Phil Gramm

Mr. GRAMM

Mr. GRAMM. Section 881 of the IRS Code.

Mr. GRAMM. And the greater flexibility they have in their tax treatment in those countries. But they still have to pay American taxes on American income. In fact, the language of art is ``any income effectively connected with the United States.''

Mr. GRAMM. That is right.

Mr. GRAMM. I conclude by noting that with the adoption of this amendment, it will say to companies that pay half of their employees in America that we are not going to let you sell to the American Government, but to foreign companies that have no employees in America and have never invested a penny in America, we are going to let you sell to the U.S. Government. Again, it is popular. It will get you a big hurrah anywhere in the country, but it is not good public policy.

Mr. GRAMM. Yes.

Mr. GRAMM. They would be in Detroit, MI. That is the point. We basically come down to the question as to whether or not this is good public policy. It is popular policy. It will always get applause. But the question is, Is it good public policy? I would answer no. Should we be building walls around America? Can you imagine the United States of America trying to penalize people who want to transfer their wealth somewhere else? We are the country where people from all over the world send wealth here. This is a role reversal, if I have ever seen it. These are games that other countries play. This is GATT-illegal. This has no redeeming virtue, other than it is momentarily popular and it will get you a rousing applause. I yield the floor.

Mr. GRAMM

Mr. GRAMM. I thank the Chair for the recognition. Mr. President, I hope people who are following this debate realize that we are having a debate about politics; that this is a debate about the next election; that this is hardly a debate about Medicare. How extraordinary it is that we are here talking about an entitlement program that represents the largest single commitment of Federal spending in 37 years, one program that will cost in and of itself more than defending the national security of the United States. Yet no bill has ever been reported out of committee. This was a process from beginning until end--and I hope we are approaching the end--that was designed to fail. It was designed to fail because we did not follow the normal procedure; we did not report a bill out of committee. We violated the budget. So, therefore, by not reporting a bill out of committee and by violating our own budget, it means that each of these proposals that are made have to get 60 votes. We have already had one proposal that had we followed the regular order, the normal procedure of the Senate, would have already been adopted. I have to note that basically what is going on is a political debate. One of the issues I find alarming about this debate is that it is obvious that some people believe the way to win the political debate is to spend money. I wish to remind my colleagues of a little history. In 1999, we had a report of the Bipartisan Commission on the Future of Medicare. Senator Breaux from Louisiana was the chairman. We had a clear majority of Members who were in favor of the recommendations for reform, but we had to have a supermajority of 11 Members to make a recommendation to the Congress and to the President. That bill would have funded prescription drugs with the savings that we would have obtained by reforming Medicare. Until the last minute, it looked as if we would get the 11, but President Clinton had his four appointees all vote no. When that happened, President Clinton held a press conference and released a program and said: If you would give me $168 billion, I can fund prescription drugs for American seniors. That was in 1999. Then in the year 2000, the Senate debated a proposal, that Senator Robb was the sponsor of, that basically said if you will give us $242 billion, we can provide prescription drugs for America's seniors. Then last year, Senator Baucus said we could fund a program that meets every need that the American people have, all the needs of our seniors, for just $311 billion. Then when we wrote a budget, the Democrat proposal in the Budget Committee, which was never adopted by the Senate, and we were told-- actually $168 billion, $242 billion, $311 billion--that is not enough, we need $500 billion. Then on the bill on which we did not waive the budget point of order last week, we were told that it would require $600 billion. When we fill up the gaps, when we project out for 10 years, we have been seriously debating on the floor a proposal that would spend a trillion dollars, that has never been reported by any committee, that has never had a systematic consideration by a committee of the Senate, and that was designed from the beginning to fail. I wish to conclude by making the following points: The proposal by Senator Graham of Florida and Senator Smith of Oregon that is before us, that we are going to vote on in the morning, is being sold as a catastrophic coverage proposal that is quite similar to a proposal that Senator Hagel, Senator Ensign, and I offered that got over 50 votes. I would like my colleagues to understand that this proposal is nothing like our proposal. It is better than the original Graham-Miller proposal, it is more affordable, but it is not the proposal that Senator Hagel, Senator Ensign, and I made. Our proposal said that we can set up a simple program where every senior in America will be able to engage, through a private company, in buying pharmaceuticals competitively so that we can bring down the cost of pharmaceuticals between 20 and 40 percent for everybody. Then we had a stop loss, a maximum out-of-pocket expenditure, that for moderate-income seniors was about $100 a month. They would be spending that $100 a month through these private companies that would be purchasing pharmaceuticals competitively, and they would be spending their own money and therefore would be cost conscious. When they reach that $100 a month and the Federal Government starts picking up the cost, they have already entered into a situation where they are buying pharmaceuticals competitively. Secondly, we did not have the same stop loss for everybody. One of the reasons the bill before us costs $400 billion over 10 years and provides such little coverage is that Bill Gates has the same stop loss that my mother has. Ross Perot has the same stop loss that the poorest recipient of Medicare in America has. This is not at all like the Hagel-Ensign bill, where the stop loss was dependent on one's income. I remind my colleagues that was an affordable proposal. It was the only proposal that we have voted on that was within our budget, for the simple reason that it put the money toward helping the people who needed the help the most. The problem with all of these other proposals is that for every 10 people they help, 8 people do not need it. We are displacing massive amounts of private health insurance in the name of helping people who do not have health insurance. The advantage of the Hagel-Ensign proposal, the reason it was within budget and these other proposals are not, is that it put the focus of attention on helping people who fell into two categories. Either they had relatively low income and substantial drug bills, or they were moderate and upper income with astronomical drug bills. In either case, they got help. But if their drug bills are low relative to their income, they did not get help and, quite frankly, people who have incomes and retirement that run into the hundreds of thousands of dollars and have private health insurance are not the people in need. It is the people who do not have health insurance and who are having a very difficult time with paying for their pharmaceuticals who need help. I hope this amendment will be rejected. When we do not have enough unity of purpose to pass a bill out of the committee of jurisdiction, in this case the Finance Committee, we should not be engaged in a political exercise on the floor where we are literally committing ourselves to a trillion dollar expenditure over the next 10 years. We are talking about the largest commitment of money that this Nation has undertaken in 37 years, and yet there is no substantial bipartisan agreement. Every proposal is tailored to some political constituency. We are dealing with a process that was designed to fail by not reporting a bill out of committee, by not staying within budget and, therefore, having to get 60 votes. So my own opinion is that the sooner this charade ends, the better off America will be. Let the record show there has been only one proposal that was within budget. There has been only one proposal that was fully funded by the budget and that was logically consistent, that encouraged efficiency and economy and met the needs of the people who need the help the most, and that was the Hagel-Ensign bill. I urge my colleagues to reject the amendment that is currently pending before the Senate. We are going to vote tomorrow. It has a budget point of order. It is $100 billion above the budget. When we adopted this year's budget last year, we said we were going to spend up to $300 billion on providing prescription drug assistance. This amendment, by the most generous scoring that can be made, costs $400 billion. I urge my colleagues, do not waive the budget point of order, sustain the budget process, and reject this amendment. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Reserving the right to object, I suggest the absence of a quorum.

Mr. GRAMM

Mr. GRAMM. Madam President, I yield myself such time as I may consume. I want to begin with some thank-yous and congratulations. First, I want to congratulate Senator Sarbanes on this bill, and I want to make note that in a very difficult period, where so many were trying to point the finger of blame, when it seemed almost every day that people were clamoring to make the strongest statement they could make to get the sound bite on television, Senator Sarbanes could have taken that same route in the Banking Committee. We are the committee that has jurisdiction over the issues that had been at the very heart of our recent concerns in the capital markets. However, Senator Sarbanes did not take that route. I congratulate him. He not only brought good reflection on himself, but he helped raise the esteem that the Banking Committee is held in and reflected well on the Senate. We had hearings but we were focusing on what could be done to fix the problem. As a result, those hearings were the most productive that were held. They contributed to bringing us to where we are. Now let me make it clear, from the very beginning there has been a broad consensus, and a very deep consensus, on 90 percent of the issues in this bill. One of my frustrations in this debate--and when you are debating something as high profile as this is, there are frustrations. I am not complaining--as my wife says whenever I complain about this job, not only did nobody force you to take it, but a lot of good people worked hard to keep you from getting it--I am not complaining, but part of our problem has been that the media has wanted to present this as a debate that had to do with how tough people were being, to the exclusion, often, in my opinion, of how reasonable we need to be. We have before the Senate a bill that is clearly an improvement over the status quo. I don't care how disappointed you are in any one provision--and on several provisions I am very disappointed. No matter how disappointed a Member is, this is an improvement over the status quo, and for two reasons. One is obvious. That is, we needed stiffer criminal penalties. And, second, we needed to create an independently funded and an independently operating accounting oversight board so that we could deal with ethics questions in a framework that will promote high ethical standards, in the framework of independence. In addition, we desperately needed to have an independently funded FASB. I would just say as an aside, Madam President, over the years I have agreed with FASB in some of their decisions; I have disagreed with FASB on some of their decisions. However, I am proud to be able to say today I have never taken the position that Congress ought to override FASB. As incomprehensible as some of their rulings have been to my way of thinking, having Congress vote on accounting standards is a very dangerous thing. Some of our colleagues want to vote on the whole issue of expensing stock options. Wherever you come down on that issue, having Congress vote on accounting standards is very dangerous, very counterproductive. I hope that will not happen. Certainly, I am not going to vote to impose accounting standards on this board. We want FASB to set accounting standards. We want to be sure they have the independence that is necessary to allow them to do it. In those areas there has never been a disagreement on this bill. The disagreements that have occurred have had to do with the perception of individual Members as to what was practical, what was workable, what was desirable. The one view I have always subscribed to, and I would have to say given my period of service in public life I am more convinced of it than ever, is that Thomas Jefferson was right when he said good men--he would say good people today, of course--good men with the same information are prone to have different opinions. There is a natural tendency in the human mind to think, if people disagree with you, that either, A, they don't know what they are talking about; or B, they don't have good intentions. I subscribe to the Jefferson thesis. The areas where I disagree with the bill are pretty straightforward. First of all, I believe there is a very real problem in auditor independence. If I were a member of this new accounting oversight board that we are going to put into place and I had to vote on the nine prohibited areas that are written into law in the bill, I would want to study them in detail. I might very well support all nine of them. I do not believe they should be written into law. The advantages of letting the board set these standards--it seems to me that there are three: No. 1, the board is going to have more time and more expertise than we have and is likely to do a better job. No. 2, if we make a mistake and we write it into law, it is hard to fix things that are written into law. As Alan Greenspan has said, if Glass-Steagall, Depression-era banking legislation, had been a regulation, it clearly would have been changed by the 1950s. We did not change it until 1999. It took a long time to change it. Finally, and probably of greatest importance, there is a natural tendency when we are talking about the problem in an era where we are all reading about Enron and WorldCom and the huge companies, to forget this law will apply to 16,254 companies. Many of these companies are quite small. One of the advantages of allowing the accounting oversight board to set out prohibitions on auditors performing other services in regulation, instead of prescribing them in law, is that the board can find a system whereby they can recognize what is practical in dealing with smaller companies and how that might differ from what is practical for General Motors. An example that has come to my mind is one where I am operating a small public company, stock traded on an exchange or on Nasdaq, and I employ an accounting firm that has a CPA who basically does my auditing. He is in Houston. I am trying to hire a new bookkeeper in my company. I have three candidates. When my auditor is in town auditing my books, I say: I have these three candidates. I majored in physics in college, and I don't know anything about accounting. Could you interview these three bookkeepers and tell me who you think would be best? Under this bill, that would be illegal. That would be providing a personnel service. It is prohibited for my auditor to provide that service for me as well. For General Motors, should your auditor be providing a personnel service? My guess is they probably should not. But for this small company in College Station, Texas, what this prohibition ultimately will do is force them to do one of three things: In all probability, they will hire the bookkeeper without ever getting the advice of a CPA; No. 2, they can hire another CPA to interview these three candidates for a bookkeeper and pay them; No. 3, they can file for a waiver through the SEC and through the board. Each option is a worse choice from those available to such a small company today, and a worse choice for its shareholders. The bill allows a waiver on an individual company by company basis. I rejoice that is the case. I personally believe we should have given the board, with the agreement of the SEC, the ability to grant blanket waivers based on the circumstances of classes of individual companies. For example, if you have already granted 1,000 waivers where companies have applied for a waiver for a certain requirement based on their size, their location, practicality, the cost, whatever, at that point shouldn't the board be able to say: We have established this principle, and if your company meets these conditions, you are granted the waiver? Then, all they have to do is prove they meet the conditions. My concern--and who knows, maybe this will be true, maybe it will not. The problem is we are legislating. We don't know. We can't look into the future. My concern is that by not granting them the ability to provide blanket waivers we are going to force a lot of smaller companies to hire lawyers and lobbyists to come to Washington to petition the SEC and the board. My concern is that this is going to use up their time and use up the resources of companies. There is another side of this story and that is the concern that blanket waivers could be used to get around the intent of the law. How do you deal with that? How do you find a happy balance? It is not an easy question. I would have to say I believe we have imposed a one- size-fits-all regimentation that is going to be difficult to deal with--not impossible to deal with, but I think it is going to be difficult. Another problem I have is that we have in this bill an accounting oversight board. Its members are not elected officials. They are not appointed in the sense that they are not Government officials. They will have the ability to make decisions that will affect the livelihood of Americans who are in the accounting profession. They will literally have the ability to say to a CPA: We are taking your license away and you can never practice again in providing accounting services to a publicly traded company. Clearly, there are cases where that is justified. Clearly, there are cases where people ought to be fined and, clearly, there are cases where people ought to be put in prison. But I think when you are taking people's livelihoods, they ought to have an opportunity to appeal to the Federal district court where they live. I think there ought to be a burden on them to make their case, and obviously the court is going to take into account that this board, that was duly constituted, made a decision. But I think that is an opportunity that people ought to have that they do not have under this bill. I am also concerned about litigation. During the whole Clinton administration, there was only one bill where we overrode the President's veto, and that was a bill having to do with private securities litigation reform. We had a massive number of predatory strike suits where people filed lawsuits against companies. They almost always settled out of court. We had one law firm that filed the lion's share of the lawsuits. And the chief lawyer in that company said, in effect, ``It is wonderful to practice law where you don't have clients.'' That was a mistake when he said that, but he said it. We took action to try to eliminate or minimize this abuse. In doing so, we codified a 1991 Supreme Court decision that addressed what happens if you think you have been wronged. We are not talking about criminal activity. We are not talking about SEC enforcement. We are not talking about the Justice Department. We are talking about civil disputes that people have. Under that law, in codifying what the 1991 Supreme Court decision said, we said that within a year after you believe you have been wronged, you have to file your lawsuit, and within 3 years after the event happens, you have to file your lawsuit. One of the things this bill does, which I oppose, is it raises that to 2 years and 5 years, respectively. I would say that if there were evidence that people were not getting these lawsuits filed because of a lack of time, that under the circumstances I think that increasing the statute of limitations would have been justified. But as we have looked at the data, the mean average lawsuit is filed 11 days after the injury is discovered. Something like 90 percent of the lawsuits are filed in the first 6 months. It seems to me that this provision and other provisions of the bill that expand the ability of people to sue may have a positive effect in making people pay attention to their business, but we all know, based on our legal system, that it is going to be abused and that very heavy costs are going to be imposed on the private sector of the economy as litigation costs ultimately are added to the cost of the product that is produced and reduced from the stock value held by shareholders. I could go on and on. There are other people who want to speak. We are under a time limit. But let me sum up. I thought about this long and hard, and as I thought about this bill, I had to weigh, Does it do more good than harm? I have concluded that it does. It does less good than it could have done; it does more harm than it should have done--we could have corrected these things--but, quite frankly, in the environment we were in it was impossible. In the environment we were in, where everything was judged on some concept of being tough rather than on practicality and workability, it was impossible for us to come back and deal with these problems. Finally, in the timeframe that we all faced in conference, we never really got around to discussing the practical kinds of things that do not seem important when you are writing law but seem very important 2 or 5 years later when you are implementing it. Having said all that, I cannot stand up here and argue that this bill has worsened the status quo. This bill is better than the status quo for two reasons. No. 1, change needs to be made and criminal penalties need to be raised. These independent boards need to be established, and 90 percent of this bill, in my opinion, clearly represents a step in the right direction. But, second--and this may sound like strange logic but I think it is important. I think to understand American government you have to understand it. The American people expect Congress to respond to a problem. We may not know the answer. We may not have perfect knowledge. But they expect us to try to do something about it. That in and of itself is an argument to which we should respond. I would argue--being a conservative, as everyone engaged in this debate knows--I would argue we need to be careful. But in the end this bill is an improvement on the status quo. It could have been better. There are changes that could have been made that were not. But in the end, I cannot argue that this bill should not pass, should not become law. The President is going to sign the bill, and clearly he should. I do believe we will have to come back after the fact and we will have to correct some of these issues. I think as time goes on we will see we may not have done enough in one area. Maybe we went overboard in another area. But the Congress will meet again, people will be paid to do this work, and I am confident that it will be done. So let me conclude on this thought. I believe the marketplace has gone a long way toward solving this problem. I think the New York Stock Exchange action was excellent. Once again, they are proving that they are a great institution. As I have often said about the New York Stock Exchange, I feel as if I am standing on holy ground at the New York Stock Exchange. Every boardroom is different from what it was before this crisis started. No one sitting on a board, corporate board or an audit committee, will ever be the same. No auditors will ever look at their task the way they did before all of this started, at least for a very long time. or at least for a very long time. One of the advantages of having structure is when they forget, the structure won't forget. I totally agree with that. I think this represents a complement to it. There is much in here I would have done differently. But in the end, I think this is a response that people can say the Government did hear, the Government did care, and Congress did try to fix it. I don't doubt that there are mistakes in here. I think I could name some, if asked to. But, on the whole, this is a response that was aimed at the problem. People went about it in a reasonable manner. Certainly, the authors of this bill intended to do as good a job as they could do. I again want to congratulate Senator Sarbanes. I also want to thank him, looking back now at how quickly the conference went. I know people were unhappy when we had this period when the floor was tied up, and there were numerous amendments people wanted to add to the bill. But I think, given how the whole thing played out, it worked out from that point of view pretty much right. If people on Wall Street are listening to the debate and trying to figure out whether they should be concerned about this bill, I think they can rightly feel that this bill could have been much worse. I think if people had wanted to be irresponsible, this is a bill on which they could have been irresponsible and almost anything would have passed on the floor of the Senate. I think given where we are on this bill that it is a testament to the fact that our system works pretty well. I yield the floor.

Mr. GRAMM. Mr. President, I yield 12 minutes to the Senator from Wyoming.

Mr. GRAMM. Sure. Mr. President, I yield an additional 3 minutes to the Senator from Wyoming.

Mr. GRAMM. The Senator can have all the time he wants.

Mr. GRAMM. Mr. President, how much time do we have?

Mr. GRAMM. We were going to shoot for about 4:30 so I may yield some of it back, depending on who comes over. Let me, first, thank my dear colleague, Senator Dodd, for his kind comments. I have enjoyed working with him over the years. I very much appreciate the comments he made. I want to say something about my staff. A famous philosopher once said: In no way can you get a keener insight into the true nature of a leader than by looking at the people by whom he surrounds himself. I would always be happy to have anybody judge me by Linda Lord and by Wayne Abernathy. It is amazing how much impact staffers have on the Senate. I am blessed in this area to have two of the best staff people who have ever served any Senator in the history of this country. On most issues on which I worked with Linda Lord, she knows more about this subject than anybody, and generally more than everybody else combined. In working with her, I see that the Lord was a great discriminator; he gave some people incredible ability and most of us he gave relatively few, in the way of talents. I thank her for the great job she has done. I thank Wayne Abernathy. In the years I was chairman of the Banking Committee, Wayne Abernathy was chairman of the Banking Committee. In the day-to-day work, he has made an incredible contribution. If there is an unfairness to it, it is that I have gotten credit for all the good work that they have done, and I am grateful for that. I reserve the remainder of my time.

Mr. GRAMM. Mr. President, we have reached the hour that we set for a vote. I am ready to yield back the 12 minutes and have the vote proceed. I reiterate that this is a bill that was fraught with danger in the environment that we were in. Literally anything could have passed. I think, by a combination of good work and some good fortune, that has not been the case. We have a vehicle before us that I think will be complicated. It will be difficult to implement. I think we will probably change it in the future. But I think in terms of our ability to prosper under the bill, and for the economy to survive not only the illness but the prescription of the doctor in this case, I think it is doable. I yield the remainder of our time.

Mr. GRAMM

Mr. GRAMM. Madam President, one of the reasons I love this job is that you never reach a situation where you are able to say I have heard it all before. In much of life, as you live longer and longer, you get to the point where there is nothing new under the sun, where any new event had so many precedents for it that you understand it and you know it and you expect it. The wonderful thing about this job is that there is always a new proposal, always a new approach, always a new way of doing things that you would have never, ever thought of, and that you would have never believed that anyone else would have thought of. I have spent 18 years in the Senate trying to deal with deficit spending. It has been a long, sometimes fruitful, sometimes not so fruitful, battle. I would have to say in the last year and a half, it has been a very unfruitful battle from my point of view because we started out with a surplus which literally burned a great big hole in our pocket. We literally could not spend the money fast enough. Now, interestingly enough, we have a deficit. The last projection by the Congressional Budget Office is that we are going to spend, this year, $165 billion more than we take in. That deficit seems to grow every time there is a new projection. Yet our behavior is totally unchanged. In fact, I can say that in almost 25 years of service in the House and in the Senate, I have never seen the urge to spend money more unchecked in Congress than it is today. To me, it is a very frightening prospect as to what this is going to mean when all these bills come due. Let me try to respond to the proposal before us because in so many ways, it is extraordinary. The logic of it is pretty straightforward. The States are in a position that, because of the state of the economy, many States are beginning to have deficits that used to have surpluses. In fact, it is projected now that unless something happens very positive and very dramatic in the next few months, that as many as 40 States will run deficits next year, or at least will face the prospects of deficits because many States, like my own, have to balance their budget. They will have to come into session in January, and they will have to make hard choices. We don't make hard choices in Congress, but they will have to make hard choices in the legislature. When you add up the cumulative projected deficits for all 40 States that are looking at potentially being in the red, that accumulated aggregate deficit projection is about $40 billion. Now, the proposal before us extraordinarily says let's declare an emergency so that we can spend another $9 billion that we don't have, every penny of which will come out of the Social Security trust fund; but let's go ahead and borrow that money now. Let's take it out of the Social Security trust fund and spend it so that States will not be required to make tough choices. The only problem is, our projected deficit is four times as great as the aggregate sum of all the deficits of all the States in the Union combined. In fact, it would have made more sense--I would not have supported it but it would have made more sense had our dear colleagues proposed that we reduce Medicaid reimbursement because the States have a better financial situation than we do and, therefore, they are in a better position to deal with this problem. I would not have supported that proposal because I do not think we want to beggar our neighbor in terms of imposing our problems on the States, but at least it could have been argued, with a deficit projected to be four times as big as all the State deficits combined, that we cannot be as generous as we wanted to be. That argument would make sense at Dicky Flatt's Print Shop in Mexia, TX. People would understand that argument in Oklahoma. They might not like it. They might oppose it, but they would understand it. They would say it made sense, but I do not believe people at Hesser Drug Coffee Bar in Ennis, TX, or people anywhere in any State in the Union, would find logic in the Federal Government borrowing another $9 billion we do not have, taking the money out of the Social Security trust fund because every penny of this surplus is Social Security surplus. I do not think they would understand us declaring an emergency to spend this $9 billion to give it to States, that if we added up their total deficit is not one-fourth of the deficit that we are running right now. So we basically are down to a question that we have to ask ourselves: Are we willing to declare an emergency to run a new deficit of $9 billion--spend $9 billion today, and in doing so, take $9 billion out of the Social Security trust fund? Are we willing to do that because States are running a cumulative deficit that is one-fourth as big as the deficit we are running? That basically is the question that is before us. It is easy for one to say this is a compassionate decision because they do not want their State to have to make a tough decision, but compassion is what one does with one's own money, not what one does with somebody else's money. This money is coming out of the Social Security trust fund. This money is coming from, ultimately, the taxpayer who is going to have to pay it back, plus interest. If the proponents of this amendment were anteing up out of their own pockets, we could say they are compassionate about their States; they are worried about what will happen in States that have deficits. But it is not compassion when it is somebody else's money. The idea that we would run a $9 billion deficit today, that we would take $9 billion out of Social Security today to give to States that are running a deficit, that when added up among all the States in the Union is not one-fourth as big as the deficit we are running, it makes absolutely no sense. I think, at least where I am from, and maybe where I am from is different than where other people are from, but in my State that would make absolutely no sense. Finally, every time we talk about letting people keep more of what they earn, every time we have a debate about letting working families keep more of what they earn, many of our colleagues stand up and say we cannot afford it. We would like not to force families to sell their business or sell their farm when pappa dies so the Government can get 55 cents out of every dollar they have accumulated in their whole lifetime, even though they have paid taxes on every penny of it. Our colleagues tell us we do not like doing that but we do not have any choice because we do not have the money; we are running a deficit now. When we talk about making the repeal of the marriage penalty permanent so we do not penalize people for the simple act of falling in love and getting married, both of them good things it seems to me, we are told that we would like to do that but we do not have enough money because we are now running a deficit. Why is it we never, ever have enough money to let people keep more of what they earn but we always have enough money to spend? Why is there this huge difference? I would assert basically because deep down many Members of the Senate believe they can spend money better than families can spend money. I have raised a point of order against this amendment, and I want to be sure my colleagues understand what the point of order is about. This amendment will force the Government to take $9 billion out of the Social Security trust fund and give it to the States at a time when all the States combined have a deficit that is not one-quarter the deficit of the U.S. Government. This is a very bad decision. I can see how it would be popular in the legislatures, but it cannot be good public policy to do this. So I urge my colleagues to sustain this budget point of order. If our colleagues want to come back and say, look, this is important, we want to do this, and we are willing to take $9 billion away from something else that is not as important, then depending on what they take it away from I might be willing to support it. To simply say we want to give this money away, even though we do not have it, I do not believe that is a responsible position. As a result, I have raised the budget point of order. I hope my colleagues who constantly talk about protecting the Social Security trust fund, I hope my colleagues who constantly talk about the fiscal irresponsibility of letting working people keep more of what they earn through tax cuts, will apply that standard today when we are gratuitously taking $9 billion out of the Social Security trust fund, borrowing it knowing we are going to have to pay it back plus interest. This is irresponsible policy. It should be stopped, and I urge my colleagues to sustain this budget point of order. I reserve the remainder of our time.

Mr. GRAMM

Mr. GRAMM. I would yield him 10 minutes. He deserves to be heard.

Mr. GRAMM. Mr. President, we are coming to the end of this debate. I would like to make note of how deficits occur. If anybody wants to understand why the Federal Government, which is the summation of all of the taxpayers in the country, owes trillions of dollars, this is a classic example of how that comes about. We are talking about spending $9 billion. There are 140 million taxpayers. That is $64 per taxpayer. The problem is, taxpayers are at work. It is 11:30 on a Thursday. They don't know this debate is occurring. But all the special interest groups that want this $9 million, members of the State legislatures who ran for office to make decisions in the States, all the people who want this money are looking over their Senator's right shoulder trying to tell them that they ought to care about people on Medicaid or about the State legislature or about the State's deficit. That would be insignificant if the 140 million taxpayers were looking over the left shoulder. The problem is, it is 11:31 on a Thursday morning and all those 140 million taxpayers are at work. They don't even know this debate is occurring. So as a result, what tends to happen over and over and over again is that spending interests dominate. Our colleagues tell us: States have difficulty. I remind my colleagues, the Federal Government has difficulty. A year ago we had a $283 billion surplus. We were spending madly. Today we have a $165 billion deficit, and we are still spending like drunken sailors, as Ronald Reagan would say. Only drunken sailors are spending their own money, and in all fairness, we are spending somebody else's money. We hear that the States in total could run as much as a $40 billion deficit this year. I certainly am unhappy about it. My State faces tough decisions. But we are running a $165 billion deficit. We are running a deficit over four times as big as all the States combined. Our colleagues say: This fits an emergency. This is unforeseen, unpredicted, unanticipated. Well, it is created by a formula that has only existed for 37 years. So for 37 years we have known what the formula was. What is unanticipated, what is unpredicted about this? Finally, as if the argument to waive this budget point of order and bar this $9 billion and take it away from Social Security could be any weaker, the argument basically comes down to: There are some States that in the last few years have been doing better than other States, better than the country as a whole, and unless we give them more money now, they may be adversely affected by the formula. The way the formula works is, the higher the State's income relative to national income, the more of the Medicare share they pay. Should it be the other way around? Should poorer States pay a higher share? There is not one substantive argument in favor of borrowing this $9 billion. If the American people knew this debate was occurring at 11:35 this morning, if all 120 million taxpayers were following this debate, this amendment would never have been offered and probably would not have gotten 20 votes. The problem is, those 120 million taxpayers are at work, and all the people who want this money are looking over their Senator's right shoulder, sending letters back home, telling people whether he cares about State finances or she cares about Medicaid beneficiaries. That is the dilemma we are in. I urge my colleagues to look at the fact that in 12 short months, we have gone from $283 billion in the black to $165 billion in the red. When does it stop? We are broke, and we don't act like it. When do we stop spending this money that we do not have? I urge my colleagues to sustain this budget point of order. I urge everybody who has ever lamented the spending of the Social Security surplus to put their vote where their mouth is. I urge everyone who has ever lamented the deficit, who has ever gone back to their State and said, I am for fiscal responsibility, to put your vote where your mouth is. I want to urge everybody who has ever said, we can't let working people keep more of what they earn because we have a deficit, we need the money, we can't afford it; I urge them to vote against this spending. I don't know how you can have any possibility of being consistent in taking the position that we ought to borrow this money. This is totally unjustified. I know some people want it. If you spend $9 billion, you are going to benefit somebody even if by mistake. I am not in any way denigrating that this $9 billion will help people. I am not saying it won't. But the point is, we have a budget process. We have seen the surplus go from $283 billion in the black to $165 billion in the red. Let us stop that process here. I urge my colleagues to vote to sustain the budget point of order.

Mr. GRAMM. How much time do I have remaining?

Mr. GRAMM. Mr. President, anybody who has not heard me talk about the deficit has not been listening in the last days, weeks, and years. Secondly, I ask unanimous consent to have printed in the Record the accounting of the Office of Management and Budget on where this deficit has come from. We have gone from $283 billion in the black to $165 billion in the red, and only 9 percent of that change had anything to do with the tax cut.

Mr. GRAMM. Mr. President, I will conclude by saying that we have come down to a decision about whether or not we are going to borrow $9 billion, which we don't have. Given the state of the American economy and budget, given that our deficit is four times as big as the cumulative deficit of the States, I urge my colleagues not to bust the budget, not to waive this budget point of order, but instead to be fiscally responsible. I yield back the remainder of my time.

Mr. GRAMM

Mr. GRAMM. Mr. President, I thank our dear colleague from Nebraska for his leadership on this issue. I think the best proposal that has been presented to the Senate is the Hagel-Ensign proposal. It is the only proposal that is rational. It is the only proposal that is organized in such a way as to give most of the help to the people who need it the most. It is the only proposal that is affordable. My strong suggestion and my recommendation to my colleagues is that we adopt this proposal. This proposal basically says if you have a moderate income and you have high drug bills, you are going to receive assistance from Medicare. A simple guideline is that if you have a family income, in retirement, of less than $23,000 a year, if this bill goes into effect, you will spend only slightly more than $100 a month on pharmaceuticals before you receive assistance. The amount that people would have to spend before they hit the critical level where they would receive assistance rises with people's incomes, so that at $46,000, you would have to spend $3,500, or about $300 a month; at $69,000 of income, that amount would be $5,500. So what does this do? It does two things. Immediately, it provides assistance by setting up a program whereby we can use the ability to negotiate prices. Medicare does not buy competitively. It is estimated that by allowing people to choose among selections that will be available through Medicare and by utilizing a purchasing cooperative, whereby they will enter into an agreement with private companies to purchase their pharmaceuticals and find the cheapest price for them, every senior will save between 25 percent and 40 percent on their drug bills. That benefit will start immediately--not in 2004 as the Democrat alternative does, not in 2005 as the tripartisan alternative does, but upon adoption. The other parts of this bill will go into effect as of January 1, 2004. So this bill helps everybody now, brings efficiency in purchasing health care for every senior, and provides assistance to people who need it the most. I urge my colleagues to vote for this amendment.

Mr. GRAMM

Mr. GRAMM. I move to reconsider the vote.

Mr. GRAMM

Mr. GRAMM. Under section 205 of H. Con. Res. 290, I raise a point of order against the emergency designation of section (c) of the pending amendment, No. 4316.

Mr. GRAMM

Mr. GRAMM. Let me finish this point, and I will be happy to yield.