Kent Conrad

Mr. CONRAD

Mr. CONRAD. Five minutes for each Senator.

Mr. CONRAD

Mr. CONRAD. Mr. President, I move to reconsider the vote.

Mr. CONRAD. I ask for the yeas and nays.

Mr. CONRAD. Mr. President, one has to wonder where the Senator was when they were doubling the debt over the last 8 years. But this solution is the most curious offered yet. What it says is we would make getting a budget resolution--which is the only prospect of disciplining the process--even more difficult. The cure is worse than the disease. I urge my colleagues to oppose this wrongheaded amendment.

Mr. CONRAD. We already have the problems that President Obama has inherited. We are stuck with that.

Mr. CONRAD. Mr. President, I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 763

Mr. CONRAD. Mr. President, the next amendment in order is the Lieberman-Collins amendment. We have a 30- minute time agreement equally divided on the amendment.

Mr. CONRAD. With that, I suggest the absence of a quorum.

Mr. CONRAD. Mr. President, I yield 2 minutes off my time to Senator Kyl. I do that not because I am eager to hear from Senator Kyl but because I would like to maintain the overall time constraint we have put into place, given all the other demands. I am happy to yield to the Senator.

Mr. CONRAD. Mr. President, that would take us, if I am not mistaken, to the Sessions amendment, and we understand he will be here shortly, so that leaves some time. Mr. President, I can announce on behalf of the leader that as a result of this agreement there will be no further rollcall votes today. It will be our intention to try to stack votes at approximately 11 a.m. tomorrow. I think we will need to finalize and formalize that and announce it later in the evening, but that will be our intent. Are we in agreement on that, I ask Senator Gregg?

Mr. CONRAD. Mr. President, look, I believe that, over the first 5 years, this budget resolution takes us in the right direction. The resolution dramatically reduces our deficits, reduces them by more than two-thirds, it reduces our deficit as a share of gross domestic product from 12.2 percent this year down to less than 3 percent in the fifth year. The place where I would actually agree with my colleagues is in the second 5 years of either the President's budget or, frankly, mine, although mine would have substantially less debt than would the second 5 years of the President's. My own belief is getting down to 3 percent of GDP is not enough. Why is it not enough? Because at 3 percent of GDP, you stabilize the debt. That is why it is so critical to get there. At least that is what the economists tell us. The problem with that, I believe, is I don't think stabilizing the debt at those high levels is an acceptable outcome. I think when the Senator talks about the Chinese Premier--when Senator Kyl talks about the Chinese Premier sending a warning shot, we had better take that very seriously. I think that when we see the U.S. gross debt approaching 100 percent of GDP--gross debt as distinguished from the publicly held debt--that is a real warning flag. I understand that Japan's debt is about 180 percent of their GDP and rising. I don't think it is healthy for them or for us to have public debt so high relative to GDP once the immediate crisis has passed. Look, the problem I have with the Alexander amendment is not the sentiment behind it; it is the specifics of the amendment because what does it provide? The amendment says you are going to have a 60-vote point of order against the budget resolution when you are at those debt levels. Senator Alexander said it himself moments ago--we would not do a budget when we get to those debt levels. I don't think that is what he meant because that is not what his amendment provides. The amendment provides a 60-vote point of order against the budget resolution at those levels. I just don't get how that is the solution to the buildup of debt. I think one of the last things you would want to do is make a budget resolution more difficult because the budget resolution actually has the disciplines, the points of order, and the supermajority points of order that help discipline the budget process, which makes it easier to prevent more appropriated spending. Let me say this. I have been through this exercise of cutting $160 billion over 5 years from the President's discretionary proposal. I have the scars to prove it. I will tell you, if you want an intense experience around here, cut domestic discretionary spending. That is what this budget does. There are a lot of people who are not happy about it--very much not happy. I don't know what else you do when you are faced with losing $2 trillion in revenue. I say to my colleagues that I agree very much with the sentiment that Senator Alexander has expressed about the dangers of debt. I have said many times on the floor of the Senate that debt is the threat. The debt is the threat. I will just say this: In the previous administration, we never heard the word ``debt'' leave the mouths of the President or Vice President of the United States. Never did you hear them talk about the debt of the United States. Do you know why? Because they doubled the debt during their time. Our colleagues were complicit in that activity. They stood and voted with them to endorse the policies that doubled the debt of the United States. That was during good economic times. In the final year of the Bush administration, the economy plunged into the worst condition since the Great Depression. That is true. But in the early days of that administration--well, the early days were recession, too. They began in recession and they ended in a very severe recession. But in between, we had a number of years of economic growth, but that growth was propelled by writing trillions of dollars of hot checks. That is what was being done during the Bush administration. The result is right here. This is what they did to the debt. They doubled it. That is the Bush legacy--doubling the debt of the United States and, again, during relatively good times. Our friends on the other side of the aisle were with them every step of the way as they took us right over the cliff. Why did we wind up in this devastating economic downturn? I personally believe it was the result of four factors: No. 1, a very loose fiscal policy under the control of the Congress and the President of the United States. And I fought it every step of the way. I opposed this massive buildup of debt because I thought it would fundamentally threaten the economic security of the country. No. 2, a loose monetary policy under the control of the Federal Reserve. After 9/11, the Federal Reserve kept interest rates low. So we had a combination--very unusual in economic history--of very loose fiscal policy and loose monetary policy. On top of that, we had a dysfunctional trade policy with trade deficits running well above $700 billion a year, meaning we were consuming substantially more than we could produce. We were sending vast sums of money to other countries to buy their energy, to buy their goods and to, in effect, make them our bankers, because guess what? We financed our budget deficits largely through foreign borrowing. No. 4, we had a very loose regulatory climate in which nobody was watching these derivative instruments, these other exotic investment tools, the mortgage-backed securities that were created by people who lent money and did not care if they got repaid because as soon as they made the mortgage, they packaged it in these collateralized debt obligations and they took those packages and sold them around the world and got huge fees from it, made a lot of money from it, didn't care if the people who had the underlying mortgages paid them back or ever had any prospect of paying them back because they were not there to collect. They had shuffled it off to somebody else. They didn't shuffle it off just to American banks, they shuffled it off to banks all around the world, precipitating this crisis. On top of it all, we had investment banks going from 11-to-1 leverage to 30 to 1. These guys were no fools. They thought to themselves: This is going to be great, we go from 11-to-1 leverage to 30-to-1 leverage. What does that mean? Let's say you bet on the price of oil and the price of oil goes up a buck. You make $11 if you have 11-to-1 leverage. If you have 30-to-1 leverage, you don't make $1, you make $30. But leverage works both ways. It works very well when things are going up. It does not work so well when things are going down. What did these guys figure out? They figured out: Let's see if we can't find somebody to sell us insurance against the downside risk of the debt we are incurring, against the downside risk of the deals we are entering. So, in case the complicated packages of loans we're holding as assets begin to default, we will be covered. That leads us to AIG, doesn't it? Because AIG, which had been a very strong insurance company, a highly respected company worldwide, had this little skunk works over in England, about 300 people, who started writing these exotic insurance policies called credit default swaps which insured owners of debt securities against default on the underlying loans. AIG sold that insurance at very high premiums and earned huge profits on those insurance sales. The buyers paid those premiums because having the insurance from AIG insulated them from downside risk. Or so they thought. So what went wrong? What went wrong was that AIG never took any steps to cover their potential insurance obligations in case things went bad. They did not have the capital to back up the insurance agreements they entered into. So when things, in fact, did go bad, they could not come up with the money to provide the insurance that others had paid in expensive premiums to purchase. It reminded me of the guy--remember back in the World Series when it was in San Francisco and they had the earthquake? We are watching the World Series and all of a sudden, the stadium starts shaking. I heard about a guy out in the Bay area who, after that, came up with a scheme to sell earthquake insurance. His earthquake insurance idea was that he would get you a helicopter within 15 minutes of the next earthquake to rescue your family, or rescue your top executives. He goes around and starts selling insurance to have a helicopter rescue you within 15 minutes, he starts collecting premiums. The problem is he did not have any helicopters. That is basically what AIG was doing with their bogus debt insurance--insuring the debt of already heavily leveraged banks and investment banks against defaults on their debt securities. When it was revealed that AIG had not covered its bets, could not cover its bets, credit markets seized worldwide. Shame on them. Shame on all of them. They put the world's economy at risk, and we are reaping the whirlwind today. If I am right about this analysis that the seedbed for all of this is created by very loose fiscal policy, massive runup in debt, loose monetary policy by the Federal Reserve, irresponsible trade policy, and almost no regulatory oversight--that is the seedbed for the current precipitous decline. That is what I believe. Senator, if you believe that, why are you writing a budget that has more debt? Very simply because when you are in a steep contraction, a steep decline, the only entity big enough to provide the liquidity to prevent a complete collapse is the Federal Government. Consumers cannot do it. They are tapped out. Companies cannot do it. They are tapped out. The only one left to do it is the Federal Government. If we do not do it--if we did not do it--the precipitous decline we are already in could become a deflationary spiral that would suck this economy down, like the Great Depression. Let's remember, we have 8.1 percent unemployment today. In the Great Depression, they had 25 percent unemployment. Ninety percent of the stock market's value was lost in the Great Depression. It took them decades to recover. We think we have problems now? Don't pursue the right policy options, don't have the Government provide liquidity, don't have the Government provide things such as guarantees to money market funds. I tell you, I was in the room with the previous Secretary of Treasury and the head of the Federal Reserve when they came one night to tell us--not to consult us, to tell us--they were taking over AIG the next morning. Leaders of Congress were there, the chairmen of the Banking Committees were there, the chairmen of the Budget Committees were there, and the ranking members of the House and Senate were there. We were told in no uncertain terms by the Secretary of the Treasury--not this one, the previous one--and the Chairman of the Federal Reserve that if they did not take over AIG the next morning, there would be a global financial collapse. That is what they told us. And they did not just use those words; they provided a lot of specifics of the companies that would be on the brink of going under within 1 week if we did not provide the assistance required and if they did not make the decision to take over AIG. Again, they were not there to consult us. They were not there to ask us. They were there to tell us what they were doing. If this analysis is correct--and I believe it is--then our current economic circumstance is the result of an overly loose fiscal policy, overly loose monetary policy, dysfunctional trade policy, coupled with deregulation that provided no oversight. These deals by AIG, those derivative deals--nobody even has a list of what these deals were around the world. There is not even a list because there was no requirement for any governmental agency anywhere to oversee it. There are real consequences to policy failures. In the short term, there is no question in my mind we have to take on additional deficits and debt in order to give lift to this economy and provide liquidity to prevent a much greater collapse. As this economy strengthens and recovers--and it will--we then have to pivot to get back to a more sustainable long-term policy. But honestly, I don't think the answer is the Alexander amendment. I think the answer is something much more like what Senator Gregg and I proposed, which is a special task force with everything on the table made up of 16 Members of Congress, members of the administration, everybody with some responsibility to come up with a plan to dig out. That is what I believe is the appropriate response. Again, I would resist the Alexander amendment because I think it could in a strange way actually make things worse. Not to have a budget resolution, not to have the disciplines that are provided for in a budget resolution I think would be a big mistake because in a budget resolution, there is a whole series of points of order against additional spending, against excessive spending, 60-vote hurdles. Without a budget resolution, we would be left with simple majority votes. Anybody who has been here, if we get an appropriations bill out on this floor and not have any of the budget protections that are in the Budget Act in a budget resolution--it is open checkbook, open checkbook. That is what would happen. I have enormous respect for Senator Alexander and for Senator Gregg. They are well motivated. They are serious about this country's economic future. But I believe this particular solution, as I said earlier--this is a circumstance in which the cure is worse than the disease. I hope my colleagues will resist it. I ask the Chair, how much time is remaining on the Alexander amendment?

Mr. CONRAD. No, I think not. They are counting the official 2 hours. That is not the agreement we are operating under. Maybe we should clarify. If we are at 60 minutes equally divided, including the time already used, would there be any time remaining on this amendment?

Mr. CONRAD. Mr. President, I ask unanimous consent that following the use or yielding back of time on the Lieberman-Collins amendment, the next amendments to be debated are the following: the Alexander amendment regarding debt, with 60 minutes equally divided, including the time already used, and we will come back to the disposition of the remaining time on that amendment; the Sessions amendment regarding a discretionary freeze, 45 minutes equally divided, with Senator Inouye in control of 10 minutes in opposition; that upon the use or yielding back of time on the amendments, the amendments be set aside and the Senate proceed to a period of debate only with the following order: Senator Cardin recognized for 15 minutes; Republican members of the Joint Economic Committee recognized for 30 minutes; myself or my designee for 30 minutes; following the remarks of Senator Conrad or his designee, the Senate continue for debate only for Senators to speak for up to 10 minutes each on the resolution or on amendments they intend to offer at a later time; further, that speakers alternate between the two sides; finally, that the previous order with respect to Senator Conrad or his designee to offer a side-by-side amendment to amendment No. 735 remain in effect.

Mr. CONRAD. There is no objection to that.

Mr. CONRAD. Mr. President, one part of the unanimous consent request was that at the end of today, at the end of all the speakers and when we have exhausted all the time today, we will have 20 hours left on the resolution to be equally divided. Mr. President, one other caveat I would like to have as an understanding is with respect to Senator Inouye. If he is somewhat late because of other responsibilities, he would still have his full 10 minutes.

Mr. CONRAD. I thank the ranking member, and we thank Senator Sessions for being not only on time but ahead of time. He sets a very good example for our colleagues. We appreciate very much Senator Sessions being here early.

Mr. CONRAD. Madam President, when I hear the other side all of a sudden concerned about debt, it raises the question in my mind: Where were they? Where were they over the last 8 years when their administration doubled spending, doubled the debt as is shown in this chart, and they were voting for all of the policies that led to these results? Now they come and all of a sudden they are very concerned about debt. I have been concerned about debt the entire 22 years I have been here. But I also recognize that when you are in the sharpest economic downturn since the Great Depression, trying to freeze spending or trying to cut spending or raise taxes doesn't make a whole lot of sense. That would make the downturn only worse. Senator Gregg, who is the ranking member on the committee, recognized that in a floor statement on March 11. I referred to this earlier today. March 11 is riveted in my mind because it is my daughter's birthday. My birthday is the next day. And this year--you know, typically Senator Gregg and I exchange birthday gifts. This year I got no present. I didn't even get a card. I did get this statement--which is very helpful. So I will take this as my gift. He said: I'm willing to accept this short-term deficit and not debate it because we are in a recession, and it's necessary for the Government to step in and be aggressive and the Government is the last source of liquidity. And so you can argue that this number, although horribly large, is something we will simply have to live with. He was right then. I say it is very clear, if we are going to have any kind of rational economic policy, we have to be taking the steps necessary to prevent a much steeper slide. That is the near term. In the longer term we have to pivot and get this debt under control. That is critically important. This budget seeks to do that by cutting the deficit by two-thirds by 2014. Under the budget resolution we go from $1.7 trillion of deficit this year--most of which is a responsibility of the previous administration because we are living off their last budget. Then we are going to cut the deficit $500 billion in this resolution before us, the next year cut it another $300 billion, the next year cut it another $300 billion and get it down to $508 billion by the fifth year, a more than two- thirds reduction. If you measure it the way economists prefer, we are reducing the deficit from 12.2 percent of GDP in 2009 down to 2.9 percent in 2014. That is a very substantial reduction, a reduction of more than three-quarters over the 5 years of this budget. With respect to the question of spending, let me be clear what this budget does. On discretionary spending, both defense and nondefense, we bring the spending down as a share of GDP in both categories and by about the same amount. For example, defense in 2010 is 4.8 percent of GDP. At the end of the budget period, we will have reduced it to 3.7 percent of GDP. Nondefense discretionary this year is 4.7 percent of GDP. By 2014, we will have reduced it to 3.6 percent of GDP, a roughly proportionate reduction in both defense and nondefense discretionary spending. On domestic discretionary spending, the percent of the GDP under the budget resolution is reduced from 4.3 percent in 2010 to 3.2 percent in 2014. On total domestic discretionary spending--and this excludes international--we bring it down from 4.3 percent of GDP to 3.2 percent of GDP. Let me be clear: The average annual increase in nondefense discretionary spending under this budget resolution is 2.5 percent. That is a pretty tough budget. Anybody who doesn't think it is a tough budget, come and join me in my office for the next 2 hours and see the phone calls I am getting from colleagues and others who say: Won't you add a little more here or a little more there. I have to say: No, no, no. Why? Because we have to get on a more sustainable budget course. The increases we do have, where do they go? Where does the money go? Thirty-seven percent of the increase in discretionary goes for regular defense funding. International is the next biggest increase, 14 percent; that is, 14 percent of the increase that we have provided in total discretionary goes for international funding. Why did we do that? Because, again, in the previous administration, they kept hiding money. They kept it out of the budget, and they kept putting it into supplemental appropriations bills in order to try to hide the ball. We are not hiding the ball. We are laying it right out there. I had both the Secretary of Defense and the Secretary of State call me the weekend before last, asking me to do more for international funding. It is very rare. I have never had the Secretary of Defense on any budget call me and ask me to have more funding for international accounts. Why did he do that? He made it very clear that we have been funding in the defense budget things that more properly belong in the State Department budget. I had to tell the Secretary of State and the Secretary of Defense I was having to cut that line by $4 billion from the President's request, still providing an increase but reducing the amount the President requested by $4 billion. Why did I do that? I did that because we lost $2 trillion from the revenue forecast. When you lose $2 trillion, guess what. You have to make some changes. Ten percent of the discretionary increase is for veterans. We have given veterans the biggest increase in the history of the Senate Budget Committee. We have done it because we recognize these vets are coming home, and they deserve the best health care we can provide. Ten percent of the increase is in education. Ten percent is in income security; 8 percent for the census. We have to do a census every 10 years. It costs money. So 8 percent of the increase was for the census. Six percent is for natural resources, to try to reduce our dependence on foreign oil; 3 percent for transportation; 2 percent is other. That is where the money has gone. Again, I emphasize, here is the amount of spending increase for nondefense discretionary spending over the 5 years of this budget. It averages 2.5 percent a year. That is one of the most conservative budgets anybody has brought to this floor in a very long time. It is a response to the need to get back to more sustainable deficit numbers. We have done it, reducing the deficit by two-thirds over the next 5 years. How much time remains on my side? I note the Senator from Texas is here, and we would like to accommodate her.

Mr. CONRAD. How much does Senator Sessions have?

Mr. CONRAD. How much time would the Senator from Texas like?

Mr. CONRAD. I yield the remaining 3\1/2\ minutes of Senator Sessions' and a minute and a half of my time so the Senator from Texas has 5 minutes.

Mr. CONRAD. On this amendment. But I am happy to yield the Senator a minute and a half of my time.

Mr. CONRAD. Madam President, I would like to correct a statement of the Senator from Texas. She said the only change we made to reduce deficits from what the President has proposed was, we went from a 10- year budget to a 5-year budget. That is not the case. We did go from a 10-year to a 5-year budget, because in the 34 times Congress has done a budget, 30 of those 34 times it has been a 5-year budget. The reason for that change is the second 5 years of forecasts are notoriously unreliable--notoriously unreliable. The reason we have substantial savings from the President's budget over the 5 years of our budget--in fact, we have $608 billion of savings from the President's budget, comparing his 5 years to our 5 years--is because we cut spending, not only discretionary spending, but we cut mandatory spending, and we had revenue changes. The combined result is a savings of $608 billion over 5 years. So we have $608 billion less of deficits and debt. That is the fact. I see the very distinguished chairman of the Appropriations Committee. Is he seeking time or would he prefer to--the chairman has asked to defer for a couple minutes until he is prepared to discuss this amendment. Madam President, could I ask, how much time do I have remaining?

Mr. CONRAD. Nine minutes. Then the chairman of the Appropriations Committee still has 10 minutes?

Mr. CONRAD. All right. I thought there were 10 minutes, under the order, reserved for the chairman of the Appropriations Committee.

Mr. CONRAD. Well, Madam President, I do not know how that would occur without my being notified, but let me ask unanimous consent that the chairman of the Appropriations Committee be given the 10 minutes that was intended.