, at that number you would lose about 60,000 jobs statistically.

That is the challenge we have as we look forward. We do not want to do anything in the economy to bring down productivity, because productivity is what gives us a higher standard of living, productivity is what gives us lower prices, productivity is what gives us economic dominance in the rest of the world. Our rate of productivity is higher than any other nation's, and we clearly want to keep it that way.

The challenge is to get GDP growing faster than productivity. That is where the jobs will come from, and that is why we are having a different kind of recovery this time, because it is a different kind of recession, because it is the first recession of the information age when we are finally reaping the rewards of all the investment we have made in technology in the decades leading up to this. It is finally paying off in this very significant productivity.

That is what I believe is happening. As we do our analysis around here, I think, therefore, it is not helpful to be using industrial age assumptions dealing with the first information age recession and recovery.

A few other items, and then I am through.

We have heard a lot on this floor about the size of the deficit and how terribly big it is. In terms of nominal dollars, I will concede-- absolutely, I will stipulate--it is the largest deficit in history.

Now let's look at it the way you have to look at it if you are going to understand it intelligently, which is, how big is it with respect to the size of the economy?

Going back over the same period where we have talked about previous recessions, only this time I have gone back and picked up some others, this chart goes back to the recession of 1970--again, the recession period is shaded--the recession of 1975, the double dip of the early Reagan years, the recession in the early 1990s, and now the recession we have just gone through. In every case, when you go into the recession, the deficit comes up.

In this case the deficit is not measured in absolute dollars. It is measured as a percentage of the economy. In 1970, it goes up. When you get into the recovery, it comes back down. In the next recession, the deficit goes up dramatically because this recession lasted longer and becomes a double dip. The deficit goes up tremendously because this was the most serious recession we had. Then in the recovery it comes back down. It goes up. The recovery hits us and it starts coming down. Indeed, we even get into a surplus period. And we were in a surplus but the recession hit us, and once again the same historic pattern occurred as the deficit came back up and is now coming back down.

The blue lines are history. You can see that the highest point of the deficit as a percentage of GDP was during the double dip that occurred in the early Reagan years. Then there was a pretty high point in the recession of the early 1990s, pretty close to the high point of the recession in the mid-1970s. The current point is about equivalent to the size of the deficit in the 1970s, below the deficits of the last two recessions.

The red line and the green line on the chart are the projections of where the deficit is going in the years ahead. The red line is the President's projection. The green line is CBO's projection.

I can't tell you which one of the two is right. I can tell you that both of them are wrong. Because when you try to make projections that far ahead with an $11 trillion economy, you are always going to be wrong. But I can tell you that the trend will be down.

I remember the projections when the deficit was here. This was when I came to the Senate when President Clinton went to the White House. We hoped and prayed--and we signed the balanced budget agreement in the mid-1990s--that it was going to get the deficit down to zero by 2002. We went into surplus in 2 years. We missed it. Everybody missed it. CBO missed it. OMB missed it. Everybody missed it. The economy was so strong that the deficit turned into a surplus.

Then we had the projections of surplus, and we missed it again. I hear the rhetoric on the floor: We were promised this surplus. Well, the only thing I can promise is that these lines are wrong. Even though they are CBO's best guess, they are OMB's best guess, they are wrong. Because the economy responds in different ways than the computers anticipate around here.

Let's go directly to the question of the debt. This is the real issue, because deficits in one year or one business cycle don't matter all that much. It is the accumulation of the deficits, cycle over cycle, that adds up to the national debt that matters. If you have too many of them back to back, you have real problems. If you have one that is not a problem by itself, you can deal with it.

Here is the publicly held debt as a percentage of GDP. That is the measure Chairman Greenspan urges us to use and so that is the measure we have used. People are always a little surprised to find that the highest level of publicly held debt in our history was 1945. We paid for the Second World War with debt. It was over 100 percent of the economy. It started coming down.

Here we have the Korean war, and the debt kept coming down. It bottomed out in the mid-1970s and started to rise again. That is the period of time

when we began to get some entitlement programs built into the system, the later years of Richard Nixon and Jimmy Carter. Then it starts going up again, and it goes up again and up again and up again.

As we saw from the statistics in the previous chart, the deficit then fell, even becoming a surplus, and the debt comes down dramatically. Then we hit the latest recession. The debt starts up again. Once again, the blue line is historic debt to GDP. The red line is the President's projection and the green line is CBO's projection.

Once again, the only thing I know about those projections is they are wrong. It will be something different. It always is.

We can see the debt at the present time is in relatively comfortable territory. I know Senator Conrad will then start talking about, yes, but what happens out here. I agree with him, what happens out here is going to be horrendous if we don't start to fix things. But I don't think that this particular year, in a time of war, in a time of recovery, when the economy is just getting traction, that the size of the deficit--which we don't know what it will be at the end of the year; last year we missed it by $80 billion--is going to determine what is going to happen out here. I think what is going to happen out here in terms of the Social Security and Medicare problem has to do with the way we restructure Social Security and Medicare around the demographic realities rather than what we do in this particular year. I am perfectly willing to vote for this budget as it comes out in this situation.

There are other charts that I shall not burden you with. I will end with this one. We, once again, get to this question of projections. We have a projection of a surplus. No, we have a projection of a huge deficit. We always go back after the fact and the actual figures never match the projections. They are always high or low. Again, last year the fiscal year that came in $81 billion lower than the high projections we got in the middle of the year. You say: Gee, $81 billion is a huge miss.

Not necessarily. Out of an $11 trillion economy, $80 billion is within the margin of error, a phrase that all of us understand.

Here, then, is the analysis of what happened to the surplus. Yes, the blue shows that the surplus went for tax cuts. The 2001 tax cut took 18 percent of the projected surplus. The economic stimulus package that we passed in 2002 took another 1 percent. The tax cuts of 2003 took another 5 percent of the surplus. Thirty-eight percent of the surplus went for increased spending: the war on terror, rebuilding New York, handling the aftermath of 9/11, homeland security, and lack of discipline on the Senate floor for a whole series of issues.

I am a member of the Appropriations Committee. I know what happens in the conferences. I know what happens when people come in and start saying: We have to have this much more and that much more, and you have to hold the line. And the line doesn't get held and the combination is more red, if you will, than blue.

But the biggest part of the chart, the reason we missed the projection, 40 percent was the weak economy. We just missed calculating what the economy would produce because we missed the recession. We didn't see the recession coming and we didn't see how weak the recovery would be.

There are those who insist--and I happen to agree with them--that if we had not passed the tax cut, the economy would have been weaker than it was.

Just about every economist I talk to on Wall Street says: If you had not passed the tax cut, you would not have had the recovery that you have had in the financial markets.

That is not trivial because in the financial markets we have seen the recovery, if you will, in the form of between $3 trillion and $4 trillion worth of wealth. That may very well have funded the increased business investment I showed on an earlier chart. You cannot say this is a sum zero game and if the tax cuts had not occurred, then you would have had that much of the surplus left, because if the tax cut had not occurred, there would have been more weakness in the economy. I don't think it is one-to-one. I think clearly the tax cuts took more out of the economy than came back. But, over time, it may well have been one- to-one. The tax cuts happened at the right time and in the right places to produce a stronger economy and give us the recovery we need.

So, Mr. President, I conclude with this observation once again: I believe that the recession we have just gone through is the first recession of the information age; therefore, this is the first recovery of the information age. It has not behaved like any previous recession, and it has not behaved like any previous recovery. We need to understand it far more than we do--we may have to go through 2 or 3 more before we truly understand it--in order to make the right prescriptions as to what we should do. But we are in recovery. The recovery is now strong.

GDP is now growing almost as fast as productivity, and if GDP can grow faster than productivity, then jobs will come. We don't want to do anything to destroy productivity in the effort to create jobs because it is the growth of productivity that is responsible for our standard of living and for our hope for the future.

Overall, for the next 10 years, the prospects for the U.S. economy are very strong and bright. Hanging out there in the future, there is the baby boom retirement problem and the challenge that we have to deal with that in a structural fashion.

I hope this has been useful to the chair and other Members of the Senate. I appreciate the indulgence and allowing me to go through this in detail.

I yield the floor.

Mr. President, I listened to this particular debate for a while. I have a few observations. I am not prepared to make a significant economic statement. I will be doing that at some point during the debate. But I think I will respond to a few comments that have been made.

If I may quote Paul Samuelson in a recent article in Newsweek and the Washington Post, he said most of the debate about jobs that is currently going on is bogus, and he makes the point that if a President could create jobs, the unemployment rate would be permanently at 3.2 percent. If a President could create jobs, every President would. If a Congress could create jobs, every Congress would. No one wants to go home and address his constituents at a time when jobs are difficult.

The fact remains, however, that the Congress or the President cannot, with a wave of the hand or the passage of legislation or the adoption of a political slogan, create jobs. Jobs are created in the economy. Jobs are created because of two things: There first must be accumulated wealth, accumulated capital of some kind, and then there must be someone who holds that capital who is willing to take a risk.

All wealth is created by the combination of accumulated capital and risk taking. When we tax people, we tax their accumulated capital. We have to do that. We should do that. I am not suggesting in any sense that taxes are not appropriate, but if we tax capital too much, capital flees. It goes some place else. If we regulate risk taking too heavily, it goes some place else or it is killed altogether.

As a consequence, if we are going to have jobs, we want an economic situation where accumulated capital is allowed to work and where risk takers are rewarded for their risk and where they receive the incentive necessary to compensate them for the risk they take.

I do not mean to be overly personal, but I hear people talking about two things. One, they talk about small business and how wonderful small business is, and then they talk about millionaires and how millionaires should be willing to sacrifice a little of their money so everybody else can have a job.

It is very interesting that those who talk about let's not make the tax cuts permanent then praise small business in the next breath. Perhaps they do not realize most of the tax returns that show income in excess of a million dollars are, in fact, the tax returns of owners of small business.

Let me give my own personal example to illustrate the point. I have done it before, but I have discovered since I have come to the Senate, there is no such thing as repetition in the Senate. We always give every speech as if it is brand new.

Before I came to the Senate, I was the president of a privately held corporation that filed its taxes under the S section of the Tax Code. Therefore, it was known as an S corporation. It used to be called a subchapter S corporation, but they changed the law a little and it is now just an S corporation.

When that phrase is used, people's eyes glaze over and they say, what does that mean? Well, it is very simple. If the corporation earns $1 million and it has 10 shareholders, instead of the corporation paying taxes on that $1 million, as an S corporation it pays no taxes, but each of its 10 shareholders, assuming their shareholdings are equal, pays taxes on $100,000. Why would any shareholder want to do that? Very simple. It avoids double taxation.

If the corporation made $1 million, had 10 shareholders and it paid taxes, it would pay taxes at 36 percent. The Federal Government would get 36 cents out of every dollar it earned.

At the time I was doing this, the top tax rate was 28 percent. By saying, all right, we are going to register as an S corporation so the corporation does not pay any taxes on the $1 million, it comes to the 10 shareholders and each one of us will pay taxes on our share of the earnings, which in my case was 28 cents, that is a very significant difference--the difference between paying

28 cents on every dollar you earn and 36 cents on every dollar you earn.

During the period of time Bill Clinton was President, that number went up to 42. I had said before if we had started that company at a time when the effective tax rate was 42 percent, we probably would not have survived, but because we started it during the Reagan years when the top individual tax rate was 28 percent, we got to keep 72 cents out of every dollar we earned.

What did we do with that? We put it back into the corporation and we created jobs, real jobs. The company had four full-time employees when I joined it as the chief executive--not a very big company, frankly, not a very big deal. It eventually grew to 4,000 jobs. The reason it had that kind of momentum as a small business is because we only paid 28 cents back to the Federal Government out of every dollar we earned. We put the 72 cents into growing the business and from a base of 4 jobs we created 4,000 jobs. If we add up all of the income taxes that were paid by those 4,000 employees and the corporate taxes that were paid by the company when it finally went public and ceased to be an S corporation, it became a C corporation, and the taxes that were paid by the suppliers of our company and the taxes that were paid by their suppliers and all the rest of it, we come up with a very large number that came into the Federal Government because that company was started.

As I said in the beginning, it was started because of two things: accumulated capital and risk taking. How much accumulated capital did we have? We borrowed $175,000 from the bank. It was the bank's capital. That was our accumulated capital. How big a risk did we take? Every one of us signed away everything we owned in the form of a personal guarantee to make that company go. After about 9 months of operation, I remember the principal shareholder of the company saying to me, Bob, are we going to make it? Are we going to survive?

I said to him, well, it depends on whether we get repeat business. We sold a product that had a year's life and the question was would the people at the end of the year come back and buy the product at the end of the year. I said, if we get 55-percent repeat business, we are going to survive. If we get less than that, your next phone call has to be to a real estate broker because you are going to have to sell your house. The bank is going to show up and take everything you own.

On that pleasant note, we went ahead with the business. It turned out we got more than a 55-percent renewal rate. We got a 95-percent renewal rate and the business doubled. It continued to grow and we funded it with internally generated funds because we were able to keep 72 cents out of every dollar we earned and put every dime of that 72 cents back into the business.

Because we were an S corporation and the profits we were earning showed up on our individual tax returns, I filed tax returns that showed I was earning over $1 million a year. Now, in fact, my salary as the CEO of that company was $140,000, but there was the other million that was added to it as my share of the company's earnings reported on my personal income tax return.

If we go to the chart that was shown by the Senator from Michigan, I would be one of those who would be earning $1 million a year. In fact, my take-home stayed exactly the same at the $140,000 figure. The rest of it was all a bookkeeping entry. We did it because we wanted to avoid double taxation and because we wanted to take advantage of the fact that the effective rate for individuals was lower than the effective rate for corporations. We built the business and we created the jobs because the tax situation was as I have described it.

We hear all of these comments about how wonderful small business is and how small business is the engine that is driving the economy, and they are right. We hear all of these comments about how small business is where the new jobs are, and they are right. It is interesting that almost unanimously those who represent small business are saying to us, keep the President's tax cuts in place. If you do not, you will stifle small business.

On this floor we are seeing our colleagues say, let's let the millionaires pay for the things we want to do, let's take a little off the top from the millionaires and then we can afford all of these wonderful Federal programs we want to fund, all of the time while we are saying, gee, we are spending too much money, but we should spend more money here and we should spend more money there and we should spend more money in the other place. And where are we going to get it? Well, we will let the millionaires pay it.

Then they say, all of this will help small business. The small businesspeople are saying, we are the millionaires and it is not coming to us in personal income, it is showing up on our tax returns in K-1 forms filed to deal with an S corporation, and you are stifling job growth, you are stifling small business if you do it this way.

We do not hear from the real small business man and woman. We hear from those who say, I am speaking for small business while I am saying small business is wonderful, and at the same time I am saying increase the taxes on those small business men and women who have sole proprietorships or S corporations or limited liability corporations.

The other point I want to make in this debate has to do with jobs. We are hearing over and over, where are the jobs? Once again, it is the President's fault. President Bush has presided over the loss of more jobs than anybody since Herbert Hoover. He must have done it deliberately is the implication. As I said at the outset, Paul Samuelson said if a President knew how to create jobs, we would never see the unemployment rate go above 3.2 percent.

What is the basis of the creation of jobs? Let me give a statistic. When economic activity goes up, obviously there is a need for more jobs. There is a need for more people to work at businesses, at firms that are involved in the economic activity growing. So the economic activity has gone up.

We had a great year in 2003. The gross domestic product grew by 4.3 percent, which in historic terms is terrific. The President said we will get good growth if we have these tax cuts, and we have gotten good growth. We have added something like $3 trillion to $4 trillion worth of wealth on the stock market--and that involves over 50 percent of our population.

The stock market is not just for the privileged few at the top now. Teachers' pensions, labor union pensions, veterans' pensions, people who have invested for their children's college funds--over half of Americans are now invested in the stock market. They have seen, since the President's program went into place, an increase in the overall value of the stock market in the multiple trillions of dollars. This is not a small accomplishment.

But where are the jobs if GDP is at 4.3 percent, historically a high position? The stock market has come back, creating a tremendous amount of accumulated wealth, and where are the jobs?

There is another statistic that answers the question we need to pay attention to. In 2003, once again GDP increased by 4.3 percent. Normally that is a time when you would see the creation of many jobs. However, in that same year productivity increased by 4.4 percent: a staggering number in historic terms. But the net effect is that it was higher than GDP.

Whenever productivity grows faster than the economy grows, something we don't like happens and that is we lose jobs. For all of the efforts on this floor and in the White House and in the Federal Reserve to get the economy growing, to get the traction in the recovery growing--and we produced a year of 4.3 percent growth in 2003--with that strong growth, we lost 60,000 jobs. The reason was productivity grew at 4.4 percent while GDP was growing at 4.3 percent.

Some will say the solution to the problem is to get productivity down, to have GDP growing and productivity falling. That, of course, is a prescription for long-term economic disaster. The most significant thing we want to do in our economy is keep it as productive as possible, to have productivity growing rapidly here so we can outgrow the rest of the world. That is what America has done for 100 years or more.

Go back to the middle 1800s and look at the productivity figures for the then leading economy in the world, which was Great Britain, and the productivity figures for the young upcoming

country in the world, which was the United States. You see that over the years the United States had a higher productivity than Great Britain by about a half a percent. That was enough, over the decades, and then the century, to see America eclipse Great Britain and see Great Britain ultimately disappear as a major world economic factor. America now stands as the strongest economy in the world. We do not want our productivity to go down.

The thing that has happened in this recession and recovery, something that has not happened before, is that through the quarters of recession and recovery productivity remained strong. Productivity simply means you are getting more value out what the workforce is producing. You are getting more goods; you are getting more services; you are getting more to sell. If you can get more out of the workforce in this fashion, it means ultimately your society has a higher standard of living and your consumers pay less for the goods they use. But if productivity is growing faster than the economy is growing, that means you are getting that result, higher standard of living and lower cost, with fewer people.

This is the real dilemma we are facing that is not being discussed when we talk about economics. The real dilemma we are facing is how do we get the GDP to grow faster than productivity

I believe productivity will come down from the high of 4.4 percent that we saw in 2003. I don't think that is sustainable. I think the GDP will eventually cross over the line so the GDP is growing more rapidly than productivity does, and when that happens the jobs will automatically come into play. They will appear. It will not be because of anything we do or not because of anything President Bush does or of anything that a potential President Kerry might do. It will happen because the economy is strong enough that the GDP will grow faster, that productivity will be passed by the GDP number. Whoever holds office at that time, be he or she, Republican or Democrat, will take full credit for it. They will say, since it happened on my watch, I did it.

But let us, at least for a moment, in the rhetoric of this election year, pause and recognize what is happening. We are in the midst of the information revolution. It is as fundamental to changing the economy as the industrial revolution was in the late 1800s. We have not yet learned quite how to cope with it and deal with it. But the potential for good for our citizens, and for the world, is enormous.

I don't want to peddle fear and pessimism because, in fact, we should be optimistic and excited about the future that this represents to us. It will be filled with challenges, just as the industrial revolution brought enormous challenges. But it will be filled with opportunity and it should be filled with optimism.

I close with this observation. If we had been having this debate 100 years ago, in 1904 instead of 2004, and some economist with a great, clear crystal ball had come before us and told us the following we would all have panicked, but it would have been true if he had said this 100 years ago. He would have said: Sixty-nine percent of America's labor force works on the farm; 69 percent of America's labor force is involved in agriculture, which is civilization's oldest economic activity. One hundred years from now, in 2004, that number will be two. Yes, you heard me, it is now 69 percent; 100 years from now it will be 2 percent.

If that were all he had said, the sense of panic would be enormous. Of course, he would have been accurate because agricultural jobs now have gone from 69 percent of the labor force to 2 percent.

What in the world have we done with all of those people who are out of work? The industrial revolution took hold and their productivity became greater and greater and greater, and today the 2 percent of Americans who are involved in agriculture produce more food and fiber than Americans can possibly eat or wear, even though obesity is our largest health problem. We have to export food to keep the farmers busy and only 2 percent of our working force is in agriculture.

We have enormous productivity.

Here is another statistic and cautionary tale in that same situation. The percentage of workers involved in manufacturing has been going down, just like the percentage of workers involved in agriculture for 50 years--not just in this country but all over the world. As we now see the percentage of workers going down in manufacturing and we get all excited because it is going down in one President's term, or in the 8 years of Bill Clinton, or in the first President Bush's term, or in Jimmy Carter's term, or wherever it might have been going down, it has been going down on a steady basis for over 50 years here and in Europe and in every other industrialized country in the world.

What have we done with those workers? How have we been able to find jobs for them? The son of the steelworker who no longer has a job because about 10 percent of the number of steelworkers is necessary to run a steel mill now compared to the number that was necessary when we had open hearth furnace steel mills, the sons and grandsons of those steelworkers who worked in the open hearth furnaces are now working for Microsoft, or Verizon, or in a startup that will become the next e-Bay, or whatever company you want to speculate. They are earning more money than their grandfather and their father earned, and they are providing for their families better. We are in the midst of the information revolution, as I said, that is transforming the economy as fundamentally as the industrial revolution did.

As we deal with this recession and this recovery and talk about what we need to do, let us understand the environment in which we are operating.

There are many things we don't know about the information revolution. There is much to understand before we can make sound policy. But we come back to a fundamental truth which was true during the agricultural age, which was true during the industrial age, and which is true now during the information age; that is, in order to get economic activity, growth, and wealth creation, you need two things--accumulated capital and the willingness to take a risk.

If we can always remember those two fundamentals--that all growth and all wealth comes from the combination of accumulated capital and taking a risk--we will make wise decisions.

If we fall for the siren song that says the way to deal with our problem is to share the wealth and take the accumulated capital and spread it all around in a way that nobody then has any risk--Karl Marx suggested that and we have seen what has happened to the economies that followed his economic advice--we will kill the goose that has been laying golden eggs in this country for over 240 years.

That is a dramatic condemnation of some of what I have heard on the floor, and it is over the top. But, frankly, much of what I have heard here on the floor is over the top.

Let us stay with the basics. Let us do our tax policy in a way that encourages accumulation of wealth. Let us do our regulatory policy in a way that encourages the taking of risks. Then as the wealth is created by the combination of accumulated capital and risk taking, let us devise a tax system that does not kill the golden goose but that does take out of the economy the money we need to deal with the proper role of government. I am not one who says we shouldn't have taxes. I am not one who says people shouldn't pay their fair share. I am not one who says just because you are successful you should be left alone. But my fundamental goal is a tax system that functions to raise enough money to pay for the legitimate needs of government, not one that picks winners and losers, not one that tries to set social policy by tax incentives. Let social policy be set by Congress. Let the taxes be drawn in a way that produces the greatest efficiency in the economy. Then the gross domestic product will grow more rapidly than productivity, even though the information age will keep productivity high. At that point the jobs will start to come and we will have done our jobs.

We cannot create jobs. The President cannot create jobs. But what we can do is create an economic circumstance where jobs are discouraged and economic activity is dampened. When that happens, we will all pay the price.

I yield the floor.

Mr. President, will the Senator yield for a question?

Mr. President, I agree with the Senator about the size and terrifying nature of what we are facing with retirement of the baby boomers. But I disagree with him about the connection between this budget and that kind of disaster. I feel even as we are running surpluses right now, the disaster that is facing us is exactly the same size regardless of where we are right now.

My question to the Senator is when he references the Chairman of the Federal Reserve Board, with whom he and I both have had this discussion--we know how strongly Chairman Greenspan feels--is the Senator not aware Chairman Greenspan is of the opinion that the President's tax proposals did indeed help produce the recovery in which we now find ourselves, and indeed Chairman Greenspan has endorsed making the President's tax proposals permanent? Is the Senator aware of the fact Chairman Greenspan, even as he warns about the same things the Senator and I agree upon in terms of the problems of the future, says in the present context making the President's tax proposition permanent is a good idea?

Mr. President, if I could respond, I have no idea if what I pay is what I legitimately owe or not because the Tax Code is so impenetrable I did not get an answer out of two different people as to what the amount is. I pay the amount my tax preparer tells me I owe and so far the IRS has accepted that as legitimate.

Give me a third opinion.

If I could make a quick comment without the Senator losing his right to the floor.

I recognize fully the level of revenue currently coming into the Federal Treasury is at a distressingly low historic point. But I go back again to a comment that Chairman Greenspan once made to a group of us. I am not sure whether the Senator from North Dakota was present. It fits in with the area of agreement that we have. He said to us: You can set the level of spending just about wherever you want. You can pass a law and be pretty sure spending will be where the law says it will be. You cannot set the level of income where you want. That is a function of the economy.

If we look at the period which we all look back on with such great satisfaction--that is, the years in which we were in surplus--one of the major reasons we were in surplus was that the economy unexpectedly, according to the computers at CBO, produced far more revenue than CBO scored. This came as a result of the balanced budget agreement, the agreement entered into with the Republican Congress and the Democratic President after the 1996 election, an agreement that the Speaker of the House in 1995 tried to enforce with heavyhanded political methods and got himself in trouble in 1995. But after the election, the leadership of the Senate and the House and the leadership in the White House with President Clinton sat down and we got the balanced budget agreement, the balanced budget proposals, and in that process the Congress insisted, the President resisted but finally agreed to cut the capital gains tax rate.

The CBO scored the amount of revenue we would get from that tax cut. The actual revenue, I believe, was five times as great as CBO scored it. No one had anticipated the rivers of cash that would come in.

Now, rivers of cash came in, in my view, because there was capital tied up in mature investments that wanted to find more entrepreneurial kinds of investment but believed that it could not move it--that is, the owners of capital believed they could not move it with the capital gains rate of 28 percent. When the capital gains rate came down to 20 percent, they figured that was enough to allow moving the capital out of mature investments and into entrepreneurial investments and we saw Federal revenue go above 22 percent of gross domestic production, which I don't think has ever happened before.

Now we are in a recession. There are no capital gains. The revenue has gone down into the teens in percentages of gross domestic production. The recovery, historically, can be depended upon to take care of that and the more the recovery persists, the more Federal revenue as a percentage of gross domestic production will rise.

I thank the Senator for his courtesy and will not continue this dialog because I am intruding on the good will of others, but I appreciate the opportunity to have engaged in this exchange.

Mr. President, I thank my colleague from Arizona for the time and for the opportunity to address this issue. Let me make one statement at the beginning that I think needs to be made on the political rhetoric that is surrounding this issue. I am not questioning the patriotism of those who are complaining about, disagreeing with, or even attacking the President. I question their accuracy. I question their wisdom. But I am not questioning their patriotism. I think that needs to be made clear because in the debate over this war, there has been rhetoric that, in my opinion, has gone over the top.

The former Vice President with the blood rushing to his face and the veins standing out on his neck screeched before a crowd which has been repeated on the television that the President has betrayed this country. You can disagree with George W. Bush. That is legitimate and proper and in an election year expected. But you should not accuse him of being a traitor. You should not accuse him of treason.

I want to make it clear again that as I disagree with those who are attacking the President, I am not attacking their patriotism or their love of this country. But I do disagree with their wisdom and with their accuracy.

In the speeches that have just been given, we have had a lot of conversation about what I would consider past history. I am not going to get into that; that is, what did we know about weapons of mass destruction? What did the inspectors know? What should we have done here? What should we have interpreted there? I will leave that to the historians themselves to sort out. A debate on those issues becomes an attempt simply to bash the President and avoid the fundamental issue.

The fundamental issue that we have to face as Senators, as policymakers, is what do we do now? We are in Iraq whether you voted for the resolution, as Senator Kerry and Senator Edwards did and as I did, or whether you voted against it, as Senator Durbin did. Debating the wisdom of that at this point is merely an exercise in avoiding the reality of the situation with which we find ourselves faced now. What do we do now?

The large majority of this body along with a large majority of the Members of the House of Representatives, and the unanimous vote in the Security Council of the United Nations took us to war. What do we do now?

That is the fundamental question that we should be addressing and that we should be facing.

Oh, say some, no, no. The fundamental question is whether or not there were weapons of mass destruction. And, since there were not, the real question is, Did the President lie?

Well, let us look at the situation we are facing now with respect to weapons of mass destruction. The question is not are there weapons of mass destruction in Iraq and did the President lie? The question is, What happened to the weapons that everybody knew were in Iraq, and has the President taken proper steps to protect us from them?

When I say the weapons that everybody knew were in Iraq, whom do I include in that? The first person to convince me there were weapons of mass destruction in Iraq was Madeleine Albright, Secretary of State to President Clinton. She met with us here in the secure room of the Capitol; the room where we get top secret briefings from the highest possible level. It was in that room that Madeleine Albright sat down with the Members of the Senate and laid out the irrefutable evidence that Saddam Hussein had weapons of mass destruction and justified to

us the Clinton administration's determination that they would go to war, and they did.

Bombing another country is an act of war, and the Clinton administration, in 1998, in response to the irrefutable evidence that Saddam Hussein had weapons of mass destruction, took the United States to war. We did not invade Iraq with troops, but certainly dropping bombs in the quantity and regularity with which we dropped them in 1998 is an act of war. We did it unilaterally. We did it without consulting the United Nations. We did it without talking to the French or the Germans in the way that some of the President's critics say we must. We did it because we knew Saddam Hussein had weapons of mass destruction.

David Kay and his inspectors have been to Iraq, and they say they cannot find warehouses full of weapons of mass destruction, which raises the fundamental question that most people are not addressing. What happened to them? Where are they? We know he had them. We went to war to deal with them. What happened to them?

I think there are four possible answers to that question.

First, one that has been raised by President Clinton himself, we got them all in the bombing. President Clinton said we didn't know how many we got. We could have gotten all of them. We could have gotten none. But we did our best to try to destroy them.

One answer to the question of why David Kay was unable to find weapons of mass destruction when he got into Iraq with his inspectors is the possibility that we got them all in the bombing and had no way of knowing that.

No. 2, the second possibility raised by David Kay and others is that they were trucked out of the country. They went off the border to Syria or someplace else. They are still in existence. They just aren't still in Iraq. We don't know the answer to that. But that is a possibility.

Possibility No. 3, they were destroyed by Saddam Hussein himself. Someone would ask why would he want to do that. Look at the man. Look at what he did. Look at his record. He believed that the United States would, in fact, not invade. We had bombed in the first gulf war. We had bombed in 1998. He believed we would bomb again but that we would not invade, or, if we did invade, we would not topple him. After all, we didn't topple him last time.

Pressure from the French, pressure from the Germans, said don't go ahead with this. He could very well have believed that the international community would put enough pressure on President Bush that the United States ultimately would stop short of removing him, particularly if inspectors from the U.N. got into Iraq and discovered there were no weapons of mass destruction. Therefore, he could have destroyed them himself on the assumption that he would stay in power and then, as soon as the inspectors were gone, he could reconstruct his weapons program, reestablish weapons of mass destruction, and be right back where he was before we took the action in 1998. That is the third possibility.

The fourth possibility is that they are still there. There is the possibility that we haven't been able to find them but they are still there. That is a very serious question, one that is being ignored by everybody who is debating the question of whether Bush went to the United Nations the right way, or whether he said the right things, or whether he read the right intelligence. Those questions are minor compared to the consequences of answering this question.

Let me pose it again and go through the four possibilities and give you my answer.

What happened to the weapons of mass destruction that everybody in the world knew he had? We destroyed them in the bombing, or they were taken over the border to someplace else, or Saddam Hussein himself destroyed them in order to fool the inspectors, or they are still there.

My answer is I believe all four. I believe we destroyed some in the bombing. I believe some got over the border. I believe he dismantled some of his programs, and I believe there are some still to be found.

That means, if I am right, there is work to be done to help make the world safer that is not being done while we are being distracted by an irrelevant debate that is best left to historians.

There is possibly still a threat out there that we are not addressing because we are paying so much attention to the questions of what kind of intelligence did he read and did he have the right 16 words in the State of the Union Message. We waste our time on that when we are facing this far more serious and obvious question.

What happened to the weapons that we knew he had? We should not rest easy until we have an answer to that question.

Which of the four or combination of the four possibilities really applies? The real question we are facing as we look ahead to November-- and make no mistake, this debate is all about looking ahead to November--is what will the United States do after the Presidential election is over?

How will we proceed in Iraq once the determination has been made as to who will control our foreign policy for the next 4 years? That is the fundamental question the American voters need to be debating. That is the question they need to pay attention to as they make up their minds as to whom they will support in this election.

The choice is fairly clear. We can only guess about the future, but the best indication of the future lies in the actions of the past. President Bush has made it pretty clear what the future would be with respect to Iraq if he prevails in November. President Bush has made it clear if he prevails in November, we will stay the course in Iraq. We will stay in Iraq until we have succeeded in our goal, which is to plant in Iraq a self-governing, westward-looking, open society where private property rights are respected, where the rights of individuals to vote and control their destiny are preserved, and where free market principles will prevail; an Iraq that will stand as an example to the rest of the Middle East that freedom, democracy and capitalism can indeed thrive there. President Bush is an optimist who believes those things are so fundamental in the human spirit that they can survive in an Islamic background.

There are pessimists around who say no, the Muslims can never live in democracy. The Muslims can never live in freedom. President Bush is an optimist who says, I don't believe that--without trying to change their religion or attack their culture. I believe they will respond to freedom and the Americans will stay there until we have achieved the goal of planting freedom there.

That is the answer to the question of what will happen in Iraq if George W. Bush wins this election. That is an easy answer to give because his past resolve and his past determination have been very clear.

The second question, of course, is what will happen in Iraq if President Bush loses the election and we get a new steward in charge of our foreign affairs. That question is a little harder to answer because we do not have as clear a track record. On the assumption that the junior Senator from Massachusetts will become the President if President Bush loses the election, we do have the signposts indicating what he would do if he inherited the situation we now have. He said on ``Face the Nation,'' the first thing he would do is go to the United Nations and apologize. I am not quite sure for what he would apologize, but he has indicated the first thing he would do is to go to the United Nations and apologize.

If I may quote the columnist for the New York Times, Tom Friedman, who spoke to a group in Europe. They turned to him after the weapons of mass destruction question arose and asked, Are you now prepared to apologize for your defense of Bush and your support for this war? He said something like this: Well, let me see. We have removed Saddam Hussein, one of the most brutal dictators of the world, found in the process that he had slaughtered at least 300,000 of his own people whom he had buried in mass graves. We know he is responsible for a million more deaths in the two wars he started with his neighbors over the last 12 years. We know he supported terrorism, down to the detail of paying $25,000 to anyone who would wrap himself in dynamite and blow himself up just so long as he could take another human being with him, and that he

kept his people in absolute degradation and subjugation for 38 years. Now he is gone with his torture chambers and his secret police and his brutality, and I am supposed to apologize for that?

I am not quite sure what Senator Kerry might say to the U.N. when he goes to apologize, but apparently what he will say, as I try to gather from the speeches he has given, is the United States should no longer act unilaterally, that we should get international support before we go forward in an event like this, and presumably he would then say to the U.N. we are where we are, the responsibility now of building the kind of Iraq George W. Bush envisioned--I give Senator Kerry the credit of assuming he is in favor of that kind of Iraq--the responsibility for building that kind of Iraq now lies with you, United Nations. We in America are going to show a little humility--that is another word he used--show a little humility on this issue and turn it over to you and let you take over the responsibility of producing the results we all want in Iraq.

If that is, indeed, his program--and I assume we will find that out as the election goes forward--I make these observations. Number one, the United Nations has no force with which it can provide security to the Iraqis. There is no United Nations army. There is no United Nations police force. There are no United Nations federal marshals or any other kind of enforcement facility you might think of. The only force the United Nations can ever use is the force that would be provided to it by its member states. The United Nations can pass resolutions, the United Nations can threaten people, but the threats carry no force unless the member states of the United Nations respond to the U.N. resolutions and can go forward.

That is the point President Bush made when he spoke to the United Nations and said to them, if you won't enforce your resolutions, we will. I don't think we need to apologize to the United Nations for enforcing their resolution 1441 that passed by a unanimous vote in the Security Council and which David Kay has now said Saddam Hussein was in complete violation of. That is something we should remember as we have this debate.

The history is not all that comforting to me. Koffi Annan sent a group of U.N. folk into Iraq to help with the nation building and here is the series of events that occurred. The head of the U.N. mission showed up and took possession of a building where he was going to operate. The Americans showed up and put their armored vehicles around the building. He came out and said, No, that is too militaristic. You Americans are too quick to show force. We are the United Nations. We come in peace. Get rid of the armored vehicles.

The American commander, after arguing with this fellow, said all right, and he got rid of the armored vehicles, but he spread concertina wire through the courtyard, and the U.N. head of the group came out and said, get rid of that. You are too militaristic. We are the United Nations. We are not the United States. We are not here to show military force. We are here to help build the country.

Finally, the Americans took away the concertina wire and the next day a truck bomb drove across the courtyard, blew up the building and killed the man who had said, I don't need this kind of protection. After this, Koffi Annan said, get them out of there. We can't provide their security. We can't keep them safe.

I welcome the United Nations involvement. I hope we get the United Nations involvement, but I don't think that track record speaks very well for the idea that the first thing we should do about dealing with the problem in Iraq is to go to the United Nations and show some humility and apologize. The number one civil right which all of us desire more than anything else and that is most essential in Iraq is the right to walk down the street without being shot, the right to walk out in public without being beaten over the head. To establish security is the first responsibility of civilization. Security in Iraq is being provided by the American military and its allies in the Iraqi forces.

George W. Bush, for all of the mistakes that have been made, and all of the difficulties that have been encountered, has demonstrated America's resolve to provide this civil right to Iraqis. The United Nations has fallen short in this category.

This is the fundamental question all of us should look at: Instead of debating whether the President looked at the right piece of intelligence, whether the committees had the right information, whether this or that or the other was looked at and was not, the real question is, where do we go from here. We are where we are, regardless of how we got here. Where do we go from here--the question the American people will decide in November.

I close with this anecdote or comment from Bernard Lewis. Bernard Lewis probably knows more about this region than any other academic in America. He has spent more time studying it, and has written books on it. He spoke to a group of us, and he was an optimist. He agreed with President Bush that democracy could be planted in the region and we should stay the course until we do it. He made this comment. He said: Listen to the jokes. In the Middle East, the only form of expression that is not censored is the jokes. And this is the joke that is going around in Iran, right next to Iraq. Two Iranians are talking. The first Iranian is complaining about how bad the government is, how bad things are. The second Iranian says: Yeah. They go back and forth, saying: What are we going to do? Where are we going to turn? Finally, the second Iranian says: I know. What we need is an Osama bin Laden. The first Iranian says: Are you crazy? That would make things that much worse, and the second Iranian says: Nope. If we had an Osama bin Laden, then the Americans would come and save us.

There are hundreds of thousands, if not millions, of people in the Middle East who are watching what we are doing in Iraq in the hope that, in the words of the joke, the Americans will ``come and save us.''

We have set our hand to the plow to that particular assignment. We should not turn back now. We should back our President and his resolve to see this through until freedom, prosperity, and self-determination are established in Iraq, from which it will then spread, change the Middle East, and ultimately transform the world.

I have listened with interest to the Senator from New York and will respond to several of the things she said.

I notice the chairman of the Appropriations Committee in the Chamber. I do not wish to intrude on his time unduly because he is the real expert on this process and can explain why we are where we are far better than I can.

I do have personal reactions to several of the comments the Senator from New York has said. She talks about things that have not been passed by the Senate and gives two examples--country-of-origin labeling and vouchers--and says we are ignoring the will of this body.

But what she does not comment on and may not realize is that in both these instances, the House of Representatives took a diametrically opposed position to that which was taken by the Senate. The purpose of conference is to deal with that kind of a challenge.

I will talk about the country-of-origin labeling because I was personally involved in it. The House of Representatives said: Absolutely, we are going to kill this program. The Senate said: Absolutely, we have to keep this program. There is not a lot of room for negotiation between those two positions.

For her to say it is terrible, what came back from conference was not what the Senate passed and somehow we did it because the administration told us to do it ignores the fact that the House of Representatives has exactly the same amount of power under the Constitution as the Senate. And they took a very firm position.

What we came up with, in conference, and I was the one who suggested it so I have direct knowledge, was a compromise that said we will not take the House position and kill this program, but since the House will not take the Senate position and implement it immediately, let's simply delay the effective date to give us time to figure out a way to make it work, if it is possible to work.

I don't consider that under cover of darkness. I don't consider that a violation of what we learned in civics class about the way to resolve problems between the House and the Senate. I think it is a legitimate position that comes to a compromise between the House's firm statement and the Senate's firm statement and says we will keep the law, which is what the Senate wanted, but we will delay the implementation, which is not quite what the House wanted. I view that as a win for the Senate position.

I am a little bit troubled to have the Senator from New York say we have violated the spirit of the Constitution with this kind of a compromise and this kind of accommodation between the two.

I have said this before and undoubtedly will again. I learned from my father when he served in this body this truth: We legislate at the highest level at which we can obtain a majority. Many times the process of getting to a majority is not pretty. Many times things are done which in civics class people would get very upset about, but in order to get a majority to get the thing done, this is where we are.

This bill represents the highest accommodation of all the interests we can arrive at for which we could obtain a majority.

One other comment that I would like to make with respect to the Senator from New York and her constant repetition that all we did in this conference was buckle under to the will of the administration; all we did was accept the administration's position and over and over again; we ignored our responsibilities as the legislative branch and said whatever the king wants we will give him. This is the rhetoric we get.

I have not been here as long as many Members and certainly not as long as the chairman of the full committee who will speak next but I have been here long enough to have been in a number of Appropriations Committee conferences, most of them under the previous administration, the Clinton administration to which she referred, and I tell my constituents, in every conference of the Appropriations Committee on which I have sat--and there are a number of them--when the Clinton administration was in power, the Clinton administration made its wishes very much known. And in every instance the veto threat that came out of the Clinton administration was, if you do not increase spending above the amount you are talking about in this bill, the President will veto it.

There were times when we gave in to that pressure from the administration. We felt it so necessary to pass the appropriations bills and fund the Government that we would grit our teeth and say, all right, we will, even though it was not adopted in either House we will, in fact, increase spending in order to avoid a veto threat.

The veto threats we have heard out of the Bush administration have been the other way. The veto threats out of the Bush administration are, these spending numbers are too high and we have to cut them down in the name of fiscal responsibility.

I make that point because one of the things being said in this political season is that the Republicans have given up on fiscal responsibility; the Republicans are responsible for the runaway spending. I have been there. I have been at the conference committees. I can assure all Members that this administration is no more active in the conference committees than the previous administration, and all of the pressure out of the previous administration was to increase the spending whereas the pressure out of this administration has been to try to get the spending under control. I simply want to get that information clearly on the record as we go into this political season.

With that, I yield the floor so we can hear from the other Senators.

I agree with the Senator from Iowa and my ranking member. There is a long history of the Rural Economic Development Grant and Loan Program being a very effective tool to provide capital for many worthy job creating projects. I concur that the Department should release the funds sitting in the cushion of credit account to qualified applications as quickly as possible.

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Mr. President, I object.

Mr. President, I would like to be allowed to speak very briefly about Senator Roth as well. I don't have a prepared statement. Could I go for 1 minute between Senator Carper and Senator Specter?

Mr. President, I will not take a great deal of time. I don't need to because all that needs to be said about Bill Roth has been said.

My wife and I had the privilege of going with Bill and his wife to Romania. We traveled with them to other countries throughout Europe talking about NATO and other issues. In that process, we became well acquainted with two of America's finest public servants. But on that occasion, they became two of our best friends.

I join with all of the people from Delaware and all of the colleagues in the Senate in paying tribute to Bill Roth, saying goodbye to him for his service, and extending my warmest sympathy and condolences to Jane for the loss of her husband as well as recognition of her service to this country. What a remarkable couple. America, as well as the State of Delaware, has been very well served for their willingness to participate in the public arena.