Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I have just spoken with Senator Gregg, the ranking member of the Budget Committee. He has graciously agreed that I could begin to discuss the budget conference report. He is at the White House and will be returning shortly. We have agreed in principle that the time I consume and that perhaps he consumes when he later arrives will be used against the 10 hours, that we will do that retroactively. But we start without an agreement because they are working on a global agreement as to how we will conclude the work of the Senate the remainder of this week. Until they have that agreement, we will not reach a unanimous consent agreement with respect to how we dispose of the budget conference report. For the information of colleagues, there is up to 10 hours allocated to the budget conference report discussion. We hope that could be done in less time, obviously, and that we might vote this evening, for the notice of my colleagues, or potentially tomorrow, depending on how long it goes and the decision of the leadership. Before I begin the discussion of the conference agreement, I ask that the clerk keep a close tab on the time because we will try to reach an agreement later to retroactively apply the time.

Mr. CONRAD

Mr. CONRAD. Mr. President, before I begin on the budget conference report, I wish to say publicly how the entire Senate family is thinking about Senator Kennedy and Vicki and the family, how much we miss him, his presence on the floor, how much we miss his presence at our caucus, and how much all of us are fervently hoping for his full and quick recovery. If there is anybody who can beat this, it is Ted Kennedy. He is a lion. Rarely have I ever met somebody of such force of will, somebody who is so totally dedicated to serving the people whom he represents, someone who cares so deeply about America's democracy, about this institution. On both sides of the aisle, I have had many Senators say to me: Ted Kennedy is simply the most productive Senator among us. Nobody turns out more work, more quality work than he does. Whether you agree with his legislative positions or disagree, you have to admire the incredible energy and devotion that he brings to the job, the respect he has for this institution, and his determination to advance causes in which he believes. My family has been close to the Kennedy family for many years. When John Kennedy's advance people came to North Dakota or Robert's advance people or Ted Kennedy's, they always stayed with my family. So I have always felt a very close association with the Kennedy family. Anybody who looks back on his extraordinary service here, virtually unparalleled in the history of the Senate, has to have profound respect for Ted Kennedy, for his work, his values, his deep and abiding love of this country, and of the institution of the Congress, and his respect for the Presidency of the United States. I want Senator Kennedy to know that all of us here are pulling for him. I want Vicki to know that we stand ready to do whatever we can to lighten her burden and the burden of the rest of the family. I deeply admire Senator Kennedy. Also, what a light he is in this Chamber. He uplifts the rest of us. I have seen many times, when others were stricken in this Chamber, the first person to call was Ted Kennedy, always eager to help when somebody faced a tragedy. We are thinking about Ted.

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent that we be in a period of morning business, that Senators be permitted to speak for up to 10 minutes each, and that the clerk keep a close count on the time consumed and that this period be for debate only. We are asking colleagues--we do not have a unanimous consent agreement--but we are asking colleagues to confine their remarks to the budget because we have up to 10 hours and, in the interest of getting the work of the Senate done before the break, it will be most effective and most efficient if we can focus our time on that. I ask unanimous consent that after I am done, Senator Gregg be recognized, that I be allowed such time as consumed and the Senator then be given that same opportunity.

Mr. CONRAD

Mr. CONRAD. Madam President, we are now considering the conference report on the budget. For the knowledge of my colleagues, and especially my colleague, Senator Gregg, I will consume somewhere in the range of 35 minutes. If he has other things to do, we can get that word to him so he is not inconvenienced while I make an opening statement. Here is what we are confronting--a very dramatic deterioration in the budget condition of our country. You can see, in 2007, the official deficit was $162 billion; that is down from what had been record levels. We achieved an all-time--not achieved, there is no achievement to it--we saw an all-time record deficit in 2004 of $413 billion. That became the record. The year before was the record up until that point-- $378 billion in the red. Of course, the real situation is far worse because this does not disclose how much the debt has been increased. Then we saw some improvement, to 2007, a deficit of $162 billion. But now we are right back at record levels--$410 billion estimated for this year. I believe it is going to be even worse, and 2009 will be about the same level. When I talk about debt, here is what I am talking about. The gross debt of the United States has gone up like a scalded cat under this administration. When this President came into office at the end of the first year, the debt stood at $5.8 trillion. By the time we are done with the 8 years he will have been responsible for, the debt will have increased to more than $10.4 trillion--a near doubling of the debt of the country. Increasingly, this money is being borrowed from abroad. As this chart shows, it took 42 Presidents--all the Presidents pictured here, 224 years to run up $1 trillion of U.S. debt held abroad. This President has far more than doubled that amount in just 7 years. There are over $1.5 trillion of foreign holdings of U.S. debt run up by this President in just 7 years. He has taken what 42 Presidents took 224 years to do and he doubled it and then added another 50 percent to foreign holdings of U.S. government debt. The result is we owe Japan over $600 billion, we owe China almost $500 billion, we owe the United Kingdom a little over $200 billion, we owe the oil exporters over $150 billion. My goodness, we owe Hong Kong over $60 billion. We now owe Russia over $40 billion. That is a sad fiscal record, but that is the legacy of this President's fiscal policy. This tremendous runup in foreign debt means we have spread dollars all over the world and are now increasingly dependent on the kindness of strangers to finance our debt here. One of the results of that has been a substantial drop in the value of our currency. If you think about it, the value of a currency is in part a reflection of supply and demand. When you put out a tremendous supply of dollars, guess what happens to the value of the dollar--it goes down. That is what has happened. You can see back in 2002, this is Euros per dollar. It was 1.13 in January 2002. Through the end of last month, we were down to .63. The value of the dollar against the Euro has dropped like a rock. It has dropped 44 percent. If anybody is wondering why food prices are going up so rapidly, why oil prices are going up so rapidly, here is one of the key reasons. Those commodities are sold in dollar terms in the world market. When the dollar goes down in value, guess what happens to the value of commodities: there is tremendous upward pressure on their value. That is what, in fact, has happened. We have also seen the economic growth of the country stagnate. You can see, if we look at the nine previous business cycles we have experienced since World War II, you can see that economic growth averaged 3.4 percent a year during previous business cycle expansions. But, if we look at average annual economic growth since the first quarter of 2001, we see it is stagnating at 2.4 percent. Something is happening in this business cycle that is unlike what we have seen in the nine major business cycles we have seen since World War II. We see this recovery is much weaker. We see it in job creation; we see it in business investment. For example, on job creation, if you look at job creation, again looking at the nine previous business cycles since World War II, and you look at the months after the business cycle peak and look at job creation--this dotted red line is the average of the nine other major business cycles since World War II--that is the dotted red line. Now, this other line is the current business cycle. You can see that we are 10.3 million private sector jobs short of the typical recovery since World War II. In other words, if you take all the previous nine major business recoveries since World War II and you average them, compare them to this business recovery, we are running 10.3 million private-sector jobs short in this recovery. What does that tell us? That tells us something is wrong, something is wrong with our economic performance. We don't just see it in job creation. We see it in business investment. Again, the dotted red line is the average of the nine previous recoveries since World War II. The black line is this recovery. You can see that we are now running 59 percent below the pace of business investment at the same point during the nine previous recoveries. Something quite significant is happening in terms of our national economy. Anybody who does not see this and understand it and seek to find solutions to it, I think is missing the point. There is something wrong with the underlying economy that has been affecting us since 2001. It is so atypical, it is so different than the other nine recoveries since World War II. This budget resolution seeks to address some of what we know. It seeks to strengthen the economy and create jobs in several different ways, first, by investing in energy, education, and infrastructure. We think those are priorities to strengthen the economy. It expands health care coverage for our children; it provides tax cuts for the middle class; it restores fiscal responsibility by balancing the budget by the fourth and fifth year of this 5-year budget plan. It also seeks to make America safer by supporting our troops, by providing for veterans health care, by rejecting our homeland and rejecting the President's cuts in law enforcement, the COPS Program, and for our first responders, our emergency personnel, our firefighters, our emergency medical responders. In terms of the tax relief that is in this budget resolution, this budget conference report that has come back from an agreement with the House of Representatives, we do the following things. We extend middle- class tax relief, specifically: the marriage penalty relief is provided for; the child tax credit is provided for; and an extension of the 10- percent bracket. We also provided for alternative minimum tax relief, because we know if we did not, the number of people who would be exposed to the alternative minimum tax would explode from roughly 4 million now to 26 million if we failed to take action. We also provided for estate tax reform. Right now we are in this bizarre situation where the estate tax goes up to $3.5 million of exemption per person in 2009; the estate tax goes away completely in 2010, there is no estate tax; and then in 2011, it comes back with only a $1 million exemption. We say that makes no sense at all. We should extend the $3.5 million provision per person, $7 million a couple, and index it for inflation. We also provided for energy and education tax cuts to provide incentives to develop alternative forms of energy and reduce our dependence on foreign oil. We also provided property tax relief and, of course, the popular and important tax extenders, things such as the window energy credit, the solar credit, the research and experimentation credit. All of those are provided for in this budget. We balance the books by the fourth year, $22 billion in the black, or in this case in the green, by 2012. By 2013 we maintain balance, all the while we are bringing down the debt as a share of gross domestic product from 69.3 percent of GDP to 65.6 percent of GDP in 2013. So we are bringing down the debt as a share of gross domestic product each and every year of this budget resolution. Let me be the first to say, that is not enough. We need to be doing more. I will say in a minute how I think we can and should do more. But this is an important beginning. One of the ways we do it is we restrain spending. Under this budget conference report, we bring down spending as a share of GDP each and every year of the 5-year plan from 20.8 percent of GDP down to 19.1 percent in 2012 and 2013. The other side will be quick to say, but you are spending more money than the President is. That is true, we are spending somewhat more money than the President, because we have rejected his cuts to law enforcement, to our first responders, and to other things we think are priorities of the American people. But when they talk about the difference in spending, they have a tendency to dramatically overstate the difference. Here is the difference between our spending line, which is in green, and the President's spending line. If you are looking at this on television, you probably cannot see any difference. That is because there is almost no difference between our spending line and the President's spending line. In fact, for this year, the difference in total spending between our budget and the President's budget is 1 percent. That is the difference, 1 percent. Over the life of this 5-year plan, you can see it is a very modest difference. Let me turn to 2009, because that is the most immediate year covered by this budget plan. You can see the Bush budget calls for $3.03 trillion of spending. We call for $3.07 trillion of spending. Again the fundamental differences are, we are investing in education, in energy to reduce our dependance on foreign oil, and on infrastructure which is so critically important to our future economic success. On the revenue side of the equation, we also have somewhat more revenue than the President's plan because we have lower deficits and lower debt than the President's plan. Here you can see the difference. The green line is our revenue line; the red line is the President's revenue line. You can see in the first 2 years there is virtually no difference between our revenue lines; they are right on top of each other. In 2011 there is a slight difference, and 2012, 2013, as we climb out of deficit and balance the books. But again the differences are quite modest, and here they are over the 5 years. We are calling for $15.6 trillion of revenue, the President is calling for $15.2 trillion of revenue. That is a difference of 2.9 percent. That is the difference between the revenue we have proposed, which leads to lower deficits and lower debt than the President's plan. You will hear our friends on the other side say, this represents the biggest tax increase in the history of the world. We beg to disagree. We do not think any tax increase is necessary to meet these numbers. If someone is listening and they heard me say, well, Senator, you said you have got more revenue, although it is only 2.9 percent more revenue, than in the President's plan, but you say you can do that without a tax increase, how is that? How can you do that? Well, here is how I would propose to do it. First, the Internal Revenue Service estimates the tax gap, the difference between what is owed and what is paid, is $345 billion a year, the difference between what is owed and what is paid. Now the vast majority of us pay what we owe. But unfortunately there are an increasing number of people and companies who do not pay what they owe. That difference is now estimated at $345 billion a year. That goes back to 2001. I personally believe it has grown substantially since then so it would be a higher number. But that is not the only place where there is leakage in the system. I have shown this chart many times on the floor of the Senate. This is a five-story building in the Cayman Islands called Ugland House. This little building down in the Cayman Islands is the home to 12,748 companies. Let me repeat that. This little five-story building down in the Cayman Islands is the home, at least they say it is their home, to 12,748 companies. They say they are all doing business out of this building. Now I have said that is the most efficient building in the world, little tiny building like that, and it houses 12,000 companies. How can any building be that efficient? Well, we know they are not doing business there. They are doing monkey business, and the monkey business they are doing is to avoid taxes in this country. And how do they do it? Well, they operate through a series of shell corporations, and they show their profits in the Cayman Islands instead of the United States to avoid taxes here. Why would they do that? Do they not have taxes down in the Cayman Islands? No. Is that not convenient? So they do not show their profits here, even though they make their profits here, they show their profits down in the Cayman Islands. That is the kind of scam that is going on. If you doubt it, here is a story that came to us from the Boston Globe on March 6 of this year: Shell companies in the Cayman Islands allow KBR [that is Kellogg, Brown and Root] the nation's top Iraq war contractor, and until last year a subsidiary of Halliburton, has avoided paying hundreds of millions of dollars in Federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven. More than 21,000 people working for Kellogg, Brown and Root in Iraq, including about 10,500 Americans, are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands, but they claim it is their home. This is a scam. That is what is going on here. This is the largest defense contractor in Iraq, and they are engaged in a total scam to avoid taxes in this country. If this does not make people angry, I do not know what it would take, because what they are doing is they are sticking all of the rest of us who are honest with our tax obligations. It does not stop there. Here our own Permanent Committee on Investigations issued this report last year: Experts have estimated that the total loss to the Treasury from offshore tax evasion alone approaches $100 billion per year, 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. So when somebody says: Well, you have got to raise taxes to produce 2.9 percent more revenue than the President has called for, I say, no, you do not. Let us go after some of this stuff. Let us go after these offshore tax havens. Let us go after these abusive tax shelters. Let us go after this tax gap. Now, the other side will say, well, there is nothing you can do about it. Well, certainly there is nothing you can do about it if you do not try. You cannot do a thing if you do not try. But if you try, you can get this money. Let me say, I know you can, because I used to be the tax commissioner for my State. I was the chairman of the Multistate Tax Commission. I went after this money. I got hundreds of millions of dollars for my little State of North Dakota going after some of these scams. The United States could do much more. Here is a picture of a foreign sewer system. This is a sewer system that is in France. Why do I put up a picture of a sewer system in Europe when I am talking about the budget of the United States? Well, because the two have a linkage. What is the linkage? The connection is that we actually have investors in this country buying European sewer systems, not because they are in the sewer business, no, no, no. They are buying European sewer systems to reduce their taxes in this country. How do they do it? It is very simple. They go over, they buy a European sewer system, they then show that on their books as a depreciable asset. They depreciate it over a period of years to reduce their taxes in this country, and then lease the sewer system back to the European city or municipality that built it in the first place. Now, why should we allow that? This is the kind of thing I think we can shut down and easily achieve 2.9 percent more revenue than the President has proposed. The question comes, well, why haven't you done something about shutting down these scams already? There is a very simple reason we have not. It is called the President of the United States. Because the President of the United States has repeatedly blocked attempts to shut down these scams. Here are a few of the examples. We tried to codify economic substance, prohibiting transactions with no economic rationale, things that were done solely to avoid taxes. The President threatened a veto. We tried to shut down schemes to lease foreign subway and sewer systems and depreciate the assets in this country. The President threatened a veto. We proposed ending deferral of offshore compensation by hedge fund managers trying to evade taxes in our country. The President threatened to veto it. We proposed expanding broker information reporting so we could close down some of this tax gap. The President threatened a veto. We proposed taxing people who give up their U.S. citizenship in order to evade taxes here in America. The President threatened a veto. Now, I have indicated, I have acknowledged, we have 2.9 percent more revenue in our plan than in the President's budget. The other side will say: Biggest tax increase in the history of the world. That is exactly the same speech they gave last year. Now we have the benefit of a record. Because we can look back, we can look at the speeches they gave last year, and we can look at what has actually happened this year. We can see, what did this Democratic Congress do? Did they raise taxes? No. In fact, here is precisely what happened: They reduced taxes in the House and the Senate by $194 billion. They had offsetting loophole closers, for a net tax reduction of $187 billion. Anybody who is listening can reality test. Just go to your mailbox. Have you gotten a little check from the U.S. Treasury representing a tax cut as part of a stimulus package? Millions of Americans have, and millions more will. That is part of this $194 billion of tax reduction that has occurred with Democrats running both Houses, despite claims of our colleagues on the other side that we were going to have the biggest tax increase ever. We all know some of the things that are happening in this economy. One is that gasoline prices are soaring. I filled up my car last week. I have a 1999 Buick. I know people think all Senators have limousines and drivers. Not me. I have a 1999 Buick that I drive myself. I filled it up last week, $52.19. The price of gasoline has soared. In January of 2001, gas was $1.47 a gallon; in May of 2008, $3.79. We are hearing by Memorial Day gas average $4 nationwide. We have addressed that in this budget by investing in energy, creating green jobs, reducing dependence on foreign oil, and strengthening the economy. We have provided for energy tax incentives in this budget. We have provided for $2.8 billion over the President's budget for energy to provide for alternative sources of energy, homegrown sources of energy so we are less dependent on foreign oil. We have also created an energy reserve fund to invest in clean energy and the environment. But we know skyrocketing gas prices are not our only problem. We also know if we look at what is happening to education, we are falling behind our global competition. This is one metric to look at that, the number of engineering degrees in China and the number of engineering degrees in this country. The red line is China's engineering degrees. You can see they are absolutely soaring. There are over 350,000 a year graduating as engineers in China. In this country, we are down here at about 75,000 engineering graduates. Engineering is critical to future economic growth. We know that. So that has to be a concern. Here, China is now graduating 350,000 engineers a year; we are in the 75,000 range. That is something we have to pay attention to. Obviously, I have used one example. There are many others. This budget resolution invests in education to generate economic growth and jobs, to prepare our workforce to compete in a global economy, to make college more affordable, and to improve student achievement. We have provided for education tax incentives to encourage people to go to college. We have provided $5.5 billion over the President's budget in discretionary funding for education, and we have created an education reserve fund for school construction and for the reauthorization of the higher education legislation. It doesn't stop there. We also have serious infrastructure issues in this country. Here is a picture of the dramatic collapse of the bridge on 35-W between Minneapolis and St. Paul last year. I am acutely familiar with this bridge because when my wife was in medical school, I went across that bridge many times a week. Can you imagine the absolute horror of the people who were on that bridge? Here are the cars of people who were on that bridge when it fell out from underneath them. This was at rush hour last year, one of the most heavily used bridges in the State of Minnesota. This budget seeks to address infrastructure by providing targeted investments to repair crumbling roads and bridges, improve mass transit, expand airports and schools. It creates a reserve fund to allow for major infrastructure legislation. It provides $2.5 billion more than the President for key discretionary transportation accounts. It fully funds highways, transit, and increases funding for the Airport Improvement Program. This budget resolution also deals with other critical national priorities, including fully funding the defense requests of the President. The President has asked for $2.9 trillion over the next 5 years. This budget provides $2.9 trillion. We also provide $3.3 billion more for our veterans health care than the President. The President has called for $44.9 billion over a 5-year period. We have adopted the independent budget, which is a budget that was put together by the veterans organizations to more fairly reflect the needs we see coming because of veterans coming back from Iraq and Afghanistan. We have allocated $3.3 billion more than the President for that purpose. We think we owe these veterans the high-quality care they were promised. All of us who have been to our VA hospitals, who have been to Walter Reed, are acutely aware of the need for more investment in those facilities. We have also provided in this budget, in fiscal year 2009, $2.8 billion more than the President's budget for law enforcement and first responders. Inexplicably, at least to this Senator, the President has called for the complete elimination of the COPS Program. The COPS Program has put 100,000 police officers on the street, over 200 officers on the street in my home State of North Dakota. The President, in his budget, didn't just call for cutting that program. He called for its total elimination. It makes no sense to me. I just had my house here broken into while I was back home during the break. I have a fellow who rents from me in the basement. He came home from work and our place had been broken into. The place was totally trashed. Many of his things were stolen. Why we would take police off the street when, in jurisdiction after jurisdiction, we are facing heightened criminal activity doesn't make any sense. I am getting to the end. I know my colleague has been riveted listening to me talk about these charts. He has only had a chance to see them maybe 12 times. I thank him for his patience. We also have budget enforcement in the budget resolution, discretionary caps for 2008 and 2009. We maintain a strong pay-go rule that I know my colleague will probably want to comment on. We also 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. I know this is a place where my colleague will agree. I am sure he is pleased that we don't have a reconciliation instruction in this conference report for any other purpose, and we have no reconciliation instruction for any purpose. We also have a point of order against mandatory spending on an appropriations bill. Again, this is something the Senator will strongly support because we have seen the games that were beginning to be played when the appropriators figured out they could start to do that. We tried to shut it down or at least to create a budget point of order, maintain a budget point of order to prevent that practice from expanding. The budget conference report also addresses long-term fiscal challenges. I don't want to overstate this because, the truth is, I don't believe an annual budget resolution is the place to deal with the long-term fiscal challenges facing the country. The annual resolutions tend to be done on a partisan basis. Our fiscal challenges are so big, so deep, my own conviction is this has to be done with a special process, a special procedure. The Senator, who is the ranking member of the Budget Committee, and I have teamed up to offer our colleagues legislation that would create a bipartisan task force that would be responsible for coming up with a plan to deal with our long-term challenges, our fiscal challenges, the imbalance between spending and revenue, and the overcommitments we have made on the entitlement programs. The proposal we have made is very different from what others have made because our proposal would require a vote in the Congress, not another commission report that sits on a dusty shelf somewhere. That is not going to cut it. We need a plan. We need a plan that is bipartisan. We need a plan that gets a vote. The Senator and I have a plan to do that. While we are getting ready for that process to occur--and I hope it will--we have provided for a comparative effectiveness reserve fund to deal with health care, a health information technology reserve fund-- the Rand Corporation has told us we could save $80 billion a year if we had information technology widely deployed in the health area, program integrity initiatives to crack down on waste, fraud, and abuse in Medicare and Social Security, and a long-term deficit point of order to guard against legislative initiatives that would increase the long-term deficit. Finally, as I mentioned, Senator Gregg and I have a proposal to address these long-term imbalances, a panel of lawmakers and administration officials with an agenda of everything being on the table, with fast-track consideration, and a requirement that Congress must vote. If the members of this task force, at least a supermajority of them, were to agree on a plan, that plan would come to Congress for an assured vote and a further assurance that there would be a bipartisan outcome because we would require not only a supermajority of the task force to report a plan but a supermajority in Congress to pass it as well. Before surrendering the floor, I thank Senator Gregg for his many courtesies and the very constructive way that he has helped run the Committee on the Budget throughout this year. He is a gentleman, a person of honor whose word is gold. I deeply appreciate that. I also appreciate very much the professionalism of his staff. I yield the floor.

Mr. CONRAD. Would the Senator yield on the math?

Mr. CONRAD. I say to the Senator a 1-percent difference is a 1- percent difference, whatever the denominator is. One percent is a very small amount of money. I think the Senator would acknowledge that 1 percent difference is--

Mr. CONRAD. Would the Senator yield for one more moment on the numbers? One percent of $3 trillion, I think the Senator would acknowledge, is not $300 billion, it is $30 billion?

Mr. CONRAD. But would the Senator acknowledge that the $300 billion that he referenced is simply not accurate.

Mr. CONRAD

Mr. CONRAD. I thank my colleague, Senator Hatch. He is always gracious. I also thank him for his words on Senator Kennedy because we know they have shared a close association in the Chamber for many years. I also thank him for his leadership on child pornography. It is pretty sick, some of the things that go on. It is almost hard to believe. I saw the slide the Senator from Utah showed about activity on just 1 day of this year, earlier this month. It is almost hard to comprehend. We thank him for his leadership there as well.

Mr. CONRAD

Mr. CONRAD. Madam President, I thank the leader. I was thinking about this the other night. We don't thank the leader enough. We are blessed on our side with a leader whom I think every Member on our side has high confidence in because of his good judgment, his fairness, his balance, his willingness to listen and then decide. Even though he may not always agree with any one of us on a particular issue, he always listens, and he does it with respect, and then he decides. He makes a decision. I thank him for it. I know the role of leader is absolutely the toughest job in this town. It is an extremely difficult, demanding job, and our leader does an outstanding job of it. That is why he enjoys the confidence of our colleagues and the affection of our colleagues.

Mr. CONRAD. I thank the leader. Madam President, I wish to indicate to the Chair that we have one other Member on our side who is going to come to the Chamber to talk. Senator Whitehouse is going to come. I think he will only be seeking about 15 minutes, I say to the Chair. He will be here in 10 minutes. He will seek only about 15 minutes. I mentioned this to Senator Gregg. So after Senator Whitehouse, other than Senator Dodd, who might still come for 6 or 7 minutes, that will complete speakers on our side. Senator Gregg told me he does not believe he has any further speakers on his side. I yield the floor and suggest the absence of a quorum.

Mr. CONRAD

Mr. CONRAD. Madam President, through you, I ask the Senator if he would yield for the purpose of a unanimous consent agreement we have worked out?

Mr. CONRAD. I think it would be helpful to the overall process that we do this.

Mr. CONRAD. Madam President, I have enjoyed listening to my colleagues describe this budget resolution. But it has nothing whatsoever to do with the budget resolution we have produced. It is a wonderful speech. It is the same speech they give every year no matter what the budget resolution says. But it absolutely has no attachment to what we have presented. I hear this talk about the biggest tax increase ever in the world history. He said the same thing last year. And you know what happened. We have cut taxes. In fact, I have that chart too. It is very interesting because he gave precisely the same speech last year. It may have been exactly the same speech. And what has happened with this Democratic-controlled Congress? Well, here are the tax cuts we have enacted, $194 billion. After they said we were going to have the biggest tax increase in the history of the world last year, we have cut taxes by $194 billion, with $7 billion of revenue raised through loophole closers that have been enacted, loophole closers that, frankly, many of them supported to advance the legislation that was important to us all. But that is the record. After the speech, the identical speech, virtually the identical speech he gave last year, that we were going to have the biggest tax increase in the history of the world--what is the record? We have cut taxes by $194 billion, overwhelmingly on the middle class. Now, let's look at this budget resolution. The green line is the revenue that is in our resolution. The red line is the President's. That is a very small difference, as you can see, a very small difference between the two. In fact, here is the difference: $15.6 trillion of revenue in our resolution, $15.2 trillion of revenue in the President's proposed budget. That is a difference of 2.6 percent. So I do not know what he is talking about when he is talking about the biggest tax increase in the history of the world. That has nothing whatever to do with our resolution. In fact, our resolution has substantial tax relief. The Baucus amendment adopted on the Senate floor with bipartisan support extended the middle-class tax relief by providing for marriage penalty relief, by providing for extension of the child tax credit, by extending the 10-percent bracket. We also provided alternative minimum tax relief to prevent 26 million people from being caught up in the alternative minimum tax, almost an eightfold increase from the number affected now. We have taken effective action to prevent that from happening. We have estate tax reform that will provide that only two-tenths of 1 percent of estates will face any taxes. We provide for energy and education tax cuts. We provide for property tax relief, and we provide for extension of the popular tax extenders. All of that is done in this bill. Now, there is a difference in revenue, as I indicated, a very modest 2.6 percent between what is in our budget resolution and what the President called for. Well, where are we going to get that revenue if we are not going to have a tax increase? Well, the first thing we do is go after the tax gap which is now estimated at $345 billion a year. That is the difference between what is paid and what is owed, $345 billion a year. If we got 20 percent of that amount alone we could meet our numbers with no tax increase. But that is not the only place we can look because, as I have shown before on the floor of the Senate, this building down in the Cayman Islands called Ugland House, this little modest, five-story building is the home to 12,748 companies. Now, I have said this is the most efficient building in the world. Think of that. That little building down in the Cayman Islands, and 12,748 companies claim they are doing business out of that little building. Of course, the only business they are doing in this building is monkey business because what they are doing is claiming they are doing business there in order to engage in tax avoidance. That is the business they are engaged in in Ugland House. Now, if anybody doubts it, here is a recent story from the Boston Globe from March 6 of this year: Shell companies in Cayman Islands allow Kellogg, Brown and Root to avoid Medicare and Social Security taxes in the United States. What they have done down there this is the Nation's top Iraq war contractor until last year, a subsidiary of Halliburton, is to avoid paying hundreds of millions of dollars in Federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven. Now, what we are saying is, let's shut down this kind of scam. How much is there? Well, the Permanent Subcommittee on Investigations said there is $100 billion a year that is being lost to the U.S. Treasury in tax scams being run in these offshore tax evasion schemes. So if you have $345 billion a year in the tax gap, money that is owed that is not being paid, and the vast majority of us pay what we owe, it is outrageous that some are getting away without paying what they owe. And our argument on our side is that we ought to go after those folks who are not paying what they owe and are cheating all the rest of us. On our side we say: Let's shut down these offshore tax havens that are costing us another $100 billion a year, these tax scams that are cheating all of the rest of us. You add those two together, that is $445 billion a year. Again, now we need less than 20 percent of that in order to completely close this revenue gap. But it doesn't end there, because I have shown this chart on the floor of the Senate too. This is a picture of a sewer system in Europe. What does a sewer system have to do with the budget of the United States? We have companies in America buying European sewer systems to write them off on their books to reduce their taxes here. Then they lease the sewer systems back to the European cities that built them in the first place. Is that unbelievable? Our friends on the other side don't want to do anything about that. They don't want to shut that down. They think that is OK. We don't. We think that should be shut down. This is another tens of billions of dollars a year in these types of tax scams. We have things we have done to try to shut down some of these operations. We have put these in bills that the President has threatened to veto. This is almost hard to believe, but this is what has been going on. We proposed shutting down these scams. One of the things we propose is codifying economic substance, prohibiting transactions with no economic rationale done solely to evade taxes. We proposed shutting down schemes to lease foreign subway and sewer systems and depreciate their assets on the books of the United States to avoid taxes here. We have proposed ending deferral of offshore compensation by hedge fund managers trying to avoid taxation in this country. One of those people, by the way, earned over $1 billion last year alone. And there is not just one; there are many of them who earned over a billion dollars a year last year. Then they cook up a scheme where they move their money offshore to avoid paying taxes in this country and stick all the rest of us with the bill. We have said no, let's shut that down. The President has threatened to veto that. We have talked about expanding broker information reporting to prevent this evasion and taxing people who leave this country and give up their citizenship to evade taxes they owe here. As unbelievable as it may sound, we have people who give up their U.S. citizenship, go to one of these tax havens and say: We don't owe any taxes in America because we don't live there anymore. We are no longer a citizen of that country. We are now down in the Cayman Islands or another one of these tax havens. In fact, I went on the Internet. It is amazing to go on, put in ``offshore tax havens.'' Punch that in and then do a search. You will get over 1 million hits. One of my favorites is ``live offshore in a luxury yacht, never pay taxes again.'' This is the kind of scam that is going on. We say shut it down. If we only got back 15 percent of the money in the tax gap--not 50 percent, 15 percent--if we got back 15 percent of this tax gap, of these abusive tax shelters, we could meet our numbers with no tax increase. Remember, in our resolution, we have hundreds of billions of dollars of tax reduction on middle-income people, because we have extended all the middle-class tax cuts. That is what this resolution does. The other side doesn't want to do that. What they want to do is make sure to protect the wealthiest among us. They want to protect those who are engaged in these scams. I don't know why they want to. I don't get it. But that, apparently, is their position. They are going to have to defend it. As I have indicated, there is no assumed tax increase in this budget resolution--none. There are substantial tax reductions, hundreds of billions of tax reductions. I will end as I began. Last year the Senator on the opposing side gave the same speech, that our budget resolution had the biggest tax increases in the history of the world. Here is the record. Now we can look back and we can see what happened. Did Democrats increase taxes? No. Democrats cut taxes by $194 billion. In fact, people all across the country are getting checks from the Federal Government right now that represent those tax reductions enacted and, by the way, enacted on a bipartisan basis. The President signed the bill. So people know they got a tax reduction from Democrats when we have been in control of Congress this year, because they are getting the checks in the mailbox right now. After the Senator asserted last year we were going to have the biggest tax increase in the history of the world, it didn't happen. There wasn't any tax increase. Instead, there were tax reductions. There is no tax increase in this budget resolution either. None. None is assumed. We don't need any to meet the revenue numbers which are only 2.6 percent more than the President's revenue numbers. In fact, we have substantial middle-class tax relief. The middle-class tax relief that is in this package is right here. We extend the middle-class tax provisions that provide marriage penalty relief. We extend the important child tax credit. We extend the 10-percent bracket that provides such good relief to middle-income people. We have provided for relief from the alternative minimum tax. We have provided for estate tax reform. We have provided energy and education tax cuts, property tax relief, and the popular tax extenders. All of that tax relief is in this package. I hope our colleagues will reject the assertion that is in the Senator's motion because it bears absolutely no relationship to the budget resolution before us. I yield the floor, suggest the absence of a quorum, and ask unanimous consent that the time be charged equally.

Mr. CONRAD. Madam President, I will not object. So let's go forward with that, and then I will seek recognition.

Mr. CONRAD. Madam President, I ask that we enter into a unanimous consent agreement on the Kyl motion--there will also be a side by side--that we do an hour on the two, equally divided.

Mr. CONRAD. Oh, they are typing up the comprehensive agreement. So shall we----

Mr. CONRAD. Let's proceed on the basis that we will make a good-faith attempt that we try to do this in an hour. Is that OK?

Mr. CONRAD. Madam President, if I can say, maybe we can work things out. We will try to be flexible and work in people as they come. We will do our best effort to get it done in an hour. Motion To Instruct

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

Mr. CONRAD. Madam President, I am going to extend my remarks. I think many people in the country hear the phrase ``AMT'' and they wonder: What is that? It is the alternative minimum tax. It was established decades ago because they found there were people making $200,000 a year who weren't paying any taxes. To address that, they created the so-called alternative minimum tax. The problem with it is that it was never indexed for inflation. The result is that now, instead of affecting just a few people, it is affecting millions of people. In fact, the estimates are that if we don't do anything about this, it will increase from 4 million people in 2007 to 26 million people in 2008. In this budget resolution we say: No, no, don't let that happen. Don't increase taxes on 26 million American families. Don't do that. In this instruction to the conferees, we say: Yes, absolutely, don't allow the alternative minimum tax to grow like a cancer. Instead, let's take care of that. Let's remove it as an option, and let's try to pay for it by closing down these abusive tax shelters, these offshore tax havens, and closing the tax gap. Our friends on the other side have a different approach. They just want to put it on the charge card. The problem with that is if you eliminate the alternative minimum tax without paying for it, it adds $1.7 trillion to the debt. That is trillion with a ``t.'' Where do we get the money? Well, we borrow it. We have been doing a lot of borrowing under this President. This is his record. He is building a wall of debt that is almost unprecedented in the history of the finances of this country. When he came in at the end of his first year, the debt was $5.8 trillion. At the end of his tenure, it will be $10.4 trillion. In the 8 years he is responsible for, the debt will have risen to $10.4 trillion. In fact, he will have nearly doubled the debt of the country. More alarming is where we are getting it from because increasingly we are getting this money by borrowing from Japan and China. We even owe Korea money. This chart shows it. This chart shows that it took 42 Presidents 224 years to run up $1 trillion of U.S. debt held abroad; $1 trillion of foreign-held debt--foreign-held U.S. debt. It took 224 years to run up $1 trillion of foreign-held debt and all these Presidents, 42 of them. This President tops them all. He increased foreign holdings of our debt by $1.51 trillion so far, and counting. He has dug a very deep hole. We have proposed a series of reforms. I held up just moments ago a picture of a French sewer system and asked the question: What does this have to do with the U.S. budget? Well, it turns out it has quite a bit to do with the U.S. budget because we now find companies in this country--wealthy individuals buying European sewer systems, not because they are in the sewer business but because they want to avoid taxes in this country. How do the two have any relationship? Well, here is how it works: They buy a European sewer system, they put it on their books here, they depreciate it for tax purposes here, reducing their tax bill, and they lease the sewer system back to the European cities that built them in the first place. What a scam. I just held up a picture of this little five-story building. Here it is. This little building down in the Cayman Islands is home to 12,748 companies. What a remarkable building this is. That little five-story building is supposedly the corporate headquarters of 12,748 companies. Now, are they all really doing business out of that little building down in the Cayman Islands? No, of course not. They are not doing business down there. They have a postal drop down there in order to claim that it is their headquarters for tax purposes. Why would they do that? Because the Cayman Islands doesn't have any taxes. So what they do is they have a subsidiary of this company that sells to another subsidiary that is wholly owned, and they sell at cost to subsidiary No. 2. Then they sell from subsidiary No. 2 to subsidiary No. 3 that is down in the Cayman Islands. They sell to them at cost. Then the subsidiary in the Cayman Islands sells to another subsidiary over in Germany or France and shows a big profit in the Cayman Islands where there are no taxes. That is an outrage. The vast majority of us pay what we owe. We have some who don't, and they are getting away with it with these scams. We say shut it down. Let's not go borrow more from China and Japan and dig the hole deeper the way the President wants us to do. That is what our budget resolution says. That is what my amendment says. Yes, absolutely, don't let the alternative minimum tax be expanded from 4.2 million people in this country to 26 million. Don't let that happen. Yes, extend the research and experimentation credit. Yes, extend the sales tax deduction. Yes, provide for these other important tax incentives, especially the energy tax incentives. But instead of borrowing the money, instead of just going back hat in hand to China and Japan and asking them for more money, let's shut down these offshore tax havens, these abusive tax shelters and this tax gap where we have people who owe money but aren't paying it. Let's go after them instead of going over to China and being dependent on the kindness of strangers to finance our country. We are headed for a cliff here because under this administration the debt has skyrocketed before the baby boomers ever retire. I have shown the chart that shows what has happened to the debt. The debt has gone up like a scalded cat. Here is what has happened to the debt under this President and these policies: up, up, and away. He has nearly doubled the federal debt. He has more than doubled the foreign holdings of our debt. In fact, the increase in foreign-held debt under this President is now 150 percent of the amount accumulated by all previous Presidents combined over 224 years. As a result, we now owe the Chinese hundreds of billions of dollars. We owe the Japanese even more. We even owe Korea now over $40 billion. Enough is enough. Enough is enough. Let's quit digging the hole deeper. Yes, absolutely, let's provide middle-class tax relief. That is in this budget. As I have said before, with all the talk from the other side about the biggest tax increase in the history of the world, here is the record. Democrats had been in charge for 1 year and we have provided $194 billion of tax relief, and you don't have to wonder if that is true. Just go home and check your mailbox. You are receiving a check passed by this Congress, signed by the President--a stimulus package-- with $150 billion in that package alone. But we have taken other steps to provide other tax relief as well, including not allowing, last year, the alternative minimum tax to be expanded, and we are not going to let the alternative minimum tax be expanded this year either. That is a fact. That is the record. It is not rhetoric, it is a fact. Madam President, I yield the floor and note the absence of a quorum.

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

Mr. CONRAD. Perhaps, I would ask the ranking member, could we just agree that whenever we go into a quorum call, we equally divide the time?

Mr. CONRAD. I ask unanimous consent that we adopt that as a rule, that any time we go into a quorum call, we equally divide the time.

Mr. CONRAD. I yield the floor and note the absence of a quorum.