Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, I rise to continue the discussion which was raised by the Senator from Tennessee relative to the letter which has been signed by all the Republican members of the Appropriations Committee. This is a unique event, in my experience. I have had the great honor and privilege of serving on this committee now for 14 years, and I have never participated in this type of an undertaking, which is basically the Appropriations Committee Republicans, at least, stepping up and doing the responsible thing in the area of trying to control the fiscal policy of this country when the Budget Committee has left the field. The Budget Committee didn't leave the field arbitrarily; it is just that the other side of the aisle decided they did not want to do a budget for some reason. Actually, I know the reason. The reason we are not doing a budget of the country as we are supposed to do is that the budget shows we are in dire straits. We are going to have a $1.4 to $1.6 trillion deficit this year. It looks as if next year we are going to have a deficit in the range of $1.4 trillion. And for the next 10 years, every year under the Obama budget and under the spending plans of the Democratic leadership of this Congress, we are talking an average of $1 trillion a year of deficits. That adds up to a doubling of the debt in 5 years and a tripling of the debt in 10 years. The American people understand that we cannot do this, we cannot continue that type of profligate spending, that type of out-of-control spending. But, unfortunately, the other party, which now controls with significant majorities both the House and the Senate, is unwilling to step up and produce a budget which brings those numbers down, which makes us more responsible in the area of spending and reduces the debt burden on our children. So the Republican members of the Appropriations Committee have said: Enough. We want to stop this out-of-control spending. We want to have a spending proposal in place that makes sense. And we picked a number that is very reasonable. It is essentially a freeze at last year's levels. It is a number which has been supported, interestingly enough, on this floor when it was offered as the Senator Sessions-Senator McCaskill amendment on four different occasions, by a majority of the Senate, with all of the Republican Members of the Senate voting for this type of essential freeze and with a number--I think between 16 and 18--of Democratic Senators voting for this. That is because there is a full understanding, at least on our side of the aisle and by some Members on the other side of the aisle who did vote for this, that we have to do something about controlling spending around here. This letter essentially says that before we start marking up any bills in the Appropriations Committee, we have to have an understanding as to how much we are going to spend. Is that an unusual idea? Is it a terribly radical idea, that we should reach a number, an overall agreement on an overall number as to what we are going to spend around here before we start producing spending bills? No, it is not. It is exactly what the budget is supposed to do. But we do not have a budget for the reason I mentioned earlier--people do not want to talk about how big the deficit is around here because they are afraid the American people have already figured this out and will just get more outraged about it. What we are doing and what we are suggesting in this letter and what we are saying in this letter is that we as Republican members of the Appropriations Committee expect there to be a budget for the Appropriations Committee even though there was not one passed here, with the top-line number being essentially the number in the Sessions- McCaskill, what amounts to a freeze proposal--freezing at 2010 levels, essentially--and that we will test every committee appropriations bill that comes forward on the basis of that number, and we hope our colleagues on the other side of the aisle, those on the Appropriations Committee and those who are not on the Appropriations Committee, will join us in this effort because it is a sincere effort and a reasonable effort since it was already voted on here with all of our side voting for it and a majority of the Senate voting for it. It is a reasonable number to set forward as the goal. Yes, it does mean a significant reduction. We have to be forthright about this, and this is what we need to do, quite honestly. It does mean a significant reduction from what the President requested. It means a significant reduction from what the Senate Budget Committee passed in committee, which budget was never brought to the floor of the Senate because they did not want to shine lights even on that budget. There is no question it is a reduction and a fairly significant reduction from those numbers. But it is a reasonable number and it is an important number because it says we are willing to be disciplined about our spending around here and that is what we are going to have to do. We are going to have to make these types of tough choices. This is an effort by the Republican members of the Appropriations Committee to make clear that we are willing to make those types of difficult choices.

Mr. GREGG. Triple it. The Senator was off by 100 percent but close. In the next 5 years, the President will double the national debt under the deficits which he is projecting under his budget. And in the next 10 years he will triple the national debt. As you say, if you take all of the Presidents from George Washington through George W. Bush, put all of the debt they have added on the books of the United States through all of those administrations, cumulatively, add every one together, President Obama will have added more debt than all of the prior Presidents added, the first 43 Presidents of this country, in the first 4\1/2\ years of his administration.

Mr. GREGG. I think the Senator from Tennessee is absolutely right. How can we run a country and a government of a country if we are not willing to decide on how much we are going to spend and then stick to it? The reason we are so out of control around here in spending is because every week for the last 8 to 10 weeks we have seen a new bill brought to the floor of the Senate which has added to the debt and the deficit of this country. Interestingly enough, 8 weeks ago we passed a bill on this floor, with great fanfare from the other side of the aisle, called pay-go. That bill said all the bills that came to the floor of the Senate were going to be subject to a test, which essentially said that before you spent any money, you paid for what you are spending. Since we passed that bill, over $200 billion--billion--has been proposed or passed by the Senate which violated the very rule we allegedly passed to try to discipline the Senate. So it is very clear that unless you set out some hard parameters, unless you set out some very specific spending limits--and that is what the letter from the Appropriations Republicans does--you are not going to get any discipline around here. We will just bring bill after bill out of committee and we will spend money we do not have. Where does it all go? Well, it all goes to our children as debt, and we have to borrow it from the Chinese or we have to borrow it from somebody else. Then we have to pay the interest on that. That interest does not do us any good as a nation. In fact, under the President's own projections, his own budget, the interest on the Federal debt will exceed any other item of spending in the Federal budget on the discretionary side within 7 years. We will spend more on interest, because we are adding all of this deficit and debt, than we spend on national defense. What a waste of money that is. So unless we get some discipline around here on the spending side, this deficit is going to grow, the debt is going to grow. I saw a most interesting figure. I think the Senator from Tennessee has seen it too. Since President Obama has been President, for every second since he has become President, $56,000 has been added to the debt of the United States--$56,000. That is the mean income of Americans today. So every second he has been in office he has wiped out the income of some American who is working, because that income is all going to have to be spent to pay off that debt. Granted, not all that debt was his fault. But interestingly enough, as we go further into his administration, a large amount of it is his decisions and the decisions of this Congress, such as the $200 billion in debt that we have been adding or about to add that violates pay-go. This week we are going to take up another supplemental bill. Does the Senator know how much deficit and debt that bill will add if it is passed in the form the administration and the Democratic leadership have asked, just this week? I think it is somewhere in the vicinity of $20 billion to $30 billion of new deficit and debt.

Mr. GREGG. Yes, I would accept a question from the Senator from Tennessee.

Mr. GREGG. I yield the floor and suggest the absence of a quorum.

Mr. GREGG. I thank the Senator from Tennessee for his point. That is absolutely valid. This is a bipartisan proposal for all intents and purposes. It has been voted on. I think it got 57 votes once. I think that was the most it got; maybe it got 58. There are only 41 Republicans, so clearly it had a large number of Democratic votes from the other side of the aisle, because the number is reasonable. ``Freeze'' is a reasonable number on the nondefense discretionary side, at a time when we are running deficits that are over $1.4 trillion. You have got to start somewhere. You know, all great journeys begin with a step. So this is the place we should start, right here, by freezing nondefense discretionary spending. We, as Republican appropriators, have said we are willing to do it. I certainly think the Senator from Tennessee is absolutely right; this is an attempt to reach across the aisle and bring in a bipartisan coalition to accomplish this, using a number which has already received significant bipartisan support.

Mr. GREGG

Mr. GREGG. Madam President, today I would like to recognize and thank a dedicated civil servant, Martin Leonard Skutnik. Lenny, as he is known, recently retired after working for 30 years for the Congressional Budget Office. He started at CBO in 1980 handling the mail and messenger duties--before the advent of the internet, email, and blackberries--and later worked to help print and produce CBO reports and provide IT support. Lenny worked behind the scenes, tirelessly for three decades, to help provide Congress with the information it needed. Lenny was a model civil servant, and for that he deserves our respect and praise. Lenny was also a model citizen, and whether he thought so or not, a hero. In January 1982, Lenny witnessed a horrible event when an Air Florida plane crashed into the Potomac River near the 14th Street bridge. Without so much as a thought about his own safety, Lenny jumped into the river, which was full of chunks of floating ice, and saved the life of one of the crash victims. He was honored later that month by President Reagan during his State of the Union Address, and this began the inspirational tradition of Presidents honoring ordinary people who have done extraordinary things. Through it all, Lenny shied away from the spotlight and continued to report to work, putting 100 percent effort into his work each day. He worked hard, remained humble, and never sought to exploit his fame. His character exemplifies the best of the American spirit, and for that he deserves our admiration. I wish to thank Lenny for his hard work and for his heroism--may he enjoy a healthy and well-deserved retirement.

Mr. GREGG

Mr. GREGG. Mr. President, first, all of us express our deepest concern for what the Senator from Florida, the people of Florida, and those along the gulf coast are going through. It is an unconscionable situation going on down there. I think the Senator has correctly indicted the failure of the people responsible to bring the resources that are available on site in order to try to address at least the skimming of as much of the oil as possible. I appreciate his doing this on a daily basis until we can get something done. This is critical, obviously. I want to speak today, however, about an issue that is equally threatening to our Nation--although not as ominous, in many ways--and that is our debt and the continued spending by this Congress in a way that ignores the fact that we are on the path to passing on to our children a nation which they will not be able to afford as a result of the massive debt which is being put on their backs. We heard today from a number of Senators from the other side of the aisle how we have to pass this extender bill. There is some irony in this, in that they are claiming that it is necessary in order to address what are significant stresses on Americans who find themselves confronted with this economic slowdown. What they do not address, of course, is the fact that in passing this bill in the way they have structured it, they are going to put even greater stress on the next generation of Americans by creating even more debt for them to pay off. There are some legitimate ideas and programs in this extenders bill, but they should be paid for. They should all be paid for. They shouldn't simply be put on the credit card and passed on to the next generation. These are issues which address costs of today--unemployment insurance, the tax extenders. They are issues which affect today's spending and they should be paid for with today's dollars. We shouldn't borrow from the next generation in order to pay for this problem--the problems and the issues which this bill tries to address. Yet that is the proposal that comes to us. Three times now they have brought these extender programs forward. Once they were going to add $79 billion--$79 billion--to the deficit, and it failed on a point of order brought by myself on the issue of budget fiscal responsibility. Then they brought forward a proposal to spend $50 billion that was not paid for, and again it failed. Now we are going to get a third proposal today, and I suspect it will also be a deficit proposal where we add to the debt and pass the bill on to our kids for something we want to do today that is politically attractive. But this is just a small tip of the iceberg for what has been happening around here. Since we passed pay-go legislation and we heard all these grandiose statements by the President and by the Democratic leadership of the Senate and the House that they were going to use pay- go to discipline spending around here so we would not be passing these bills on to our kids, since we passed that bill--now almost 2 months ago--we have spent or put in the pipeline to spend $200 billion--$200 billion of new spending that violates the pay-go rules, that adds to the debt of this country. But that, again, is only a small tip of the iceberg. When we look at what is happening to the Federal debt, this is the line. This is where Federal debt is going as a percentage of gross national product. Historically, our Federal debts have been about 35 percent of gross national product. But since the Obama administration came into office and this Democratic Congress took control of fiscal policy in this country, that debt has gone right through the ceiling, and there is no stop to it. It is going up and up, to the point now where total debt as a percentage of GDP has passed the tipping point. What is the tipping point? That is what Greece found. That is what Iceland found. That is what, regrettably, maybe Spain may be finding. It is when you get so much debt on the books that people stop believing you can really pay it back in an effective and efficient way. People in the world who are supposed to lend us this money--regrettably, it is other countries now: Saudi Arabia, China, Russia--they start asking themselves: Can they really pay that debt back? Shouldn't I charge a lot more to lend them money because I am not too sure they can pay the debt back? That tipping point is 60 percent of GDP. When your debt to the gross national product exceeds 60 percent of GDP, it is generally accepted in the world community that you passed the tipping point. When it gets up to around 90 percent of GDP, you are in junk bond status. You are on your way to bankruptcy. You are on your way to becoming Greece. We have an advantage over Greece. We can do something called monetizing our debt. But we still have the same problem. We passed 60 percent this year. Why are we doing that? Because we are spending a lot of money we don't have on the extender program and on the other $200 billion of spending that has come to this floor on pay- go, on the stimulus package, on the health care bill. The health care bill expanded the size of this government by $2.5 trillion. All of that is an expense which grows the government at a rate we cannot afford. Under the President's own budget as he sent it up here--and where is the budget, by the way? Did I miss something? Isn't the Congress of the United States supposed to do a budget? Isn't that what we are supposed to do as a responsible steward of our financial house and of the American taxpayers' dollars? Where is the budget? Under the desk here? Maybe it is down where that paper was that just fell. Nobody can find it. Why is that? Because the other side of the aisle does not want to show the American people what the deficits are, how much spending they are planning to do that they do not plan to pay for--not only in this year but for the next 10 years. The President at least had the integrity--I guess under law he had to do it--to send up a budget. His own budget projects a $1.4 trillion deficit this year. That is 4 times larger--3.5 times larger than the biggest budget under the Bush administration--biggest budget deficit. It is the largest budget deficit in our history, $1.4 trillion. But that is not the end of it. For the next 10 years, the President's budget projects a $1 trillion deficit on average every year for the next 10 years. The practical effect of the President's own budget is that the debt of this country doubles in 5 years and triples in 10 years. These are staggering numbers. These are numbers that lead to bankruptcy of our Nation from the standpoint of fiscal policy. You don't have to look too far to see what these types of numbers mean. Just look at what is happening in Greece and other countries that have grossly overextended their debt. Doubling the debt in 5 years, tripling it in 10 years is an unacceptable action. The numbers are so big, it is hard to put them in context. But to try to put them in some sort of context, if you take all the debt rung up by Presidents since the beginning of this country starting with George Washington through George W. Bush, that is $5.8 trillion. That is all the debt of all the Presidents who came before President Obama and this Democratic Congress. Under the budget sent up by the President, the debt that will be added will be three times that, almost three times that. The amount run up over all these 232 years we have been a nation--in 10 years, we will be adding more debt than occurred in the first 232 years by a factor of almost 2\1/2\--over 2\1/2\. It is incredible. Yet nobody around here says anything or does anything about it on the other side of the aisle. What we hear from the other side of the aisle: Let's bring out another bill. Let's game the entitlements. Let's game the pay-go rules one more time, as the extender bill does--or tries to do--and let's spend some more money we don't have and add it to the deficit and the debt. Bill after bill is brought to this floor to do that--spend money we don't have and add it to the debt. What does it mean in real terms? Children born at the beginning of President Obama's administration and this Democratic Congress, this liberal Congress--it should not even be called a democratic Congress because it is so liberal--had an $85,000 debt on their backs--think of that--when they were born. However, as of today they have a $114,000 debt on their backs. That means kids born just 4 years ago--not even 4 years ago; 1\1/2\ years ago--have had added to their burden--and they are going to have to bear this burden. This is not theoretical. This debt is owed. It is owed to China. It is owed to Russia. It is owed to Saudi Arabia. This debt has to be paid back by these people, our children. Just in the last 1\1/2\ years, it has gone up by almost $30,000. By the end of this Presidency, should the President be reelected--or even a little bit past that--by the end of the budget projected by this President, that debt on these children will be $196,000. That is what they will have to pay. How are they supposed to buy a home, buy a car, send their kids to college if they have to pay off this debt, which they will have to do through the tax burden? It is inexcusable what we are doing. Then you have to couple it with the larger picture. Is anything being done to improve this situation? Here are the President's own numbers. Historically, taxes have been about 18 percent of GDP. You will hear a lot of people on the other side of the aisle say we just need to raise taxes more. Under the President's own budget, they are projecting that taxes are going to go up rather dramatically, to almost 20 percent of GDP. What they don't tell you is that spending has historically been about 20 percent of GDP. If we had the tax revenues they are projecting, we wouldn't have hardly a deficit at all. We would be in pretty good shape. But that is not what is happening here. As a result of the President's programs--note here how this line goes up sharply during the depression. It is estimated to come back down because of the stimulus being taken out of the spending stream--a very badly flawed decision, by the way, to pass the stimulus in the form it was passed-- but then it goes straight back up. If we were to extend this line, it is way up here. What is that caused by? That is caused by the health care bill, $2.5 trillion of new spending, and by the aging of the population. There is no attempt to take this line and bring it down where it should be going, so we close that figure. No, this area in here is a structural deficit that has been grossly-- not structural. It is a created deficit that has been grossly aggravated by the policies of this administration and is being aggravated by the policies of this Congress, as we have seen more and more bills brought forward which are unpaid for and end up adding to this red line going up. It is not a tax issue. It is not a revenue issue. The President's own budget--these are the President's own budget numbers--shows that it is not a revenue issue. Revenues, they project, will be very robust and will be well above the historic highs fairly soon. Why would they do this? Why would people be doing this to our Nation, running us into bankruptcy like this, putting this burden on the next generation that is so extraordinary? I think there is a philosophy here. The philosophy is pretty simple: This administration is very committed to moving the American model. They want to take us down the road of a European-style social welfare state democracy where you actually have cradle-to-grave coverage of all sorts of social concerns and you have an ever-expanding, dramatically expanding public sector. The President is very honest about this. He said that the way you create prosperity is to grow the government. I don't think anybody ever believed he would grow it quite this much, but he was honest about it, at least. But the implications of it are that because of the fact that we do not have the capacity to pay for this government, we are driving ourselves right into a ditch as a nation. We are putting ourselves into a totally unstable situation which will inevitably lead to some sort of fiscal crisis which will be cataclysmic for our country and will lead to a lower standard of living. That is what this inevitably leads to--a lower standard of living, not a higher standard of living for the next generation. The European model is not a good model for us to pursue. It simply is not. Look at what is happening in Europe--anemic growth, lack of creativity in the area of economic growth, very little productivity, and basically countries wallowing in a debt structure they cannot get out from under because they are not willing to make the tough decisions. Are we going to take that path also? It appears that way. Under this administration, in this Congress, that appears to be the choice. But it is the wrong choice. There are ways to address this. To begin with, we could stop spending--very simple. Stop spending money we don't have. Stop bringing bills to the floor that have high deficits attached to them. We need to address the entitlement programs and recognize that they are, in their present structure, not affordable. We need to address our tax laws, which are not structured in order to create an incentive for productivity and capital formation but are instead replete with special benefits to special interest groups. We can reduce the rates on all Americans, and especially we can reduce the rates on the productive side of the ledger, on our corporate rates which are now the second highest in the world, and still generate significantly more revenues if we do a total tax reform along the lines of what Senator Wyden and I have actually proposed. We need to change our energy policy. We have to stop shipping all this money overseas and buying energy. We need American production of energy. We need more nuclear; we need more natural gas; we obviously need more conservation; we need better cars--hybrids, electric; and sure, we need renewables, but renewables are not going to solve the problem. It is in production of American energy that we need to solve the problem, primarily, and in conservation. Most important, we need to abandon this idea that we should follow the European model because it stifles productivity, entrepreneurship, risk taking. We need a model that says to the American people: Be creative. That has been at the essence of what has made us strong as a nation. It has always been one of our unique advantages over the rest of the world--willing to take a risk, willing to make an investment, willing to go out and push the envelope. As a result, they have created jobs in the most prosperous Nation in the history of the world. But that is all at risk now because we decided to depart on this path of massive deficit and debt in order to recreate the European form of government: a social welfare state, which is, first, not sustainable, and, secondly, is not a model for prosperity. It is time to change, and let's begin the change right here right now by rejecting any extender bill that comes to this floor that is not fully paid for. I yield the floor.

Mr. GREGG

Mr. GREGG. Madam President, I rise to congratulate the Senator from South Dakota for his amendment. This is a responsible way to approach this issue. The amendment to the bill that is before us, offered by the Democratic leadership, adds $50 billion to the deficit; that is $50 billion to the debt. That is $50 billion our kids have to pay so we can spend money today on politically attractive things. On top of that, the bill, as proposed, has some onerous tax policy in it which will significantly contract economic activity in this country by taxing people at ordinary income for activity which has historically been taxed at a capital gains rate, thus forcing people to be less incentivized to go out there and be productive and create jobs. It is poor tax policy. So the Senator from South Dakota has come up with a proposal, which is the way we should be governing now, which is to pay today for the things we want to spend on today. We are facing a $1.4 trillion deficit--$1.4 trillion--this year. Next year, we are facing an equally large deficit. Under the President's budget and the budget of the Democratic leadership, we are talking a $1 trillion deficit for as far as the eye can see. The debt of this country is going to double in 5 years under the President's and the Democratic budget--double. It is going to triple in 10 years. A child born at the beginning of the Obama administration arrived in our Nation with an $89,000 debt--$89,000. By the time my colleagues on the other side of the aisle get finished, should the President be reelected, under the terms of his budget that child is going to have a $200,000 debt to pay. Why? Because we keep getting bills like this: $50 billion here, $100 billion here, $25 billion here; money being spent without being paid for and, therefore, being added to the deficit and to the debt. It is totally wrong. It is unfair. It is unfair that one generation should do this to another generation, and it is certainly not responsible government. We had a big debate in this Chamber about 2 months ago now about how responsible the other side of the aisle was going to be on spending. They called it pay-go. It should have been called fraud-go because as a very practical matter, that is what it has become. This bill games the pay-go rules of the Democratic leadership to the tune of $50 billion by declaring it an emergency on items that are not emergencies, that we know exist and that have been spent on now for quite a while. Since that bill was passed, that pay-go bill, which allegedly was going to require this Congress to pay for all the money it was going to spend, the other side of the aisle has brought forward, or is in the process of bringing forward, $200 billion of spending which is not paid for-- $200 billion in spending which will be added to the deficit and to the debt. That is totally irresponsible. So the Senator from South Dakota has it right, as he so often does. He has said: Let's do this responsibly. If we are going to spend this money, if we are going to put forward these extenders, if we are going to spend this money on these different social initiatives, let's pay for them because they benefit us today and we shouldn't pass the bill for them on to our children tomorrow, next year, and 10 years from now. This is responsible budgeting. I congratulate the Senator from South Dakota, and I look forward with enthusiasm to finally voting for a bill around here that is paid for, which is what we should be doing every day instead of spending money we don't have and passing those bills on to our kids. I yield the floor.

Mr. GREGG. Madam President, I appreciate the chairman's request. I wish to speak for 5 minutes in support of the Thune amendment.

Mr. GREGG

Mr. GREGG. Mr. President, this bill, as it comes forward, spends more money than we budgeted for and, as a result, it violates the budget. We are trying to get some fiscal discipline around here. This would be one of the places we should start. So I raise a point of order that the pending amendment offered by the Senator from Montana would cause the aggregate level of budget authority and outlays for fiscal year 2010, as set out in the most recently agreed to concurrent resolution on the budget, S. Con. Res. 13, to be exceeded. Therefore, I raise a point of order under section 311(a)(2) of the Congressional Budget Act of 1974.

Mr. GREGG

Mr. GREGG. Mr. President, today I wish to honor a resident of the Granite State who was respected by his friends and family for his devotion to service, his devotion to country, and his devotion to his fellow citizens. Kathy and I wish to express our deepest sympathies to those who knew COL John Kelley Springer. Our thoughts and prayers are with those that are mourning this loss. John Kelley Springer passed on February 4, 2010, at the age of 78, and today, in Rollins Chapel at Dartmouth College, his friends and family will gather to conduct a memorial service in his honor. I hope that memories of John and his efforts to advance the health and safety of this Nation can provide comfort during this difficult time. A resident of Sunapee, New Hampshire, John was the President of the Dartmouth Class of 1953. Upon graduation, he joined the U.S. Marine Corps, serving 5 years on Active Duty as a jet and helicopter pilot, and many more in the Marine Corps Reserve before retiring with the rank of colonel. John was also a longtime contributor in the health care field. Serving in various capacities--from hospital administrator to chief executive--John left his indelible mark throughout New England. For his outstanding community involvement, John was presented with the Award of Honor from the American Hospital Association and the Tree of Life Award from the Jewish National Fund. And as if these contributions to country and community weren't already enough, John was also a diligent philanthropist and genuinely goodhearted person, dedicating time and energy to various church boards and committees, and making everyone he encountered feel appreciated. John Kelley Springer is survived by his beloved wife Jane; his daughters Kelley, Dana, Susan, and Nellie; his brother Wilbur; his sister Elizabeth; and 10 grandchildren. May his memory and devotion live on in each of them.

Mr. GREGG

Mr. GREGG. Mr. President, first, I congratulate the Republican leader for a superb statement on where we stand relative to the bill on regulatory reform. It is truly a bill that is misnamed. This bill should be called ``The Expansion of Government for the Purposes of Making Us More Like Europe Act.'' As a very practical matter, the bill does almost nothing about the core issues that have created the issue of financial stability in this country. It does nothing in the area of Fannie Mae and Freddie Mac, which is the real estate issue. It does virtually nothing in the area of making sure we have a workable systemic risk situation and structure so we can address the issue of systemic risk. Instead of addressing it in a constructive way, which would actually put some vitality and usefulness in to regulate the derivatives market, it actually steps back and creates a derivatives regulation that all the major regulators, whom we respect, have said simply will not work. I wish to talk about that. I didn't think there was anything you could do that would make this regulatory proposal on derivatives worse. But now we see an amendment from the chairman of the committee, which I am sure is well intentioned, but it makes it worse. The way the derivatives language of the bill has evolved is it gets worse and worse, in an almost incomprehensible and irrational way, which is rather surreal. It is almost as if we were at the Mad Hatter's tea party the way this derivatives language is evolving. We now have in the bill itself proposed language which the chairman of the FDIC, the Federal Reserve staff, Chairman Volcker, and the OCC have all said will not work. In fact, not only did they say it will not work, they have said it will have a negative impact on the stability of the derivatives market. It will cause the market to move overseas and make America less competitive. It will cause a contraction in credit in this country, and it will hurt consumers and users of derivatives across this Nation. Those are the words--paraphrased to some degree but essentially accurate--of the major players who actually discipline and look at this market, in defining the bill as it is presently before us. Now, in some sort of bizarre attempt--as if the Mad Hatter had arrived--to correct this issue, we see an amendment from the chairman of the committee suggesting that we should put into place an even more convoluted system, tied to uncertainty of no decision occurring for 2 years. The proposal says we will have the stability council, which is made up of, I think, nine different regulators, take a look at what is in the language of the bill now, relative to taking swap desks out of financial institutions and determine whether that language makes sense. Well, it doesn't. We know that already because a group of regulators has already said it doesn't make sense. So we are going to wait for 2 years to determine it doesn't make sense, when we already know it doesn't. Then they are going to make that recommendation to the Congress, so the Congress gets to legislate to correct what we already know is an error in the bill. Then, to make this an even more Byzantine exercise in regulatory absurdity, the Secretary of the Treasury has the right to overrule the Congress or maybe act independently of the Congress and take action pursuant to whatever the stability council decided. On top of this convoluted exercise in chaos, the proposal actually undermines the Lincoln proposal, which is in the bill, and makes it even less workable, by saying the swap desk cannot even be retained by affiliates but must be totally separated, which inevitably leads to swap desks that do not have capital adequacy or stability or the necessary strength to defend the derivatives action which they are making markets in. So you weaken and significantly reduce the stability of the market, making it more risky and, at the same time, the estimate is, you would contract credit in this country by close to $\3/4\ trillion less credit. What that means is John and Mary Jones, who are working on Main Street America producing something they are selling to a company that is maybe a little larger, and then they are selling that product overseas, are probably not going to be able to get the credit they need to produce the product, so they will have to contract the size of their business, and we will reduce the number of jobs in this country or certainly the rate of job creation. This country's great and unique advantage is that we are the best place in the world for an entrepreneur and risk-taker--somebody who is willing to go out there and do something to create jobs--to get capital and credit at a reasonable price and in a reasonably efficient way. This bill fundamentally undermines that unique advantage that we have in this language, and this language compounds that event, undermining that unique situation. It is, as I said, similar to participating in the Mad Hatter's tea party to watch the way this bill has evolved on the issue of derivatives regulation. The product--I guess the Queen of Hearts would be proud of it, but I can tell you the effect on the American people, on commerce, and on Main Street will be extraordinarily negative should we pass it. I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I ask for the yeas and nays.

Mr. GREGG. I yield the floor.

Mr. GREGG. Mr. President, I ask unanimous consent that the time run equally against both sides.

Mr. GREGG. Mr. President, I really think the Senator from Connecticut is sort of reaching in his arguments here. This is really about a State like California defaulting and the rest of us having to pay for it. That is what this is about. This is about a State that has been irresponsible, to be kind, with its spending and now finds itself in a situation where it cannot pay its debt. You know the legislators of that State are saying: Let's go to Washington and get the money so that we can get reelected on the basis of spending all this money. That is not fair. That is not how a federalist system is supposed to work. You cannot argue that the American system was set up so that when one State would be profligate, another State would have to pay for the cost of that profligateness. The Senator's bill uses this same language. The Senator from Connecticut had phraseology that claimed my language as inappropriate on the issue of default and how he defined it, and it basically mirrors his language in title II. If it works in title II, it ought to work here. The real issue is that we should not set up a situation where States and communities can expect to spend a lot more than they can take in, know they are spending more than they are taking in, run up a lot of debts they cannot pay, and then come to the rest of America and say: You pay our debts because we want to get reelected. That is what this is about. It is limiting the ability of States to act in a fiscally irresponsible manner and expect the country will stand behind them and bail them out. I reserve the remainder of my time.

Mr. GREGG. Mr. President, how much time remains?

Mr. GREGG. Mr. President, this amendment is pretty simple. It says American taxpayers should not be put on the hook for States which have been profligate. It says, specifically, that: Federal funds cannot be used to purchase obligations of States or local communities that are in default or are about to default, unless those States have gone through some sort of crisis such as the Katrina situation. But if the default that the State or local community is about to experience is the function of their failure to discipline their fiscal house, then we are not going to ask the taxpayers across this country to support that error in judgment and that misguided fiscal policy of that State or that local government. If we do not have this type of rule in play, basically we will be setting up a situation where the American people will become the guarantor of inappropriate actions across this country by legislators and city governments. You will have this untoward situation where you will basically create an atmosphere that there is an incentive for State governments and local communities to not be fiscally responsible. It is this moral hazard issue. We debated it at considerable length when we discussed too big to fail in the banking system. This bill has a lot of issues, as far as I am concerned, but one of the things it actually handles reasonably well is the issue of too big to fail. It does need some adjustment. But it basically handles that issue pretty well. We have designed language in this bill between Senator Dodd and Senator Shelby, which essentially says: No longer will the American taxpayer be presumed or in any way expected or have any obligation at all to support a financial institution which has gotten too large and has taken on too many risky decisions and is therefore in fiscal distress. That institution will fail. Its stockholders will be wiped out. Unsecured bondholders will be wiped out and the American taxpayer will not come in and defend that situation. Too big to fail ends with this bill, hopefully. But it should apply also to States and local governments. We should not create the moral hazard of having taxpayers in New Hampshire or taxpayers in Nebraska or taxpayers in New Mexico responsible for profligate activity in other States. In fact, many of our States, of course, have balanced budget requirements. In fact, in Nebraska, they do not even allow any debt, period. They have a constitutional amendment that says, there can be no debt. So they are extremely disciplined, these States, in the way they handle their budgets. The taxpayers and the citizens of those States expect their leaders to be disciplined. So how can we ask those taxpayers and those citizens in those States that have been disciplined, who have elected people who are willing to live within their means as they govern, whether it is at the community level or at the State level, how can we ask those citizens across this country to go in and bail out other States and our communities that have been totally undisciplined in managing their fiscal house and have put themselves at huge distress and have defaulted on their debt or are about to default on their debt? This is not acceptable. If we are going to have a bill which addresses the issue of too big to fail, it should apply to this type of a situation. So I have offered this amendment. It is very simple, as I said. It prohibits Federal funds from being used to purchase or guarantee obligations of States and local communities that are in default or about to go into default. It is a pretty strict standard, pretty clear. If you have a State that for reasons of its own making has created a fiscal mess of inordinate proportions and cannot pay its debt, it cannot come to Washington and say: We want you to bail us out. That is not right. That is not appropriate. So this bill bans that sort of an event from occurring. Why do we need to do this? It is pretty obvious. There are a couple States in this country that have been irresponsible in their spending, that have not disciplined themselves, and that, I think, are expecting everybody else in this country to bail them out. I sure do not want to be part that. I do not want my taxpayers in New Hampshire to be part of that. It is not fair that they should be part of that. Those States are going to have to figure out how to straighten out their own fiscal house. They should have to do that within the terms of their own spending streams and their own revenue streams. They should not expect the Federal Government to come in and take them out of their distress, which was self-imposed and self-created. There is an exception in this bill. There is this language so that if a State is put into severe distress because of an emergency situation, such as a Katrina-type situation, this would not apply. Obviously, it should not apply then. If it is a self-imposed event, simply resulting from the human nature of legislators and city councils to sometimes spend a heck of a lot more money than they have and that they can take in under their structure, they should have to pay for it and figure out how to deal with it themselves. They should not pass that problem on to the American people by financing it through Washington. It is consistent with the theme of this bill that there should be nothing that is too big to fail in this country, including State governments and local governments or financial institutions. I hope my colleagues will support the amendment. I reserve the remainder of my time and yield the floor.

Mr. GREGG. Mr. President, I admire the Senator from Connecticut and I appreciate what he has done in his efforts to stabilize the financial industry in this country. At the core of what he has done, of course, is to say: No more bailouts. That is essentially what this bill is about: No more bailouts; the taxpayers of this country will not step up and bail out large financial institutions which have taken actions which have put them at risk financially, and the only people who should bear that burden are the stockholders and the unsecured bondholders of those institutions. What this bill also says is no bailouts, no bailouts for States which are in default or about to default on their debt. They are doing it not as a result of some external event forcing them into dire straits but because they simply spent their way into a fiscal situation where they can't pay their own debts. Why should the people of Connecticut, the people of New Hampshire have to bail out the people of California-- let's be honest about this; this is about California, the people of California--because their government has been totally irresponsible in spending for a large number of years, has created a massive obligation, especially in their public pension programs, which they can't afford to pay? Why did they run up those obligations? So that people who were running for office in California could get elected. Just promise this, promise that, promise this, promise that. Then, the people in New Hampshire are supposed to pay to help those people get elected on those promises which they could never fulfill and for which they created obligations to pay for? I don't think so. I don't think that is fair or right. If the people of New Hampshire and the people of Connecticut and the people of New Mexico have been fiscally responsible in the managing of their towns and their cities and their States and their counties, why should they suddenly have to pay for California which hasn't been? Clearly, they shouldn't. If we are going to have a no bailout bill, it ought to apply to California as well as to large financial institutions that have acted inappropriately and unwisely. That is all this says. It doesn't say you are not going to be able to get your usual Federal assistance that comes through the usual course of action. That is a bit of hyperbole. I appreciate the intensity and energy of the Senator from Connecticut, but that is hyperbole. This is about not having Federal funds be available to States that are in default or about to go into default on their debt as a result of the actions of the State leadership as elected by the people of that State and not asking the people in the rest of the country to have to pay the cost of those inappropriate actions and those actions which were fiscally irresponsible. It seems like a proposal which is totally consistent with the basic purpose of this bill, which is to end bailouts. I reserve the remainder of my time.

Mr. GREGG. I thank the Chair. I reserve the remainder of my time.

Mr. GREGG. A parliamentary question: Mr. President, don't I have the right to modify without asking for unanimous consent?

Mr. GREGG. That is correct.

Mr. GREGG. Yes.

Mr. GREGG

Mr. GREGG. Mr. President, I know we are in morning business. But at the conclusion of morning business I will be offering an amendment which I understand is the next one in order. Since there is nobody taking the morning business time, I will take that time to begin the discussion of that amendment. The amendment which I am proposing goes to this whole issue of who the taxpayers of America should bail out. I personally don't think they should bail out anybody, to be honest with you. They certainly should not be bailing out financial institutions that have gotten too big. They should not be bailing out automobile companies that have overextended themselves and are doing a poor job. They should not be bailing out other countries. They certainly should not be bailing out States and local governments that are about to default on their debt. It is very hard to explain to a citizen of New Hampshire or Illinois, Connecticut, New Jersey, Pennsylvania, why their tax dollars should go to bail out a State which is about to default on the debt it has run up because it has been irresponsible in its spending. The obvious State that comes to mind is the State of California, which has very serious problems. But they are self-inflicted problems. These are not problems which were created as a result of some general problems across the country, and they were not problems created, for example, by an event-- an environmental event or emergency such as Katrina. They were totally self-inflicted problems. The question is, Should the American taxpayer, all the rest of us in this country, be put in a position where we have to bail out that State? I do not think we should. That is what my amendment is going to go to. But I see now the Senator from Florida has arrived. He has the morning business time we are in. I reserve the remainder of my time and yield the floor.