Robert Bennett

Mr. BENNETT

Mr. BENNETT. Mr. President, today's papers are filled with stories about energy prices and particularly gas costs and editorials demanding that the Congress and the President do something about it. I think perhaps the best comment that appeared was in this morning's Wall Street Journal in a story with the headline ``Bush Aims To Rein In Gas Costs,'' where there is a quote from Robert Ebel, who directs the energy program at the Washington Center for Strategic and International Studies. All of us are familiar with CSIS and the good work that it does. I would like to quote Mr. Ebel because what he has to say is the clear understanding of where we are. He says: A good politician never admits he's powerless in a situation, but I don't see anything that the Congress can propose that will make any difference. We don't stand in isolation from the rest of the world oil market, and there are events going on around the world that affect the world price of oil. I note that he uses the term ``world''--I could count how many times, but multiple times--and we act as if this is a domestic problem. We act as if this is something we in Congress or the President in the White House can wave a magic wand and do something about. I would like to point out a few facts and perhaps bring a little humility into this body, something that is in fairly short supply but in great need. As Mr. Ebel points out, the price of oil is set by a series of world events. It is not set in the Congress. It is not set in the White House. People look at the cost of a gallon of gasoline and say to themselves: You know, it only costs--picking numbers out of the air but being illustrative--$1.50 to put that gallon of gasoline in the tank at the service station, yet the service station operator is charging me $3 to take it out; there is price gouging going on somewhere. The reality is that the price in the tank at the service station is not figured on the basis of what did it cost to get that gallon there; the price at the service station is figured on the cost of what will it cost to replace that gallon there. So the reason a gallon of gas is at $3 at the service station is that all of the forces involved in putting that gallon of gas in there assume that it will cost $3 to replace it; therefore, they better charge $3 for it in the first place. Now, they may be wrong. It may be that they can replace that gallon of gas for $2.50, and as soon as they come to that conclusion, that gallon of gas will come down to $2.50. It may be that the cost of replacing that gallon of gas will be $3.50, and at that point, everybody will lose some money along the way. But whether it is the production of oil in the oilfield, the transportation of oil around the world, the refinement of oil in the various refineries, the transportation from the refinery to the service station, everyone is making a guess as to what it will cost for the next gallon of gas along the way, and that shows up in what appears at the service station. So when there is trouble in Nigeria, someone says, by virtue of that trouble in Nigeria, the next gallon of gas is going to cost more than we think, and that is why the price goes up. If there is trouble and difficulty in Iran, well, that is going to cause the price to go up, and let's bet against that future. If there is trouble in Venezuela, then that figures in. When it turns out that the trouble doesn't materialize, the price of gasoline drops dramatically, and we have seen that in this past history. The primary thing that started gas prices going up was Katrina. Why? Because Katrina wiped out a good percentage of our refinery capability. As the Senator from Montana has pointed out, we haven't built a refinery in this country for several decades. We need to get about it. But that is a 5- to 10-year problem. We can't instantly create a refinery out of nothing. As the refineries were shut down as a result of Katrina, the price of gas spiked as people anticipated that there would not be enough supply. As the refineries came back on line more rapidly than anybody anticipated, the price of gasoline dropped. Now refinery capacity is being shut down again. Why? Because we here in this Congress mandated the replacement of MTBE with ethanol, and the refineries have to gear up to make that shift. When they do that, they shut down in order to retool. When they shut down, there is a lack of gasoline, and you have prices going back up again. Once they have made the shift over, we will find those prices will start to come down, unless there is some other unsettling situation somewhere in the world. The bottom line, to repeat a refrain I have stated ever since I have been in the Senate, is that we cannot repeal the law of supply and demand. We engrave Latin phrases around here--and they are wonderful-- to remind us of our history and our background, but if I could control what we carve in marble and see every day, it would be that statement: You cannot repeal the law of supply and demand. If we had built the facilities in ANWR in 2001 when there were sufficient votes in the House but was killed in the Senate, it is likely that oil would be coming on line now, because at the time people said: Don't get excited about ANWR; it is going to take at least 5 years. Well, 2001 was 5 years ago. If we had done that, we would start to see that oil. Would it lower the price? Of course it would because it would change the equation of expectations of people who are involved in this whole situation. One last comment. I have talked about ethanol, and I have talked about MTBE. These are additives to lower the emissions that come out of gasoline, and they are good things. They are, however, expensive, and we cannot say on one hand: OK, let's get the price of gasoline as low as possible, and by the way, while we are doing it, let's put new burdens on the refineries that require this additive, that additive, and the other additive, that will require the creation of what are called boutique fuels, so that the refinery, instead of just putting out gasoline in regular or super high test, are putting out a boutique fuel for this part of the country and a boutique fuel for that part of the country and a boutique fuel for the other part of the country. That means constantly retooling, shutting down, starting up, changing, and all of that adds to the cost. We have added to the cost here in the Congress in the name of environmental protection. I am not saying environmental protection is bad, but I am saying it costs money. We should pay attention to that so when the time comes for us to say what can we do about the high gasoline prices, the answer is we can pay attention and be a little more humble before the power of market forces. If we think Government can intervene with market forces and produce long-term lower prices, all we need to do is dredge up memory of what happened the last time we panicked about this as a nation in the 1970s. Under the leadership of President Carter we created a synfuels corporation, created oil company windfall taxes, and ended up in lines on separate days. You could only get your gas tank filled on alternative days. Ultimately, we saw all of the effort collapse when market forces finally took hold and brought the prices back in line. I know it is not a message people want to hear. I, like Senator Burns and other Senators, have been out in my constituency during the break, and I heard people talking about: What are you going to do about gas prices? I had two choices. I could either tell them I will come back here and I will fight to lower the gas prices--and make them feel good--or I could tell them the truth. I chose to tell them the truth. This is a long-term problem, it is a serious problem, and it can only be solved by serious policies. The most intelligent serious policy that we can adopt is to do whatever we can to facilitate the kinds of competition and market forces that ultimately will bring supply up and prices down and deal with the demand side as best we can through conservation. It is not a quick fix. We can't pass a resolution and say, gee, look what we did and see something happen at the pump the day after tomorrow. It is time we recognize that fact and told our constituents the truth. I yield the floor.

Mr. BENNETT

Mr. BENNETT. Tomorrow, the Senate will continue to debate the border control bill. Based on the comments by the bill managers earlier today, we are hopeful that we will be considering and voting on amendments tomorrow morning and throughout the day, starting with the four pending amendments that have been waiting in the queue for several days. There was a cloture motion filed by the minority leader. Rule XXII requires that all first-degree amendments to the substitute now be filed at the desk by 1 p.m. tomorrow.

Mr. BENNETT

Mr. BENNETT. I ask unanimous consent that the committee-reported amendment be agreed to, the concurrent resolution as amended be agreed to, the amendment to the preamble be agreed to, the preamble as amended be agreed to, the motions to reconsider be laid on the table, and any statements relating to the bill be printed in the Record.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of calendar No. 387, S. Con. Res. 60.

Mr. BENNETT

Mr. BENNETT. Mr. President, if there is no further business to come before the Senate, I ask unanimous consent the Senate stand in adjournment under the previous order.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Senate now proceed to consideration of S. Res. 423, which was submitted earlier today.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that there now be a period for morning business, with Senators permitted to speak therein for up to 10 minutes each.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 386, S.J. Res. 28.

Mr. BENNETT. Mr. President, I ask unanimous consent that the joint resolution be read a third time and passed, the preamble be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of S. Res. 422, which was submitted earlier today.

Mr. BENNETT. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table.

Mr. BENNETT

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

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that calendar No. 374, S. 598, now be referred to the Banking Committee and then immediately discharged and placed on the calendar.

Mr. BENNETT

Mr. BENNETT. I ask unanimous consent that the Senate proceed to the immediate consideration of S. Res. 421, which was submitted earlier today.

Mr. BENNETT. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table, and that any statements relating thereto be printed in the Record as if read.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that when the Senate completes its business today, it adjourn until 9:30 a.m. on Wednesday, April 5; I further ask that following the prayer and pledge, the morning hour be deemed expired, the Journal of proceedings be approved to date, the time for the two leaders be reserved, and that the Senate then resume consideration of S. 2454, the border control bill.

Mr. BENNETT

Mr. BENNETT. Mr. President, as in executive session, I ask unanimous consent that the injunction of secrecy be removed from the following treaty, transmitted to the Senate on April 4, 2006, by the President of the United States: Investment Treaty with Uruguay (Treaty Document No. 109-9). I further ask unanimous consent that the treaty be considered as having been read the first time, that it be referred with accompanying papers to the Committee on Foreign Relations in order to be printed, and that the President's message be printed in the Record.

Mr. BENNETT

Mr. BENNETT. Mr. President, I have heard the arguments, and I agree with most of them. I simply want to put it all in perspective. Let us remember that the Senate Ethics Committee, under the man who is currently the assistant majority leader, the majority whip, Senator McConnell, censured the chairman of the Senate Finance Committee, a member of Senator McConnell's own party. The Senate Ethics Committee is not a namby-pamby, rollover, protect-the-party kind of institution. Let us remember that the current Democratic leader, the Senator from Nevada, was on the Ethics Committee when it censured a member of his own party with sufficient strength to cause that Member to recognize that he could not possibly seek reelection. There would be those who would say: Oh, Senator Reid will protect the Democrat. Senator Reid will see to it that the decision of the Justice Department, which said he had not violated a law, would be sufficient and would give him appropriate political cover. Senator Reid did not do that. Instead, the Ethics Committee came out with a statement so strong that the Senator in question withdrew himself from the election. Again, the Senator from Kentucky, when he was chairman of the Ethics Committee, came out with statements so strong that the chairman of the Senate Finance Committee--in some people's view, the most significant committee assignment anyone could have in this body--was forced to resign. Let us not listen to those who say the Senate Ethics Committee does not do its job and needs some kind of a watchdog--some kind of a gatekeeper, if you will--that will go out and gather those accusations which the Ethics Committee has not properly examined. Let's create the Senate version of the independent counsel. The Independent Counsel Act came after Watergate, as people reacted to the Watergate scandal and said: We need a counsel who is independent of all politics. They don't recognize that the people who ended up with the prosecutions and the convictions that sent members of the Nixon administration to prison were not people connected with an independent counsel; they were people out of the Justice Department. Let us remember that when the President tried to do things with the Justice Department that were viewed as being protective of him, there were individuals who refused to accept appointment, who resigned from the Justice Department rather than carry out a partisan agenda. We are getting the independent counsel mentality here of the same kind. There has been a scandal. Jack Abramoff has broken the law. I agree with the comment made by the Senator from Nebraska, Mr. Nelson, who said: Washington is the only place I know where, when people break the law, our reaction is, change the law, make the law tougher. Jack Abramoff is going to go to prison, and he is going to go to prison under the old rules. He is going to go to prison under the existing laws. That doesn't say to me that the existing rules and the existing laws somehow failed. What failed is that Jack Abramoff failed his moral and integrity responsibility to abide by the law, not that there was something wrong with the law. So we had the Independent Counsel Act after Watergate, and we saw what happened. When the impeachment trial here in this Chamber was over, Senator McConnell and Senator Dodd, the chairman and ranking member respectively of the Senate Rules Committee, both went upstairs to the press gallery and both said: It is time to kill the independent counsel statute. The independent counsel statute has gone too far, it has created too much partisanship, it has created too much difficulty. A bipartisan call, and this body agreed, and the independent counsel statute lapsed, with no tears being shed for it in this body. Now there is a sense that somehow, in response to the Abramoff scandal, we must do the same thing that was done in response to the Watergate scandal. If we do this, at some future point, the future counterparts of Senator McConnell and Senator Dodd will go to the gallery and say it is time to kill the Office of Public Integrity. Let's go back to the way things make sense. We have heard all of the examples from all of the Senators as to the way this would work and the way it would make sense. I oppose this amendment, and I hope all of the Members of the Senate will do so as well.

Mr. BENNETT

Mr. BENNETT. Mr. President, I want to thank the managers of the resolution for providing me with a few minutes to discuss my introduction today of the Sustainable Solvency for Social Security Act. In introducing this legislation, I am under no illusion that there will be a rush to enactment, but do believe this is an appropriate time to draw attention to this issue and the broader issue of entitlement spending as we consider the budget resolution for fiscal year 2007. Yesterday, we had a close vote on an amendment to reinstitute pay-as- you-go rules for spending increases and tax reductions. I opposed that amendment because a vote for it was, in essence, a vote for automatic tax increases on the American taxpayer. A more honest approach would have been to ask the Senate to adopt an amendment that required 60 votes to pass any legislation that would prevent the expiration of any tax provision that would, if allowed to expire, result in a tax increase on individual taxpayers. I mention this because I do believe that we need fiscal discipline. We do need to collect higher revenues, but collecting higher revenues does not mean that you need to impose higher tax rates on capital or labor. Even if the sponsors of pay-go had prevailed, the real issue would be--once again--ignored. The loaded gun held to the heads of American taxpayers is entitlement benefits that have been promised, but cannot be paid for under any realistic scenario. Economic growth can help solve or mitigate many fiscal challenges, but it cannot overcome the twin realities of demographic destiny or benefit structures that are simply unsustainable. Today, four items--Social Security, Medicare, Medicaid and interest-- consume just under 10 percent of our Gross Domestic Product. If we do nothing we will see expenditures for the three programs increase to almost 20 percent of GDP. That is simply unsustainable. Over the past year, I spent a great deal of time talking to members on both sides of the aisle, as well as the administration, about ways to begin addressing this looming crisis. 'started with Social Security. Some asked, ``Why start with the smallest problem?'' The answer was simple. If we can't come together on a problem that can be fixed by aligning benefits with program income, how can we ever expect to come together on more difficult issues like Medicare reform. In the case of Social Security, we can quibble about exactly when, but at some point between 2042 and 2052, the program will be unable to pay benefits called for under current law and benefits will be reduced automatically to match program income with program outlays. As I said, I have no illusion that the legislation I am introducing today will be enacted this year, but I offer it for my colleagues' examination and suggestions. This legislation does not include personal accounts of any shape or form. It focuses exclusively on the goal of making Social Security solvent. And it does so without any increases in taxes or increases in the payroll cap. Presently, the Social Security system faces an actuarial deficit of 1.92 percent of payroll. According to the Chief Actuary at Social Security, 1.60 percent of this deficit is related to the Old Age and Survivors Insurance (OASI) program--what we traditionally think of as Social Security. The remaining 0.32 percent is attributable to the disability insurance program. As I discussed this issue with many of my colleagues and with others, it was clear that there was a broad consensus that the disabled should be held harmless. It was also clear that there was little or no support for the proposition that retirement program beneficiaries should subsidize the disability program. Therefore, this legislation does not touch the present disability program and leaves open the question of how to address the disability program deficit. Additionally, there was broad agreement that current retirees and those nearing retirement, born before 1950, should not have their benefits affected. This legislation focuses solely on the 1.60 percent actuarial deficit in the OASI program. It achieves sustainable solvency for Social Security's OASI program through two primary policy tools: progressive price indexing and longevity indexing. Those reforms would slow the projected real rate of increase in future retirement benefits to a more sustainable level, while protecting low-wage-earners, the disabled, and their dependents. It also modestly accelerates the timetable for the transition under current law to a normal retirement age of 67, and it ensures sufficient backup general revenue funding to maintain a contingency reserve in the Old Age, Survivors and Disability Insurance (OASDI) trust fund. My proposal for sustainable solvency has been scored by the office of the actuary at the Social Security Administration. The effects of its provisions affecting retirement benefits, progressive indexing, accelerated NRA 67, and longevity indexing, would eliminate entirely the OASI program actuarial deficit of 1.60 percent of payroll that is projected under current law. Progressive indexing would not begin until 2012. First, it is important to note the beneficiaries, and Social Security programs to which progressive indexing would NOT apply. It would not apply to any current or future retiree born before 1950. Its provisions also would not apply to any worker in the future whose Social Security earnings history was in the lowest 30 percent of career earnings for workers becoming eligible to retire in a given year. Progressive indexing essentially slows the future growth rate of benefits for higher-earning workers. Their initial retirement benefits will grow more In line with price growth, rather than the even-higher rate of increase pegged to wage growth under current law. Under current law, retirement benefits are calculated under a ``wage indexing'' formula that will help propel them to levels significantly higher than the payroll tax revenue available to pay for them. The formula uses the average rate of growth of wages within the economy, rather than changes in the cost of living, to adjust, or ``index'', the past earnings of a worker that are used to determine the worker's initial benefit level at retirement. Because average wages generally grow faster than prices over time, the current benefit formula essentially guarantees that future retirement benefit levels will grow faster in ``real'' dollar value from generation to generation. Under this proposal, the individuals in the lowest 30 percent of all wage earners retiring in a given year would continue to have their past wages, and resulting benefit levels, indexed according to wage growth, while those at the top of the wage distribution would have their past wages indexed for changes in prices. Those falling in between would have their past wages indexed based upon a ``progressive blend'' of wage and price changes. In short, future benefit levels for workers who earned higher wages over their working career would not rise as much as benefit levels for workers with lower lifetime earnings, but those workers most dependent on social security for retirement income would be protected from such changes. This blended version of progressive price indexing targets the sustainable levels of revenue that will be available for future Social Security benefits under current law in a manner that ensures that those retirees that will be most in need are treated the most generously. It builds on the underlying progressive structure of the current benefits formula that replaces lower levels of career earning with a relatively higher share of retirement benefits. The real purchasing power of future OASI benefits will continue to grow, but not as much, in future decades for higher wage workers. Longevity indexing recognizes that future retirees will live longer and, accordingly, receive inflation protected levels of their initial retirement benefits for longer periods of time than prior retirees. Absent any adjustment for changes in life expectancy beyond the age of retirement, longer lifetimes in retirement would mean increasingly greater dollar amounts of lifetime Social Security retirement benefits in future decades. Under present law, the retirement age is scheduled to increase incrementally to age 67 beginning in 2022, the normal retirement age gradually increases for workers born in 1960 and later years, by two months each year starting in 2022 until it reaches age 67 in 2027. Under this proposal, the move from age 66 to age 67 would begin in 2012. The Normal Retirement Age or NRA would be increased by two months each year until the NRA reached age 67 in 2017. After that date, initial monthly benefits for future retirees would be periodically adjusted by the Social Security Administration to account for changes in the expected average lifetimes of future retirees. Because it does not change current-law benefits for disabled beneficiaries, my bill does not address the remaining actuarial deficit for the DI program under current law, which amounts to another .32 percent of payroll. Accordingly, it does not close the larger overall actuarial deficit for the combined OASDI programs. The latter is 1.92 percent of payroll under current law, and would be substantially reduced to only .28 percent of payroll under my bill. My plan's provisions that reduce OASDI benefit obligations first begin to operate in 2012, and they then improve annual unified budget balances for that year and all subsequent years within the standard 75- year projection period used by the Social Security Administration. Several other measures demonstrate the improved solvency for the overall OASDI programs under my bill. The net cash flow from the OASDI Trust Funds to the general fund is improved by $3.6 trillion in present value. The OASDI Trust Fund exhaustion date would be extended from 2041 until 2056. Until we can find further support for dealing with the remaining solvency problems in the DI program, we should at least ensure that sufficient resources are committed to prevent sudden across-the-board reductions in OASDI benefit levels in later decades. Therefore, my bill provides budget authority for general fund transfers as needed to maintain a 100 percent OASDI trust fund ratio in later years. Those general fund transfers are estimated by the SSA actuaries to amount to $0.6 trillion, in present value, over the next 75 years. This provision ensures solvency for the combined OASDI program through that period. After 2080, additional general revenue transfers are not expected to be necessary, and annual program cash-flow balances are projected to be improving and approaching positive annual balances beyond that year. I also think it is important to point out that this legislation recognizes that changes in economic conditions have an impact on the actuarial balance of the program. Greater economic growth can improve but not alone restore the program's solvency; recessions can significantly worsen that financial position. Some expressed concern early in discussions on this legislation that we might be going too far, that some of the changes might prove unnecessary. For that reason I have included a provision that will allow for the administrative ``turning off' if you will of the progressive indexing or longevity indexing if the program comes into actuarial balance prior to those provisions being fully phased in. In conclusion, this legislation would substantially reduce the mountain of unfunded debt projected for the Social Security program in the decades ahead. It does so in a manner that gradually and sensibly reduces the formula-driven increases in real retirement benefits under current law for future retirees, while protecting low-wage workers and the disabled. We could do more, but this bill would do a lot. At other times, I have proposed separate provisions to enhance overall retirement security, such as through the option of personal accounts funded partly from current payroll taxes and partly from additional personal saving. I have also proposed reforms in pension policy to encourage automatic enrollment in employer plans, provide better access to standard investment options, and stimulate increased saving by workers. But I have left those issues for another debate and focused on the solvency of the retirement program. I offer this legislation as a starting point. I remain, as I have been over the past year, open to suggestions or modifications that can lead to bipartisan reform that will insure the permanent solvency of the Social Security system. We cannot afford to ignore this issue any longer. Burying our heads in the sand will only magnify the folly of inaction. I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record.

Mr. BENNETT

Mr. BENNETT. Mr. President, I want to thank the managers of the resolution for providing me with a few minutes to discuss my introduction today of the Sustainable Solvency for Social Security Act. In introducing this legislation, I am under no illusion that there will be a rush to enactment, but do believe this is an appropriate time to draw attention to this issue and the broader issue of entitlement spending as we consider the budget resolution for fiscal year 2007. Yesterday, we had a close vote on an amendment to reinstitute pay-as- you-go rules for spending increases and tax reductions. I opposed that amendment because a vote for it was, in essence, a vote for automatic tax increases on the American taxpayer. A more honest approach would have been to ask the Senate to adopt an amendment that required 60 votes to pass any legislation that would prevent the expiration of any tax provision that would, if allowed to expire, result in a tax increase on individual taxpayers. I mention this because I do believe that we need fiscal discipline. We do need to collect higher revenues, but collecting higher revenues does not mean that you need to impose higher tax rates on capital or labor. Even if the sponsors of pay-go had prevailed, the real issue would be--once again--ignored. The loaded gun held to the heads of American taxpayers is entitlement benefits that have been promised, but cannot be paid for under any realistic scenario. Economic growth can help solve or mitigate many fiscal challenges, but it cannot overcome the twin realities of demographic destiny or benefit structures that are simply unsustainable. Today, four items--Social Security, Medicare, Medicaid and interest-- consume just under 10 percent of our Gross Domestic Product. If we do nothing we will see expenditures for the three programs increase to almost 20 percent of GDP. That is simply unsustainable. Over the past year, I spent a great deal of time talking to members on both sides of the aisle, as well as the administration, about ways to begin addressing this looming crisis. 'started with Social Security. Some asked, ``Why start with the smallest problem?'' The answer was simple. If we can't come together on a problem that can be fixed by aligning benefits with program income, how can we ever expect to come together on more difficult issues like Medicare reform. In the case of Social Security, we can quibble about exactly when, but at some point between 2042 and 2052, the program will be unable to pay benefits called for under current law and benefits will be reduced automatically to match program income with program outlays. As I said, I have no illusion that the legislation I am introducing today will be enacted this year, but I offer it for my colleagues' examination and suggestions. This legislation does not include personal accounts of any shape or form. It focuses exclusively on the goal of making Social Security solvent. And it does so without any increases in taxes or increases in the payroll cap. Presently, the Social Security system faces an actuarial deficit of 1.92 percent of payroll. According to the Chief Actuary at Social Security, 1.60 percent of this deficit is related to the Old Age and Survivors Insurance (OASI) program--what we traditionally think of as Social Security. The remaining 0.32 percent is attributable to the disability insurance program. As I discussed this issue with many of my colleagues and with others, it was clear that there was a broad consensus that the disabled should be held harmless. It was also clear that there was little or no support for the proposition that retirement program beneficiaries should subsidize the disability program. Therefore, this legislation does not touch the present disability program and leaves open the question of how to address the disability program deficit. Additionally, there was broad agreement that current retirees and those nearing retirement, born before 1950, should not have their benefits affected. This legislation focuses solely on the 1.60 percent actuarial deficit in the OASI program. It achieves sustainable solvency for Social Security's OASI program through two primary policy tools: progressive price indexing and longevity indexing. Those reforms would slow the projected real rate of increase in future retirement benefits to a more sustainable level, while protecting low-wage-earners, the disabled, and their dependents. It also modestly accelerates the timetable for the transition under current law to a normal retirement age of 67, and it ensures sufficient backup general revenue funding to maintain a contingency reserve in the Old Age, Survivors and Disability Insurance (OASDI) trust fund. My proposal for sustainable solvency has been scored by the office of the actuary at the Social Security Administration. The effects of its provisions affecting retirement benefits, progressive indexing, accelerated NRA 67, and longevity indexing, would eliminate entirely the OASI program actuarial deficit of 1.60 percent of payroll that is projected under current law. Progressive indexing would not begin until 2012. First, it is important to note the beneficiaries, and Social Security programs to which progressive indexing would NOT apply. It would not apply to any current or future retiree born before 1950. Its provisions also would not apply to any worker in the future whose Social Security earnings history was in the lowest 30 percent of career earnings for workers becoming eligible to retire in a given year. Progressive indexing essentially slows the future growth rate of benefits for higher-earning workers. Their initial retirement benefits will grow more In line with price growth, rather than the even-higher rate of increase pegged to wage growth under current law. Under current law, retirement benefits are calculated under a ``wage indexing'' formula that will help propel them to levels significantly higher than the payroll tax revenue available to pay for them. The formula uses the average rate of growth of wages within the economy, rather than changes in the cost of living, to adjust, or ``index'', the past earnings of a worker that are used to determine the worker's initial benefit level at retirement. Because average wages generally grow faster than prices over time, the current benefit formula essentially guarantees that future retirement benefit levels will grow faster in ``real'' dollar value from generation to generation. Under this proposal, the individuals in the lowest 30 percent of all wage earners retiring in a given year would continue to have their past wages, and resulting benefit levels, indexed according to wage growth, while those at the top of the wage distribution would have their past wages indexed for changes in prices. Those falling in between would have their past wages indexed based upon a ``progressive blend'' of wage and price changes. In short, future benefit levels for workers who earned higher wages over their working career would not rise as much as benefit levels for workers with lower lifetime earnings, but those workers most dependent on social security for retirement income would be protected from such changes. This blended version of progressive price indexing targets the sustainable levels of revenue that will be available for future Social Security benefits under current law in a manner that ensures that those retirees that will be most in need are treated the most generously. It builds on the underlying progressive structure of the current benefits formula that replaces lower levels of career earning with a relatively higher share of retirement benefits. The real purchasing power of future OASI benefits will continue to grow, but not as much, in future decades for higher wage workers. Longevity indexing recognizes that future retirees will live longer and, accordingly, receive inflation protected levels of their initial retirement benefits for longer periods of time than prior retirees. Absent any adjustment for changes in life expectancy beyond the age of retirement, longer lifetimes in retirement would mean increasingly greater dollar amounts of lifetime Social Security retirement benefits in future decades. Under present law, the retirement age is scheduled to increase incrementally to age 67 beginning in 2022, the normal retirement age gradually increases for workers born in 1960 and later years, by two months each year starting in 2022 until it reaches age 67 in 2027. Under this proposal, the move from age 66 to age 67 would begin in 2012. The Normal Retirement Age or NRA would be increased by two months each year until the NRA reached age 67 in 2017. After that date, initial monthly benefits for future retirees would be periodically adjusted by the Social Security Administration to account for changes in the expected average lifetimes of future retirees. Because it does not change current-law benefits for disabled beneficiaries, my bill does not address the remaining actuarial deficit for the DI program under current law, which amounts to another .32 percent of payroll. Accordingly, it does not close the larger overall actuarial deficit for the combined OASDI programs. The latter is 1.92 percent of payroll under current law, and would be substantially reduced to only .28 percent of payroll under my bill. My plan's provisions that reduce OASDI benefit obligations first begin to operate in 2012, and they then improve annual unified budget balances for that year and all subsequent years within the standard 75- year projection period used by the Social Security Administration. Several other measures demonstrate the improved solvency for the overall OASDI programs under my bill. The net cash flow from the OASDI Trust Funds to the general fund is improved by $3.6 trillion in present value. The OASDI Trust Fund exhaustion date would be extended from 2041 until 2056. Until we can find further support for dealing with the remaining solvency problems in the DI program, we should at least ensure that sufficient resources are committed to prevent sudden across-the-board reductions in OASDI benefit levels in later decades. Therefore, my bill provides budget authority for general fund transfers as needed to maintain a 100 percent OASDI trust fund ratio in later years. Those general fund transfers are estimated by the SSA actuaries to amount to $0.6 trillion, in present value, over the next 75 years. This provision ensures solvency for the combined OASDI program through that period. After 2080, additional general revenue transfers are not expected to be necessary, and annual program cash-flow balances are projected to be improving and approaching positive annual balances beyond that year. I also think it is important to point out that this legislation recognizes that changes in economic conditions have an impact on the actuarial balance of the program. Greater economic growth can improve but not alone restore the program's solvency; recessions can significantly worsen that financial position. Some expressed concern early in discussions on this legislation that we might be going too far, that some of the changes might prove unnecessary. For that reason I have included a provision that will allow for the administrative ``turning off' if you will of the progressive indexing or longevity indexing if the program comes into actuarial balance prior to those provisions being fully phased in. In conclusion, this legislation would substantially reduce the mountain of unfunded debt projected for the Social Security program in the decades ahead. It does so in a manner that gradually and sensibly reduces the formula-driven increases in real retirement benefits under current law for future retirees, while protecting low-wage workers and the disabled. We could do more, but this bill would do a lot. At other times, I have proposed separate provisions to enhance overall retirement security, such as through the option of personal accounts funded partly from current payroll taxes and partly from additional personal saving. I have also proposed reforms in pension policy to encourage automatic enrollment in employer plans, provide better access to standard investment options, and stimulate increased saving by workers. But I have left those issues for another debate and focused on the solvency of the retirement program. I offer this legislation as a starting point. I remain, as I have been over the past year, open to suggestions or modifications that can lead to bipartisan reform that will insure the permanent solvency of the Social Security system. We cannot afford to ignore this issue any longer. Burying our heads in the sand will only magnify the folly of inaction. I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record.

Mr. BENNETT

Mr. BENNETT. Mr. President, today I rise to pay tribute to Arnold Friberg, a gifted American artist. For more than eight decades as a painter, Mr. Friberg has set down a profound and varied body of work, including magazine covers and illustrations, World War II depictions, the Northwest Mounted Police, Book of Mormon illustrations, portraits, including Her Royal Highness Queen Elizabeth of England, and many rich and dramatic depictions of the Old West. This year marks the 30th anniversary of his revered Prayer at Valley Forge, which shows George Washington at prayer. Along with Emanuel Leutze's Washington Crossing the Delaware, Friberg's Prayer at Valley Forge is one of the great American patriotic paintings. In 1953, Arnold Friberg was summoned to Hollywood by Cecil B. DeMille for a 1-month consultation on costume design for a film he was going to remake. DeMille became so impressed by the artist that soon afterward Mr. Friberg was called back to Hollywood and began a warm, personal collaboration with the storied director that lasted for 4 years. Mr. Friberg became DeMille's chief artist-designer for the well-known movie ``The Ten Commandments,'' which brought the artist an Academy Award nomination. Half a century later, ``The Ten Commandments'' still draws sizable audiences to television broadcasts and DVD sales. Becoming the visual designer for what DeMille and his set decorators and cameramen put on film, Mr. Friberg painted major scenes of the salient episodes in the Old Testament including The Finding of Moses, Moses and the Burning Bush, First Passover, Exodus Begins, Orgy of the Golden Calf, Moses Receiving the Law, and Crossing of the Red Sea. Visually, the film was built around these scenes, along with major costume designs created by the artist. After completion of the film, Mr. Friberg's original paintings were widely exhibited wherever the film opened, and more than 1 million copies of a catalog depicting them were sold. The golden anniversary of the release of the film is being celebrated this month at an exhibition of these marvelous paintings, along with artifacts from the film, at the Utah Cultural Celebration Center in West Valley City, UT. I am honored today to acknowledge the work of Arnold Friberg and add my name to the long list of Americans who are grateful for his outstanding contributions.

Mr. BENNETT

Mr. BENNETT. I thank the Senator from Pennsylvania for his courtesy and pay tribute to him and the Judiciary Committee for their effort in dealing with this most vexatious problem. When the asbestos problem burst into the American consciousness, everyone was concerned there would be a way to compensate those who are victims of this difficulty. Unfortunately, certain members of the trial bar developed what I would call a business plan that was based on two fundamental principles: No. 1, venue shopping; and No. 2, a deliberate pattern of overwhelming the legal system so the various cases could not be heard on their merits. Those who adopted this business plan have been tremendously successful. They have driven 75 companies into bankruptcy. They have created enormous litigation all over the country. Unfortunately, the outcome in terms of the victims has not been what anyone would want, with the possible exception of those who were behind the creation of the business plan in the first place. The net effect of what we have seen in the asbestos litigation is to take an American tragedy and turn it into an American disaster, with a relative pittance for the victims; an undeserved windfall for people who have no health problems; and an overwhelming bumper crop of cash for the trial lawyers who developed the plan in the first place. There is a great uprising of demand that we do something about this. That demand is legitimate. The Congress should act. We do need a national solution, even though we have seen progress take place--not at the Federal level but at the State level. It is very interesting to watch what has been happening as various States have grappled with this challenge and done their best to deal with the two problems I have identified: the venue shopping and the strategy of overwhelming the system. One breakthrough in this regard came from a Federal judge. Her name was Janis Jack. I am told she had something of a medical background. She was trained as a nurse. So when these cases came before her she instinctively realized there was something fundamentally wrong with the medical claims. Without going into the detail of what happened before Judge Jack, I quote the statements she made as she handed down her scathing decision: These diagnoses were driven by neither health nor justice, they were manufactured for money. The court finds that filing and then persisting in the prosecution of silicosis claims, while recklessly disregarding the fact there is no reliable basis for believing that every plaintiff has silicosis, constitutes an unreasonable multiplication of the proceedings. I pause here to say she is highlighting what I talked about before, that there was a conscious business plan to overwhelm the system. She calls it ``an unreasonable multiplication of the proceedings.'' Continuing the quote: When factoring the obvious motivation, overwhelming the system to prevent examination of each individual claim, and to extract mass settlements, the behavior becomes vexatious, as well. Therefore, the court finds that the firm will be required to satisfy personally the excess costs, expenses, and attorney fees reasonably incurred because of such conduct. I am not a lawyer, but I understand when a Federal judge uses the words ``vexatious'' it is probably not good for the people who are in her court listening to her. And she is requiring the law firm that brought the case to pay all of the costs of the case. That has sent a chill throughout the plaintiff's bar who thought they had a free ride with their business plan. The other thing that has happened as various States have looked at this has been the setting up of inactive dockets, or deferral registries, two terms with which I was unfamiliar before I got into this. They make eminent good sense. All they do is say to those plaintiffs who, in fact, are not sick: We will let your claim stand, we will not dismiss it out of hand, but we will put it in an inactive docket or a deferral registry. In other words, your claim cannot be pursued until you get sick. Just because you have a doctor's certificate that says you might get sick does not mean you are entitled to damages. Interestingly enough, the fallout from Judge Jack's ruling where she found that doctors had gone beyond medical practice in order to give these certifications that would allow people to come forward as if they were plaintiffs, means that some doctors are facing jail time and some lawyers are facing jail time as a result of the findings in Judge Jack's court. The combination of a judge who finally says, You need to focus on whether people are ill, and State legislation that says, We will not allow the courts to be overwhelmed by the claims of those who are not ill, has begun to taper off the level of asbestos cases and has caused some people to say we have turned the corner; that the trust fund established in the bill before us is an idea whose time has gone; that it is not necessary to have a trust fund to deal with these issues. Others say: No, we have to have the trust fund. We have to have the bill before us. One of the perplexing things to me, as I listened to people in the business community discuss this, has been to discuss how split the business community is, how there are so many companies that come to me passionate in their insistence this bill be passed, or they say there will be disaster going on uninterrupted into the unknown future. Just as passionate are other companies who come to my office, sit down with me and say: This bill is the biggest disaster we have ever seen. You cannot allow it to happen. If this bill happens, we will go out of business. That is not a minor gulf between the proponents and the opponents. I have tried to figure out why business men and women examining this as dispassionately as they can have come to such diametrically opposite positions. I have found, for me, what is an explanation. I have prepared two charts that will demonstrate this. Both of these are based on assumptions. We must understand that this entire debate is based on assumptions. No one really knows. There are those who say the $140 billion called for in the trust fund will be more than enough to take care of all of the claims. There are those who say it is nowhere near enough. There are those who say the claims will go down as a result of the trust fund, and there are those who say the claims will increase as a result of the trust fund. No matter how you slice it, every argument everybody is making, including the ones I will make, is based on an assumption that is not provable. But I have done the very best I can to come up with sources that are reliable. So here is why I think the business community is split. It has to do with where you fall on the trust fund chart, what tier you are in, and basically how much money you have to pay. Here is the first list that comes up, and this is compiled by a consulting firm to the bankruptcy court that looked at asbestos claims. I have summarized in this column of the chart, if there is no trust fund, the estimated liabilities of the companies listed. That means, Armstrong World Industries, according to the consulting firm, if there is no trust fund, will face a liability of roughly $2 billion. Babcock & Wilcox will face a liability of roughly $2 billion--and so on all the way down--U.S. Gypsum, $4 billion. I will come back to U.S. Gypsum in a minute because it helps make my point. So this is the column that shows the liability of these 10 companies if the trust fund is not enacted. Now, this is the column that shows what they will pay to the trust fund. In other words, their liability will go from this number to this number, if the trust fund is established. Here in this column is the difference. For these 10 companies, it is $20 billion. If I were the CEO of any one of those companies, I would be very strongly for the trust fund. Now, I reject the idea this is being driven by K Street and lobbyists. This is a very logical business decision on the part of the CEOs of these companies, and I do not think any of them had anything to do with this allocation. It is the way the trust fund was structured. As they read the details, they said: This makes good sense for us. Let's be for it. But out of this chart comes a fundamental question that I have at the bottom of the chart. If there is a $20 billion difference between their liabilities and their contributions, who will make up the difference? So now let's go to the second chart. On this chart is a list of companies with estimated outlays, if there is no trust fund, that will be substantially less than those on the first chart. Foster Wheeler--I understand this number may change. These are estimates. All of these numbers may change. But I have heard, just this morning: Hey, we are trying to recalculate that, Senator. We want you to be exactly accurate. It might be $79 million, but it may not. But it will be relatively low compared to the number on the next chart. So let's understand all of these. But here is Foster Wheeler, Oglebay Norton. They will have no obligation--no obligation--if the trust fund does not pass. Why? Because they have insurance. They took precautions. They have insurance that will pay the claims. They will have no obligation. National Service Industries will have $11 million if the trust fund is not enacted, and so on. Now, Oglebay Norton will owe the trust fund $495 million in order to be relieved of zero obligation if the trust fund does not pass. Who will make up the difference? It will be made up by companies like these, some of which earn so much lower numbers than the numbers that are here that this could very easily jeopardize their survival. Some of the companies on this chart might not survive if the trust fund is passed. You have no obligation, but you have to pay half a billion dollars over a 30-year period? There are some companies here whose total revenue is $100 million a year, and their annual responsibility to the trust fund is $19 million. Twenty percent of their total revenues will be required, and they have no exposure or relatively no exposure. There is not a company here with exposure, no matter how high it may be, that would not be satisfied by 2 or 3 years' contribution to the trust fund, but they are going to have to make that contribution for 30 years. The companies on the first chart will see their stocks go up dramatically as soon as this bill is passed, and I do not begrudge them that. I think that is wonderful. But the other companies that will make up the difference will not only see their stocks fall, they may disappear and see their employees put out of jobs, their employees put on the unemployment line. I do not think there was anything sinister about the way in which the trust fund decisions were made. But I do not think it has been analyzed properly with respect to the real-world impact of those decisions. So, to me, that is why we have the split in the business community, with some companies saying this is a great idea, and other companies saying, with some irony, over our dead body, because they may be very much dealing with a dead body here. All right. Does that argue that we should not have Federal legislation? No. The progress in the States, causing this level of litigation to level out and begin to turn down, is not even throughout the country. We need a national standard. Ohio has led the way. Ohio has bills that are causing the litigation to begin to dry up. We are seeing the pattern of venue shopping dry up. But we still do not have any action out of California or New York. And, if I may, I remember when the Governor of Utah was once asked: What is the greatest economic development agency you have in Utah? And he said: The California State Legislature. I think we can wait a long time before the California State Legislature can be depended upon to deal with this issue. So we do need a national bill. But the one thing everybody on either one of these charts wants is certainty. Let's go back to the first chart and the example I was talking about with respect to U.S. Gypsum or USG. Within the last week or two, USG announced they were setting up a reserve for their asbestos liabilities. They said: We are setting up the reserve with $900 million in cash and $3 billion in contingent notes. Their stock went up 15 percent the next day because their investors said there is a degree of certainty. Now, if you take that $3.9 billion figure they determined was the amount of their liability and you compare it to what the consultants said their liability was--$4 billion--you are very much in the ballpark with roughly the same figure. Now, the interesting thing about the contingent notes they said they would sign for the $3 billion is the contingency. The contingency was whether this bill passes. If this bill does not pass, they will then be on the hook for the $3 billion in contingent notes. If the bill does pass, they are out with only the $900 million. As we see, they are only required to pay, under the trust fund, $797 million. So as to the $900 million, they may even get a refund from that if this bill passes. That demonstrates the value of certainty. They came up with certainty, one way or the other, and their stock went up 15 percent. We can give people certainty with the right kind of Federal bill that does not have the problems that this trust fund has. So what do I search for in a bill? Well, the first one should be obvious from the presentation I have made: a restructuring of the liabilities in the trust fund. And if the trust fund were to go away, that would not bother me either, if we could have an understanding of how we could take the experience in the States and make it work on the Federal level. Back to Judge Jack and her rulings and the actions of the various States, we discovered there really are only a few things that need to be done to tame this monster. The first one is to stop the venue shopping. Well, if we pass a Federal bill, we can do that. The Judiciary Committee has worked hard in that direction, and I commend them for it. No. 2, building on what Judge Jack discovered, we can have the right kind of medical certification. All she did was force these people to prove they were injured and the claims went away. I am not satisfied the medical certification in this bill is strong enough. I would prefer to take the kind of medical certification we have at the State level, particularly Ohio, and say if we can write that into the Federal bill, then we are on our way toward realizing Judge Jack's goal in eliminating those who are not medically certified. The third thing we can do is adopt the position that many of the State courts have adopted, which simply says: You can file your claim if you are not sick because you think you might be, but we are going to put that claim in an inactive docket, or a deferral registry--pick whichever term of art you prefer--and it will sit there unacted upon until you can come in and prove you are sick. If we can do those three things--stop the venue shopping, get a legitimate medical certification, and set up inactive dockets--at the Federal level, the State experience says we can solve this problem. Whether there is a role in all of that for the trust fund, I am not sure. I am enormously respectful of the senior Senator from Pennsylvania. He is a close, personal friend and has been the entire time I have been in the Senate. I commend him and the members of the Judiciary Committee for their efforts in working on this bill. But I do have a sense that in their focus on the disaster this has been throughout our history they have crafted a solution that, like the generals in the Army, may be the solution to the last war. They may have been fighting the last war instead of addressing what has currently happened. So I understand the Senator from Texas has an amendment, which I intend to support. I understand the Senator from Arizona, Mr. Kyl, has a provision that presumably will affect this difference between people on the two lists. I am interested in that. I am not sure it is the solution, but I want to move in this direction. I think we need a bill. I want to support a bill. As the bill currently stands, I think it is in need of the kinds of changes I have outlined.

Mr. BENNETT. I am happy to yield.

Mr. BENNETT

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