Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I thank the whip, Senator Durbin, for all of the leadership he has provided that has helped us get to this point. We had some pretty direct meetings with some of our colleagues. Sometimes voices were raised, and there was a lot of energy in the room, but it is that kind of dialog which is essential to getting agreement. I think we have done that, and we have achieved it in a way that is responsible and fair, and I thank him very much for his leadership and his friendship. Mr. President, Senator Grassley is next, and I would yield--how much time?

Mr. CONRAD. I yield 15 minutes off Senator Gregg's time to Senator Grassley, who is, by the way, let me just say, a very valuable member of the Senate Budget Committee, the ranking member of the Finance Committee, and somebody who is extremely constructive. We don't always agree. That is the beauty of democracy. But when Senator Grassley speaks, people listen because he has earned their respect.

Mr. CONRAD. Mr. President, let me take a moment to review what is in the resolution before us with respect to taxes because I think it is important to go over it. The actual tax changes on a net basis in this package are a reduction from current law of $764 billion. We have $512 billion of middle-class tax relief. All of the 2001 and 2003 provisions that provide individuals tax relief to the middle class are provided for for the next 5 years in this budget resolution. The 10 percent bracket, marriage penalty relief, all the other 2001 and 2003 tax cuts, including the child tax credit and the education incentives, all of them are in this budget. We also have alternative minimum tax reform for 3 years, as the Senator indicated. We have estate tax reform going to $7 million a couple excluded from any estate tax. That means 99.8 percent of estates would pay nothing, zero. The tax extenders for business are all included for a subtotal of tax relief of $861 billion. On the other side we have $97 billion of tax raises. That $97 billion is loophole closers aimed primarily at offshore tax havens and abusive tax shelters. Let me just indicate, only 2 percent of taxpayers with business income are affected by the changes in the top rate because, again, all the 2001 and 2003 tax cuts are extended for those earning less than $250,000 a year. Only 2 percent of taxpayers with small business income are affected by the top rate changes. That means 98 percent are not. Under the definition being used by our colleagues across the aisle, former Vice President Cheney would qualify as a small businessman because what they are describing as small business people is ``anybody who has on their income tax returns small business income.'' There are a lot of people who are very big business people, have big businesses, who show small business income on their returns. Vice President Cheney, under the definition used by our colleagues on other side of the aisle, like any taxpayer with any small business income, qualifies as a small businessman. Vice President Cheney in 2007 had income of $3 million. He had $180,000 of small business income, small businesses in which he apparently has an interest. Under their definition, he is a small businessman. I would say that is a tortured definition. There are people with much greater wealth--under their definition, Bill Gates is a small businessman. The richest or second richest man in the world is a small businessman. Under their definition, Warren Buffett is a small businessman. I don't think so. In the Bush tax cut in 2007, people averaging over $1 million a year in income got on average a tax reduction of almost $120,000 a year. The vast majority of people got next to nothing, as this chart shows. But those with average incomes of more than $1 million got tax reductions averaging $120,000. That is one of the reasons we are in the deep hole we are in. My assertion is, on the loophole closers we have, we can go after money that is owed that is not now being collected. The tax gap in the most recent year for which there is a calculation, 2006, amounted to $345 billion a year, money that is owed that is not being collected. That is the first place we ought to focus before we talk about a tax increase for anyone. The second place we ought to look is these offshore tax havens. These offshore tax havens are running amok. Here is the conclusion from our own Homeland Security and Government Affairs Permanent Subcommittee on Investigations. This is from their work in 2007: Experts have estimated that total loss to the Treasury from offshore tax evasion alone approaches $100 billion per year-- It is $100 billion a year in these offshore tax haven scams-- including $40 to $70 billion from individuals and another $30 billion from corporations engaging in offshore tax evasion. Abusive tax shelters add tens of billions of dollars more. We do not have to wonder if our own Permanent Subcommittee on Investigations knows what they are talking about. We can just go to the newspaper. Here is February 20 of this year, the New York Times: The UBS memo was blunt: The ``Swiss solution'' could help affluent Americans. That message, sent to the bank's executives in July 2004, referred to a UBS plan to help rich customers evade taxes by hiding money in offshore havens like the Bahamas. The memo, along with dozens of e-mail messages like it, were disclosed on Thursday in a blistering court document filed by the Justice Department, which sought to compel UBS, based in Switzerland, to divulge the identities of 52,000 Americans whom the authorities suspect of using secret offshore accounts at the bank to dodge taxes. We do not have to use our imaginations very much to figure out what is going on. Here is a little five-story building in the Cayman islands called Ugland House. It claims to be the home of 14,000 companies. Can you see them there in this little five-story building? Do you see them doing their business out of this building, 14,000 companies, supposedly doing business out of this little building down in the Cayman Islands? They are not doing any business out of that building. They are engaged in monkey business. What they are doing is an elaborate tax scam, much of it revealed in the UBS court documents; much more revealed in the collapse of Stanford Financial, which has shown that there are loads of companies, loads of individuals, who are engaged in dodging what they legitimately owe the United States by establishing these offshore tax haven locations, where they claim they do business, and all they are doing is dodging taxes. Let me say, most of the largest U.S. corporations have subsidiaries in tax havens. Eighty-three of the one hundred largest publicly traded U.S. corporations have subsidiaries in tax havens, and 42 of these companies have subsidiaries in 10 or more tax havens--10 or more. Sixty-three of the one hundred largest U.S. Federal contractors have subsidiaries in tax havens, and 33 of these companies have subsidiaries in 10 or more tax havens. Look, anybody who does not see what is going on is blind. Here is the picture I hope people will pay attention to. This is a sewer system in Europe. A sewer system in Europe. What has that got to do with the budget of the United States? Well, it turns out to increasingly have a lot to do with the budget here, because this is a sewer system that was bought by a U.S. company that is not in the sewer business. They bought this sewer system in Europe to depreciate it on their books in the United States to suppress taxes they legitimately owe here. Do you know what they did. After they bought it so they could depreciate it, they leased it back to the European city they bought it from and paid for it in the first place. If we do not cut down and stop this kind of scam, shame on us. Shame on us. And some of our friends over here say that is a tax increase. Well, sign me up if that is a tax increase to shut down this kind of scam. The vast majority of us pay what we owe, but a few get by with establishing these accounts in these offshore tax havens and engaging in these unbelievably abusive tax shelters. So we need tax reform. We have got a tax system that is out of date and hurting U.S. competitiveness. We are hemorrhaging revenue. Right now we are only collecting about 75 percent of what is actually due under the current code. So without any tax increases, we can completely close the structural gap between spending and revenue in this country if we collect what the current system says is owed. The fact is, the vast majority of us on tax day pay what we owe. But increasingly we have got big companies, wealthy individuals, who are not. Let's end it. Let's end it. The AMT is another problem threatening millions of middle-class taxpayers that we have addressed in this proposal. Additionally, we have a long-term imbalance that must be addressed between spending and revenue. Finally, we need simplification and reform to keep rates low for the vast majority of us who are honest. I have heard the argument on the other side that we have got the highest corporate rate in the world. Well, what is true is we do have one of the highest nominal tax rates, stated tax rates. But our effective tax rate on corporations is among the lowest in the world. That is because, while the statutory rate is 35 percent, the effective rate, what companies actually pay, is only 13 percent. When you take that into account, here is where we stack up. Here are the major industrialized countries in the world. Here is the average. Here is where the United States is. The only countries that have a lower effective corporate tax rate than the United States are Slovakia, Poland, Austria, and Germany. Everybody else has a higher effective corporate tax rate than do we. I make this review for the purposes of establishing this in the Record.

Mr. CONRAD. Mr. President, it is my understanding Senator Udall of Colorado would like to speak as in morning business.

Mr. CONRAD. I note my colleague Senator Sanders, who is an important member of the Budget Committee, is here. I ask the Senator how much time does he seek?

Mr. CONRAD. I would be happy to yield 5 minutes. If the Senator would like more at the end of that time, he only needs to ask.

Mr. CONRAD. Mr. President, again I thank Senator Sanders for his kind remarks and for his contributions to the work of the Budget Committee. He has been a very energetic and important member. He has done an outstanding job of questioning witnesses before the committee, and he has also been someone who has worked very hard on community clinics, which I think are going to make a great difference across the country. There is a very significant increase for those clinics in this resolution, and the person responsible and the person who deserves credit is the Senator from Vermont, Mr. Sanders. We thank him for that contribution. We are now approaching the 4 o'clock hour. We have Senator Coburn who wishes to come and speak at roughly 4:30; Senator McCain, whom I understand wishes to speak at roughly 4:45; I understand that Senator Udall from Colorado wishes speak as in morning business. I want to alert his staff, if they are listening, this would be a good time for him to come and speak, because we have some time between now and when we expect Senator Coburn. I hope we are able to move to a vote soon after Senator McCain concludes his remarks. But we have yet to hear definitively that that will be the case. I want to very briefly go over what I think is important about this budget. First, it preserves the President's key priorities of reducing our dependence on foreign energy, which is critically important to our national security and our economic security; a focus on excellence in education, because if we are not the best educated, we are not going to be the most powerful country for very long; and, third, fundamental health care reform. We are on a course that is completely unsustainable in health care. We are spending nearly 18 percent of our gross domestic product on health care. That is $1 of every $6 in this country. But we are on a trend line to spend 37 percent of our gross domestic product on health care. That is more than $1 in every $3. That can not be the outcome. That will put us at a huge disadvantage both in terms of competitiveness in this global economy, and it would have devastating consequences on American patients, American consumers, American families, American business. We know we need fundamental health care reform. The President has put that front and center before the Congress of the United States, and it is accommodated in this budget resolution. No. 4, we have the extension of middle-class tax cuts, over $700 billion in tax cuts included in this bill, most of it directed at the middle class. In addition, this budget reduces the deficit by two-thirds over 5 years. Relative to GDP, we are reducing the deficit by more than that, by three-quarters between now and 2014, from 12 percent of GDP in 2010, to 3 percent of GDP in 2014. Those are the fundamentals of this budget. Is it perfect? There is no document that is prepared by the hand of men and women that is perfect. So we understand this is not a perfect document. This is the product of compromise between 435 Members of the House of Representatives and 100 Members of the Senate. This is purely a congressional document. It does not become law. It is not signed by the President of the United States. It is a document to guide the spending and the revenues of the United States for the next 5 years. Obviously, since we do another budget next year, the most important thing is what this budget does over the next year. Remember that this President inherited an extremely difficult situation--massive deficits, an economy that was in the worst shape since the Great Depression, a circumstance in which the United States is having two wars. This President inherited a very tough situation. We also know we are starting to see the signs of a turn in terms of consumer spending, in terms of housing sales, in terms of automobile sales. For the first time, we are seeing an improvement. Last week we had before us in our caucus Mr. Bernanke, Chairman of the Federal Reserve, who said he sees the economy turning, that the precipitous downturn seems to have stopped or ebbed at least, and he sees the prospect of the beginning of recovery later this year. We all hope that is the case. This budget is an important part of an overall economic recovery strategy. While we have not adopted precisely the budget the President sent us, there is good reason for that. Because from the time the President's people made their estimates of the revenue available over the next 10 years, the Congressional Budget Office, some months later, did a new estimate which is the basis for our budget. The President's budget had $2 trillion more available to him when he wrote his budget than we have had available to us in writing our budget. That necessitated changes in order to achieve the deficit reduction he had called for and the deficit reduction most economists say is fundamentally necessary. We wrote a 5-year budget, not a 10-year budget. Of the 34 budgets that have been written under the Congressional Budget Act, 30 of the 34 have been 5-year budgets. Why is that? Because forecasts for 10 years are notoriously unreliable. That is why Congress, 30 of the 34 times it has done a budget, has done 5-year budgets because the forecasts, even then, for the outyears were highly suspect. When we are talking about a 10-year forecast, that is just throwing a dart. That is where we are. We have worked in a credible way to fashion a budget document that meets the needs of the American people, that puts us in a better position for the future. I freely acknowledge we must do much more, especially in the second 5 years. It is absolutely imperative we do more to get our long-term financial house in order. That is going to require entitlement reform--Medicare, Social Security. That is going to require tax reform because we have a tax system that is only collecting about 75 percent of the money due and owed under the current tax rates. We wouldn't need any tax increase of any kind to balance the books if we would just collect what is due and owed under the current system. Unfortunately, while the vast majority of us pay what we owe, we have an increasing number of people and companies that don't. That has to stop. With that, I thank the Chair and suggest the absence of a quorum. We are expecting Senator Coburn at roughly 4:30, Senator McCain at roughly 4:45, and Senator Udall of Colorado. If he is available and his people are within earshot, this would be a good time for him to come and use the time he has requested.

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

Mr. CONRAD. I have received information now that Senator Udall will be with us at roughly 4:15. Senator Udall at 4:15 for 10 minutes and then Senator Coburn at 4:30 for 10 or 15 minutes and then Senator McCain at 4:45 for roughly 15 minutes. I am not asking unanimous consent because we don't want to be locked in if one of them comes before another. We don't want to be wasting time. I may need time to respond to what other Senators might offer. We are hopeful that if there are any others who wish to speak, they will let their respective cloakrooms know. I suggest the absence of a quorum.

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

Mr. CONRAD. Mr. President, I thank the Senator from Colorado. He has been such a bright addition to this Chamber, and we are delighted he is here. He comes very well respected from the House of Representatives. We count ourselves fortunate to have him participating in this budget discussion, and I look forward to working with him in the future.

Mr. CONRAD. Mr. President, I thank the Senator.

Mr. CONRAD. Mr. President, there are a couple of things I wish to respond to. I have respect for the Senator from Arizona, Senator McCain. We came to this Chamber at the same time. First, he said, on reconciliation I told him I was against it. In fact, I did not include it in the budget resolution out of the Senate. He said in conference committee I voted for it. I say this. I voted for the final agreement. I did not vote specifically for reconciliation. I opposed it every step of the way publicly and privately. I think it is a mistake. I have said so publicly and privately. I believe reconciliation will not be used for health care, even though it is authorized under the conference report. I believe that as people examine what would actually happen using reconciliation, they will be convinced it is not the appropriate way to do health care. I believe that, at the end of the day, the reconciliation approach will not be used for health care reform. With that said, I want to make very clear--and you can ask any of the participants--I argued strenuously against reconciliation every step of the way. It was not included in the resolution here, over which I had direct control. It is included in the final conference agreement because the President wanted it as an insurance policy, the majority leader wanted it as an insurance policy, and the Speaker of the House wanted it as an insurance policy. And, frankly, although I have some influence, I don't have the ability to overcome the President, the majority leader, and the Speaker of the House. The Senator also questioned a 10-year budget versus 5-year budget. Let me repeat what I said before. We have had 34 budgets under the Budget Act; 30 of the 34 have been 5-year budgets. The basic reason for that is not hiding things, as was asserted here; it is because forecasts beyond 5 years are notoriously unreliable. That is why Congress in 30 of the 34 times has written the budget on a 5-year basis. Frankly, the outyears of a 5-year forecast are not very credible, but years 6 through 10 are throwing a dart. I used to forecast revenue for my State. I know something about forecasting revenue and expenses. When you get beyond 5 years, you are in kind of a world that doesn't exist. That is total guesswork. Beyond that, I didn't accept the trajectory the country was on in the 10-year budget that the President proposed. I believe we have to do far better. That is why the ranking Republican and I have proposed a task force of Democrats and Republicans, with the responsibility to come up with a plan, and if 12 of the 16 members of the task force could agree, that plan would come to Congress for a vote--not another study to sit on a dusty shelf somewhere, but a vote. The Senator made a number of other assertions with respect to this budget. He termed it ``generational theft.'' Let me say that the trajectory we are on has nothing to do with this budget but has everything to do with the reality of the fiscal circumstance of this country. Our spending is above our revenue. There is a structural gap; and the Senator is absolutely right, if we allow that to play out uninterrupted, it will constitute generational theft. But this budget makes the first steps toward turning that around. It reduces the deficit by two-thirds, in dollar terms, over the next 5 years, and, in terms of a share of GDP, which the economists say is the better measure, it reduces the deficit by three-quarters, 75 percent, from 12 percent of GDP to 3 percent. Additionally, at 3 percent of GDP you basically stabilize the growth of the debt relative to our national income. Why are we in this circumstance? It is because the previous administration doubled the debt, put this economy in the worst recession since the Great Depression, and now we have to dig out. The first thing we have to do is give lift to the economy. The stimulus was passed to provide liquidity to the American economy, because the only place it could come from was the Government. We have learned in past economic downturns that if the Government fails to acts, you could have a deflationary spiral that would suck the economy down as we saw in the Great Depression. In the short term, I make no apologies. I am known as a deficit hawk, somebody who believes in balanced budgets, somebody who has fought for them my whole career. But when you have a severe economic downturn, that is not the time to turn away from the Government being the last resort, the Government providing the liquidity to the system to prevent a collapse. This budget is responsible. As I have said at every step: in the second 5 years, we must do much more. The President has said that. The President is committed to it. So am I. If our colleagues are serious about entering into a long-term negotiation about entitlement reform and tax reform, count me in. Count me in. It has to be done. It is in the interest of the country. That is where we agree. Mr. President, I see Senator Alexander is here, a very valued member of the Budget Committee, someone for whom I have high regard. We may not agree on every detail, but I certainly have great respect for the contribution he has made to the Budget Committee. How much time does the Senator desire?

Mr. CONRAD. I yield 10 minutes off Senator Gregg's time and say to the Senator, if he requests more, we will absolutely be happy to extend it.

Mr. CONRAD. Will the Senator yield?

Mr. CONRAD. Let me say, if I had not agreed, I probably would not have been a conferee. There are certain things such as higher powers around here.

Mr. CONRAD. Mr. President, I thank Senator Alexander. I am serious when I say he is a very valuable member of the Budget Committee. He has made a real contribution there, and we thank him for it. We now have exhausted all of the speakers who have given us notice on both sides. We are awaiting word on whether we can go to a vote. I am hopeful we can go to a vote soon, but we will need to hear from the leadership on both sides as to when that might be possible. We have had a spirited, healthy debate today on the question of the budget. I feel strongly that this is a responsible approach. Adopting the President's clear priorities of reducing our dependence on foreign energy, focusing on excellence in education, providing for major health care reform, all the while providing more than $750 billion of additional tax relief to the American people, focused on middle-class taxpayers, and reducing the deficit dramatically, reducing it by more than two-thirds in dollar terms, by more than three-quarters as a percentage of the gross domestic product, getting to a deficit level which will stabilize growth of the debt. Again, I am swift to say much more needs to be done in terms of long- term deficit and debt reduction. I believe deeply we ought to have a special process for entitlement and tax reform. As I have noted throughout this debate, for the long term, we are on an unsustainable course in this country. That is a situation that is not the creation of President Obama. That is a situation that was the creation of the previous administration that inherited massive surpluses and turned them into massive debts. That is a fact, and there is no way to change that fact. The previous administration left this country in the deepest recession since the Great Depression. Of course, the deficit has skyrocketed as a result. That is not the fault of the President who has been in office for 100 days. He inherited this mess. He is expected to clean it up, and he has taken aggressive, vigorous action to move us in the right direction, and the American people are responding. The latest polls show that now there has been a tripling of the percentage of people in this country who believe we are now on the right track--a tripling in the 100 days of this Presidency. I was the second Senator to endorse Senator Obama. The first Senator to endorse him was his colleague from Illinois, Senator Durbin. I was the second Senator to endorse him. I had never endorsed in a Presidential primary before. I did it because I saw something exceptional in Senator Obama. I saw in him somebody who is not only very smart, but extraordinarily calm, somebody who has the right temperament to deal with the crises that any President confronts. I must say, I have been so proud to have been an early supporter of this President because I believe he is keeping the promise that he made to the American people to turn us in a new and better direction. He adopted the motto of ``Yes We Can.'' That is the motto I had when I first ran for the Senate in 1986. When he found out, he said maybe he owes me royalties. I said: No, you don't owe me a thing. I am so pleased that he is the President of the United States at this moment in time. He has the right background, the right temperament, the right intelligence, the right character to be our leader at this extraordinary time of challenge. While our budget is quite different than his because we had $2 trillion less in revenue to write the budget because of the changing forecast, because of the nature of the economic downturn, nonetheless we were able to preserve his key priorities, and I am proud of it. Mr. President, I see the ranking member, Senator Gregg, is here. Perhaps he can enlighten us as to whether there are additional speakers or when we might be prepared to vote. I suggest the absence of a quorum.

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

Mr. CONRAD. Mr. President, I ask the Senator, would he like additional time for debate or should we call the vote for 5:30 p.m. and yield back all time?

Mr. CONRAD. First, I thank Senator Gregg for that sentiment. Let me say that Joel Friedman of my staff, who is a very senior member of the Budget Committee staff, one of my deputy staff directors, is in the hospital, has been there for about a week. We are very concerned about his recovery. I care deeply about Joel, his wife Debbie, his family, his children. He is someone who has labored extraordinarily hard in the months leading up to consideration of the budget. I know he is frustrated not to be able to be here, and I want him and his family to know we are thinking of them, we love them, we miss him very much, and we are praying for his swift recovery. We have a circumstance in which we have intense debates, as we have had today, but on both sides there is a respect for the professionalism of the other side, and we certainly appreciate Senator Gregg's professional staff. They are outstanding. Their word is good, they are people of character, and they wish nothing but the best for this country. Senator Gregg is an outstanding leader; someone whom I actually share many views with about our long-term budget circumstance. Sometimes that is not altogether clear as we have this debate about short-term budget situations, but I believe he is absolutely right about our long-term budget condition and the need to do much more. I appreciate very much the way he approaches his job. He takes on his position with knowledge, he does it in good faith, and I appreciate very much the way he conducts our Members on the other side and the work of the committee. We have a very smooth-functioning committee because of the good professional relationship we enjoy. Again, I wish to applaud his staff, certainly my staff as well, especially Mary Naylor, my staff director, my other professional staff, John Righter, Steve Bailey, Sarah Egge Kuehl, Jim Esquea, Josh Evenson, Michael Feldman, Brodi Fontenot, Joel Friedman, John Fuher, Joe Gaeta, Robyn Hiestand, Cliff Isenberg, Mike Jones, Jackie Keaveny, Matt Mohning, Jamie Morin, Stu Nagurka, Kobye Noel, Anne Page, Steve Posner, Purva Rawal, Josh Ryan, Matt Salomon, and Ben Soskin. Let me say they have worked weekends for months and months and months, late into the night for months and months and months, as has Senator Gregg's staff, and we all owe them a great debt of gratitude.

Mr. CONRAD. Mr. President, we would be agreeable on our side. Again, I wish to thank the ranking member for his graciousness throughout this process and for organizing the work of the committee and the work on the floor in a way that I think does reflect well on this body and certainly well on the committee. This is the way the Senate should function. We debate vigorously, but at the end of the day, we get the job done in a way that assures that the American people can feel both sides have been represented with vigor. That has certainly been the case today. I thank the Chair, I yield the floor, and I suggest the absence of a quorum.

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

Mr. CONRAD. Mr. President, I ask unanimous consent that at 5:30 p.m. today, the Senate proceed to a vote on adoption of the conference report to accompany S. Con. Res. 13, the concurrent budget resolution, with all statutory time yielded back.

Mr. CONRAD. I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. CONRAD

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