Daniel Coats

Mr. COATS

Mr. COATS. Well, Mr. President, if the Senator would yield.

Mr. COATS. Mr. President, I wish to say to the Senator from California, many of the points she made are valid. I came back for the purpose of addressing our overspending and that involves all kinds of tax expenditures and all kinds of subsidies. It is necessary because of our current debt and deficit situation. We have to get control of this. It is the only reason I ran. It is the only reason I am back in the Senate, with a commitment from the people of Indiana who supported me that, yes, this is what needs to be done in Washington. So I am not here to criticize the efforts of Senator Coburn or Senator Feinstein and others to begin to address these subsidies. That is exactly what we need to do. I think the phrase of the Senator from California: ``This is what we are doing in a timely way,'' goes to the heart and the essence of where I believe we need to go. We have subsidized, for some valid reasons early on, the production of ethanol. We did that because we said we are not independent in terms of our energy production, and our dependence on oil--particularly Middle Eastern oil. Our dependence is not only costly to us from the standpoint of OPEC setting the price of oil worldwide, based on their output, but also from the standpoint that we have spent a lot of money in blood and treasure to continue this dependence on oil, by placing troops in the Middle East. Would anybody think we would pay nearly as much attention to the Middle East as we are now were it not for the fact the oil supply that comes from there is absolutely necessary for our economy and the world economy? I think everyone in this Chamber would say we want less dependence on foreign sources and more independence. So the production of homegrown energy out of corn or other products grown in the soil which can be converted to a form of energy, so we-use less foreign oil and more of our own resources to drive our trucks and cars and fuel our planes, is a valid goal. To get that started--I wasn't here--but Congress passed a set of subsidies in order to encourage that industry. On the basis of that, States, private entities, public-private partnerships committed to move forward with production of ethanol. We are at a point now where there is essentially agreement that this subsidy has to be phased out, taken away, and the producers of ethanol agree. Maybe it is a political reality or for whatever reason. As I spoke to ethanol producers across my State, I basically said we cannot continue this subsidy in our current situation of debt. It has always been designed to become economically feasible, and it would be related to the price of oil. Well, the price of oil has gone up. This gives ethanol producers a more level playing field. The problem many of us from the Midwest have--but I will only speak for myself--many of us from corn-growing and ethanol-producing States-- and Indiana, by the way, is one of the leading States in the Nation, producing a significant percentage of ethanol--is that this amendment basically says it is over now. A bipartisan group has come together around a transition proposal Senator Thune has put forward. I am all for a straight up-or-down vote on the best way to eliminate this subsidy and to phase it out completely. I can't imagine anybody here would think, as we address Tax Code expenditures, that there wouldn't be a transition process in place for eliminating that expenditure for an industry or for an individual in the United States. I joined Senator Wyden, a Democrat, in a bipartisan effort for comprehensive tax reform. Our proposal basically eliminates most of the special provisions in the tax code, totaling almost $1 trillion. We take away these specialized tax provisions in a way to reduce rates and make our companies more competitive, lower individual rates and simplify the Tax Code. But, we know that in doing so, there has to be a transition period. We cannot just yank away from the private sector or the public-private sector an economic basis on which they went forward and committed to that particular entity and product. So all we are asking for is a transition process. I know there is talk about giving Members a vote next week on this proposal and so forth. I don't blame Senator Coburn and Senator Feinstein one bit for using a procedural rule--actually, Senator Feinstein did not do that and did not support that and I think deserves a second vote. I don't fault Senator Coburn for using procedural methods which were maybe not necessarily something of precedent, but it is possible under our procedures to do what was done in order to get his vote on the floor. He has been asking for that vote for weeks, if not months. It is an issue we ought to be debating. But there ought to be a debate--an honest debate--between essentially the two sides of this issue, both of which agree the subsidy ought to be removed; one of which says we remove it today on this vote, the other says we remove it over a period of time--3 years or so. We take the money immediately saved and donate it to reducing the deficit, but we take some of the money in order to transition away from the subsidy, which is what Senator Thune is trying to do without getting into all the details, which I don't need to do. What I am here to do is to plead for an opportunity to debate both sides of this; to have a vote on the Coburn amendment and a vote on the Thune legislation, winner take all--that is the way it works here--and let the chips fall where they may. But at least we will have had an honest debate about two alternatives to try to reach the same goal. One takes a longer period of time than the other. The Senate will vote and the yeas will be yeas and the nays will be nays and the yeas will prevail and we will move forward on that basis. All we have now is a promise that maybe we will give the Senate an opportunity to bring something up next week so we can vote on the phaseout program. Some Members will say: Hey, this is great. I can vote for both, and then I can go home and say, yes, we need to eliminate the subsidy and that is why I voted for Senator Coburn's amendment. Then I can also say the following week I voted for Senator Thune. One of these should work. We have it both ways. We should make a distinction between which way we want to go and what we want to do. I happen to choose, for I think valid reasons, that we ought to transition out of this because of the enormous financial commitment made on the part of ethanol producers in my State, and the enormous benefit that has come to our agriculture sector which has grown a lot of corn and paid a lot of taxes, helping our economy grow. But to just yank it away from them right away because we say this has to be done right now without any transition, I don't think it is fair to all those who have made that commitment. Does ethanol need to be economically viable to compete with other forms of energy? Yes. Did it need--and I wasn't here, again, but this body of Congress, including the administration, said it needed a head start so we could reduce our dependence on foreign oil, and they gave them that in the form of these subsidies and in the form of a tariff and in the form of some credits. Financially, have we come to the point where we now need to look at this, as well as hundreds of other subsidies and tax expenditures that we simply can no longer afford? The answer is, yes, we have come to that point. But is the best way to do this, particularly in this instance, where there is more than just an interest for one or two companies, which we find in so much of the Tax Code. There is a national security interest in this as well. Our military says our continued dependence on foreign sources of oil is a national security issue affecting our troops, affecting our expenditures, affecting our deployments, where these people need to go to keep the ceilings open, to keep the oil flowing, and so forth? So there is a national basis on which we need to have competing forms of energy that can lessen our dependence, and ethanol is one of those. Does it need to be economically viable? Absolutely. How do we get there? We can get there by pulling the rug out from them now, shutting it down, and seeing a precipitous drop in ethanol production because it is no longer economically viable or, as Senator Thune has tried to do and a coalition of us who support that, we can put in place a sensible way to reduce this subsidy to zero, to bring ethanol to a point of economic viability on its own and immediately send a significant amount--$1 billion--to reduce the deficit. So this could be a transition to allow ethanol to be an economically viable part of our ability to provide transportation energy without having to call up the Middle East and say: Keep sending it and, by the way, we will send our troops, we will send our money, we will send our treasure because we absolutely have to have this to drive our economy. I think there is compelling reason to allow the Thune amendment to be heard on the floor, to give Members an opportunity to debate and make their case on each side, take a vote, and we will let the chips fall where they may. But we will at least have had the courage to stand up and honestly say: This is where I come down, this is what I stand for, and then the voters can decide whether they like that. But I think it makes sense from an economic standpoint and from an energy independence standpoint. Also, it is common sense that anybody who has been encouraged by this body to invest in this product to reduce our dependence on oil, to at least give them a chance to phase this thing down so they don't necessarily put a padlock on the refining plants and basically put them out of business. That doesn't achieve the goal--the very reason this body put these enhancements and subsidies in place in the first place. Conclusion: We need to phase out the subsidy. There are other subsidies and other expenditures out there we can eliminate now without having this kind of adverse economic effect and without having a negative effect on our national security, but this is not one of them. I urge my colleagues and I urge the leadership to allow the pleas of Senator Thune and others of us to be heard so we have an honest debate, an honest choice, and then we accept the results. With that, I yield the floor, and I suggest the absence of a quorum.

Mr. COATS. I accept that fully. Having had the opportunity to work with Senator Feinstein on the Intelligence Committee, I do not hesitate for a second to accept her word and know she will keep it. It has been a pleasure to work with her on that committee. We spend many hours behind closed doors discussing issues of great importance to this country, and she has provided great leadership in that effort. I will look forward to working with the Senator from California, accept fully her offer. Hopefully, we can find a good solution to this issue. I could not agree with Senator Feinstein more that this is the first of many things, tough decisions we are going to have to make. If we are not flexible in making these decisions at this time of clear fiscal distress, we are going to be judged very harshly by the markets and by our constituents. They know we are spending too much. They know we need to make decisions, some of which will be painful. We are trying to do this in a way that does not become Draconian, and I appreciate the words of the Senator from California in terms of the willingness to sit down together and work this through. As the Senator said, this will be the first of many difficult days ahead. But what is encouraging and ought to be encouraging to the American people is, there is a bipartisan commitment--first of all, a bipartisan understanding of the plight we are in--I wish we were not here, but we are--and a bipartisan understanding, a growing bipartisan understanding, that working together is the only solution to this. Because if it becomes stalemate, we are doing a great disservice to the future prosperity of the country and its impact on future generations, including our current generation and the many people who are out of work who need an economic recovery to take place sooner rather than later. I thank the Senator for her comments and look forward to working with her, along with others, in this, the first of probably many difficult but important and necessary discussions.

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

Mr. COATS

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

Mr. COATS. Madam President, I know the Democratic side has not used its full allotment of time, but because another speaker is not here, I will go ahead, and hopefully we will be able to yield time if someone else does come forward.

Mr. COATS

Mr. COATS. Madam President, I have been on the Senate floor several times now during the last few weeks to discuss our grave economic condition, the need to reduce Washington's out-of-control spending, and, most importantly, the urgent need to start taking action before time runs out. If there is any remaining doubt in anyone's mind that the U.S. economy is facing a historic and unprecedented fiscal crisis, consider a few of the recent news reports since I last spoke on the floor, which was not that many days ago. Reports came out saying that the national unemployment rate increased to 9.1 percent, with over 22 million Americans unemployed or underemployed. This is not how we rebound from a recession, historically. There is something more going on here than the normal downturns and upturns of the economic cycle. This is something of historic proportion. Since I last spoke on this floor, two more rating agencies--Moody's and Fitch--have issued serious warnings that they may downgrade America's AAA debt rating. This comes after S&P already lowered its outlook of the U.S. economy to negative. Just last week, on its cover, USA TODAY published the frightening headline ``U.S. owes $62 trillion; unfunded obligations amount to $534,000 per household.'' Those are unfunded obligations. We have funded obligations we currently owe in addition to that, and some put those even higher. There was an interview yesterday with Bill Gross, who heads up PIMCO, the largest bondholder in the country--in the world, actually. Bill Gross indicated in this interview that the money owed to cover future liabilities in entitlement programs in the United States is actually in worse financial shape than Greece and other debt-laden European countries. Much of the attention, of course, is focused on our public debt, which is running at $14.3 trillion, but what hasn't been focused on as much are the unfunded liabilities that will come due, the obligations and promises already made that will have to be paid for, that will be in addition to the $14.3 trillion already on the books. Taken together, Gross said this is going to equal nearly $100 trillion. It is a number beyond anyone's comprehension, it is hard to fathom what $100 trillion means to the American taxpayer, to America's abilities, obligations and financial responsibilities. Now, maybe $100 trillion is a little high. It doesn't matter whether it is $80 trillion or $90 trillion or $100 trillion; it is certainly going to put our country in a very, very difficult position. I wish to read one more piece from the CNBC interview with Bill Gross: We've always wondered who will buy Treasurys after the Federal Reserve purchases the last of its $600 billion to end the second leg of its quantitative easing program later this month. It's certainly not Pimco and it's probably not the bond funds of the world. I quoted Erskine Bowles, who is a Democrat, was Chief of Staff for President Clinton and was one of the coauthors of the fiscal commission report presented at the request of the President laying out the dire crisis we face and recommendations on how to address it. Erskine Bowles, co-chair of the President's fiscal reform commission, said that the growing national debt and Federal deficits are ``a cancer and they are truly going to destroy this country from within, unless we have the common sense to do something about it.'' This is the challenge before us--each Member of the House of Representatives and each Member of the Senate and the President of the United States. This dwarfs all other matters before this Congress. With all due respect, the Senate spending several weeks on the Small Business Innovation Research Act, the Federal Aviation Administration's bill, and now the Economic Development Revitalization Act has left little time for the debate that ought to be undertaken on this floor in continuous fashion to address this fiscal situation. The crisis has implications for the future of our country, the future of this Nation. The rapid escalation of the deficit and debt requires our full engagement--not later but now. The growing consensus among those who have given serious analysis to our fiscal plight calls for an all-of- the-above approach in addressing the problem, including--dare I say it--entitlement spending, which essentially is Social Security, Medicaid, and Medicare. If Congress and the White House are serious about preventing the destruction of our economy, it is time we get serious about talking about entitlements, including Medicare, because the hard truth is that if Medicare is not included in the debate, any effort to put together any kind of a credible plan necessary to bring about fiscal stability will be defeated. Medicare has proven to be the greatest fiscal challenge facing this country. It alone last year took in $1.8 trillion of new liabilities, which is more than we spend on all nondefense discretionary spending. Nondefense discretionary spending is that spending which goes to every other function of the Federal Government other than interest on our national debt and mandatory spending. The Medicare trustees recently sounded alarm bells in a report announcing that the program's total of unfunded future obligations is a staggering $38.4 trillion. They cautioned that the hospital trust fund, known as Medicare Part A, will be exhausted by 2024. This is 5 years earlier than what they had predicted just a year earlier. So 1 year has passed, and the trustees are now so alarmed they are saying we are going to run out of money 5 years earlier than we thought. What are they going to say next year? They will probably shorten that time even more. Economists and policy experts on both sides of the aisle--Republican, Democratic, conservative, liberal--have been warning about the dangers of Medicare spending and the impact on our national debt for years. Yet Congress has punted its responsibilities, saying ``we will take care of it after the next election.'' Back in 2006, Chairman of the Federal Reserve Alan Greenspan warned lawmakers, saying that Medicare spending is unsustainable and could one day drive debt and government interest rates substantially higher. I suggest that date is here, and this crisis is knocking on our door. Michael Cannon, director of health policy studies at the Cato Institute, said: Nothing presents as great a threat to the Federal budget--and therefore to economic growth--as the persistent and rapid growth of Medicare spending. At a White House summit last year, President Obama recognized the unsustainability of entitlement spending. This is a quote from our President: Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our federal debt. And if we don't get control over that, we can't get control over our federal budget. I am quoting the words of the President of the United States, who now has taken the position that we shouldn't address the Medicare problem. Yet, as President, he has said that almost all of the deficit and debt we face relates to the exploding costs of these two programs, Medicare and Medicaid. He repeats it by saying ``almost all of it'' and ``the single biggest driver of our Federal debt.'' Alice Rivlin, who served as budget director under President Bill Clinton, said it best: ``There's no mystery about what we ought to do, we just need to get on with it.'' Madam President, we just need to get on with it. But that hasn't happened. Despite the President's own recognition of the single biggest driver of our Federal debt and despite the warning sirens from economists and even the Medicare trustees, the President has yet to submit a single proposal to address this urgent problem. Others in positions of leadership have also decided to ignore these critical warnings about Medicare and its looming insolvency and threat to our fiscal house. They have rejected any proposals for changing Medicare as we know it. Well, the category for these people are the ``do-nothings.''

Mr. COATS. Let me skip forward here. Despite the President's own recognition of this problem, we have not taken this plan forward. There are do-nothings who think that if we do not act, Medicare will be secure. Actually, the do-nothings are the ones who are making Medicare's future unstable. It is those who have taken the responsibility to stand up and recognize this problem and be free and open in debate and honest with the American people who are the ones who have had the courage to go forward. Yet they get reviled for ``throwing grandma under the bus'' or taking Medicare away. I was approached by a person in a factory in Indiana who came up to me and said: You are taking away my 88-year-old mother's health care. He was upset, and rightfully so, but I told him he is upset at the wrong person because we are trying to save that health care. We are trying to save Medicare. We have two options: We can either continue with the status quo and let Medicare go bankrupt or we can step up to the plate, debate thoughtful proposals, and work to keep our promise to America's seniors by enacting meaningful reform. It is those of us who are willing to step up to the plate who are here to save Medicare, not destroy Medicare. It is those who are saying we need to do nothing or who refuse to do anything who are going to cause Medicare to go bankrupt and take benefits away from seniors. This is the debate we need to have. We are burdened by this. We need to address it. It is the challenge of the day. Let's go forward, stand up, and do the right thing. I appreciate the extension of time. I yield the floor.

Mr. COATS. I ask unanimous consent for 2 more minutes.

Mr. COATS

Mr. COATS. I thank the Senator.

Mr. COATS

Mr. COATS. Absolutely not, I would say to the Senator from Oregon. Clearly, if you go back to the origin of the alternative minimum tax, it was designed to go after those handful, in comparison to the total number of taxpayers in this country, who have found creative ways of not paying any taxes whatsoever. Wealthy taxpayers have simply been able to manipulate the Tax Code legally but in a way that allowed them to avoid paying taxes altogether. That is how all of this started. What has happened is that we are now in a situation where it is grossly unfair to the majority of taxpayers in this country simply because they fall into categories that throw them into having the AMT calculated in their tax returns. It is costing them a lot of money. It was never intended to address the middle-class taxpayer, and it has grown exponentially since it started.

Mr. COATS. The Senator from Oregon is exactly right. I took three tax courses in law school. I cannot do my taxes with any assurance that I am doing it right because this code has become so incredibly complicated. The alternative minimum tax adds an additional set of calculations that make it even more complicated. Today, 80 percent of the tax filers have to get help to file their taxes, 20 percent of those buy software and hook it into their computer and try to work through it that way, and 60 percent take it to a professional. If you are not working as a professional in a career as a CPA or a tax return specialist, you cannot keep up with the 70,000 pages and 10,000-plus exemptions and the complexity of filing a return. It should not in any sense of the matter be a tax collection system that requires 80 percent of our taxpayers to have to seek professional help at a significant cost. As I think I indicated earlier, $6 billion a year is spent on transferring money from the person paying the taxes to someone just to prepare their returns. Small businesses face a similar problem. Small businesses do not have the big back room with the hired accountants and others to handle all the paperwork. Small business men and women have to be out front selling the product and have to be talking to the customer. Yet they now also are caught up in this web of complexity in terms of how to file their taxes, and they are having to expend time and money on getting their tax returns filed and making sure they are filed right. Over time, as the deficit and debt problem has increased significantly, Members have been all the more reluctant to eliminate this on a single stand-alone basis because of the impact it would have on our ballooning deficit. But on comprehensive tax reform, if we can put this together with a package of comprehensive reforms, we can do it in a revenue-neutral basis so it does not have an adverse impact on the economy. Again, I commend Senator Wyden and Senator Gregg for putting together a package that does just that, and I ask my colleague if he wants to elaborate on that a little bit. I thank him for the opportunity to come down to discuss for the first if not the last time some of the egregious aspects of the Tax Code in this country that I think will dictate how we should move forward and why we should move forward in enacting comprehensive tax reform. I thank the Senator.

Mr. COATS. Madam President, I want to thank my colleague from Oregon, Senator Wyden, for working with me, and particularly working with Senator Gregg who is now retired from this Chamber. They spent an extraordinary amount of time, very productive but very time consuming, trying to put together a comprehensive tax reform, which, as Senator Wyden has said, has been 25 years since we have tackled the Tax Code to try to simplify it and try to take out egregious provisions that were put in it over the years that may benefit a special few but don't begin to address the average middle-income taxpayer who is bearing a very substantial burden of taxes paid in this country. Probably the most egregious provision and, as Senator Wyden said, the poster child for the current dysfunction of the Tax Code and our tax system is the alternative minimum tax. Senator Wyden and Senator Gregg's program that they put together--and Senator Gregg urged me as I was coming into the Senate and he was leaving to work with Senator Wyden in terms of working to keep this bipartisan effort going forward, and I have had the pleasure of doing so. We do have a comprehensive bill that we wish to debate and share with our colleagues. But we also want to point out the reason why tax reform is so necessary. A Tax Code that now comprises more than 70,000 pages with more than 10,000 special exemptions and preferences is certainly something that is way beyond our Founders' intention or any intention of taxation of the American people. This complexity is literally driving everybody nuts, including the tax accountants and CPAs and those who have to deal with it every year but, more importantly, the tax filers, American citizens, who each year start getting the sweats along about mid-March in terms of how they are going to get their tax return done. If they try to do it themselves, they ought to be able to; and, if passed, Wyden-Coats would give them the simplicity of reduced rates, easy filing for information, and the ability to do their taxes at home. We spend an extraordinary amount of money--I think it is Americans spend nearly 6 billion hours a year--to have tax preparers do their tax returns. The alternative minimum tax is particularly egregious, as Senator Wyden has said. It is grossly unfair. It hammers working Americans. The temporary fix Congress has added in subsequent years from its initiation now protects individuals with incomes up to $48,000-plus and couples up to $74,000-plus. But taxpayers who earn more than that get whacked by the AMT, the alternative minimum tax, and the problem just gets worse. As Senator Wyden has said, it started with a few taxpayers in the high income brackets trying to evade paying any tax. That is how that came into play. But in 1997, several years later from the initiation, the AMT has hit 1 percent of all taxpayers. Next year, after this current fix expires, it will hurt more than 20 percent of taxpayers. To be exact, that is 34 million hard-working Americans. It is a poor fix that is currently in place on a temporary basis. In my State of Indiana, 42,700 taxpayers had to pay AMT taxes in 2008, and without another extension of the patch or the fix, that will rise to 372,000 in 2012. If you are a family with a number of children and you live in a high tax State or a local tax State, you are thrown into the alternative minimum tax computation. That means a double process by which you or your preparer has to file your taxes, and it means higher taxes never intended to hit the working class. So in continuing this, I wish to reaffirm my thanks to the Senator from Oregon for allowing me to be part of this effort, and we look forward to many opportunities to discuss some of the more egregious portions of the Tax Code and reasons why we need to continue to work for comprehensive reform. I would ask my colleague if he would delve a little more deeply into this in this colloquy we currently are entertaining.

Mr. COATS

Mr. COATS. Mr. President, I wish to thank the Senator from North Dakota for allowing me to go first. I will be relatively brief. I have spoken on the floor on a number of occasions regarding my frustration about the Senate not spending enough time debating what I think is the key, essential issue and challenge facing us, probably greater than any other challenge facing this body in a long time. My frustration only grew yesterday as we voted down four budget proposals. You know, it has been 757 days since we have passed a budget in this body, and so far, no budget has been proposed this year out of the Budget Committee for us to examine. The President offered up a budget earlier this year that would have spent more, taxed more and borrowed more. It was voted down last night in what I think probably was a historic vote. I did not go back and check the records, but I am not aware of any budget that has ever been presented by the executive branch to the Congress for approval that has not received at least some votes. The vote last evening was 97 to 0 against the President's budget. It is almost unthinkable that a President--the executive branch--would send a budget to the floor to be debated and voted upon and not achieve one vote. I think what it tells us is that, obviously, that budget was not designed to gain any kind of bipartisan support. But it didn't even obtain any partisan support. It was not taken seriously, at a time when we need to have in front of us a serious budget to debate and vote on. As I said, there have been 757 days without a budget before us. You cannot run a company, a family, or run anything, unless you prepare a budget and avoid going into debt. That is where we are today. Republicans did come forward with three proposals. Unfortunately, all of those were voted down. You can argue that none of those three were sufficient to garner enough support. All three received a significant level of support--particularly two of them. Yet there were not enough votes to pass this body. So while the House has passed a budget, which we voted on yesterday, but unfortunately fell short, these are the only proposals we have had in front of us to debate. These are the only proposals we have had to vote on and set the structure for how we are going to spend the taxpayers' money. So here we are now approaching the month of June, 5 months into the current calendar year, and 9 months into the fiscal year, and we still don't have a handle on how we are going to spend the taxpayers' money, what restrictions and restraints we will put on that, and how we can live within our means. This is the debate this Congress should undertake, and it has not been undertaken. Many of us have come to the floor in situations such as this where we have asked for some time to speak, but the issue itself has not been put before us. We know there are negotiations going on relative to how to put a plan into place, but we are a long way from that. I am here once again to try to urge my colleagues to work together and try to achieve a result--or at least a product on which we can have serious debate to determine the future of how we are going to spend the taxpayers' dollars in a responsible way. The most important factor we have to address is the need, in my opinion, to rein in Washington's excessive spending. The bottom line is that government spending is out of control. The public understands this. I think the response in 2010 to those of us who were running in all the elections sent an unmistakable, long, loud, easily understood signal: We have too much government, we cannot afford the government we have, and we cannot continue to add even more government, which pushes us deeper into debt. Nearly $1.4 trillion of our spending is discretionary spending that requires us to borrow money. That borrowed money increases our debt obligation reinforcing the need to rein in our spending. This is something we should debate, something that is part of the responsibility of the Congress and Senate. When we are talking about addressing a national debt of over $14 trillion, we need to get serious. A little nick here, a little nick there in spending reductions will not solve the problem. We need to look at the larger picture. We are staring down $14.3 trillion in debt. Credit ratings by Standard & Poor's have downgraded the outlook for the U.S. debt, with a negative warning. Economic growth is sputtering across the country. Unemployment remains high, and States are dipping deeper into the red, zeroing in on billions--which is a lot of money, but it is only a minuscule amount compared to the trillions we are saddled with in debt that we ought to be addressing. It is time for Congress and the administration to stop ignoring the obvious. The rapid growth of mandatory spending is endangering our financial future. I point to this chart on my left. It simply points out the dramatic growth that has occurred and will continue to occur over the years in the future. It doesn't take a mathematician--although the math is pretty simple--when you spend $3.7 trillion a year and take in $2.2 trillion, that leaves you with a big deficit. But it doesn't take a mathematician or anybody with any sophistication in economics to understand that if we stay on the current path, we are going to continue to see this line escalate. This red on here is red ink. It is net interest we will owe. What does that mean? It means that to continue borrowing in order to finance what we are doing, we are going to have to pay larger and larger rates of interest to the lenders because of the risks associated with our potential inability to pay back the loans we have taken. This flow of red ink, this red tide--if we don't address this, it is going to make it difficult for Americans to buy cars, pay their mortgages, purchase homes, and buy groceries. The prices of products will go higher because the interest rates will go higher. We are running ourselves into a desperate situation. I think everyone understands that. I think it has been made clear to the American people. We don't have to spin this whole message here in order to convince the American people we don't have a problem. We do, and they understand that. That is what 2010 was all about. We cannot continue to go forward in 2011 without providing any basis of a real solution to assure the financial world and the people that we are taking steps in order to address this. I think there is a consensus--and if anybody doesn't understand this, they haven't looked at the problem--that we could tax Americans to death, we can cut discretionary spending by massive amounts, and we won't begin to address the problem we have, unless we address the massive amount of spending on mandatory programs. We don't have control over mandatory programs in terms of budgeting; they are simply there, and if you are eligible, you get to draw from the program. All of that is fine, if you have money to do it. But we are running out of money to pay those recipients who are continuing to receive benefits from these entitlement programs. Unless we address those, we are not going to solve the problem. Let's take a couple of these, and let's look at Medicare. Everybody says this is a political nonstarter. If you dare talk about it, you are going to get zinged in the next election, and you will be characterized as taking away benefits from the elderly, when the plans that have been put forward don't do anything of the sort. Nevertheless, it is important to understand the dimensions of the problem we are facing from this one entitlement. Over the next 10 years, Medicare spending-- spending on this one entitlement--is expected to double. A few weeks ago, the Medicare trustees announced that the hospital trust fund would be exhausted by 2024--5 years earlier than estimated in last year's report. Who knows what next year's report is going to tell us. The bottom line is this program is going to go broke. Failing to restructure Medicare jeopardizes the medical benefits of present and future elderly Americans. So rather than terminating Medicare, as has been charged but is not true, rather than destroying Medicare, which has been charged but is not true, what we are trying to do is find a way to restructure it in a way that Medicare will be viable and solvent so benefits will be available for future retirees. When Medicare was first enacted in 1967, the program cost $2.5 billion. At that time, Congress predicted that the program would cost $12 billion by 1990. That wasn't the case. We underestimated it just a bit--by $86 billion, which is more than just a bit. When it starts at $2.5 billion, and you project it will be $12 billion, and you ended up being off on that estimate by $86 billion, you have to start asking yourself some questions. You have to start thinking that maybe we got this formula wrong, or maybe our assumptions didn't turn out as we thought they were going to on the cost of Medicare. Today, Medicare is roughly $494 billion, with approximately $89.3 trillion in total unfunded liabilities. These are staggering numbers. They are numbers beyond our ability to comprehend. These numbers are beyond our ability to sustain. There is no possible way on Earth, no matter how fast or how hard we grow, that we can reach solvency in the Medicare Program without any action. Why? Because after World War II, soldiers came home, and people had deferred having families, and the so-called baby boom generation was born. It has moved through our entire history, over the last 60 years or so, like a pig moves through a python. Early on, there was a rush to provide housing for soldiers and their families. There was a massive infusion of money into baby cribs and the need for hospitals and doctors and nurses to deliver children. A few years later, all of a sudden, we had to build a massive number of new elementary schools. As this baby boom has moved through their lifespan, we have seen dramatic impacts on the economy--many of them positive. But the colleges that had to be expanded and built, and universities and training facilities, and the education that had to be provided, the employment that needed to be provided--all of this has had a dramatic impact on our economy. We have known for decades that eventually the pig moving through the python was going to reach the point of retirement, and when it reached the point of retirement, it was going to have an enormous impact on our finances. Instead of anticipating this coming and putting into place structural plans that would accommodate the needs, legitimate needs of those for retirement income and benefits, we have instead ignored this reality. We have pushed it down the road. Nobody wanted to touch it. Election after election, it was said we better postpone that debate for the next election because it is too hot to deal with now. Well, it is all coming undone. We are at the point almost of no return. The proposals that have been put forward--you may not agree with every portion of them, and I don't. But the House brought to us a budget plan. You have to give Paul Ryan a great deal of credit for the extraordinary amount of work and effort he put into it. Maybe you don't like all of it, but it is at least a plan to debate, modify, and adjust; it is something that gives us an opportunity to start down the path of paying off our debt, of maintaining solvency for the Medicare Program. That is what we ought to be debating instead of saying we are into another cycle of ``gotcha,'' and you have touched the third rail. You made the decision to put Medicare in play and go to the public and tell them we are going to take away their health care benefits when they retire. The opposite is true. We are trying to save that for those who are retiring. We are trying to look at ways to restructure the program so it doesn't break Medicare, or break our entire economy. Today, the average man is living into his 70s, and an average woman into her 80s, or even 90s. As a result, more elderly Americans are on Medicare than originally anticipated. The Federal Government can no longer continue with business as usual. It is time for some honesty for the American people. Washington is promising to deliver benefits it can't afford. We can no longer nickel and dime doctors and hospitals and force them to pay for the care Washington promised elderly Americans. More and more doctors are forced to turn away Medicare patients. The American Medical Association revealed that 17 percent of the more than 9,000 doctors surveyed are forced to limit the number of Medicare patients they accept. And among primary care physicians, this rate is 31 percent. Why? Because we don't have the money to reimburse them for the cost it takes to provide that care. The American Osteopathic Association said 15 percent of its members refused Medicare and 19 percent declined to accept new Medicare patients. Physicians and hospitals in my home State of Indiana are feeling the pain from the Congress's inaction as well. Hospitals such as Deaconess Clinic in Evansville, IN, say one-third of their patients are on Medicare. When hospitals and doctors are not receiving the necessary compensation for services conducted on one-third of their patients, it has a devastating impact on their businesses. If we don't reform Medicare, we lose Medicare. Let me repeat that. If we don't take steps to reform Medicare, we lose Medicare. If we don't restructure the program, more patients will lose the care they desperately need. Mr. President, a very prominent figure--a leader of this country-- made this statement: Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our Federal debt. And if we don't get control over that we can't get control over our Federal budget. That defines, in a very basic statement, exactly the challenge that is before us. It gives us the warning we need to heed, and it should spur us into action. Let me repeat that statement once again. Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our Federal debt. And if we don't get control over that we can't get control of our Federal budget. That statement was made by President Barack Obama. It was not made by a Republican. It was not made by an editorial piece in the Wall Street Journal. It was not made by a tea party leader or advocate. It was made by our current President. Our President has said we cannot sustain what we are doing, and we have to address it or it is going to take down our whole budget. I think that is true--it has been backed up by analysts who have looked at this whole situation, left, right, nonpolitical, political, whatever. Why then are we not going forward with addressing this very question? That is what people sent us here to do in 2010. That is what they are asking us to do now. Yet we are acting as if this statement by the President of the United States has nothing to do with what we need to do, that we can simply ignore this and go forward and just cut a little here and cut a little there but we can't touch the entitlements--we can't touch Medicare. The papers are full today with headlines saying that the results of the New York special congressional race was because the people have been scared--well, they didn't say ``scared,'' but that it was people saying ``don't cut our Medicare.'' What it should have said is, those people who are saying ``don't cut our Medicare'' are basically saying ``keep mine going until this thing runs out. I am afraid I might live too long, and then I won't have benefits at the end.'' But for sure our kids won't have it, for sure our grandchildren won't have it because at its current rate, as the President of the United States has acknowledged, it is unsustainable. So we have two options here. We can continue with the status quo--we can quibble over how much to cut from our discretionary spending, or that portion of the budget which we have control of--and continue ignoring the entitlement programs or we can make a commitment and have the political will to fulfill that commitment by saving those programs through some sound restructuring. This does not mean current recipients of Medicare are going to be knee-capped or have their benefits dropped. This does not mean that even those nearing retirement are going to face that prospect. What it does mean is, if we don't put the structural reforms in now to address the future problems, we are going to lose the whole program. The gravest threat to Medicare is doing nothing. If we do nothing, not only will Medicare collapse but so will our fiscal house. In the papers today, a former President--another Democrat, Bill Clinton--has urged his fellow Democrats not to ``tippy-toe around'' Medicare. Continuing that quote, he said the program ``is part of a whole health-care system that has a toxic effect on inflation.'' He went on to say, ``We've got to deal with these things.'' Mr. President, I am here not to criticize the Democrats for putting us in this situation. I think we all bear some responsibility. The country does not want us to point fingers at each other, and they do not want us to use this as a political advantage for the 2012 election. They want us to do the right thing, which they all know needs to be done, and I believe they will reward us and recognize us for at least having the courage to step forward and address a real problem that I think everyone now understands and recognizes. So whether it is the Paul Ryan plan coming out of the House, whether it is a Democratic budget plan coming out of the Budget Committee, whether it is some other plan coming out between the negotiations that are going on--or should go on--between the executive branch and the congressional branch, this is something we have to do. We have simply got to put aside our partisanship and concerns and worry about the 2012 elections and rise above politics. We did that in 1983 when we restructured Social Security. We had a Republican President, a Democratic House leader, and members of the Democratic congressional committee and Senate committee--the political people--all stood together and said: This rises above the election. It is too important not to address it. We can just take this one issue and say: Let's take this out of politics. Let's stand together as Republicans and Democrats, along with the President, and do what is right for the country. The bottom line is that no matter what we do here, if the President doesn't support us in this effort, it will not succeed. He has the veto pen, and he has the ability to lead or not lead. So I guess, as I have before, I am calling on the President and saying this important issue can only be successful if he will engage and lead us and be part of this effort to solve a problem that affects every living American and those yet to be born in this country. It dramatically affects our future but sooner than any of us, I believe, think. It affects our economy and our ability to grow. All of this has to be coupled with pro-growth policies. We can't cut our way out of all this. We can help restructure, we can help make cuts where necessary, and we can help our economy grow by putting policies in place that will stimulate the economy. That combination, put together in a package, is what we need to support. And I am hoping we will put politics aside for this one issue that is so important to the future of our country. Mr. President, I have probably said more than I needed to say at this particular point in time. I appreciate the opportunity and again thank the Senator from North Dakota for agreeing to let me go forward here. As chairman of the Budget Committee, I know he is fully cognizant and aware of these issues and is working to try to address them also. I hope we can work together to find a solution to this very urgent problem. With that, I yield the floor.

Mr. COATS

Mr. COATS. Mr. President, tomorrow morning, a joint meeting of Congress will welcome the Prime Minister of Israel, Benjamin Netanyahu. It will be the first time Mr. Netanyahu has addressed us in a joint meeting and only the second time any Israeli Prime Minister has addressed a joint meeting of Congress as its sole participant. It is a distinct and historic honor and an opportunity for us to hear again how crucial is the friendship between our two countries. In anticipation of this event, I rise today to provide for the record a restatement of how I and I believe many--if not most--of my colleagues regard the State of Israel and America's relationship with that fellow democracy. This restatement is necessary, I believe, in light of the President's speech last week regarding the Arab spring. The President's remarks, which were delivered just before President Netanyahu's arrival in the United States, seriously muddied the waters of American policy toward Israel and its troubled region. The Arab spring has sprung from new popular forces throughout the region, overthrowing regimes that have lost their relevance to the aspirations of their people and threatening to overthrow others. The administration's response has been slow in coming, awkward and confused in efforts to explain its policies, inconsistent in its application from one part of the region to another, less than transparent in keeping Congress informed, and, worst of all, ineffective in its guidance and understanding of events. The protests in the Middle East and northern Africa have justifiably stirred the emotions and aspirations of the Palestinian people as well. They also seek a homeland of their own--secure, stable, and living at peace with their neighbors. I agree this must be among our goals. Some believe the groundswell of newly vibrant popular aspirations throughout the region and also among the Palestinian people is both an opportunity and a requirement for new, creative steps in the search for permanent peace. There may be an opportunity here that leads to progress if we and the parties to this long-lasting dispute make the right choices, if we seek the right ends, and if we pursue them with the right strategies. Unfortunately, the administration seems to misunderstand the nature of this opportunity. In a speech last week regarding the wave of startling events in the Middle East and north Africa, President Obama attempted to bring coherence and purpose to his administration's policy. Instead, the speech brought more confusion, potentially jeopardizing prospects for successful negotiations with Israel and the Palestinian Authority. In my opinion, it was a serious mistake for the President to preemptively declare U.S. support for a Palestinian state based on the 1967 borders. President Obama's declaration that Israel must withdraw to the 1967 border lines is unprecedented and unwelcome. It is true that previous administrations have referred to the 1967 lines in the past as a reference point in the negotiations. It is also true that the Palestinians regard the 1967 lines as their beginning negotiating position. But even with the President's vague acknowledgment of the need for land swaps, no U.S. administration has previously adopted the Palestinian position as its official policy until now. How can this help restart negotiations or drive those negotiations toward a successful conclusion? As Mr. Netanyahu made clear to the President in the Oval Office, a return to the 1967 lines is ``indefensible'' and ignores new realities on the ground. This position was formally recognized by President Bush in 2004 and must now be reconfirmed by any realistic assessment of what steps are possible and necessary. The object of negotiations is to reach a successful and durable conclusion. But ignoring core realities cannot possibly contribute to progress and almost certainly would make it more difficult to achieve the ends we all seek. Another major concern I have following the President's speech is the reaction to the recent announcement by the Palestinians of a reconciliation agreement between the Fatah party of President Abbas and Hamas, the organization in charge in Gaza. This alleged reconciliation is likely a product of the Arab spring and the conviction the Palestinian people need to unite to pursue their common goals. This is understandable, and it would be acceptable if not for the character of one of the main factions to this reconciliation. Make no mistake about it, Hamas is a terrorist organization. This group denies Israel its right to exist, it fires thousands of rockets into Israeli territory and bemoans the death of bin Laden, one of its heroes. If this announced reconciliation of these Palestinian groups actually occurs, the Palestinian Authority of President Abbas--to which the United States, by the way, provides considerable financial and humanitarian support--that administration, that group--that reconciliation will have President Abbas and that group dancing with the devil. It cannot, therefore, expect further support from us, nor can it expect support or understanding in any negotiations with Israel intending to create a Palestinian state. Indeed, we must not require or even encourage Israel to resume negotiations with an entity that includes terrorists. But how did the President address this in his speech? He did not mention the word ``terrorist'' or provide any solid indication that negotiations with Hamas would be impossible. He did not affirm that American assistance to Palestinians, including Hamas, would be off the table. He merely said that ``Palestinian leaders will have to provide a credible answer'' to these remaining questions. The President also suggested in his speech that the Israelis and Palestinians should focus negotiations in a restarted peace process on the issues of borders and security, leaving the highly contentious issues of Jerusalem and refugees for later. This type of step-by-step negotiating has been rejected many times in the past, and for good reason. Land is Israel's main asset in negotiations. Even if it were possible to reach agreement on land and borders first, Israel would be left in a far weaker position to negotiate the subsequent matters. The refugee issue is perhaps the most difficult of all because acceptance of the Palestinian position would completely change the nature of Israel as a Jewish state. Indeed, it is a fundamental survival issue that cannot be addressed in isolation. Finally, I am deeply concerned that the President's speech may be used by the Palestinians to support their campaign to bring a unilateral declaration of statehood from the United Nations General Assembly. A declaration of statehood to the U.N. is a dangerous step that would preempt any new negotiations and make sure sufficient efforts are stillborn. If this strategy succeeds at the U.N. General Assembly this September, it will bring serious legal, political, diplomatic, and practical negative consequences for both a real peace process and Israel itself. Let me restate that. If this strategy succeeds at the U.N. General Assembly in September, it will bring serious legal, political, diplomatic, and practical negative consequences for both a real peace process and for Israel itself. The Palestinian Authority has already announced its intentions to challenge Israeli interests in U.N.-related bodies, including the International Court. This tactic contradicts Palestinian claims that it seeks to bring new energy to the peace process. Peace will come through realistic negotiations, not through unilateral preemptive action. The President did say he opposes this Palestinian effort to isolate and delegitimize Israel at the U.N., and this was a welcome statement. But supporting a Palestinian state based on 1967 borders, speaking out against alleged reconciliation with the terrorist faction Hamas in only the most ambiguous terms, and promoting a policy that deprives Israel of its strongest negotiating advantage will only encourage the Palestinian Authority to pursue its U.N. strategy. These confusing, inconsistent messages from the administration will not be enough to dissuade other U.N. member states from supporting the Palestinian maneuver. I fear the United States will then be forced to veto a resolution in the Security Council that our very own errors have helped bring about. Then we will find ourselves in a minority in the General Assembly and watch as the prospect of substantive negotiations become far more distant than before. Both we and our Israeli friends deserve better than this. Mr. President, this is not a statement of support for Israel only. It is true that we are united with Israel by permanent bonds of history, values, shared strategic interests, culture, and religious heritage, but those bonds are also the principal reason we have for pursuing a peace that is durable and just for everyone in the region. That peace will serve the Palestinian people just as much as Jewish Israel. A secure homeland of their own, at peace, will be the result of real negotiations based on shared understanding of what is possible. Americans, the people of Israel, and the Palestinian people all have a shared common heritage in prophetic religions. Hopefully, prayerfully, together we can aspire to a common purpose to bring enduring peace to the birthplace of that heritage. Mr. President, I yield the floor.

Mr. COATS

Mr. COATS. Mr. President, I appreciate the remarks of my colleague, Senator Levin. I just caught the tail end, but it is a good segue into what I wish to speak about today. Today is May 16, an important day for me, because it happens to be my birthday, although I am not anxious to have any more birthdays and it is no big deal. This day is more important because this is the day that Treasury Secretary Geithner said we have reached the debt limit ceiling. I read from this missive that came out a little bit ago: Treasury Secretary Timothy Geithner announced on Monday morning that the Federal Government had met its statutory borrowing limit of $14.294 trillion cap. This is the day we have been talking about for a long time. In fact, this day had been advertised as the likely date on which the United States would hit the debt limit. Here we are with an empty floor on a Monday and people are saying, Whoa, shouldn't you guys have been in every night last week and all weekend to avert hitting this limit, because doesn't this mean we have to default on our debt? Well, as the article goes on to report: Treasury will now begin a series of ``extraordinary'' measures designed to stave off a potential government default. Treasury has been able to move some money around so that now we won't reach that magic date until August 2. Is this good news or bad news? Well, it is maybe good from the standpoint that we may have avoided a catastrophic situation today, but it simply postpones the date of the inevitable. What I fear is that it simply gives us more time to avoid getting engaged in dealing with what is arguably one of the largest crises in American history, particularly in American financial history. So when we look at what has been transpiring over the last several years, as all of us have watched with alarm, our debt limit continues to climb at an unprecedented rate and there has been not nearly enough debate and engagement on how we should address this. I know the last several months have been filled with proposals and plans and dire predictions. The last year--2010, an election year--certainly aroused the interests of the American people, when I think for the first time the reality became clear on what the increase in the debt and the deficits is doing to our country's financial health. I have this chart here on the left which shows total U.S. debt and statutory debt limit from the years 1941 to 2011. In December 1941, we were engaged in World War II. We see a small little spike here in terms of the debt limit. That is understandable, because we were in a crisis situation and we had to put all of our efforts and expenditures into production to address the war needs. But as we can see, from 1941 all the way through to 1981, we moved along at a fairly low level of increase in debt and finally hit the $1 trillion mark in 1981. So for more than 200 years in the history of this country, we ran this country without going more than $1 trillion in debt. That is enough as it is. But I remember at the time, in 1981, people were saying, How could this be possible? How could we possibly reach this limit, $1 trillion? We can hardly comprehend it. The sad news is that since 1981 we have been on a steady incline of debt, which has accelerated dramatically in the last few years. Today-- May 16, 2011--we have hit a total of nearly $14.3 trillion in debt. This line continues off this chart and goes much higher as we project forward the spending, much of which is occurring because of mandatory spending put in place for programs that were locked in and it is obligatory spending on the part of the Federal Government. Of course, as we go forward, the interest rate on our debt increases and the amount we pay each year increases. So we find ourselves in a spiral, a downward spiral of debt that seems to have no end. This is no surprise to most people because there has been focus on this all across America over the last couple years. Throughout this period of time, people have had to stretch their own dollars at home in order to make ends meet. Businesses have had to make significant changes in the way they do business in order to make ends meet. State governments have found they are deeply in debt and have had to take some dramatic measures. But it is only now that the Federal Government is starting to look seriously at what we need to do. All throughout the year 2010, with no budget in place, Congress continued to spend. But I am not here to place blame on any one individual or any one group. I am simply here to point out the fact that we have a serious crisis at hand and it deserves serious debate and a serious solution or we are going to find our country in very difficult straits. From this point forward, as shown on the chart, Congress has been run by Democrats and Republicans. The Presidency has been held by Democrats and Republicans. So we can go back and say: Well, who is responsible for this and who is responsible for that and what about here and what about there? That is a wasted effort at this particular point in time. This is the situation we face, and this is the situation with which we must address. I regret that the Senate, to date--other than activities such as Senator Levin was engaged in, I am engaged in; that is, coming to the floor at a time when the issue is not before us in terms of seeking a resolution but simply stating the facts and urging us to move forward-- I regret that this year we have spent a total of only 4 hours and 20 minutes of actual debate on the spending. Instead, we have been tied up for weeks on not trivial but far less serious measures: confirming some judges to district and appellate court positions, dealing with the Federal Aviation Administration reauthorization bill, which took several weeks. Now we have been stuck on the small business authorization bill for several weeks, injecting here and there in some debate and some talk and discussion about the deficit but no real focus on that. If we do not set aside the less important and begin to focus on what we need to do, we are going to quickly find ourselves into the month of July careening toward an August 2 deadline, during which time the uncertainty that exists in the investment community and in the business community and in households, in terms of spending and what the future might bring--all that continues. What the world is waiting for, and what the world is watching and hoping and praying for, is that the Congress and the executive branch will work together to seek a solution to this problem that will bring reassurance to the investment world and bring confidence to our population that we have gotten serious and we are going to do something about this. None of us believe this is going to be easy. None of us believe this is going to be painless. But we simply cannot postpone the debate that needs to take place, not only in this Chamber and in the House of Representatives but between the House and the Senate and the White House. Some conversations have already started in that regard but also across the Nation. This is a debate that has to come before the American people because they are going to be the ones who are going to bear the brunt of whatever cuts and whatever solutions need to take place in order to put us on the right fiscal track. If I have learned anything in discussions outside this Chamber with people who have studied and analyzed and looked at this issue, it is that several things must take place, and they must take place immediately. A host of people who have spent their lives understanding the dynamics of the financial system--understanding the consequences of debt as a percentage of gross national product, understanding the consequences of how a nation rises to this level of debt, the consequences of that to its people and to its financial future and its stature in the world and its ability to do the many wonderful things the United States has been able to do, to lead the world in so many different areas--all this is in jeopardy if we do not address this issue. What they are saying, if I could bring that into just some basic conclusions, is, No. 1, this crisis is real. All you have to do is look at this chart I have in the Chamber to understand this crisis is real. Here is where we were in World War II when we were having to go into debt, which we thought was serious at the time. But look at what has happened in just the last 30 years. So the crisis is real. As measured by historical analysis of nations that have faced these kinds of situations before, the consequences are always dire. Therefore, No. 1--and I was glad to hear my Democratic colleague acknowledge this is the case because this is something both sides of the aisle are going to have to deal with--both sides have to recognize that, No. 1, the crisis is real and it is now. The second conclusion, based on what the experts are saying, is that we have to act now, not later. This is not something we can postpone. For years and years and years, as this line has gone forward, as shown on this chart, Congress has said: We'll get to that. Presidents have also said: We need to address our debt, but only after the next election. Well, there is always a next election. Now the latest thing we hear is: Well, we need to take care of that after the 2012 election. We will put it before the American people in terms of which way they want to go. The American people spoke very loudly and clearly in 2010. If that was not a wake-up call politically, I do not know what will be. But, nevertheless, falling into the trap of simply saying that waiting until after the next election we might be in a better position to deal with it then simply postpones the inevitable and potentially brings about a crisis which will occur before the election in 2012. It is shameless to put before the American people that the political situation is such that we are not willing to address this now and, therefore, we are putting their lives, their futures, their children's futures, and their children's children's futures in jeopardy, while we place a higher priority on the political outcome of 2012 rather than on what we were elected to do in 2010 and years before. No. 1, the crisis is real. No. 2, we have to act now without delay. No. 3, many experts have advised that, if we do something, it needs to be a comprehensive plan that includes all aspects of Federal spending. We need to talk about the discretionary part of our budget, which we vote on every year, although in the last couple of years we have not even passed a budget. Last year, we failed to pass a single appropriations bill. Instead, we have had continuing resolutions and supplemental spending bills, which is not what we were elected to do and not a good way to govern. But we have to address that portion of the budget. When addressing a long-term economic plan, we cannot exempt major sectors of our budget such as interest and defense and mandatory spending and we must include entitlements. That is No. 4, many experts say. If you do not have a comprehensive plan that includes everything, then the burden falls on a disproportionate share of discretionary spending that undermines essential programs the government ought to be engaged in. We cannot get from here to there without including all aspects of the budget, including comprehensive tax reform. That is another thing these experts have said. Many say the comprehensive plan must include some basis on which we move forward with tax reform. Senator Wyden and I have cosponsored a bipartisan bill for that very effort. We are not saying it is the perfect bill. We are saying it is something in place with which we could start on and address comprehensive tax reform, to broaden the base and generate more revenue from the economic growth that comes with lowering taxes and reforming the tax code. Entitlements are a must. That is what these people have said. You cannot get from where we are now to where we need to be unless we include Medicare, Medicaid, and Social Security reforms. We all know there are structural problems, given the massive move into retirement age of the baby boom population of this country. We all know these programs are teetering on the edge. There was a report from the trustees of Medicare last week saying they are moving up 5 years when Medicare runs out of money in order to pay for benefits that are promised under that program. We all know there are some relatively painless solutions the earlier we start, in terms of adjusting the retirement age, in terms of adjusting some formulas, and making some of the changes that have been proposed that we are talking about. But if we do not include that entitlement spending in our discussions, we are not going to be able to reach a successful conclusion. Another principle they have listed is that we have to make this for the long term and we have to lock it in. We have to guarantee the promises we make and the commitments we make, as we address this problem of how much to cut and how to change the Tax Code and how to work through the revenue side of this effort. They have to be locked in place and guaranteed, hopefully, with the passage of a constitutional amendment to balance the budget. We failed twice in the 1990s in this Senate to pass a constitutional amendment to send to the States for ratification. It failed by one vote on two occasions. I wonder what would have happened had we passed that. No, I do not wonder. I know what would have happened. We would have been forced to make the decision at this point, as shown on the chart, which would have brought us back to here instead of now having to go from this point on the chart all the way down--a much more painful process than had we passed that amendment then. So what we want to avoid, when we are forced to do this--and it is going to happen; we have to do it--we need to lock that in on a path that will bring us back to fiscal parity and balanced budgets and then lock it in with a constitutional amendment. It cannot be done in 1 year. That is why the other principle is that this has to be a long- term process in getting us from where we are to where we need to go, and then we need to stay with it. We cannot just pass it for 2 years, elect a new Congress and come in and make these changes. If we move forward, and if we can come together to find a rational solution to this, it will send--this is the last point the experts have said--it will send a tremendous signal around the world to all those investors who have always looked to the United States as the safe- haven, last-resort place to put their money. The dollar will be rescued from falling against other currencies. It will continue to be seen as the world's currency. Confidence in the United States as a safe place to put your money will be restored in nations around the world. The American people will have a tremendous psychological sense of relief and assurance that we are finally getting serious about doing something about this crisis that faces us. Lastly, what I would like to do is send a message to President Obama, the majority leader, my Republican and Democratic colleagues, the minority leader, and others: The time is now. I believe we should suspend, as soon as we can, everything but the absolute essential and spend the next amount of time, starting now, debating and working through--whether it takes day and night and weekends--rolling up our sleeves and sitting down, holding this debate across the country, to get input from the public, but also meeting together, working to find a solution to this, which we all recognize has to be done, without letting this thing trail all the way to late July and then do something in a panic. This crisis is going to occur. It is going to occur probably sooner than we think. The last piece of advice they gave us--I know I said it just a minute ago--but the other piece of advice they gave us was: Trust us, you do not want the financial markets to force you into doing things that will be done in a rush, that will be done in a panic, that will not be rationally applied; and instead of having a principled, rational way of solving this problem, we will be in crisis mode, and we will be having to make decisions that will have a significant negative impact on our public and on the world. I hope to keep talking about this issue. I hope to keep urging our leadership to suspend all but the essential of what we are now doing and that all of us commit whatever time it takes to bring about a debate and a decision as to how we are going to go forward. Put it in front of the American people. Let our yea be yea and our nay be nay. Then at least we will know where we stand and we, hopefully, can come together to find a reason to forgo letting the markets do this for us, which everyone concedes is not the way to go. I yield the floor and suggest the absence of a quorum.

Mr. COATS

Mr. COATS. Because he came in to express that same urgency and burden. As former chairman of the Budget Committee here for so many years, he certainly understands the current fiscal situation. His views echo the voices and views of people across this country--from economists, whether they are liberal or conservative, whether they are from Harvard or Indiana University, the whole spectrum--saying this is an emergency, this is an urgent fiscal crisis we face. The time to address this crisis is now, not later. This has to rise above political considerations for 2012 because our country is on the precipice, and unless action is taken now, it may very well be too late. We have had a number of these sessions as a caucus, and we have even had some meetings with our colleagues from the other party, where experts have come before us--again, not carrying any kind of ideological bent on this thing but basically saying: Look at the numbers. Do the math. By the way, it is not calculus, it is third grade math. When we spend $3.7 trillion and our revenues are only $2.2 trillion, we have a huge $1.5 trillion deficit, and this has happened year after year after year. Cumulatively, we are well over $4 trillion in debt over just the last 3 years, and this is going to skyrocket from here. So it is not as if we are at the peak. With the aging population and the increase in mandatory spending coming down faster than we can deal with it, we are in a dire situation. Here is the reason I came back to the Senate. People ask all the time: Why in the world, after a lot of years of service in the House of Representatives and in the Senate, as an ambassador overseas--you are of retirement age--why don't you enjoy the fruits of your labors? Why would you want to throw yourself back into the arena, particularly at such a critical time when the decisions you are going to have to make are not going to always be popular and when the requirements of what we are going to have to engage in to do what we need to do are going to be very demanding? The answer is, for the sole reason that I also have this great fear within me that we are seeing a country that has been the most prosperous free country in the history of civilization about to unwind. We have spent ourselves into a situation where we are literally at the crisis point. So I came back for one primary reason. As much as I enjoy seeing my former colleagues and being in the business of being a Senator and representing the people of Indiana, I came for one reason only; that is, I have such a concern about the future of this country. I have three children and eight grandchildren now, another one just born recently. But it is not just my grandchildren, it is America's grandchildren and America's children whom we are loading debt onto that they are not going to be able to dig out of. It is going to deny them the opportunities we have had in our generation--to save money so we can go to college and get a good education, so we can get married and have a family and afford to buy a home, so we can enjoy the opportunities that freedom and prosperity have brought to us as a nation. It not only affects us domestically, but it affects our role on the international scene. Already, NATO is saying we can't do this alone in Libya. We need America. I am not getting into the issue of whether we should be engaged in Libya. That is not the point. The point is that be it a tsunami or a nuclear accident or a flood or a disaster anyplace in the world, who is the first to show up and the only one with the capacity to deal with it? The United States--the U.S. Navy, the U.S. Marines, U.S. troops not carrying guns but carrying water, carrying food, bringing aid, first aid ships. Whom does the world turn to in times of distress and disaster? It is America. America has been a generous nation because we have had the capacity to be a generous nation. All of that is at risk. So whether it is domestic or whether it is international, we are at risk. We know we cannot solve this problem unless we can work together. We don't control two of the three thirds of government. We control the House of Representatives, and we have seen what Paul Ryan and others have done there, including John Boehner, to get us started on this process of what we need to do. But we have not done that yet in the Senate. We are trying to work with our colleague so we can. But in the end, if the President of the United States does not engage in this effort, we will not succeed. We can talk all we want. We can present all the plans we want, but until the President gets engaged, we are not going to succeed because he is the one who ultimately has to sign this bill. He is the one who ultimately has to sign off on it. Currently, and for the last 3 months, he has been totally AWOL, off doing other things, at a time while the house is burning down. I am hopeful that, in just 1 hour and 10 minutes or so, the President will come forward not with nice phrases, not with generalities, not with fluff that we heard in the State of the Union Address--some nice sounding things but no backup--but with specifics: Here is what his plan is. I hope what I hear from him is: I, the President of the United States, Barack Obama, want to sit down and get in the arena with Republicans and Democrats in the House and in the Senate and work together to avoid this potential crisis; and I agree this is not something we can do in 2013. This is not something we can play politics with. This is not something we can defer. We must do it now. I believe the American people--I can speak for Hoosiers in Indiana; I can't speak for other States, but I believe the people in Indiana, and I think this is true across America--understand this better than a lot of the politicians do. They understand this because they are part of families that have to meet budgets. They are businesses that have to put the payroll to pay their employees. They cannot allow themselves to get so drastically in debt that they are not going to be able to recover. So they are asking us to take leadership, to step up and do it, make decisions not for one's personal political future but for the future of America. The President needs to join us in that effort. I am hoping and praying that in 1 hour and 10 minutes, as the President finally presents to the country, he will do two things. No. 1 is to say: I am ready to engage and engage fully because this is the No. 1 issue facing the future of America. All is on the line. No. 2, here are my specifics in terms of what I will support or what I will work with. I hope he will say, as we have said: This isn't set in concrete. Let's work together to see what works and what will address the crisis we are facing. So I thank the Senator for his leadership as head of the Republican caucus on the budget side. He has been out front. The Senator from Alabama has been out front from day one. I thank my colleague, Senator Isakson, whom I think will engage here next, as well as Senator Barrasso, who said some nice words about me. But I think we are here for one reason and one reason only; that is, America is in trouble and we need to step up and do what we can, everything we can, to get us back on a path to fiscal health. It will not happen overnight, but if we can certify that we have a plan in place and that we are going to stick with it, we can save this situation and turn it around. So I thank the Senator for his time and for allowing me to get in my 2 cents' worth. I am here to make the tough decisions and for no other reason.

Mr. COATS. Well, it is interesting that the Senator asks that question because I just left my office and a meeting with Pete Domenici literally 15 minute ago.

Mr. COATS

Mr. COATS. Mr. President, I just wandered onto the floor hoping we were coming close to some type of an agreement. I very much regret that we have to careen from week to week, from period to period funding our government on a temporary basis. I think all of us were hoping we could get this resolved. I still hold out some hope. There is 2 hours and 50 minutes or so of negotiations still to go. I commend the Senator from Texas, Mrs. Hutchison, for her efforts. She has been relentless in reminding us for several days, if not more, that we cannot leave our troops in the field and those who are wearing the uniform serving our country in a situation where they are not paid. This, of course, affects drug enforcement agents and many others across the Federal spectrum. But these troops overseas are bearing hardship enough to not be caught up in a debate here which is necessary, a debate that needs to be resolved. As I said earlier when I spoke this morning or early afternoon, this is just a small little brushfire, as dramatic as the press has made it, and it does have consequences--serious consequences. But compared to the size of the problem our Nation faces from a fiscal standpoint relative to what we need to do and what we need to be debating, this is a small part, just talking about funding for the next 6 months to fill a gap that was left when no budget was passed and no action was taken on it in the last Congress, the last fiscal year, to put us in a position where we can move into and debate the real issue that is before us; that is, how do we make decisions that will affect the long- term spending of this country, affect our budget and our deficit, and bring us back to a fiscally responsible place? I hope as negotiations continue to go forward that we can resolve this today so that we can begin that important debate. But if we cannot, at the very least, I believe it is important that we extend this for a small amount of time--I regret we have to do it--so we can bring it to its final conclusion. But the most important point is that before midnight, we have to make sure we pass legislation which will ensure that our people in uniform are paid their rightful due for the service they are providing. Again, I commend the Senator from Texas for reminding us of that and being vigilant in making sure we absolutely address that issue before this time runs out. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. COATS

Mr. COATS. Mr. President, I join the Senator from Massachusetts in saying also we don't have more time on this. We all want more time. Each of us would like to spend more time on this important issue, but we want to give everyone the chance to speak and this is why we have the limitation. I think it is important to put this whole issue in perspective. People are saying, Well, the clock is ticking and we are 12 hours or less away from having to shut the government down. Well, yes, the clock is ticking. But the clock that has been ticking year after year on the mounting debt and fiscal crisis that is going to take this country into bankruptcy if we don't do something about it. That clock is ticking a lot faster than the clock is ticking on this debate. Let's put this debate into the perspective of the larger picture. In the last 3 years we have added over $4 trillion to our debt--$4 trillion plus in the last 3 years. This country is on an unsustainable spending binge. People throughout the year in 2010 expressed their views about the egregious, reckless spending of this Congress, and they sent a new Congress here to do something about it. Because the other party that was in control in 2010 didn't pass a budget, didn't do anything about it when the time ran out on September 30 at the end of the fiscal year--we are at this point today because we have had to have these continuing extensions which we are trying to do something about, and I hope we can resolve this. I don't want a shutdown any more than anybody else does. But people have to put this in perspective. What we are dealing with here is a request put out by the Republicans--because there is no request from the President of the United States and there has been no request from the other party as to what the package should be to deal with this--and that request requires and asks for a reduction of 1.6 percent of the total amount of spending that is going to take place in 2011--1.6 percent. If you are the head of a family or an individual making $50,000 a year and you find out you are running yourself into bankruptcy, that amount you would have to come up with to save, to start the process of getting your financial situation back in order is $800. If you are making $100,000 a year, what we are asking for is a $1,600 equivalent cut in the spending. If you are a business making $1 million a year and the boss comes and says we are spending way more than we take in in our revenues and this company is going to go bust and everybody is going to get released from employment as a result of that unless we make a start in moving forward in dealing with our fiscal crisis, and we are going to start by cutting $16,000 out of the $1 million, that is the equivalent of what we are doing here. Yet, we are talking as if this is doomsday, this is cataclysmic: These are the greatest cuts in the history of the Senate. We have a timebomb, a debt bomb, ticking away out there that is going to take the country down into second tier or third tier status, at best, or we are going to have the bond markets do it for us if we don't start. This isn't just a Republican plea. Democrats, the President's own commission, headed by Erskine Bowles, who was the President's Chief of Staff, has said there has been no more predictable collapse facing America than this one and we need to do something about it now. What we are trying to do about it now is simply do something that wasn't done for 2011, for the 2011 budget, with a modest 1.6-percent cut so we can move to what we need to do, and what we need to do is address the whole picture. As the Senator from Massachusetts said, we have to deal with more than this 12 percent of the discretionary spending for 2011. We have to put mandatory spending on the table, defense spending on the table; we have to look at tax reform as a way to grow our economy. There are a whole range of things we have to do. We have one plan in place that has been put there for us to at least begin to start the debate on what we need to do--get this thing out of the way so we can start that debate, and that is the Republican plan put forward by House Member Paul Ryan, the head of the House Budget Committee. That is the comprehensive plan we ought to be working on. We can't get to that plan because we are dealing with this 1.6-percent fix to the problem that exists for 2011. It is 2012 and 10 years beyond that needs to be addressed and needs to be addressed now. This country is facing as serious a debt crisis as we have ever had. Leading economists, Republicans and Democrats, liberals and conservatives, those from Harvard and those from Stanford and every college in between and every institution and entity that has studied this problem, say we have to do something and we have to do it now or it is going to be done for us, and the results of that will be a lot worse than if we start to address it now. Governors and heads of businesses and heads of families all across America know exactly what we are talking about because they have already had to make these tough decisions. They are already implementing what is necessary to get their fiscal house back in order. It is not just Republican Governors; it is Republican and Democratic Governors. Why aren't we listening to Andrew Cuomo? Why aren't we listening to Jerry Brown? Why aren't we listening to Mitch Daniels and other Governors, including Governor Walker from Wisconsin and Governor Kasich from Ohio? Why are we not looking at what they are doing? At least they are stepping up and doing it. Here we are, arguing over the extreme nature of a 1.6-percent reduction out of a $3.7 trillion budget. Revenues are coming in at $2.2 billion for a $1.5 trillion deficit and we are talking about a 1.6- percent cut out of all that, as if this is doomsday if we don't raise-- even come halfway, or a little more than halfway to this. Putting this in perspective I think is necessary for us. We have all the focus on this little, small grass fire happening over here when there is a five alarmer across the street. That is the fiscal house of America. Are we doing this because we are green eyeshade people and we don't like the way government functions and we want to take things away from people? No. We are doing this to save this country--to save the benefits available to those who are under Medicare, to save the benefits available to those under Medicaid, and other provisions. We are trying to keep these programs from collapsing and we are trying to keep this country's fiscal house from collapsing or burning up. Instead of fighting a little grass fire, we have a five alarmer over here and we have a little truck with a hose trying to put out that grass fire. Let us reconcile this and pass this now so we can get to the issue we have to get to. This whole thing about riders and about the largest tax cut in American history is a pebble in a pond of what is necessary for us to go forward and deal with the crisis that is before us. It is going to rest on all of our shoulders. It is going to reflect on all of us, Republicans and Democrats, liberals and conservatives, if we stand here and fiddle while our fiscal house burns to the ground and collapses. As I said, one way or another, this will happen. It may happen sooner or later. If you listen to Erskine Bowles and a former colleague, Senator Simpson, and to the President's own commission, and if you listen to any analyst who has looked at this, they say it is totally unsustainable. If you don't do it and start the process, the bond market and the interest rates will do it for you. It will fall on all of us for not stepping up to the plate and getting it done. We have 11 hours to get this done. Let's pass this now and make the decision to go forward and let our yeas and nays be recorded. Let the American people decide which side they want to be on on this particular issue. I think, given the results of the last election and the awareness of the American people, clearly they have come to the conclusion that the government is too big, it is growing too fast, it is spending too much money--money it doesn't have--and it is borrowing money at a rate that is putting us into severe jeopardy in terms of our creditors and what their demands will be in the future. When 40 cents of every dollar is borrowed, you cannot continue on that course without dire consequences. I believe the challenge before us today is to wrap up this negotiation and wrap up the issue that deals with the remaining months of 2011 so that we can immediately begin--and whether it means canceling the recess or whatever, I am more than happy to participate in that--to work on the necessary decisions and changes and debate that have to take place regarding our long-term future. If we fail to do that, we are going to reap the negative consequences. My time is about to expire. I simply plead with my colleagues, let's get past this little nothing of a skirmish here and keep this government functioning and get to work on what we have to do. We hope to have competing plans, but if not, let's go forward with the Ryan plan and get a yea or nay on it and let the American people decide whether it is the right way to go. I yield the floor.

Mr. COATS. Mr. President, I continue to reserve the right to object. If the Senator is willing to amend his request, I will not object. But if he is not, then I agree with the Senator from Virginia. There is a long list of Republicans and Democrats who would like to speak.

Mr. COATS. Mr. President, reserving the right to object--and I do not intend to object--but I am just wondering if the Senator from Massachusetts would be willing to amend his request to allow subsequent Republican speakers to also have 15 minutes to make their remarks. So if the Senator would agree to amend that request, I will not object.

Mr. COATS

Mr. COATS. Mr. President, today, along with Senator Wyden, we introduce bipartisan tax reform legislation, a piece of legislation that we believe, and hopefully we can gather a consensus in this body to believe, is necessary to be a component of addressing the current fiscal situation. The Senator from South Dakota just articulated very well the plight we currently are facing with our current Federal deficit and accumulating debt. I don't think I could have said it better than he did. He laid out what I think most Americans are now realizing, and that is we have to get a grip on our current fiscal situation in this country if we are going to provide any kind of opportunity for the future--for prosperity, for opportunity for our young people to get good jobs, buy homes, raise a family, and send their kids to college. And even in a more current sense, we need to get our economy moving again to the point where we can get people back to work and become a prosperous leading nation in the world. We are gradually, and accelerating all the time, losing that position because of our fiscal situation. This morning, a number of us met--both Republicans and Democrats--in one of a series of meetings we have been having with outside experts. Dr. Carmen Reinhart and Ken Rogoff spoke to us this morning, both distinguished and respected economists, and others who have studied the situation, and they laid out the current status of our fiscal situation and the economic plight it is putting our country into. One of the things they said--and I think the reason I am on the floor this evening--is that unless we address all the aspects in dealing with our fiscal crisis, both in terms of excessive spending that is taking place, and has taken place over the last several years, as well as components for growth, we are not going to successfully address this. We not only have to look at the spending which has accelerated dramatically in the last few years, and the amount of deficit we are accumulating every year, and the amount of debt we are rolling up, but we also have to look at ways of addressing that by cutting spending and also spurring the economy to growth. The component for growth pretty much falls along the lines of tax reform. Senator Wyden had worked for 2 years with former Senator Gregg. They spent a great deal of time putting together a very comprehensive plan. Senator Gregg, as everyone here knows, retired after many years of distinguished service. He was recognized as one of the, if not the, leading proponent of budget stability, of economic growth, and of all the aspects that go into dealing with economic situations. He is greatly missed. I had the privilege of being his friend, serving with him, and then having him encourage me to take his place in moving this legislation forward. I have spent the last 3 months working with Senator Wyden, who is coauthor of that legislation, along with Senator Gregg. We have made some refinements to this and we are introducing it today. We will be doing a formal introduction of it together in the coming days, but the agreement and the growing consensus we hear from everyone is that comprehensive tax reform has to be a component of addressing our fiscal plight and getting us back into a period of sustained growth. S. 727 is the bill that will be available for people to look at--the Bipartisan Tax Fairness and Simplification Act of 2011. It simplifies our current tax system, it holds down rates for individuals and families, it provides tax relief to the middle class, and creates incentives for businesses to grow and invest in the United States. As we know, with any structure that is built, the first thing you do is build a solid foundation. What we are trying to do in our tax reform package is to build that foundation based on several basic principles. We believe that to bring forward legislation on a bipartisan basis we have to have a tax package that is revenue neutral, that is not stereotyped or characterized as a backdoor means of raising taxes or of cutting spending. Revenue neutrality means we can go forward knowing it is not used for that purpose but for the purpose of putting in place a tax system that will stimulate growth, provide for better competitiveness for our industries and businesses, and make us a more prosperous nation. Simplification is a key foundational principle, as well as protection for the middle class and families--fairness across the board. And as I said earlier, economic growth. I want to address each of those. First of all, achieving a revenue-neutral bill. This has been analyzed by the Joint Tax Committee, and basically we have information back that it is revenue neutral. This analysis is based on a static basis. As we all know, if you put in place policies that will encourage growth and stimulate growth, it becomes a dynamic scoring. But CBO doesn't do dynamic scoring, nor does the JTC--the Joint Tax Committee. But nevertheless, even at the static analysis of this bill, it achieves revenue neutrality. It is our goal to maintain that throughout, as adjustments might be made. Simplifying the Tax Code has to be one of the very first things we do. Today, the U.S. Tax Code is 71,684 pages in length, and it includes a tangled web of over 10,000 exemptions, deductions, credits, and other preferences. I took three tax courses in law school, and I don't begin to understand the 10,000-plus exemptions and deductions and preferences that are in there. I turn it over to an accountant, who spends every working hour of his week, every day of the year trying to stay up with the complexity of this Tax Code. It is no secret that Americans spend 6.1 billion hours each year filling out tax forms, and roughly $163 billion a year is spent on tax compliance. It is a great benefit for accountants and tax lawyers, but the average person simply cannot begin to comprehend the complexity of this code, and we pay a significant price for that. Along that line, people feel a real sense of unfairness in this. They are always wondering if their neighbor has a better accountant or a better tax attorney or has figured out a way to take advantage of a deduction or exclusion or a tax preference that they may not be aware of. You know: You are having coffee on April 16 and talking about filing your taxes yesterday and saying: Well, you did take the deduction for X, Y or Z, didn't you? Or how about that extra room in your house you use for business? Or did you know you can deduct the cost of pencils, but also driving down to pick up a latte, or whatever, if you are meeting somebody for business? This stuff goes on and on forever. And you think: Gosh, I didn't know that. He got a better deal than I did. We lose our sense of confidence in terms of the fairness of the tax system. So simplification is absolutely essential. And for a 71,000- plus page Tax Code, I think it is an absolute necessity. We reduced the number of tax brackets for individuals, first of all, from six to three. We also eliminate the alternative minimum tax, which means you have to calculate your taxes twice, in many instances, to see which one is the higher and which one you pay. That doubles the amount of time, or it adds a lot to the amount of time. I want to point to this chart here on my right, the Wyden-Coats Tax Reform Act of 2010. This is what a simplified U.S. individual tax return form will look like if this bill is passed. It is one page. It incorporates, obviously, the information about who you are and whether you are married, your spouse's Social Security number and yours, et cetera, et cetera; whether you are head of household, these very simple provisions here that are on the tax form now. We can all figure out how to work through to here. Right here, you list your dependents and their relationship to you, and you get their Social Security numbers and then to see whether you qualify for a dependent's deduction, and then you check those off. You list your capital gains and your dividends here. Your total income is added together, and then you adjust that by some very simple retained exemptions that we have not taken out, and deductions, and tax credits, all still on one page. You come down to the payment, and you either get a refund or you owe the government a little more money. And that is it. Then you send it in. We also have a provision in there if you don't want to do this yourself or you have some confusion. It is basic enough. You can do it electronically or by telephone or whatever, and ask the IRS to do it for you. They will calculate it for you, send it to you, so you can review it and then certify that it is correct or that you have questions that can be answered. Point No. 1: Simplification is absolutely necessary. It can be done, and we have structured it so with three brackets that allow us and allow individuals to fill out their taxes on the basis of this simple form. Thirdly, after revenue neutrality and simplification, we are talking about how do we use this to grow the economy. Clearly, with the fiscal situation we are in today, we are not going to solve our problem just by cutting or by raising taxes. We need to have a growth component so we can achieve more revenue through the prosperity and growth of corporations and income levels of individuals and so forth. So we are reforming our code in a way to help us get out of this fiscal situation by improving the prosperity and growth of the country. Our current tax system places the employers and businesses at a disadvantage in the global marketplace. If you look at this chart on my left, the United States, out of the 36 most competitive countries competing for global business around the world, is 35th. We are 35th out of 36 in the highest rate of taxes paid by our corporations, and they are competing against countries such as Germany, France, Austria, Turkey, Chile, and all these that are listed here--Asian nations and so forth--that have much lower combined tax rates than the United States. We want to lower this level of payment of taxes in the United States by U.S. businesses to 24 percent from the current rate of 35 percent. If we go by a combined rate, it ends up with numbers a little different than that, but we want to move the United States down here into the competitive area where we are competitive with all those countries that we compete with to sell products overseas in this global economy. We do that and pay for it by eliminating a lot of the credits, special preferences, exemptions, and deductions that are available in those 71,000 pages, resulting in 10,000 or more special exemptions. We eliminate a lot of those in return for a lower corporate rate. I talked with a number of businesses--small, large, and medium--that were saying if we can just get the rate down where we are competitive, we do not need to dig into the Tax Code to try to find all these special exemptions. It has been called corporate welfare. It doesn't always fall into that category. Some of this is legitimate, but it is not across the board. While it addresses problems of a specific industry or a specific company, it does not address it across-the-board in a way for their competitors to be treated in the same way. Under Wyden-Coats, we try to level the playing field and make investing in the United States more attractive to businesses of all sizes. We have a repatriation provision in there which at another time we will explain in more detail. But a number of organizations, including Heritage and the Manufacturers Alliance, have done studies and produced information that shows that a lowering of this rate is a job creator. It is a growth component. The Heritage Foundation found that the legislation could create up to 2.3 million new jobs a year, while cutting the Federal deficit by an average of $61 billion, just through the changes we have made in the corporate structure of taxation. The Manufacturers Alliance published a paper that concluded such an approach would ``create nearly 2 million jobs on a net basis and add an extra $500 billion to GDP by 2015.'' The alliance also estimated that the increase of economic activity from this legislation could reduce the debt by $1.2 trillion over the coming decade. I wish to repeat that. While CBO or the Joint Tax might score this on a static basis--meaning that from lowering tax rates they do not calculate in what the potential growth from that might be in a fluid way, a dynamic way--history shows us that every time taxes are lowered, there is an uptick in economic activity and more important an uptick in the hiring and a drop in the unemployment rate. Getting us more competitive with our competitors around the world will clearly bring a yet undetermined number of more revenue coming into the Government based on higher profits by our companies and resulting in more employment. That is a key component of this tax reform. Protecting the middle class and families is also another key component of our tax reform and of the Wyden-Coats plan. Today a family of four in Indiana making $90,000 and filing jointly would owe nearly $13,000 in personal income taxes. Under Wyden-Coats that family would keep more of their hard-earned money and save approximately $5,000 in personal income taxes. We protect and extend important tax deductions for families. We do not eliminate all deductions to reach our simplified Tax Code with only three levels of taxation. Without increases, we retain the rates. We don't raise any of the rates that are currently in place. We keep the dependent tax credit, which is set to drop to $2,400 in 2 years. Under the Wyden-Coats plan, we permanently set that credit at $3,000, a benefit to families. The child tax credit is scheduled to revert to $500 in 2013. Wyden-Coats eases the tax burden on families by permanently setting the child tax credit at $1,000. We promote personal saving and investment. We think it is important that we encourage saving and investment. Today we have three separate IRA or Individual Retirement Account plans for savings and investments available to individuals in the United States. Wyden-Coats promotes this by expanding tax-free saving opportunities and consolidating these three new accounts into one account that would allow a married couple to contribute up to $14,000 a year to tax-favored retirement and savings accounts. We take the three current plans in existence, we consolidate them into one. We increase the amount per year that can be, tax-free, donated to those savings and retirement accounts as another way of looking out for families and their need to save for the future. We are making the Tax Code fairer. Today our current tax system picks winners and losers, with hundreds of specialized tax rates that benefit some but not all. These credits, specialized earmarks within this Tax Code that we are working with today, total $1.1 trillion. We want to eliminate, under Wyden-Coats, a number of those exemptions and end a number of specialized tax breaks that favor one sector of the economy or special interest group over another. We want to level this out. I recognize and Senator Wyden also recognizes that there will be issues with this bill, especially from groups that benefit from these special exemptions, but those special exemptions and tax earmarks often put other companies at a disadvantage, and it is time, as I said, to make our system fairer and more simple. Ronald Reagan once said: To put it simply, our tax system is unfair, it is inequitable, it is counterproductive and all but incomprehensible. Reagan went on to say that were he living at this time, even Albert Einstein would have to write to the IRS to help him fill out his 1040 form each year. It is 25 years since we had any meaningful tax reform; 1986 was the last time. During that time, our Government has vastly expanded Tax Code reform into a complicated, tangled web of deductions and loopholes for tax lawyers to decipher. But if we can reform this Tax Code and encourage job investment here at home and, through doing this, create more American jobs and make our country more competitive in a global market, we will have taken a major step to moving forward in terms of addressing the fiscal plight we are currently in. Senator Wyden and I are open to suggestion. This is not set in concrete. This is not a be-all, end-all plan. We don't have all the answers to this complex problem. But we think this is an essential start to a debate that is necessary to be accompanied by other solutions that we have to bring to our current fiscal situation. We want to put this in as a starter, as a way of saying 2 years-plus of hard work by two people who are knowledgeable about this topic--and I do not begin to bring myself up to the speed Senator Wyden and Senator Gregg achieved in the 2-plus years of very hard effort, but I am trying to learn as fast as I can. We want to bring forward a bipartisan, Democratic-Republican plan which we think is based on principles that are necessary to stimulate our growth and provide fairness and simplification of our Tax Code. We want to provide it. We are asking everybody to look at it, examine it, come to us with your questions. There will be a lot of things to like. There will be some constituents who will find some things they do not like because it takes away a special exemption that they perhaps depended on. But we want to explain the basis on which we have made these decisions. We are open to suggestions, as long as those suggestions allow us to retain those basic principles and maintain us at revenue neutrality level and a fairness across-the-board to families and businesses and individuals throughout this country. I urge my colleagues to take a look, to work with us. The door is open for us to sit down and talk, whether to colleagues in the Senate or families or businesses across the country who want to bring their special input to this particular effort. We look forward to working with them and, over time, incorporating this in the plan to make us a fiscally healthier country and a country that is growing and dynamic and can retain its place as a place of prosperity and opportunity for not only those of us today but for our future generations.

Mr. COATS

Mr. COATS. I thank the Chair. (The remarks of Senator Coats pertaining to the introduction of S. 727 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

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