Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on March 31, 2009 at 2:30 p.m. to conduct an Economic Policy Subcommittee hearing entitled ``Lessons from the New Deal.''

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Agriculture, Nutrition, and Forestry be authorized to meet during the session of the Senate on Tuesday, March 31, 2009 at 9:30 a.m. in room 328A of the Russell Senate office building.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on March 31, 2009 at 10 a.m.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate to conduct a business meeting on Tuesday, March 31, 2009, at 10 a.m., in room SD-366 of the Dirksen Senate Office Building.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on Tuesday, March 31, 2009, at 10 a.m., in room 215 of the Dirksen Senate Office Building.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Tuesday, March 31, 2009, at 2:15 p.m.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Tuesday, March 31, 2009, at 2:45 p.m.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet during the session of the Senate on Tuesday, March 31, 2009, at 10 a.m. in room 216 of the Hart Senate Office Building.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate to continue on Tuesday, March 31, 2009, at 10 a.m. in room SD-226 of the Dirksen Senate Office Building.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on March 31, 2009 at 2:30 p.m.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs' Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, be authorized to meet during the session of the Senate on Tuesday, March 31, 2009, at 10 a.m. to conduct a hearing entitled, ``Stability through Scandal--a Review of the Office of the Chief Financial Officer.''

Mr. CONRAD. Mr. President, I ask unanimous consent that the Subcommittee on Water and Wildlife of the Committee on Environment and Public Works be authorized to meet during the session of the Senate on Tuesday, March 31, 2009 at 10 a.m. in room 406 of the Dirksen Senate Office Building to hold a hearing entitled, ``EPA's Role in Promoting Water Use Efficiency.'' THE PRESIDING OFFICER. Without objection, it is so ordered.

Mr. CONRAD

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

Mr. CONRAD. Mr. President, I would like to come back to the argument I continue to hear advanced--that because we have gone from the 10-year budget the President proposed to a 5-year budget, something is being hidden. I don't believe anything is being hidden from anyone. Of the 34 budgets the Congress of the United States has done since the Budget Act, 30 of them were 5-year budgets--30 of the 34. Only four were 10-year budgets. The reason Congress has tended to do 5-year budgets--not just tended to but overwhelmingly has done 5-year budgets--is that the outyear forecasts are notoriously unreliable; notoriously. Some have said I criticized the previous administration for not doing a 10-year budget. Indeed, I did--because I believed they were trying to hide the effect of their tax cuts in the second 5 years. But this administration did not do a 5-year budget. This administration did a 10-year budget. There is nothing hidden. It is all out there for anybody to see. The Congressional Budget Office has scored the President's 10-year budget. Some of us have expressed concern about the second 5 years. People get in a habit around here and they get used to doing something a certain way, they get used to criticizing budgets a certain way so they keep doing it. It was legitimate to criticize the previous administration for not doing a 10-year budget. It was legitimate to suggest they might have something to hide. But this administration did a 10-year budget. We in Congress--remember, ultimately the budget is a congressional act. The President does not have to sign it. It does not become law. Congress has almost always done a 5-year budget; 30 of the 34 budgets written under the Budget Act have been 5-year budgets, including the last 5, including 2 in which Senator Gregg was the chairman. Again, it has been done that way, number one, because the outyear forecasts have been notoriously unreliable and, number two, because we do a budget every year. In fact, there is some question whether a 5-year budget is required because we are going to do a new budget every year. So what matters the most in any budget is the first year. But I did wish to address that because I see this criticism. I saw it in the David Broder column. I have immense respect for him. I saw it in the David Rogers column. I have immense respect for him. But I don't think the criticism applies in this particular situation. Nobody has been more clear, publicly or privately, than I have that the second 5 years of the Obama budget raises a real concern about the sustainability of our fiscal direction. Let me just say, if you took my budget, which is a 5-year budget, the budget that came out of the Budget Committee, and extended it for 10 years, you would see dramatically lower deficits and debt than in the President's budget. In fact, I believe the first 5 years we have saved $600 billion from the President's proposal. In the second 5 years the total savings--for the 10 years, if we extended our budget 5 years, would be over $2 trillion. That is just in the nature of the beast. You know, the savings grow over time. We have put in $600 billion of savings in the first 5 years. With respect to the question of spending, we are only increasing domestic spending--and that includes defense, that includes international, and that includes domestic spending in the appropriated accounts--5.3 percent. That is a modest number. Some of our friends on the other side want to absolutely freeze spending. I say to them I think that would be a serious mistake in an economic downturn, to absolutely freeze spending. In this situation, where the economy is contracting sharply, consumers cannot fill in the gap. They are tapped out, and they are worrying about losing their jobs. Companies cannot fill in the gap because they, too, are threatened. The only entity with resources to step in, to fill the breach, is the Federal Government. One of the things we learned in the Great Depression was that profound mistake that was made was not necessarily on the fiscal policy side--although that didn't help--but the biggest mistake was on the monetary policy side controlled by the Federal Reserve. They did not expand the money supply. They did not provide liquidity to prevent the contraction from deepening, from growing, and from becoming far more destructive. Thank goodness we have learned. That is not what is happening here. The Federal Reserve is providing liquidity, and that is on the monetary side. On the fiscal policy side, we did pass a large stimulus package-- as imperfect as it was. We provided a large stimulus package to help fill in some of the gap between where the economy should be and where it is, the gap that was exacerbated by a more than 6-percent contraction in the economy in the fourth quarter of last year. I believe we are doing many of the right things--again, however imperfectly. If I were able to design the stimulus package, I must say it would have been much different. I would have put much more money into infrastructure. I believe that would have been a better way to stimulate the economy. Even so, there was substantial infrastructure in the stimulus package. Not as much as I would have preferred but, nonetheless, a significant amount. Additionally, I think the Federal Reserve is going in the right direction with respect to the policies it is pursuing in terms of providing liquidity and credit. When we talk about Hoover economics that our colleagues on the other side of the aisle embraced back in the 1930s, the fundamental assumption was that markets were self correcting. That is what Hoover economics was founded upon, the notion that the Federal Reserve did not need to take countercyclical action and that the Federal Government did not need to take countercyclical actions in terms of helping people who were unemployed. Hoover opposed providing that kind of Federal Government assistance. Today we know that such assistance actually one of the most stimulative things you can do because that money gets into the economic bloodstream very quickly. It gives lift to the economy, it reduces the size of the contraction, it reduces job loss, it reduces more and more homes going into foreclosure because people can't pay their mortgage, it reduces the vicious cycle that can suck down an economy. I just wish to be clear. When we have been critical of their stance against stimulus, their stance against doing the things that are being done by the Fed, they have this mantra they chant. Too much spending-- let me look at our budget in terms of spending. In the short term, yes, spending increases because you are countering the cycle of the economy, so we are up to 27 percent of GDP in spending this year. But then we step it down to 22 percent of GDP, of gross domestic product, by the fifth year. So that is going in the right direction--even for our friends on the other side. They say too much taxes. Let me remind them, in the President's proposal, on a net basis, according to the Congressional Budget Office, his budget cuts taxes $2.2 trillion. That is a 10-year budget. Our budget on a 5-year basis cuts taxes $825 billion, on a net basis. Yes, there are some tax increases on those of us who are high-income earners. Yes, we have our taxes increased somewhat. But on an overall basis, the President's budget has significant tax cuts from current law, as does the budget that is before us now. Third, they say too much debt. Look, I am in agreement with them. But where were they in the good times during the Bush administration, when they doubled the debt of this country? They doubled the debt of this country when economic times were relatively good--until the end of the Bush administration when the economy collapsed. That is what this President inherited. He inherited an economy that was in full collapse: It declined 6 percent in the last quarter of last year; an economy that was in free fall; an economy with a housing crisis, a financial crisis, a banking crisis, and a fiscal crisis. I say to my friends on the other side, it was their policies that put us in the soup. It was their policies of doubling the debt, of tripling foreign holdings of U.S. debt, that put us in this ditch. Now this President has to try to clean up the mess and part of cleaning up the mess is higher deficits and debt in the short term. That is unavoidable. That was already happening in a very dramatic way before this President ever took office. He inherited a deficit. If he had done nothing, he would have inherited a deficit this year of $1.3 trillion. That is after our friends on other side had already doubled the debt over the previous 8 years, and, worse, tripled foreign holdings of U.S. debt. Now we have China as the biggest creditor and our friends here say: Gee, China might not continue to finance our debt. My friends, where were you? I warned about that starting in 2001. Anybody can review the record. You can go back and look at what I said on the public record over and over and over, that we were headed for big problems financing our debt. The party on the other side did not seem to respond. Now, all of a sudden, they are concerned about the debt they have passed on to this President. That is not fair. I am plenty willing to say, as I have said publicly, the second 5 years of the Obama budget needs a lot more work. We are going to have to do a lot more to keep the deficit going down. But the first 5 years is a good start for the President's budget and ours is even somewhat better. In fairness to him, we had to make additional adjustments in his budget because the Congressional Budget Office said we lost $2.3 trillion in revenue--$2.3 trillion from the forecast the President was working off of that was made some time earlier. I hope, in this debate, we do not try to lay at the desk of this President, who has been in office less than 3 months, disasters he inherited. No. No, we are not going to let that happen. That is not going to go unconfronted because that is not fair. This President walked into more crises than I can think of confronting any President, going back to Franklin Delano Roosevelt--a housing crisis deeply underway before he ever took office, a banking crisis deeply underway before he ever took office, a financial crisis deeply underway before he ever took office. So let us be fair in this debate and discussion about where responsibility lies. Barack Obama, President Obama did not create any of these problems. He has been asked to clean up the mess and an incredible mess it is. One other point I wish to make, and a place where I do strongly agree with Senator Gregg, is the need to do much more for the long term. That is why he and I have proposed a 16-member task force given the responsibility and the authority to come up with a plan. If 12 of the 16 could agree, that plan would come to the floor for a vote because I do not believe we are going to get through this without special measures and special procedures and a process to take on this long-term debt bomb that overhangs our country. But let's be fair about who is responsible for building the foundation of this mess. It does not lie at the feet of President Obama. I see the Senator from Alaska. Is the Senator seeking time?

Mr. CONRAD. Madam President, let me be very clear. I absolutely reject the notion that the budget the Budget Committee has brought before this body has gimmicks or is misleading in any way. I tell you what we do. We say things have to be paid for. Let's talk about the reserve funds that were just criticized. The reserve funds for health care, for energy, and education have a condition attached. The condition is, if the committees of jurisdiction come forward with legislation, they have to pay for them. That is the gimmick. In Washington, things are so screwed up they think if you require something to be paid for, it is a gimmick. I do not think it is a gimmick to require things to be paid for. We should have been doing that a long time ago. No. 2, he referenced the docs fix. The docs fix is this. Under current law, doctors who treat Medicare patients are going to have a cut. The President said: No, they are not going to have a cut. We will put it in the budget. But he had no offset for it. We are saying: No, we do not want the docs who treat Medicare patients to get a cut either. But, committees, if you produce the savings necessary to do that, we will not have the docs cut. You know what. That is what we have been doing. I am on the Finance Committee. We have been assuring that the doctors who treat Medicare patients do not take the cuts that are in the law. But we have paid for it. That is what this budget does. It says to the Finance Committee: Do not cut the docs, but pay for it. Do not just put it on the budget, and do not worry about sticking it on the debt. I am proud of that. That is exactly what we should have done. On the alternative minimum tax, we say, for the next 3 years, when we are in a time of economic weakness and vulnerability, you can fix the alternative minimum tax that will otherwise affect 24 million Americans up from 4 million today. We say: No, do not let them get hit with more taxes at a time of economic weakness. But beyond the 3 years, if we are going to fix the alternative minimum tax--and indeed we should--pay for it. Pay for it. That is what this budget says. That is no gimmick. That is being responsible. On health care, the reserve fund says: Yes, we should have major health care reform. But pay for it. So the administration has said, it is their intention to pay for it. That is the intention in this budget, that it be paid for. Let me be clear. These reserve funds, the ones triggered in the legislation are paid for. They call that a gimmick. I call it responsible. I know it is a new concept in this town. Most people here, I have to tell you, our friends on the other side, their record is not pretty. When they were in charge, they doubled the debt. They were for every tax cut and every spending initiative. The result is they exploded the debt, doubled the debt of this country, tripled foreign holdings of debt. We are saying: No, we are not going to continue on that path. We insist on a trajectory that dramatically brings down the deficit. That means we have to insist that all these good things get offset, get paid for. Now, the argument on the other side is, it will not happen. Not going to happen. We are not going to pay for things. Well, shame on us. Shame on us if we do not. Shame on us if we do not pay for the doc fix. We have been paying for it. Why all of a sudden do we say we cannot? The alternative minimum tax. I will be the first one to say we have not been paying for that, against my votes, because I do not want the alternative minimum tax to be imposed. But it ought to be offset so it does not add to the deficit. The same is true on energy. We should have significant energy legislation to reduce our dependence on foreign oil. But we ought to pay for it. I was part of a group called the Gang of 10--5 Democrats, 5 Republicans--who became the Group of 20--10 Democrats and 10 Republicans. We came forward with major energy legislation to reduce our dependence on foreign energy, but we paid for it. We provided the offsets so it did not add to the deficit or the debt. I hope very much that is the principle we adopt. I yield the floor and look forward to my able colleague's rejoinder.

Mr. CONRAD. Madam President, again, there are not gimmicks here. There are requirements to pay for things. I know that seems like a gimmick to some because they are not used to paying for anything in this town. But that is what this budget says ought to be the operative principle: You start paying for things. If you want to have the doc fix, and I do, you pay for it. That is what we have been doing in the Finance Committee. We have been paying for it. The President sent a budget that says you don't have to. But then we lost $2.3 trillion. So we are back to saying: Yes, you have to pay for it. The alternative minimum tax for 3 years, when the economy is down, we say: No, do not raise revenues some other place to offset that because that would not make good economic sense at a time of weakness. But when the economy recovers, offset the costs. That is exactly what we are going to have to do to get the books back in balance around here. The President put into his budget over $200 billion for disasters over the next 10 years. The Congressional Budget Office would not score it. They say it is too speculative. Nobody at this point can tell you what the disasters are going to be. Look, I am especially sensitive to this. I have a major disaster going on in my State right now. I would love to put the money in. But there is not a soul on Earth who can tell you how much it is going to be at this point in time. We do not know if the levees are going to hold or if they are going to break. To put in a number that has no relationship to any reality, that is honest accounting? I appreciate the President's attempt, but the Congressional Budget Office would not score one thin dime of it because they said it is too speculative. I find it so curious. The other side complains all the time about ``too much spending, too much debt.'' You do something to reduce spending in the budget I have offered--we cut the President's budget on domestic discretionary spending by over $160 billion--and now they complain about that. I do not know how you ever get to the end without insisting that things get paid for and reducing spending and trying to get in place an overall fiscal condition that puts you on the right glidepath. Now, the gentleman says you do not get to 3 percent of GDP because you have these reserve funds. The reserve funds require, before anything happens, that the reserve funds be deficit neutral. That is a condition, a requirement. So, yes, you do get to 3 percent of GDP on the deficit, because we are not going to release those reserve funds, and I am the one who has been given the responsibility to decide whether they are released. We have put in a condition, and I can't release them if they are not paid for. Hallelujah, let's start paying for things around here. I yield the floor.

Mr. CONRAD. Madam President, I yield 5 minutes to the Senator from New Mexico.

Mr. CONRAD. We have no objection.

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 the use of calculators be permitted on the floor during consideration of the budget resolution.

Mr. CONRAD. Mr. President, I know my colleague, Senator Gregg, the ranking member, has a statement he would like to make, and so I will withhold for his statement.

Mr. CONRAD. Mr. President, I speak to the matter now before us on the floor of the Senate, the budget. I would like to start by pointing out what this President has inherited because this President, who has only been in office a few months, has inherited a series of crises almost unparalleled in our country's history. You think about it. Not only does he have a fiscal crisis, he has a housing crisis, he has a financial crisis, he has two wars, and he has a legacy of debt that is truly stunning. The debt more than doubled in the previous 8 years, the foreign holdings of U.S. debt tripled in the previous 8 years, and the President inherited an economy in recession for more than a year, an economy which contracted by more than 6 percent in the last quarter of last year. Of course, when that happens, deficit and debt soar. That is precisely what has happened. In the last years, the deficit and debt have skyrocketed. So this President walks into a very challenging situation. This shows what happened to just the Federal debt in the past years. It went from $5.8 trillion to over $12 trillion. The way we do it, we don't hold Presidents responsible for their first year because they are inheriting a situation. We don't hold George Bush responsible for the first year he was in office. He was working off the previous President's budget. And we do not hold this President responsible for the first year because he inherits the previous President's budget. But this is what happened in the previous 8 years: more than doubling of the debt. Perhaps even more alarming, there was a tripling of foreign- held debt. President Bush, as we can see by this chart--it took 42 Presidents 224 years to build up $1 trillion of foreign-held debt. President Bush, during his period, ran up more than $2 trillion of foreign holdings of U.S. debt. Last year alone when we went to finance our debt, 68 percent of the funding came from foreign entities. Some say that is a sign of strength. I don't share that view. To have the Chinese be our biggest financier, to have Japan be No. 2, to have them financing 68 percent of our newly issued debt--I don't think that is a sign of strength. I think it is a sign of vulnerability. Not only did President Obama inherit those very tough fiscal situations, he also inherited a country facing very dire economic conditions, with over 3.3 million private sector jobs lost in the last 6 months alone. You can see, going back to September, 300,000 jobs were lost. That jumped up to almost 400,000 in October of 2008; in November of 2008, over 600,000 jobs lost. Then it approached almost 700,000 in December of 2008. In January of 2009 there were nearly 700,000 jobs lost; in February of 2009, another almost 700,000 jobs lost. We see the unemployment rate rose very dramatically, starting back in March of 2007, when it was just at about 4.4 percent. Then it started skyrocketing back in March of 2008. You can see it took off at a very rapid rate to a level of 8.1 percent in February of 2009. This is much more than numbers on a poster. These are real people losing their jobs--meaning their ability to hold on to their homes was threatened, meaning their ability to provide for their families was diminished. These people are wondering what comes next for them; what are we going to do that is going to make a difference in their lives. We also see economic growth contracted very dramatically from the third quarter of 2008, when there was a negative one-half of 1 percent of growth, to the fourth quarter of 2008 where the economy contracted at a rate of over 6 percent. That is the worst economic performance in decades. That is the situation this President inherited. But it is more than that. He is inheriting record deficits; a doubling of the national debt; the worst recession since the Great Depression; financial market and housing crises, as I indicated; 3.3 million jobs lost in the last 6 months; and on top of that, ongoing wars in Iraq and Afghanistan. I have often thought of the crushing responsibility on the shoulders of this President, but he is equal to it. I can say, in meeting after meeting I have had with him, one of the things that has always appealed to me about Barack Obama, now President Obama--not only is he a very smart person, but he is remarkably calm. Even in the face of great crisis, this President maintains a coolness under fire. I find it very appealing and very reassuring that with all of these crises he is absolutely calm and he is very clear thinking. That is what we need at this time. So when the President came with major priorities in his budget, I think many across America thought, those are exactly the right priorities. He is talking about reducing our dependence on foreign energy, one of his three key priorities; excellence in education. If we do not have the best education in the world, we are not going to be the strongest country in the world; for very large major health care reform, because I think everyone understands that is the 800-pound gorilla. That is the thing that could swamp the boat, because we are spending $1 of every $6 in this economy on health care, and we are headed for more than $1 of every $3 in this economy going to health care if we stay on the current trend line. Clearly that is unsustainable and the President has called for major health care reform. A continuation of middle-class tax cuts, the 2001 and 2003 tax cuts. The President added additional middle-class tax cuts in his budget. All the while the President called for these major initiatives, but to do it and cut the deficit in half over the 5 years. We have tried our level best to meet the President's major priorities, understanding that we were going to have to make some changes, because the Congressional Budget Office, who did their forecast of revenue available, had done their forecast several months after the President's forecast was done. In the meantime, the situation, as I have already shown, had deteriorated. So we were left with a circumstance in which we had $2.3 trillion less to write a budget than did the President when he wrote his. When I say $2.3 trillion, I want to emphasize that. I am not talking about ``million,'' I am not talking about ``billion,'' I am talking about ``trillions'' of dollars. Trillions of dollars. A trillion dollars is 1,000 billion dollars; 1,000 billion dollars. So when we say $2.3 trillion was lost in the forecast of revenue available, that is a big deal. I was given the responsibility of telling the President that we were faced with that very changed circumstance, because the Congressional Budget Office does not report to the President, it reports to the Congress. So when we learned of this very significant change, I and Chairman Spratt, the chairman of the Budget Committee in the House, were given the responsibility to meet with the President and to inform him of these very significant changes. As you can imagine, the President was not very happy. But I can tell you he is a realist, and he understood immediately the implications. He understood immediately that we would have to make some changes in his budget. But he asked us to preserve his key priorities, and that is what we have attempted to do. Again, we need to reduce our dependence on foreign energy. I think everyone knows, or nearly everyone, that this is one of the major fundamental threats to the United States. Our dependence on foreign energy, back in 1985, we imported 27 percent of the oil we use. By 2008, that had increased to 57 percent of the oil we are using being imported from abroad, much of it from unstable parts of the world, some of them not very friendly to the United States. So this poses a fundamental long-term economic and security threat to our country. The President has rightly identified, even though the pressure is off right now because oil prices are way down, that this is something we have got to face up to if we are going to have a strong America in the future. So in this budget we have responded with a reserve fund that reduces dependence on foreign energy, creates green jobs, helps preserve the environment, and helps with high home energy costs. We do it through a reserve fund to accommodate legislation, to invest in clean energy, and address global climate change. We also provide the President's level of discretionary funding for the Department of Energy for the year. We build on the economic recovery package investments in renewable energy, efficiency, and conservation, low-carbon coal technology, and modernizing the electric grid. That process had been started in the economic recovery package. It is in the budget; critically important to the economic future of the country. In terms of a focus on excellence in education, there are lots of warning signs out there that we are starting to lose the battle to be the best educated people in the world. But what are the indications? Here is just one. We are now dramatically lagging China in producing engineers. You can see, in 1985, each of our countries produced about the same number of engineers. We produced, each of us, about 75,000 engineers. But look at what has happened since in the United States. The number of engineers we are producing has declined to about 65,000. Look at what has happened in China. They have increased from about 75,000 to more than 440,000 engineers. Now, why is that important? I think we know it is important because you have got to have engineers if you are going to be building a strong infrastructure. If you do not have a strong infrastructure, you do not have a strong base for competition in this globalized world economy. We have done everything we can to capture the President's priority of emphasizing excellence in education. We generate economic growth and jobs, prepare the workforce to meet the global economy, make college more affordable, and improve student achievement. We do it with a higher education reserve fund. To facilitate the President's student aid increases, we extend the simplified college tax credit providing up to $2,500 a year, and we also focus on the President's requested level of $5,550 for Pell grants and fully fund his education priorities, such as early education. Now, I was raised by my grandparents. My grandmother was a schoolteacher. She was five feet tall. We called her Little Chief. We called her Little Chief because she commanded respect. And in our family, she would tell us there are three priorities: Education is No. 1. Education is No. 2. And education is No. 3. I tell you, we got the message, my generation. I have 13 cousins. Every one got advanced degrees. We were not a family of any special means, a middle-class family. But we understood that education was the way to secure a better future. She made it very clear to us that was the expectation. We need to reemphasize excellence in education in this country. But we also face an enormous challenge in health care. As I indicated in my opening remarks, $1 in every $6 in this economy is going for health care. This chart shows 16 percent of our GDP, and we have just gotten updated numbers that show now we are over 17 percent of our gross domestic product going to health care. If we stay on the current trend line, by 2050, 37 percent of our gross domestic product will be going for health care. That is utterly unsustainable. It is the biggest threat to our long-term deficits and debt. It is the biggest threat to our economic competitive position. It is the biggest threat to the economic viabilities of families and companies and communities. So this is something that must be addressed. President Obama has called for major health care reform, and we have sought to preserve that priority in the budget resolution. We invest in health care in an attempt to bend the health care cost curve to save money, reduce long-term costs, reduce the buildup of deficits and debt, also to improve health, to expand coverage, to increase research, and promote food and drug safety. We do it in three fundamental ways. First, a reserve fund to accommodate the President's initiative to reform the health care system. What does a reserve fund mean? It means simply this: The committees of jurisdiction are given full flexibility to write legislation to accomplish the President's goals. But they have certain requirements, and the requirement is that they pay for what they produce, that it be deficit neutral. The administration has said all along, that is their intention, and we try to match that intention in this budget. The reserve fund also addresses Medicare physician payments. It is already scheduled in law that doctors will take very significant reductions. We do not want to see that happen. So, again, we are saying to the committees of jurisdiction: Fix it and pay for it. Fix it and pay for it, because we cannot add to the deficit and debt to do it. Finally, we continue to invest in key health care programs such as the National Institutes of Health and the Food and Drug Administration. On defense, which is always of great interest in terms of a budget resolution, we actually provided $45 billion more in funding for defense than President Bush's final defense plan. You can see the final defense plan of President Bush is this red block. The hatch lines here are the additional funding we have provided over the years 2010 to 2013, because that is as far as the Bush defense plan goes. We provided $45 billion more. Frankly, President Obama came forward and said: Look, let us more honestly account for war costs than has previously been done. In the previous administration, all too often they did not put in the budget funding for war. This President did, and we do in the budget resolution. Now, the President also gave us a charge to cut the deficit by more than half over the 5 years of the budget resolution. You can see that we have done, that this year we project the deficit at $1.7 trillion under this budget resolution, and we step it down every year. We will reduce it by $500 billion the first year, by $300 billion the second year, by another $300 billion the third year, by a little bit the fourth year, and by another about $60 billion the final year, to get down to $508 billion. That is a reduction of more than two-thirds over the 5 years, as a share of gross domestic product, which is what the economists like to look at, because that takes out the effect of inflation. You can see we are reducing the deficits from 12.2 percent of gross domestic product in 2009, down to less than 3 percent in 2014. That is the magic goal, less than 3 percent of gross domestic product. Because at that level the economists tell us you stabilize the growth of the debt. That is the goal the President set, getting down to 3 percent of GDP or less in a deficit in the fifth year, and we beat that goal by a little bit. There has been a lot of talk about the spending in this budget resolution. I want to make clear here is what happens. The spending again is a share of gross domestic product. Again the economists say that is the most fair comparison over time because it takes out the effect of inflation. You can see in 2009, we are spending 27.6 percent of GDP in this budget. That is a very high level historically. And, of course, the reason for it is the tremendous economic downturn, the need to provide stimulus to the economy, to provide lift. So spending is at a high level as a share of the gross domestic product in 2009. You can see each and every year we step it down until 2012, and then basically it stays at that level for 2013, 2014, at about 22 percent of GDP. So we are going from 27.6 percent of GDP this year to 24.5 percent in 2010, down to 23.3 in 2011, and then basically stabilize at 22 percent of GDP through 2014, again getting down to our target of a deficit of less than 3 percent of GDP in the fifth year. Again, on spending, to go into some additional detail, breaking down discretionary spending, as you know, in the budget we have mandatory spending, things such as Social Security and Medicare. Those are mandatory programs, mandatory in the sense that if you qualify, the Federal Government pays for what you have coming. Discretionary programs are programs that are open for the Appropriations Committee to adjust every year. If we look at the discretionary side of our budget, we can see, on defense, we are providing the full request by the President, a 3.8-percent increase. Internationally, we are not providing the President's full request because of the diminished resources available to us. So we cut the President's request by $4 billion. We are still providing an increase of almost 18 percent. Why are we giving such a large increase to international accounts? The reason is quite simple. We are engaged in two wars. The Secretary of State called me the weekend before this weekend at home. The Secretary of Defense called me at home. Both delivered the same message. They were a little unhappy, disappointed that I was cutting international accounts by $4 billion from the President's request. They emphasized the importance of these increases because what has been done before is to make supplemental requests outside the budget. This President said no more of that. We are going to be direct. We are going to be open in the money we are requesting. These funds are needed to deal with Iraq and Afghanistan and Pakistan and other threats we are facing around the world. Interestingly, I have never before, in my 22 years in the Budget Committee, had the Secretary of Defense call me to support the budget for the State Department. Why would the Secretary of Defense call me and ask me to increase what I have provided for in the international accounts? He told me: There is a lot that is being spent out of the Defense Department budget that should be spent out of the State Department budget for activities in Afghanistan and Iraq. President Obama has put those categories of spending where they belong, and it ought to be supported. Of course, I have great respect for them both. I had to tell them: When you lose $2.3 trillion, you have to make a lot of changes to make it add up. So I felt compelled to reduce these accounts from the President's request. Domestic spending, we increase by 6 percent. The President asked for more in that category. Again, we simply could not make the numbers work without making reductions. So the total in this area, $1.03 trillion, is from last year. This year it is $1.08 trillion, for a combined increase in discretionary spending of 5.3 percent. We can see on nondefense discretionary, that combines international and domestic, we are giving a 7-percent increase. The President asked for over 10 percent. Again, I know there are people who are disappointed. I am sorry, but my responsibility is to deal with the reality with which I am presented. The reality I was presented with was $2.3 trillion less in revenue. I have had to make reductions in the discretionary accounts. I have had to make reductions in mandatory accounts. I have had to make changes on the tax side of the ledger in order to get the deficit down to a sustainable level. Revenue changes in the budget resolution: I have heard some say we have all these tax increases. That is not what the Congressional Budget Office says, when they look at my budget and look at all the proposals and compare it to current law. They conclude that I am providing $825 billion of tax reduction. That is a different story than we hear coming from some quarters. That is not my claim. This is what the Congressional Budget Office finds when they look at my budget and compare it to current law. Why the difference? First, we have extended all the middle-class tax relief provided in 2001 and 2003; specifically, the 10-percent bracket, the child tax credit, the marriage penalty relief. All that is continued in this budget, as well as education incentives. On top of that, alternative minimum tax reform costs $216 billion to prevent 24 million Americans from being subjected to the alternative minimum tax. We also have estate tax reform; estate tax reform at $3.5 million an individual, $7 million a couple. Those people who have estates of less than that amount will pay zero in estate tax. Over 99 percent of the estates in America will pay zero, nothing, not a penny. That is a reform that needed to be made. It is included in this budget. The President called for it, and we have adopted it. We also have a series of business provisions and the so-called tax extenders, things that need to be adjusted every year. We do it in this budget for a subtotal of tax relief of $958 billion. We have an offset to that, certain loophole closures, shutting down abusive tax havens, abusive tax shelters, offshore tax dodges that will raise $133 billion for total tax cuts of $825 billion. In the President's budget, he has recommended that we not continue all the tax relief contained in the 2001 and 2003 acts for people earning over $250,000 a year. We have adopted that recommendation in this budget. All of the middle-class tax relief from 2001 and 2003 is here. It is funded. It is provided for. In addition, the President called for additional tax reductions for middle-class people, the so-called make work pay provisions. Two years of that is already funded in the economic recovery package. So that will continue for the next 2 years. The President wanted to make that program permanent. Again, we could not do that in light of the new forecast. So we have provided that those make work pay provisions can be extended, if they are paid for. They will continue for the next 2 years, but after that, if they were to be extended, they would have to be paid for. We also provide for important budget enforcement in the budget resolution. We have discretionary caps for 2009 and 2010. We maintain a strong pay-go rule. We have a point of order against long-term deficit increases, a point of order against short-term deficit increases. We allow reconciliation for deficit reduction only, which was the original purpose of reconciliation. We provide a point of order against mandatory spending on an appropriations bill; no backdoor stuff that used to go on, people raiding the Federal Treasury by coming in here and changing mandatory spending on an appropriations bill. The budget resolution also addresses our long-term fiscal challenges in these ways. No. 1, we have the health reform reserve fund. That is absolutely the key element to dealing with our long-term buildup of deficits and debt. That is the part of our spending that is absolutely out of control. The only way to get it back under control is fundamental health care reform which is provided for in this budget on a deficit-neutral basis. We also have program integrity initiatives to crack down on waste, fraud and abuse and a long-term deficit increase point of order to require 60 votes to increase the deficit long term. President Obama has said this about the need for further work on our long-term fiscal situation. Let me be clear: The first 5 years--this budget is a 5-year budget--we do quite a good job, a credible job of getting the deficit down. We reduce it by more than two-thirds. We get it down to less than 3 percent of GDP. But the second 5 years of the President's plan, even if we extended our budget for 5 years, is going to require much more effort. We are on an unsustainable course for the long term. In the next 5 years, I think we have done a credible job of moving in the right direction, reducing the deficit by two-thirds. But beyond the 5 years, we have big problems on the horizon. The start in this budget to deal with it is health care reform because it is the 800-pound gorilla. But it is going to take more than that. It is also going to take tax reform because we have a tax system that is hemorrhaging to these offshore tax havens, abusive tax shelters and, frankly, a system that is very inefficient at collecting the revenue that is due. If we collected the money that is due under the current Tax Code, we would have no structural deficit. We wouldn't need any tax increase. If we just collected the money that is due under the current tax levels, we would have no structural deficit. The problem is, we aren't collecting the money that is due under the current code. We are only collecting about 75 percent of what is due. A big reason for that is the explosion of offshore tax havens, abusive tax shelters, the tax gap. All those things are rendering the tax system very ineffective. The President recognizes the need for further action to address the long-term fiscal imbalance as well. He said: Now, I want to be very clear. While we are making important progress towards fiscal responsibility this year, in this budget, this is just the beginning. In the coming years, we'll be forced to make more tough choices, and do much more to address our long-term challenges. That is the truth. We are going to have to do much more in those years beyond the 5 years of this budget. Finally, I would like to address the question of a 5-year budget versus a 10-year budget. The President sent us a 10-year budget. We have written a 5-year budget. Some have said that is an attempt to conceal the effect of the second 5 years. The President sent us a 10- year budget. It has been fully scored by the Congressional Budget Office. There is no hiding of anything. The President provided us a 10- year budget. I was critical of the previous administration for not providing a 10-year budget because I was concerned they were hiding the effect of their tax cuts in the second 5 years. This President has made no attempt to conceal his 10-year plan. He sent it to us. It has been scored by the Congressional Budget Office. We know what it is. But Congress, when it writes budgets, has almost always written a 5- year budget. In fact, of the 34 budgets Congress has written under the Budget Act, 30 have been 5-year budgets. Why? Because the projections for year 6 through year 10, the projections for revenues and expenditures for years 6 through 10, have been woefully inaccurate. They have been notoriously unreliable. But never have I seen them more unreliable than right now. That's because of the extraordinary uncertainty we're facing in the near term. Inaccuracies in the forecasts for the next several years will compound into huge differences in years 6 through 10. So we wrote a 5-year budget that fully discloses the spending and revenue for the 5 years. We did not write a 10-year budget. Congress almost never has. But the President did. And the President's 10-year plan is fully disclosed. We have done our level best to make changes that were necessary in what the President sent us in order to address his key priorities and at the same time to reduce the deficit in the way that he called for and to reach a deficit that was less than 3 percent of GDP in the fifth year. I am proud of what we have done. Is it a perfect document? The work of men and women is never perfect. We are flawed. I will confess to that. To me, the greatest flaw is we still have not fully coped with the long-term deficit and debt challenge to this country. Much more will have to be done. Senator Gregg and I have one proposal. We have a proposal for a task force that would require Members of Congress and the administration--16 of them--to be given a responsibility to come up with a plan to get our long-term deficit and debt condition in order. If 12 of the 16 could agree, that plan would come to Congress for a vote. I believe it is going to take some special effort, some special structure to deal with these long-term deficits and debt threats. I want to say for myself, I do believe the long-term debt accumulation does fundamentally threaten the economic security of America. While we have a good start in this first 5 years, much more must be done. Mr. President, I thank you for this time. I will yield the floor. Before I do it, I thank Senator Gregg, the ranking member of the Budget Committee. There are many policy issues that divide us. There are some where we are joined at the hip. But Senator Gregg has been a thorough professional in all of the work of the Budget Committee this year. His staff is outstanding as well. I recognize Senator Gregg as somebody who has credibility. He may say some things that are somewhat uncharitable about the budget I am presenting today. I understand that. That is his job. He has strong feelings, and I applaud him for them because that is what we need. If everybody in the room thinks the same thing, nobody is thinking very much. I will tell you one thing, Senator Gregg is thinking. He cares deeply about the economic future of this country, and he is doing his level best to get us on a path that makes more sense. I applaud him for it. But I would be remiss if I did not recognize the professionalism and leadership he has exhibited in the work of the Budget Committee this year. In no way does that mean he endorses this plan. He will make very clear he does not. He strongly disagrees, as is his right. But I do want to recognize the very good working relationship we enjoy. I thank the Chair and yield the floor.

Mr. CONRAD. Mr. President, if I could say, our hockey team lost to his hockey team in the last one-tenth of 1 second. I say to the Senator, our Congressman in North Dakota said: We don't want the flood fight to have the same outcome.

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of S. Res. 89 which was submitted earlier today.

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