Phil Gramm

Mr. GRAMM

Mr. GRAMM. I am happy to yield to the Senator.

Mr. GRAMM. Mr. President, I thank the Senator from West Virginia. Let me just conclude by saying that the American people cry out for bipartisanship. This is the only real bipartisan effort of this Congress. We have 54 cosponsors on this bill; they are roughly divided, Democrats and Republicans. This is not a partisan issue. I hope we can move ahead and I believe we will. I want to thank the Senator from West Virginia. It has been a great honor for me to work with him. I believe we are going to be successful, in large part, because this is the right thing to do. But as Edmund Burke once said, ``All that is necessary for evil to triumph in the world is for good men to do nothing.'' We intend to do something to make this happen--however much work it takes. We have carried this ball all the way down to the goal line, and we are not about to fumble it or call time-out right now. I thank the Chair and yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, I want to thank my colleague from West Virginia. In fact, I want to say to him what a great honor it is for me to work with him on this amendment. He made a very strong case just a moment ago about building highways, but I believe the case is stronger yet because there is one factor that I want to make sure that everybody understands, that at least in the portion of Senator Byrd's statement that I heard he did not drive home, in my opinion. And that is, it is not just a debate about highways versus other things; it is a debate about basic honesty in Government because, you see, we collect taxes specifically for the purpose of building roads. We do not collect taxes for the purpose of providing child care. We do not collect taxes specifically earmarked for welfare. We do not collect taxes that are dedicated by their source to the United Nations or to foreign aid. But we do collect taxes that are dedicated to highway construction, at least in terms of what Americans believe the policy of Government is and should be. If you go to the filling station this afternoon, and you pull up in your car or truck and you get out and you are pumping gas, while you are standing there, let me urge people to read what it says on the gasoline pump. Basically, what it says on the gasoline pump is, there is good news and bad news. The bad news is that about a third of the cost of a gallon of gasoline in America today is taxes. The good news is, as it says right on the pump, those taxes are dedicated to building the very roads that you are going to burn up this gasoline riding around on. So it is a user fee. It is a fee you pay in buying gasoline to build the roads that you are going to use. The only problem with that bad news-good news story is the good news is not true. The good news is not true because the Federal Government, beginning in about 1990, started diverting substantial quantities of funds collected on gasoline taxes to other uses. Some of it occurred by just letting surpluses build up in the highway trust fund, which under a unified budget in essence meant you could spend more money on other things in Government. Some of the problem resulted in 1993, when, for the first time in American history, we adopted a 4.3-cent-a-gallon tax on gasoline that went to general revenue and not to the highway trust fund. Senator Byrd, I, and others have solved that problem in the tax bill by dedicating that 4.3-cent-a-gallon tax on gasoline to the highway trust fund where it belongs. So let me turn to this chart and really explain how modest the Byrd-Gramm-Warner-Baucus amendment is, how modest it is in terms of what we are asking. In fact, the American people would never believe that we are doing enough. But if you look at this chart, you see where we are. As of today, we have $23.7 billion of surpluses in the highway trust fund. This is money that we have collected on gasoline taxes that we put into the highway trust fund to spend on roads, but money that has not been spent on roads. In reality, that money, through our unified budget, in the total level of spending we could have by running this surplus in the trust fund, that let Government spend that money on thousands of other things. We were successful, as I noted earlier--well, last year; that went into effect on January 1--of being sure that every cent of gasoline taxes, just as the gasoline pump says, goes into the highway trust fund. Now, under the bill that will be before us when we get an opportunity to consider it, the surplus in the highway trust fund, if my amendment with Senator Byrd was not adopted, would grow from $23.7 billion to $90 billion. In other words, over the 6 years that highway bill would be in effect, we would be collecting, in total, looking at all we have already done plus what would occur during that period, $90 billion that we are telling the American people that we were spending on highways that in reality would not be spent on highways and in reality would be spent on something else. Here is what Senator Byrd and I are saying: You have already spent this $23.7 billion, and we are not asking for it back; in fact, we are saying that we are going to let the surplus grow under our amendment from $23.7 billion that should have been spent on roads to $39 billion, and that that money will be available, therefore, for general budget uses. What we are saying is that this 4.3-cent tax on gasoline, a total of $51 billion in spending authority, we want it spent on roads. I have likened this--and I am sure some of my colleagues don't like the analogy, but I think it fits perfectly--I have likened our opponents to cattle rustlers. What they have been doing, as you can see from this chart, they have been rustling our cattle. They have been taking money that has been collected in taxes on gasoline, put into the highway trust fund to spend on roads, and they have been spending it on other things. In any other business except government you might actually go to jail for doing something like that. In fact, Senator Byrd reminded one of our opponents of the story in the Bible of Ananias in the book of Acts. In the young church, Ananias makes a big deal about selling all his property and giving it to the church, but he cheats. The Lord thought so little of that activity that he struck him dead and struck his wife dead. Obviously, we are not talking about striking anybody dead. All we are talking about is the following: We are saying, keep the $23.7 billion. In fact, we are going to let it build up to $39 billion. Just let us spend the 4.3-cent tax on gasoline on highways. Their response is, ``Well, you know, we already got the $23.7 billion and we were expecting not only $39 billion but $90 billion, and if we don't get to spend that money on all these other programs, on everything other than highways, we are going to lose the ability to spend that money.'' Well, it reminds me of a cattle rustler who has been stealing Senator Byrd's cattle and my cattle. We call the sheriff out. We confront the guy, and we say, ``You stole these cattle, and we are letting you keep on stealing cattle, but you have to limit the number of stealing. You can't steal any cattle out of this pasture.'' Their response is not, ``Thank you for not hanging me, thank you for letting me continue to do what I have been doing''; their response is, ``Where are we going to get this extra beef?'' That is not our problem. That is their problem. They shouldn't have been spending this money out of the highway trust fund to begin with. Now, let me turn to several points I want to make. First of all, if we don't pass this amendment, we are going to be locked into this highway bill for the next 6 years with mounting infrastructure needs all over the country and with tens of billions of dollars collected in gasoline taxes that will be spent on something else. If the American people had a vote on our amendment of whether to require that gasoline taxes that are collected for the purpose of building roads be spent on roads and only on roads, I can't imagine that many people would oppose this provision. But we are only going to have one chance in the next 6 years to do something about it, and that is on the highway bill. Now, those who oppose our amendment, those who want to spend that $90 billion on everything but roads say, ``Don't bring up the highway bill now, let us deal with the budget first.'' Now, they are trying to play on the confusion. Senator Byrd and I have spoken many times, and we will speak many more times until this is settled and until we have prevailed on this issue. But they are trying to play on the confusion. They are trying to act as if the proposal the President has made about expanding child care or the President has made about building schools or hiring teachers or any of the literally hundreds of programs he has proposed to increase spending, $130 billion worth of spending, they act as if somehow that is equivalent to what we are talking about. It is in no way equivalent to what we are talking about. The President is talking about increasing the total level of spending. We are talking about debating how to spend the money that is currently collected. We have a gasoline tax that is dedicated to building highways, and all we are saying is this is not a budget issue. This is an issue of honesty in Government and highway construction. All we are asking is that the money collected in gasoline taxes be spent on highways. In terms of setting spending levels, that is something we ought to do in the budget and decide what the total level of spending next year is going to be. Then any individual Senator--and obviously the majority-- will make a determination as to what they want to do. But this is not a budget issue. This is a highway issue and it has to do with spending money for the purpose that money is collected. So, we don't want this to be commingled with the budget. There is no equivalent of what we are asking we do here, which is basically a truth-in-Government provision where you collect money on gasoline taxes, you tell people it is going to highways, but you don't do it. We want to fix that. There is no equivalent between that and a proposal to raise the total level of spending in the Federal budget. We don't believe the two should be commingled. Let me turn very briefly to two other issues that a big deal has been made out of, and all of our colleagues will hear about it. I want to be sure people understand it. I want to start with the Appalachian program. That program started in 1965. It has been part of every highway bill since 1965. The President's highway bill, like ours, divides money into two parts, the 90 percent that goes directly to the States, the 10 percent that is spent by the Secretary. Under the President's budget, 1.6 percent of the highway bill is dedicated to the 13 States that make up Appalachia as part of a program that was authorized in 1965. Now, those who oppose our amendment say their amendment provides funds for those 13 States under a program that is now over 30 years old. But what they don't tell you is the rest of the story, and that is we provide a lower percentage of the money going to those 13 States out of the Secretary's discretionary funds than does the President. The President provides 1.6 percent to those 13 States; we provide 1.4 percent to those 13 States. Finally, on that issue, the President's bill, like the bill before the Senate, has this strange provision that says that if we don't have enough money in the trust fund and we have a shortage of money, that we cut the States first. Senator Byrd and I changed that in our amendment. We treat the Secretary's funds equivalent to the States' funds. So from the point of view of this issue, the issue of Appalachia, it is always easy, obviously, in these complicated bills to confuse people, but the two points every Member of the Senate should understand is that as a percentage of the highway bill, less money is going to the 13 States of Appalachia in the program, which dates back to 1965, under the President's amendment; and our amendment eliminates a terrible inequity, which says, if there is a shortfall of funds, what the Secretary has discretion over is funded first. We eliminate that. A final point, and I will be finished, is that one of our critics has said that our bill funds interstate corridors of international trade and border infrastructure. This was called for under NAFTA. Interestingly enough, the bill that is before the Senate, the highway bill--or we wish was before the Senate --provides $750 million to fulfill the commitments made in NAFTA only by a sleight-of-hand. It provides no real authorization for the money to be spent. So they tell you they are providing $750 million. You can read it right in their bill. But elsewhere they have a provision which renders that nonexistent. We have provided $450 million which is real. So in reality they claim to be providing more than we are, but their complaint is we are basically doing it; whereas they were basically misleading people about what they were doing. So I want people to understand this issue. We need to get on with the highway bill. We have work to do. We are running out of time. The highway bill is going to expire. Road construction is going to stop all over the country. We need to bring this highway bill up and we need to do it now. I want to ask our Governors, our mayors, the people who build highways, the people who use highways, we need to hear from you in this debate because your interests are at stake.

Mr. GRAMM. We have gotten the commitment, I think, in writing from Senator Thomas; that brings us up to 51. We have one other Member who has said verbally they want to cosponsor, but I want to wait until we get that in writing. The point in the 30 seconds is that this is the first legitimate bipartisan effort in this Congress. We have 51 cosponsors, Democrats and Republicans, because this is a bipartisan issue. People say they want bipartisanship. This is an issue where we are getting it, and what we need is this bill on the floor of the Senate so that we can provide this bipartisan leadership to do what the country needs.

Mr. GRAMM

Mr. GRAMM. Mr. President, I wanted to talk today on the same subject Senator Byrd spoke on earlier and that Senator Chafee also spoke on earlier. Without getting into a debate with Senator Chafee, I want to respond to a couple of things he said. I want to remind my colleagues that in the American system of Government, we have a series of dedicated revenues where we collect specific taxes and fees and we tell the American people that those taxes or those fees are dedicated to a specific purpose. When you go to a filling station, if you live in a State that has banned the little clip that holds the nozzle in the ``on'' position so you have to stand there while it's pumping gas into your car or your truck, I am sure that you have read the sign on the gasoline pump. It basically says, if you wanted to reduce it down to good news and bad news, that the bad news is that a third of the price that Americans are paying for gasoline is taxes. But the good news is every American is assured on every gasoline pump in America that those taxes are going to build highways. Virtually every American in this era of self-service has read that sign on the gasoline pump, the bad news and the good news. The problem is, the good news is not true. The bad news is sure enough honest to God true. But the good news is not true. Today, on average, somewhere between 25 cents and 30 cents out of every dollar of gasoline taxes is not spent on roads. So that when we tell the American people that the gasoline tax is a user fee for roads, as is often the case in Government, we are not totally leveling with the American people. Senator Byrd and I would like to partially change that. I want to explain exactly what we are doing. As my colleagues will remember, in 1993, for the first time in American history, the President pushed through Congress a permanent gasoline tax, 4.3 cents per gallon, that was not dedicated to the highway trust fund, and every penny of it was spent by Government on a broad array of projects and programs, none of which had anything to do with highways. You will remember that I offered an amendment in the Finance Committee that was adopted by the Senate, ultimately adopted by the conference, voted on in the House and Senate, signed into law by the President, that took that 4.3-cent-a- gallon tax on gasoline away from the general revenue and put it in the highway trust fund, where it belongs. We now are looking at a situation where, if we don't take action to allow a competition where those of us who believe that, relatively speaking, we are spending too much on many programs and not spending enough on highways, we are going to have a situation where the trust fund could rise to almost $80 billion, where we have collected $80 billion between now and the end of the highway bill that should be before the Senate today. We will have collected $80 billion, telling people the money was going to highways, and, yet, every penny of it will have been spent on something else. Senator Byrd and I have said that that is not honest. Senator Byrd and I have said that our amendment, basically, has to do in part with honesty in Government. Our dear colleague from Rhode Island has said that this has something to do with the budget surplus, or at least has talked about surpluses in the trust fund and the budget in such a way that people might get confused between the two. So I want to make it very clear what the Byrd-Gramm amendment does and what it does not do. In fact, anybody who wants to read the amendment can understand exactly what it does, because it is a very simple amendment. Basically, what the amendment says is this: We have put the 4.3 cent a gallon tax on gasoline into the trust fund. We had a surplus of $23 billion that had already been collected to build roads but has been spent on something else. What Senator Byrd and I are saying, in essence, is, all right, we ought to get that money back. Fairness would dictate it goes to roads. It was collected for that purpose. An analogy I have used is that it is like a rustler has come out and has been stealing your cattle and you catch him. Senator Byrd and I called the sheriff and the sheriff has come out and arrested this rustler. Being benevolent, we have said two remarkable things. No. 1, we are not going to hang you, and, No. 2, we are not going to make you give any of the cattle back that you have already rustled. All we are saying is stop rustling our cattle. What you have already taken from the highway trust fund and spent on other things, go and sin no more. Their response is, ``Well, it's great to spend money on highways, but where''--going back to my rustling analogy--``where are we going to get our beef? If we can't raid the highway trust fund to fund other programs of Government, just where are we going to get our money?'' That's not my problem. We have Members of the Senate who were looking at that $80 billion and saying, ``Great, if we can prevent that from being spent on highways, we could spend it to pay arrears of the U.N. dues, we could spend it on social programs, we could give it to the Legal Services Corporation, we could do all kinds of things with it.'' So they are not happy that Senator Byrd and I want to allow the money to be spent on highways. After, basically, raising the concern that they are going to be disadvantaged because they wanted to spend the money in inappropriate ways, now they are trying to say that Senator Byrd's amendment and my amendment would bust the budget. It is not so. Our amendment does not raise the spending caps in the budget. Our amendment does not provide any authority or mandate or excuse for violating the budget agreement we reached last year. All our amendment says is this: You are collecting this money in gasoline taxes. You are telling people that you are spending the taxes to build roads. At least allow those who want to deliver on what you are promising the American people the right to compete in the appropriations process with every other program of the Federal Government. The answer for those who don't want the money spent on roads is, don't bring up the highway bill; wait and vote on this as part of the budget. Now here is what they hope to do. They hope to convince some of our Democratic colleagues that if they let the highway trust fund be spent on highways, that there is strong support for building new roads, which the country desperately needs and, after all, we said the money was being spent for it when we collected the gasoline taxes. So they are worried that we will build roads or they are going to argue that we will build roads and that will take money away from other programs, so if you want other programs, you don't want to build roads. They are going to try by getting this all involved in the budget so it can be commingled with President Clinton's proposal to increase spending by $130 billion and bust the caps. They are hoping to convince Republicans that our proposal is no different than the President's proposal. The truth is, all we are asking is that money collected in gasoline taxes for highways be authorized to be spent on highways, and then we have to have competition for available money. And under the budget, if we spend the money on roads, obviously, we are going to have to set priorities, and every Member of the Senate will have to make those decisions. But this is not a budget issue. We are not talking about breaking the spending caps. This is an issue about highways. Let me tell you why it is critically important. The current highway bill ends on May 1. It is highly unlikely that we will get another extension of the highway bill. Construction projects on roads and highways all over America are going to come to a screeching halt on May 1. In my part of the country, which is more blessed by God than others, we have long building periods where people can construct through a long spring and summer and fall and actually, for all practical purposes, build year round. But in many States of the Union, they have a 3- or 4-month window when they have to build highways. So if we follow the prescription of the people who don't support building more roads, who want to spend the highway trust fund on other things, we are going to delay, and by delaying, we may get no highway bill, the States in the northern part of the country may lose their whole building window within this year and, finally, people need to make plans. They need to hire workers. They need to buy capital equipment. We have major highway projects that are partially completed, so we have tied up all this money in building new interstates and new bypasses, and the States, if we are forced to stop construction, will get no use out of those projects. So I want to urge the majority leader to bring up the highway bill and bring it up next week. I want to make it clear to my colleagues, I will not support breaking the spending cap. I would not author an amendment that broke the spending cap. Our amendment does not raise the spending cap, and that is not what the Senator from Rhode Island is worried about. He is worried that we won't break the spending cap and that highways will compete money away from other programs. Well, I am not worried about that. That is exactly what I want to do, and I think it is the right thing to do. We have 51 cosponsors. We would love to have more. I thank the Chair for the Chair's indulgence, and I yield the floor. Mr. KENNEDY addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent that I might speak for 10 minutes as in morning business.

Mr. GRAMM

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

Mr. GRAMM. Mr. President, I ask unanimous consent to speak as if in morning business for up to 10 minutes.

Mr. GRAMM

Mr. GRAMM. Mr. President, as many of our colleagues are aware, there has been a problem in America since roughly 1990 in that we have collected taxes on gasoline. Those taxes, as anyone knows who has ever stood and read the gasoline pump as they are filling up their car or truck, are dedicated to building highways. But, yet, since 1990, over 25 cents out of every dollar we have collected in gasoline taxes has not gone to building highways. It has instead gone to fund general government. This produces a real problem. If you read the sign on the gasoline pump, it basically gives you good news and bad news. The bad news is that about a third of the cost of a gallon of gasoline is taxes. The good news is that every penny you pay in gasoline taxes is supposed to go to build roads. The problem since roughly 1990 has been that the bad news is true and the good news is not true. Senator Byrd, I, and others set about last year to try to correct this problem to basically try to bring honesty to Government by having a program that in reality conforms to what we tell the American people. And that program is that if you collect money on gasoline taxes to spend on roads that you spend the money on roads and nothing else. We have done it in two parts. One part is complete. I offered an amendment to last year's tax bill which was adopted in the Senate, adopted in the House, and became law when the President signed the tax bill into law. It took the 4.3 cents a gallon tax on gasoline that in 1993 the President had dedicated permanently to general revenues--the first time in American history that such a designation had ever occurred--and it put that gasoline tax back into the highway trust fund. You can imagine how surprised we were when the President's budget came out and not one penny of that gasoline tax is proposed to be spent on highways. Senator Byrd, I, and others have put together an amendment which now has, I believe, 52 cosponsors. I want today to outline what the amendment does and what it does not do, what the result of adopting the amendment would do, and what it would not do. I also want to address two other issues that people have talked about as reasons of not being for the amendment. First of all, our amendment is on an authorization bill. It basically would change the highway bill to assure that the 4.3-cents-a-gallon tax on gasoline would be authorized to be spent on highways. Our amendment does not, nor could it, change the spending caps in the budget. Nothing in our amendment would in any way change the total amount of funds that are currently available to be spent under the budget agreement which we adopted last year. In fact, our amendment specifically states that nothing in the amendment will bridge or break those caps. So we are not debating how much total money is going to be spent next year. That debate is going to occur in the budget and probably to some extent in the appropriations process and perhaps in the Finance Committee with taxes and user fees. My position is longstanding, and I don't intend to change it under any circumstances. And that position is that we should not raise the spending caps; that we made an agreement last year with the President. We took that agreement to the American people. We made a promise. I think we ought to live up to that promise. The Byrd-Gramm amendment simply allows highways to compete with every other use of money within the budget agreement. If we do not adopt the Byrd-Gramm amendment, it means that for the next 6 years we are going to be spending less than 75 cents out of every dollar collected in gasoline taxes on highways, and we are going to continue to perpetuate an untruth where people were told when they buy gasoline that the money is going to build highways when in reality over 25 cents out of every dollar is going to general government. If you believe that when we have a dedicated revenue source--a ``user fee,'' as some call it--that we have an obligation, in fact, a moral obligation, to the American people to use the revenue for the purpose that it is collected for, then I believe that you should be for the Byrd-Gramm amendment. We have, I believe now, 52 cosponsors. I don't have any doubt about the fact that if we voted on the Byrd-Gramm amendment today as an amendment to the highway bill it would be adopted and it would probably get 75 or 80 votes. Here is the problem. Those who oppose the amendment would like to delay its consideration and consider it in the context of the budget. When we are considering the budget we are going to be considering many proposals to break the spending caps. And it is the hope of those who oppose the amendment to use that parliamentary position to try to convince people that rather than fulfilling the commitment we made to the American people about spending gasoline taxes on roads that we should not do that so we can raise spending in other areas. In fact, the strategy is to commingle this effort to allow highways to compete in an effort to break the budget entirely. I didn't think that is where we ought to consider this amendment. This is not a budget amendment. Our amendment does not break the spending caps. All we do is authorize highways at a level that would allow the spending of every penny collected in the gasoline tax, or at least that new portion, 4.3 cents a gallon. It would then be up to the Appropriations Committee within their overall budget to decide how much to spend on highways. Let me make it clear. I believe that under those circumstances we would be successful, and that we would provide the full level of funding. But in doing so we would do it within the spending caps. A couple of additional points. Our highway bill will expire on May 1st. It would be my intention--and I believe it is the intention of Senator Byrd--that if that highway extension expires, we would want an opportunity as part of rewriting it to offer our amendment. In fact, we are preserving our right to offer our amendment, as obviously anyone can at any time to any bill. We don't want to do that. We want to have the opportunity to have the highway bill in front of us. I hope my colleagues will join Senator Byrd and join me in urging our leadership on both sides of the aisle to come forward with the highway bill. I came over today because we are here at 3 o'clock with no business before the Senate. We could have already written the highway bill. It takes time to plan the building of roads and bridges. It takes time for States to set out their blueprint of what they are going to do. I am blessed in being with a Southern State that has a long construction cycle. But for people who live in States like North Dakota, they have a very short construction cycle in terms of highway construction. And if the highway bill should expire, if they lose May, June, and July, they will end up not having a highway construction period this year. So I believe that we need to get on with this bill. I think there is a solid consensus that says that within the spending caps we want to allow highways the right to compete for funds up to the amount of taxes that we collect on gasoline. If those of us who believe that the money should be spent on highways can't win that debate, then obviously we will not get the money. But since the money was collected on gasoline taxes, people were told it was going to be used for highway construction, I believe that if we do authorize its expenditure we will be successful. So I came over today to basically make two points. No. 1, nothing in the Byrd-Gramm amendment raises the spending caps. The amendment specifically states that the spending in the Byrd-Gramm amendment will be within the spending caps. We are going to debate spending caps and the total level of spending in the budget. The Byrd-Gramm amendment is authorization which authorizes the construction of highways at a funding level up to the expenditure of the gasoline taxes that we are now collecting. It will be up to each of us then within the spending limits that are set in the budget--and I hope they will be the spending limits that we agreed to last year and I intend to fight for, but within that we will have an opportunity to compete so that funds can be spent on highways and so that we can have truth in Government, so that when working Americans go to the filling station and stick the nozzle in their gas tank and they sit there while they are holding it reading on the gas pump that every penny of gasoline taxes goes to build roads, that will not be false advertising by the Government, that it will in fact be a reality. The final point I wanted to reemphasize is we are running out of time. The extension of the highway bill expires on May 1. We are not going to be able to get another clean extension. We obviously have time to deal with this bill since there is no action in the Chamber here at 3 o'clock in the afternoon. It is early in the session. We were told when Congress adjourned for the Christmas recess the first item of business was going to be the highway bill. With a construction cycle beginning in May in the northern tier of the country, with the desperate need for highways and highway modernization, with the fact we told people the money they spend on gasoline taxes is a user fee to be used for highways and roads, I believe it is important that we move ahead. I urge our leadership, both on the Republican side of the aisle and on the Democratic side of the aisle, to move ahead with the highway bill. Let the Senate work its will and know that the amendment which will be offered by Senator Byrd and by me and by 52 Members of the Senate is an amendment that does not break the spending caps. Under no circumstance am I going to support breaking the spending caps. This is a debate about priorities. It is a debate about whether or not, when you tell people that their gasoline taxes go to build roads, it should go to build roads. This is competition for available money. It is not a debate about increasing the total level of spending. I know people get confused on this issue, and I wanted to be sure that we continue every day to reiterate that this is a debate about priorities. It is a debate about honesty in Government. But it is not a debate about the total level of spending. That decision will be made in the budget, and hopefully the decision will be made to live up to the commitment we made last year. Mr. President, I thank the Chair for recognition. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, I thank our dear friend and leader from Georgia, Senator Coverdell, for yielding. Let me first say that this is a very happy occasion to me because I have come to the floor of the Senate to talk about a budget where in the one provision that Americans clearly understand best, and based on the historical problems we care about most, we have a unanimity of purpose with the White House, with the Democrats. In fact, this is the first time in my career in Congress that we have a President, a minority party, and a majority party, all of which have committed to balancing the Federal budget. It is a certainty that if the economy stays as strong over the next 18 months as it is today that we will balance the Federal budget in fiscal year 1999, which is October of 1998 through September of the year 1999. That, obviously, is good news. So I think the first thing we need to do is we don't need a debate about balancing the budget. We don't need a debate about how we differ with the President on this subject. Some people will want to debate about how it happened. Some people will want to debate who should have the credit. But it seems to me that the good news is given the economy stays as strong as it is we are going to have a balanced budget, and the President and the Congress--Democrats and Republicans--agree on the bottom line of that budget. So given all of that happy news, I think we should just simply take it to the bank, so to speak, and move ahead on that front. Now the question comes: Where do we disagree? That is what I would like to talk about today because I think those disagreements are very, very important. How did we get to where we are today? It seems to me that it started in 1985 when for the first time we really started to try to gain control of spending. It has been fiscal responsibility-- often a battle between the President and the Congress, Democratic Presidents, Republican Presidents, Democratic Congresses, Republican Congresses. But the basic fact of life is that since 1985 we have limited the growth of Government for the first time really in the postwar period. Where does the President want to take us from this happy moment, and where do Republicans want to take us from this happy moment? Given that together with a strong economy we are going to balance the budget, which road does the President want to go down? And which road do Republicans in Congress want to go down? Then it seems to me that it is up to us to define those paths as we come to this fork in the road where people need to choose which path they want to follow. The President is proposing in his budget $115 billion of new taxes and user fees. These taxes entail many different provisions from taxes on airline tickets to changing the way we deal with life insurance-- numerous provisions. But when you add up all of the taxes and user fees, the President's budget over the next 5 years will take $115 billion out of the pockets of Americans and transfer that money to the Government. The President will then use that money to fund in part a $130 billion increase in Government spending. Anyone who heard the State of the Union has heard the long list of things that the President wants to spend money on. The first thing I want people to understand is that this represents a dramatic change in policy. The President is contemplating from this point where we have all come together to balance the budget taking a leftward path at this fork in the road that entails a very substantial increase in taxes, and a very substantial increase in Government spending. Let me tell you why I am concerned about the increase in taxes and user fees. I am concerned because never have Americans paid more taxes than they do today. American families all over the country--when you add up the total taxes they pay--are paying about 31 cents out of every dollar they earn to the Government in taxes. We didn't pay 31 cents out of every dollar at the peak of the war effort in 1944 and 1945. We didn't pay 31 cents out of every dollar at the peak of the Civil War effort. Never in the history of the country have taxes been higher than they are today. Yet, in the President's budget under his own numbers, the percentage of the income of Americans who work for a living that goes to the Federal Government in taxes rises for 1998 over 1997 and rises for 1999 over 1998. For 3 years in a row, despite the fact that we are at the highest tax level in American history, the President would raise taxes again, meaning that Government would be spending more of our income than at any time in American history. And the only other times in American history that we have even rivaled this level of taxes were times when defense spending was at a record high. And today defense spending is lower than it was when the Japanese bombed Pearl Harbor on December 7, 1941. Now it seems to me that what Republicans have to do--and I think we need to do it in a very open way because this is a public policy choice--is we need to go through and look at all of the $115 billion in taxes and user fees, loophole closures, whatever euphemism the President may have for them, and we need to make a judgment. Are these good things, are they bad things, should they be done, are they equitable, and do we want to take that much in revenues? That is the first question we have to answer. I think we do it by looking at each individual program and making a decision. Then we come to the decision as to what you would do with this money if you had it. If we had $115 billion of new revenues, would we want to go out and undertake $130 billion of new spending programs, or would we want to give that $115 billion back to the American people by cutting taxes? It seems to me that the difference between Republicans and the President at this sort of defining moment where we are on the verge of achieving a balanced budget and facing this fork in the road that the President wants to go left in raising taxes to increase spending even though the tax rate is at a record high. I believe Republicans think that we should look at each one of the President's revenue proposals. But, if we believe that they merit our action, our support, we think we ought to take that money and give it back to working Americans in terms of tax cuts. We have had proposals by the President, for example, to spend $21 billion on child care, a new massive program at the Federal and State level in block grants. Republicans believe there is a child care problem. Today the average American family sends one out of every four dollars it earns to Washington, DC. In 1950, when I was a baby, the average American family was sending one out of every forty dollars it earned to Washington, DC. Today working wives in two-parent families where both parents work outside the home are paying 55 percent of their earnings in taxes that didn't exist when I was a baby. So, obviously, working families do have a problem paying for child care and raising children. But is the answer another $21 billion Federal program? Or is the answer, for example, to double the dependent exemption from $2,500 a year to $5,000 a year so that instead of taking $2,500 off your income before you figure your taxes per child for those under 6 you take $5,000 off per child. So you could keep more of your own money and invest it in your own decision about child care, whether it is professional child care, whether it was church based child care, or whether it is grandma keeping the children, or whether it is mom staying home with the children. You would have a choice. That, it seems to me, is a legitimate choice that Americans can look at. The President believes the answer to child care is $21 billion of new Government spending. We believe the answer is to take the $21 billion, double the dependent exemption for children under 6, and let working families decide how to spend the money. I think the advantage of our program is you don't have to use child care to get benefits. If you stay home with your children, you get the benefit. If you work outside the home and grandma takes care of the children, you get the benefit and you decide how to spend it. Who says one is better than the other? I think that is up to the American people. But that is the decision we are making at this crossroads where the President says the answer is more Government, and we say the answer is more freedom--in this case freedom to spend your own money. If you ask American families that are in that income level--between $25,000 a year and $50,000 a year--so that their tax rate is popping up from 15 percent to 28 percent, if they would rather the Government spend $130 billion on their behalf, or would they rather say that if they can work and make more money we will tax them at 15 percent instead of 28 percent, what if we could say for single people that they can earn $34,000 and still be in the 15 percent bracket, and we could say to working families that they can earn $50,000 and still be in the 15 percent bracket instead of $40,000? If we could do that for the same cost that the President is going to incur in funding all of these new Government programs, would working families rather keep that extra money and spend it themselves on many of the same things we say we are going to spend it on their behalf, or would they rather us do it? Again, we are at that fork in the road where we came together to balance the budget. But the President and the Democrats say let's spend this money on more Government programs. We say let's let working families keep more of what they earn, and for middle-income families who have seen all the Reagan tax cut eaten up by an increase in payroll taxes, let's stretch out this bracket at 15 percent. Let's go up to $34,000 for single, and $50,000 for working couples where they will still be taxed at 15 percent, not 28 percent. Would they prefer having that, or $130 billion worth of new Government spending? No one says the President is wrong and we are right. What we are saying is America, which do you want? Do you believe Government can spend your money better than you can spend it? Do you think we are wiser than you? Do you think we know your needs better than you know your needs? Do you think we have this wisdom and insight and perspective that you as fathers and mothers, grandmothers and grandfathers lack? Well, if you do--and that is a perfectly legitimate view; it is not one I share, but it is legitimate--then you want to support the President's program. But if you believe you could spend the money better, that you know a little bit more about taking care of your children and raising your family than the Government does, then you want to support what Republicans want to do. You want to support going down the fork in the road that we choose from this point. That is basically the choice that we have. Let me address two additional issues very briefly. If we have a tobacco settlement where we agree with the tobacco companies that they are going to pay the Government money--and the whole purpose of the settlement that everybody forgets in this rush to spend the money is that if there is a settlement the settlement is that the tobacco companies owe the taxpayers for the medical costs that have been imposed on the Federal Government as a result of people smoking--where have those costs been imposed? Those costs have not been imposed on school buildings or teachers. I'm not sure that smoking stunts your growth when you are a child but we know that it raises the probability that you will have lung problems, heart problems, and numerous other health problems when you get older. The cost of smoking borne by Medicare has been probably six dollars for every one dollar that the States have spent on Medicaid because of smoking. So if we are going to have a tobacco settlement, the cost that the tobacco companies are paying to the Government is really to compensate for the cost of Medicare. So I don't think it is unreasonable that we ought to take that money and use it to save Medicare--not just for our parents but for our children. So if there is a tobacco settlement, the money ought to go where the settlement agrees it is for, and that is to compensate the taxpayer for medical costs. And almost all of those costs at the Federal level are borne by Medicare. Finally, if we are just simply going to raise taxes on cigarettes, then we get back to the decision at this fork in the road as to whether if we are going to raise taxes on cigarettes to discourage people from smoking, should we give the money back to Americans by cutting tax rates, or lowering the taxes in some way, or should we have the Government spend it and let the taxes which are already at historic highs rise even further? Again, there is no right or wrong here. It is a question of what Americans want. Finally, in protecting Social Security, I went to the State of the Union Address, and I guess many people tuned in excited to hear what the President was going to say about Social Security. The plain truth is, to my disappointment, the President said almost nothing about Social Security. He has proposed no program whatsoever. He just simply outlined the $130 billion worth of new spending and then said to Republicans, do not dare talk about cutting taxes because you need the surplus to save Social Security. The point is, if we want surpluses to save Social Security, we should not spend the $130 billion to begin with. How would you save Social Security? First of all, over the next 5 years, $600 billion is going to be paid into Social Security above the level that we are actually paying out for Social Security benefits. Under the President's budget, we spend $400 billion of it on general Government. I think we ought to take that money and invest it in Social Security. How would you do it? Let me tell you very briefly how I would do it. Currently, workers pay 12.4 cents out of every dollar they earn in wages to Social Security. None of it represents a real investment, and it is all either paid out in benefits or spent on general Government. There is no trust fund. The trust fund exists as only a paper accounting system where the Government claims it owes money to Social Security, but it does not count it as an external debt and when it pays interest, it does not count it as an expenditure of the Government. What I would do is take that $100 billion a year being paid in above what we are spending and actually make investments that would be owned by individual workers. By doing that we can cut in half the long-term liability of Social Security. So to sum up, since I know one of my other colleagues is here to speak, we have come together on a bipartisan basis, Democrats and Republicans, the President and Congress, with a unity of purpose to balance the budget. We agree on that, and we are going to do it, and that is no longer something we are debating. The question is where do we go from here. Do we need more Government even though we have a record high tax rate, or do we need to let people keep more of what they earn? That is the choice we face. That is what the debate is about. And I hope people will understand it and make their choice. I believe they will choose freedom. They always have when they have had the choice and when they have understood it. I believe that is the choice they will make. I thank the Chair. Mr. COVERDELL addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent that I might speak for 7 minutes.

Mr. GRAMM

Mr. GRAMM. I suggest the absence of a quorum.

Mr. GRAMM. Mr. President, I want to talk about the Clinton budget which was sent to Congress this morning. I want to try to outline basically what the budget does in terms of spending and taxes. I want to talk a little bit about the tobacco settlement. I want to talk about protecting Social Security. And I want to note that it is very important for people, in understanding the President's budget, to look beyond just the cover page, because the President's budget has a number of new programs that are funded by offsetting receipts and, as is usually true when a Government document is half as high as you are, there is a lot of hidden agenda, hidden spending, hidden taxes in the President's budget. My staff and I have spent yesterday evening and this morning going over the President's plan. I am not sure we have ferreted out all the new spending and all the new taxes, but we have numbers and I think they are important. First of all, the President proposes $130 billion of new spending programs. That is a larger scale of new Government spending than has been contemplated by any budget since 1994 when the President proposed having the Government take over and run the health care system. If you exclude the health care proposal, where the President proposed that the Government on a massive scale take over and run the health care system, you have to go all the way back to at least the Carter administration to find a budget that proposes the massive increases in social programs that are contained in the Clinton budget. Interestingly enough, when you look at the Clinton budget it claims to spend $1.733 trillion, but in reality, as large as that number is and as substantial as that increase is over last year, there is at least another $42 billion that is hidden in spending that is offset by fees and by asset sales, so that in reality the budget spends $1.775 trillion, which makes it far and away the largest budget ever submitted in the history of America. I think it is startling to note that the President's budget contains $115 billion worth of new taxes. Some of these taxes are called by different names, but they all represent taxpayers paying more in taxes, more in fees, more for the things they buy so that Government can spend more as their real purchasing power is less. There is some tax relief in the President's budget: $24 billion. But when you add it all up it is a net tax increase of a whopping $91 billion. What I think is amazing about this tax increase, which is the largest tax increase since President Clinton proposed his tax increase in 1993, is that the tax burden on American workers is higher today than it has ever been in the history of our Republic. Not during the peak of the war effort in the Civil War, not during the peak of the war effort in World War II, did the average American citizens send 30.5 cents out of every dollar they earn to government at some level before. This year American families on average will send 30.5 cents out of every dollar they earn to government, which will spend it on their behalf and supposedly in their interests. It is amazing to me that the President, when we are facing the highest tax burden in American history, would be talking about another $91 billion of net taxes. Let me talk about the tobacco settlement. The President is counting on $65 billion of revenues coming from the tobacco settlement and, except for a tiny amount--$800 million which is spent on Medicare--this $65 billion goes to an array of new spending programs that have absolutely nothing to do with the tobacco settlement. I want to remind my colleagues and anyone who is interested in this issue that the whole logic of the tobacco settlement is that the tobacco companies, by selling tobacco to consumers, and through the health effects of smoking, have imposed a massive cost on the Federal taxpayer. But where has that cost occurred? It has not occurred in child care, it has not occurred in new school buildings, it has not occurred in the cost of new teachers--it has occurred in mounting costs for Medicare. Interestingly enough, while the States are big beneficiaries in their Medicaid Program from the tobacco settlement, for every $1 of cost imposed on Medicaid by people smoking in the past, there have been perhaps $6 of costs imposed on Medicare. So I believe if we have a tobacco settlement, that money ought to be put to a noble cause and that cause is saving Medicare, not just for our parents but for our children. I don't think we ought to take money in the name of reimbursing the taxpayer for medical care costs that have been borne through Medicare and spend that money on other things. I believe, if there is a tobacco settlement, that the money ought to go to save Medicare and I intend, as chairman of the subcommittee with jurisdiction over Medicare, to fight to see that any tobacco settlement goes to Medicare, that it doesn't just become a grab bag to fund new Government programs that have nothing to do with the health effects of tobacco. The President says that he wants to use the surplus to save Social Security. No. 1, I think the President's words ring hollow when you note that he is busting the spending caps that we agreed to last year in a bipartisan budget. I am sure some of my colleagues will remember that I thought the spending level was too high in last year's budget. In fact, last year in writing that budget we broke the spending caps of the budget that President Clinton had pushed through Congress in 1993. But now the President is already trying to break the agreement that we adopted last year, and I reject that. Finally, I don't know how the President can claim to be saving Social Security when the Social Security system will pay in $600 billion more into the Social Security trust fund than will be spent on Social Security, and the President spends $400 billion of the $600 billion. I believe we need to set up a program to take that $600 billion and invest it in Social Security by making real investments that are owned by the individual worker so that young Americans will have some chance of getting some benefits from Social Security. So I believe the President's budget breaks the agreement that he entered into with Congress last year. The President's budget breaks the spending caps. The President's budget proposes the largest increase in spending contemplated by Government since he proposed having the Government take over and run the health care system. The President proposes the largest tax increase, $91 billion, larger than the tax cut from last year--he proposes the largest tax increase contemplated by our Government since 1993. The President takes $400 billion that will be paid into the Social Security trust fund and spends it on general Government under this budget. I believe that should be stopped. Finally, if we have a tobacco settlement, the money ought to go to save Medicare, it ought not to go to fund general Government. So, I believe the President is breaking the deal that he made with Congress. I believe your word is your bond on these matters. I am opposed to the President's budget. I think we should hold the line on spending. I think whatever surpluses we have, A, we ought not to do anything with them until we have them, and, B, when we do have them, we should use them to make real investments so that our young workers will have some benefit from Social Security, a program that they will pay into their entire working lives. I yield the floor.

Mr. GRAMM

Mr. GRAMM. I think I have sufficient time between now and then, Mr. President. Thank you.

Mr. GRAMM. Mr. President----

Mr. GRAMM

Mr. GRAMM. Mr. President, Senator Byrd has already spoken about the highway bill. I want to amplify on what he has said. When you go to the filling station and you pull up your car or truck and you take out that pump and stick it into your gasoline tank, now most filling stations don't have the little clip on the bottom. So you have to stand out there and pump it. Probably most people have done what I have done. And that is while you are standing there you read what is written on the gasoline pump. What is written on the gasoline pump is sort of bad news and good news. The bad news is that a third of the cost of a gallon of gasoline in this country on average is taxes. The good news is, as it says right on the gasoline pump, that every penny you pay in gasoline taxes is going to build roads. The problem that Senator Byrd and I are talking about today and the problem which we are trying to fix is that the bad news is true. A third of the cost of a gallon of gasoline is taxes. But the good news-- that it is spent on roads--is not true. In fact, today over 25 cents out of every dollar collected in gasoline taxes goes to general Government. It funds programs that have absolutely nothing to do with highways, transportation, or with gasoline taxes. My colleagues will remember--perhaps some people in the country that follow the debate will remember--that last year I offered an amendment to the tax bill that took the 4.3 cents a gallon tax on gasoline that had been part of the President's 1993 tax increase, and took that money away from general revenue and put it back into the highway trust fund where it belongs. That became the law of the land last October 1st. It went into effect. It went into the highway trust fund. Senator Byrd and I are trying to take a final step which we view as an honesty-in-Government step, and that is to require that the money that we collect in gasoline taxes be spent on roads. Those who oppose this amendment are trying to delay its consideration to get it commingled with the budget so that it simply can be portrayed as another competition for available money, and perhaps an effort to bust the budget. I want to remind my colleagues that the amendment which Senator Byrd and I have offered specifically does not bust the spending caps. All we are doing is asking that the money that we collect in gasoline taxes be spent for the purpose that we are telling the American people that the money will be spent. That would require us over the next 5 years to reallocate 1.4 percent of nondefense discretionary spending, and by reallocating it guarantee that the money goes to the purpose that we said that the money would go when we collected it at the gasoline pump. We have 50 cosponsors. I urge my colleagues to join us in this effort. I urge our leadership to not commingle this with the budget. We have a highway bill to write. The current highway bill will terminate on May 1. Money will not be available for construction after that time unless we act. I think it is important that we bring the bill up and that we have an up-or-down vote on honesty in Government, and that vote is, do you believe the gasoline tax, which we tell people goes to road construction, should actually go for that purpose? I believe it should. That is why I am a cosponsor with Senator Byrd, Senator Baucus, Senator Warner, and many others in this effort to basically require that gasoline taxes be spent on roads. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, with the administration expected to seek eventual Senate approval of the recent Kyoto Protocols on ``global warming,'' I would like to enter into the Record an excellent article on the subject by the noted author and historian T.R. Fehrenbach. It is a timely reminder of the many climate-related changes our planet has experienced and places the current debate in much needed historical context. I commend this article to my Senate colleagues and ask unanimous consent that it be printed in the Record.

Mr. GRAMM

Mr. GRAMM. Mr. President, I suggest the absence of a quorum.

Mr. GRAMM. Mr. President, one of the most important pieces of legislation that will be considered by the Senate this year is Senator Jon Kyl's bill, S. 1194, the ``Medicare Beneficiary Freedom to Contract Act''. I am proud to be an original co-sponsor of this bill. Enactment of this legislation will insure that our senior citizens who participate in the Medicare program will retain the right to pay for the treatment or services they want from the doctor of their choice. The Clinton administration has sought to restrict such a fundamental freedom but I do not believe that the American people will support that position once we have had a chance to bring the matter to their attention. Mr. Kent Masterson Brown, writing in the Washington Times on January 25, 1998 has provided a succinct analysis of this issue and I commend his article to my colleagues. I ask unanimous consent that the article be printed in the Record.

Mr. GRAMM

Mr. GRAMM. Mr. President, when we convene for the second session of the 105th Congress, I will introduce legislation which will authorize the U.S. Customs Service to acquire the necessary personnel and technology to execute their duties at our international borders with Mexico and Canada. Specifically, my proposal is designed to reduce delays at border crossings to not more than 20 minutes, while maintaining--in fact, strengthening--our commitment to interdict illegal narcotics and other contraband. In working with local officials, businesses, the Border Trade Alliance, and several of my colleagues, it has become evident that the best way to accomplish these objectives is to increase Customs staffing and provide the technological resources that can give them the best chance at accomplishing their mission. Customs staffing needs to be increased significantly to facilitate the flow of substantially increased traffic on both the Southwestern and Northern borders. The practical effect of these personnel increases will be to open all the existing primary inspection lanes where congestion is a problem during peak hours and enhance investigative resources on the Southwest border. I am very concerned about the impact on Texas and the Nation of narcotics trafficking and have worked closely with Federal and State law enforcement officials to identify and secure the necessary resources to battle the onslaught of illegal drugs. At the same time, however, our current enforcement strategy--which is burdened by insufficient staffing and a virtual absence of vital interdiction technology--is effectively closing the door to legitimate trade. Long traffic lines at our international crossings serve no useful purpose and are counterproductive to improving our trade relationship with Mexico. At a time when NAFTA and the expanding world marketplace are making it possible for us to create more commerce, freedom, and opportunity for people on both sides of the border, it is important that we eliminate the border crossing delays that are stifling these goals. My bill will be designed to shorten those lines and promote legitimate commerce, while providing the Customs Service with the means necessary to eliminate the drug trafficking operations that are now rampant along the 1,200-mile border that my State shares with Mexico. I will be speaking further to my colleagues about this initiative and urge their support for the bill.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me begin by outlining the points I want to make, and I will try to be brief about it so that we can get on with other business of the Senate. First of all, I want to talk about why I oppose this amendment. I want to talk about the two principal problems it has. I want to outline changes that could be made that would make it possible for us to support the amendment and to see us proceed on a bipartisan basis. And then, without getting into a long oration or, as a critic would say, a lecture on international economics, I want to talk a little bit about trade deficits, about the sources of America's trade deficit, and talk a little bit about the history of the trade deficit in our country, and I intend to do all of this while trying to deviate from my background as an old schoolteacher and be brief. First of all, there are two problems with the amendment. No. 1, we are not going to adopt a proposal to create any commission that is going to be stacked on a partisan basis. There is no way we are going to adopt a commission that has three more Democrat members than Republicans when we have a Republican majority in both Houses of Congress. So I think the first thing we are going to have to do, if we are going to have a commission, is to have the same number of Republicans as Democrats. I think it would be a good idea to try to set some parameters on the kinds of people that should participate on this commission. If we do not want this to turn into a political commission with a bunch of political hacks on it, it would be helpful to have people who are genuine financial, economic, and international trade experts, and ones who could bring with their expertise a high degree of objectivity. I think the degree to which we could set some parameters as to who would be on the commission would probably be helpful. I do not think we achieve anything by appointing a partisan commission with a bunch of political hacks on it who have an ax to grind and are simply looking for a forum to try to promote their own political interest, their special interest, or their individual agenda. Second, I cannot see how we could adopt a commission that was given a mandate that without regard to any other policy, our goal should be simply to eliminate the trade deficit by the year 2007. I believe there are things we could do and should do that would be beneficial to the elimination of the trade deficit. And I will talk about them. But the idea that without doing those things we should simply set out to build walls around America, drive up costs to consumers, drive down living standards, disrupt economic growth, is something I think we have to be very careful about. So I think we could have an agreement here if we have a genuine bipartisan commission. I think we could have an agreement if we could try to focus the membership of the commission so that we are seeking advice from people who actually know something about the subject rather than a bunch of politicians who are simply going to express their special interest. And I think we need a little bit broader objective than simply to say that we should eliminate the trade deficit by the year 2007. To listen to those who oppose fast track and who are talking about gloom and doom on the trade deficit, you would not realize that yesterday the unemployment rate was announced and it is 4.7 percent, which is the lowest unemployment rate we have had since the early 1970s. In other words, today, with the largest trade deficit in American history, we have the lowest unemployment rate we have had in almost a quarter of a century. Let me say a little bit about trade deficits. Trade deficits in and of themselves are not good or bad. They are simply an indication of a lot of other things that could be good or could be bad. Let me give you an example. From the moment that the first settler stepped on the North American continent at Jamestown, VA, until the end of World War I, for all practical purposes colonial America and the United States of America ran a trade deficit nearly every single day--every single day. And yet we had the most sustained period of economic growth in the history of mankind. Why were we running a trade deficit from the time the first American stepped off the boat at Jamestown until the end of World War I? We were running a huge trade deficit because with this vast continent, with its boundless natural resources, with its fertile land and limitless forests, with its harbors and rivers, and with people who had more freedom than any people had ever had in the history of mankind, people from all over the world wanted to send their money here to invest in our economy. So the British sent the money to build our railroads. Investors from all over the world not only sent their money but their children to come and participate in the American miracle, and so as a result we had a trade deficit practically every single day from 1607 to roughly 1920. And to listen to our colleague from North Dakota, with all due respect, it should have been a bleak, dark, doomed place, this America. But the plain truth was we had more growth, more opportunity, more freedom and more prosperity than any place in the history of the world, then to now. Deficits are like debt. They can be a path to prosperity or they can be a path to disaster. And it all depends on what you use it for, why it comes about. Borrowing money can make you rich, if you invest the money and earn a rate of return bigger than what you have to pay to borrow the money. It can also make you poor if you invest the money poorly or simply go out and spend it until you have to pay the money back. Now, let me try, as briefly as I can be brief, to explain why we have a deficit. We need to understand that the exchange rate between the dollar and other currencies is set every day on an international exchange market where there are literally hundreds of billions of dollars of transactions every single day. Now, on this market people are buying and selling dollars, sometimes by the billions of dollars per transaction. Why do people buy dollars? People buy dollars to buy American goods. They buy dollars to invest in America or to repatriate earnings to America from American investment abroad. They buy dollars to hold as an international currency. In fact, the dollar has become the international currency of the world, and, remarkable as it sounds, we have printed hundreds of billions of dollars and people all over the world hold them to use them in their own economies. And we have been a huge beneficiary of that. Now, why do Americans buy other currencies? We buy other currencies with dollars because we want to buy foreign goods, because we want to invest abroad, because we want to repatriate earnings abroad, but by and large we do not use other currencies as an international exchange, not nearly as much as the dollar is used. Now, what this means is every day on the market for international currency, the value of the dollar relative to the yen, the value of the dollar relative to the pound, is set exactly at that point where the dollars that are being demanded to buy American goods and to invest in America are exactly equal to the dollars that we are supplying to try to buy that currency, to buy its goods, or to invest in that country. If that isn't so, then the exchange rate moves. Why is that significant? It is significant because what it really says, for all practical purposes, is that anytime you have a trade deficit you have either a capital surplus and/or people overseas are, for some reason, holding our currency. This last factor is not nearly as relevant for any other country in the world, but because our economy is the strongest in the world, because our dollar is the soundest in the world, people want to hold American dollars. As long as people want to invest in America--and today we are having a huge level of investment in America from all over the world--we are going to have a trade deficit because we have a capital inflow. Those who would like to see it otherwise are trying to repeal double-entry bookkeeping, because basically what we are seeing here with the trade deficit is accounting more than it is economics. We are seeing the accounting of the fact that we have high real interest rates because our Government is still a big net borrower-- because we as a nation don't save very much money. We have the lowest savings rate of any industrial country in the world, largely because we have a Social Security system that is pay-as-you-go and discourages personal savings for retirement. It doesn't have a real trust fund. Social Security contributions are taxes, not savings. And, so, we have collectivized retirement and retirement medical care and converted them from savings for the future into taxes for consumption today. We are not building up assets to pay for our future obligations. So, as a result, we are overspending. This is to say that while at the same time we have the strongest economic performing economy in the world on one hand, that people want to invest in, we have the lowest savings rate on the other. So all over the world people are trying to buy dollars to invest here because of high equity returns and relatively high real interest rates. Now, if we want to do something about that we certainly don't want to do anything about the high equity returns. We don't want to prevent American businesses from growing and providing jobs. We certainly don't want to pass a law that says to people all over the world, ``Don't send your capital to America to put it to work.'' One of the principal reasons we have the lowest unemployment rate we have had in 24 years is that literally tens of billions of dollars of foreign capital flow into America every year. And our foreign investors are, in the process, helping to put our people to work. But, if we really are concerned about the trade deficit, we ought to deal with the deficit in our budget, not just the on-budget deficit but all the money we are borrowing for off-budget accounts. We ought to restructure Medicare and Social Security and have an investment-based system where real capital is being built up so we can have real savings to match our growing future liabilities. We can lower interest rates by encouraging people to save more. The chairman of the Finance Committee, with his Roth IRA--and, by the way, Mr. Chairman, I heard a radio commercial yesterday morning from some securities firm advertising Roth IRA's. Those are ways that we can encourage people to save, bringing about lower interest rates, and reducing our reliance upon foreign sources of capital to America. And maybe that is something that this commission ought to look at. What we are looking at here with this amendment, to try to sum up and be brief, is we are looking at a symptom and not a cause. We have a big trade deficit because we have the strongest economy in the world and people want to invest here. We don't want to do anything about that. We have a trade deficit because we have very high real interest rates, and with very high real interest rates people want to come here to get those returns on their savings. We could do something about that if we encouraged people to save more, and if we did something about the underlying deficit, including the real, unfunded long-term deficits in Social Security and Medicare. So, to the extent that this commission could look at these underlying problems, then I think we could begin to try to do something about the trade deficit. But I go back and reiterate the point that I made earlier. Trade deficits in and of themselves do not give you any kind of effective measure of the strength of the underlying economy. We had trade deficits from the colonial period to World War I, when we had the strongest economy in the world. We have had trade deficits in trying to rebuild Europe and Japan, when we had very, very strong economies. We have had trade deficits and trade surpluses with countries all over the world. Some of the countries with the poorest economies have had trade surpluses. I don't know what the trade surplus or deficit is for North Korea. It would be a perfect model for many, in the sense that they don't import many goods, they protect their jobs, but the problem is they don't have good jobs because they are poor because they don't trade. So, what we would like to do, to try to get on with fast track and hopefully pass it, if the House does, is see if we can work out an agreement to do three things. First, have a true bipartisan commission and, if possible, in that bipartisan commission, let's try to put real experts on the commission--not politicians--who could bring some expertise to the problem and help us have some constructive ideas as to what to do about it. Second, let's look at the underlying causes of the trade deficit. Let's look at protectionism, both here and around the world. Let's look at our deficit in the Federal budget. Let's look at our long-term structural deficit in our two big programs, Medicare and Social Security. Let's look at what we can do to encourage Americans to save, and in the process reduce real interest rates, reduce our reliance on foreign capital, and in the process lower the trade deficit. So, I think there is room here for a compromise. I hope we can reach it. But in terms of the way the amendment is now drafted, we are opposed to it. But if we could refocus it, if we could make it truly bipartisan, if we could look at the bigger picture, then I think that we could have the ability to reach a compromise. I think we could adopt this--either as an amendment or as a freestanding bill, depending on what happens in the House on fast track--and I think that in the process we could go a long way toward completing the business of the Senate. I yield the floor. Mr. DORGAN addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent, now that the Senator is here, if he wants to be heard--what I was trying to do was go on and vote if nobody wanted to debate. But if the Senator wants to speak, let me ask unanimous consent that we return to the status quo ante, before my unanimous-consent request, so that the Senator can speak if he chooses to.

Mr. GRAMM. How much time do we have left on our side?

Mr. GRAMM. I yield myself 15 minutes and save the 10. How much is left on the other side?

Mr. GRAMM. Nine minutes?