Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, I rise to support the amendment offered by Senator Conrad, of which I am a primary sponsor, to address what is the second biggest threat our Nation faces. Clearly, the largest threat our Nation faces is the fact that terrorists who wish to do us harm might get their hands on a weapon of mass destruction and use it against us. That is our Nation's greatest threat. But after that, the biggest threat to this country is our fiscal situation and the fact that we are on a path where our Nation will go into bankruptcy because we will not be able to pay the debts we are running up. You do not have to believe me on that point. This is not exaggeration any longer. This is not hyperbole for the purpose of political events. This is just the way the numbers work. By the end of this year, our public debt will exceed 60 percent of GDP. That is known as a tipping point, when you owe that much money compared to how much you produce as a nation. Sixty percent is considered the tipping point toward an unsustainable situation. Within 10 years--I actually think it will occur sooner--our public debt will cross the 90-percent threshold. When you get into those ranges, you are basically in a situation like a dog chasing its tail. There is no way to catch yourself. There is no way to catch up with the amount of debt you are putting on the books. The cost of bearing that debt eats up your resources as a nation. It takes away from your productivity and your prosperity. This is not hyperbole, as I said. This is just real, honest projections on numbers which we already know exist. The proposal from the President in the last budget, under which we are now functioning, projects $1 trillion of deficit every year for the next 10 years. Today we are taking up a debt ceiling increase which is proposed to be $1.9 trillion--that is the increase--taking the debt of our Nation up to $14 trillion. And it is not the end of these requests for debt ceiling increases because we know the debt is going to continue to jump by over $1 trillion a year every year as we move forward. This chart reflects the severity of the situation. Historically, the Federal Government has used about 20 percent of the gross national product of what we cost the American people as a government. Just three programs--Medicare, Social Security, and Medicaid--by the year about 2030 will represent spending that exceeds 20 percent of the gross national product. Everything else in the Federal Government, if we were to maintain our usual spending level, could not be done. Our national defense, education, building roads--all those sorts of things could not be done. But that does not stop there. With those three programs, the costs go up astronomically as we go out into the future. To pay for those costs, we have to run up the debt of the United States at a rate that we have never seen. It will double in 5 years. It will triple in 10 years. Those are hard numbers. Our debt, as I said, will pass the 60-percent threshold. Why is that considered a tipping point? Because to get into the European Union, which is a group of industrialized states, they have a threshold which a nation cannot have a public debt that exceeds 60 percent of GDP. It cannot have deficits that exceed 3 percent of GDP. Our deficits for the next 10 years will be between 4.5 percent and 5.5 percent of GDP and, as I said, the public debt will be up around 90 percent of GDP by 2019. We know we are on an unsustainable course. What is the effect of that? What happens when we get our debt up so high? There are only two scenarios for our Nation. One, we devalue the currency. That means inflation. That is a terrible thing to do to a nation. It takes everybody's savings and basically cuts them by whatever the inflation rate is. It means your currency cannot buy as much as it used to. It means you cannot be as productive as a nation because you have an inflationary problem. Or, alternatively, you have to raise taxes at a rate that you essentially suffocate people's willingness to go out and create jobs, to be productive, take risk. And you take the money that should have been used for the purposes of taking risk and building that local restaurant or that small business and creating jobs and you move it over to pay debt. Where do you send it? You send it to China because they own most of our debt or you send it to Saudi Arabia because they are the second biggest owner of our debt, instead of investing in the United States to make us more productive. Either scenario--a massive increase in tax burden to pay debt or inflation--leads to a lower standard of living for our children. So as a very practical matter, what is going to happen to our Nation, under the facts which we know already exist, is that we will, for the first time, pass on to the next generation a nation which is less prosperous, where there is less opportunity for our children, and where the standard of living goes down rather than up. That is not acceptable. It is not fair and it is not right for one generation to do that to another. So we have to get our fiscal house in order. Many would argue: Well, that is your job. That is why we sent you to Congress. Do your job. Get the fiscal house in order, limit spending. That would be the position of our side. The other side's position would be to raise taxes. But we know that doesn't work. We know regular order does not work. Why? Because we have seen it doesn't work. We know that when you make proposals around here on these big issues of public policy, specifically entitlement programs or tax reform, you are immediately attacked. If you make them on entitlement issues and if you are a Republican, you are attacked from the left as trying to savage senior citizens. If you make a proposal on tax reform, you are attacked from the right as trying to increase taxes on working Americans. Usually, those attacks are filled with hyperbole and gross misrepresentations, in many instances. People send out these fundraising letters. If you ever say anything about Social Security as a Republican--as to how it should be reformed and made more solvent-- immediately, it seems, there is a letter that goes out from this group called Citizens to Protect Social Security--or some other ``motherhood'' name--that looks like a Social Security check, and it goes to all these Social Security recipients. It says: If you don't send us $25 today, Senator Gregg is going to savage your Social Security payments. So that little group here in Washington takes in a lot of money. It doesn't do anything to affect Social Security policy, but they sure have a good time wandering around the city with all that money. In the process, of course, the well gets poisoned and nothing can happen around here. That is what happens. Nothing happens. Well, that was maybe manageable for a while, but it is not manageable any longer. We are headed toward a wall as a nation. We are headed toward an event where we will essentially be insolvent as a country. We will become a banana republic type of situation, where we simply can't meet the obligations of our debt, or, alternatively, the people who lend us our money--many of them are Americans but a lot of them are Chinese--are going to say: I am not going to lend you any more money, America, or if I do, I am going to charge you an outrageous interest rate because I don't think you can pay it back because you have too much debt. That is where we are headed, and we know it is there. It used to be over the horizon, so the Congress never worried about it and so nothing ever happened. It is not over the horizon anymore. It is well inside the horizon and it is closing fast. As I said, we passed the 60 percent threshold just this year. We will pass it this year, and we will hit 90 percent within this 10-year budget cycle. So regular order has not worked. Some may argue: Well, the health care bill was regular order. That sure didn't work. Folks, that didn't work. It sent the cost curve up. It took resources which should have been used to address the Medicare insolvency situation and moved them over to create a new entitlement. It didn't work. Regular order has not worked around here because the politics don't allow it to work. The intensity of the community that defends these various issues will not allow constructive activity to occur under regular order. So Senator Conrad and I came to a conclusion that, since regular order doesn't work and since we know we are headed toward this cliff, we should do something. We asked ourselves: Shouldn't we try some other approach, think outside the box? The conclusion Senator Conrad and I came to, in a bipartisan way--obviously, because he is the chairman of the Budget Committee and I am ranking--was let's set up a procedure which leads to policy, which leads to a vote, and guarantee that procedure is absolutely fair, absolutely bipartisan in its execution so nobody can game the other. I can't game Members of the Democratic side and Democratic Members can't game the Republican side. So the American people will look at the product of this commission and say: That is fair. That is bipartisan. I have some confidence in that. So this commission, which is proposed in this amendment, does exactly that. It sets up a fair, bipartisan process, requiring supermajorities to produce policy and get a vote on those policies under fast track. Let me get into a couple specifics. There are 18 members on this commission. They all have their fingers of responsibility on the buttons around here. There will be 16 people from the Congress and two people from the administration--10 Democrats and 8 Republicans. The Republicans will be appointed by the Republican leadership, the Democrats by the Democratic leadership. So the membership of this commission, everybody knows, will be people who reflect the philosophical views of the leadership of the two parties. That group will meet and have public hearings, and they will have an advisory group that has all the different constituencies who want to be heard on that, and who will give them input, and there will be a lot of public input. Then the group will have to come to a conclusion on the big issues that affect fiscal policy in this country. The point is, neither side is going to come to the table on this unless everything is on the table. Let's be honest. If I say no taxes on the table, why would anybody on the other side come to the table? If they say no entitlement reform on the table, why would anybody on our side come to the table? So everything is on the table. But, of course, the interests of the different parties on issues such as taxes and entitlements are protected by the way the membership of the commission is appointed. Obviously, the Republican leader isn't going to appoint to this commission people who are going to go off on some tangent on tax policy which would be unacceptable to Republicans, and the same is true of the Democratic leader relative to entitlement reform. So the commission is made up of a balanced and fair approach, and when it reports, 14 of the 18 people have to vote for it--14 of the 18. So neither side can game the other because the majority of both sides have to be for whatever the report is. Then it comes to the Congress, and 60 percent of the Congress has to vote on it. So neither side can be gamed. It has to be balanced and it is an up-or-down vote on the proposal. No amendments. Why no amendments? That has been a point of controversy. People say: Well, you have to be able to amend it. No amendments. Because we all know what amendments are for on an issue such as this. They are for hiding in the corners. That is what Members do with amendments. They offer their amendment, and if it doesn't pass, they say: Oh, I can't vote for this; my amendment didn't pass. It is called a hide-in-the- corner approach. Well, that is why we don't have amendments. It is up or down. The theory, of course, is the membership of this commission is going to be balanced, which it will be. That is not theory, that is reality. It will be balanced and bipartisan players who will understand these issues in a very substantive way. Two of those Members are on the floor right now, who I am sure will be members of the commission--and I am not one of them. As a very practical matter, the result will be something that is politically doable. Will it be a magic wand that corrects the whole issue of this pending outyear insolvency of our country? No, absolutely not. But it will be a significant statement by the Congress of the United States that we recognize the seriousness of the situation we are in as a nation; that we recognize it is not fair for one generation to do this to another generation; that we recognize we will be unable to sell our debt as a nation--or sell it at a reasonable price in the fairly near future unless we take action. It will be a message on all those points, and it will be a positive message. The markets will react by saying: They are trying. The American people will react by saying: Thank God, there is finally a bipartisan effort to try to do something around here on this issue. Sure, it will not be the magic wand or the magic bullet that solves everything, but it will be a significant step, I suspect. I have confidence the people who will serve on this commission will be committed to that. I realize this is a process that affronts many because it is outside the regular order. But the simple fact is, if we stand on regular order around here, we are going to go through a trapdoor as a nation because we are not going to stand up to the issues that are critical to putting us back on the road to solvency. So this is a proposal that is serious, it is bipartisan, and it has a fair amount of support--34 cosponsors. It is very unusual to have that many cosponsors around here on anything, and they are bipartisan. It is about half and half. Well, I think it is 14-20. So I would hope my colleagues would vote for this. I understand my colleagues are hearing, on our side of the aisle, from a number of very credible people who oppose this because they are concerned or worried about the tax side. I understand the other side of the aisle is hearing from a considerable number of constituency groups of theirs who oppose it because they are concerned about the impact on entitlements. Maybe that means we have it right, that we have all these interest group- driven folks who are opposing it. I think it means we have it right, and I believe this is pretty much coming to be our last clear chance of getting something done; that the course we are on now is coming to the point of being irreversible, unless we do something such as this. I don't believe it is correct, as I said, for one generation of political leaders to pass on to the next generation a country that will be in total fiscal disarray. We have a responsibility to act, and this is a way to act. I appreciate the courtesy of the Members on the floor, and I yield the floor.

Mr. GREGG

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

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

Mr. GREGG. Mr. President, I ask unanimous consent to speak for up to 10 minutes, and that after my speech Senator Thune be recognized, unless the Senator from Montana has somebody in between he wishes to be recognized.

Mr. GREGG. I ask unanimous consent that the next Member to be recognized on our side be Senator Thune.

Mr. GREGG. I wish to thank Senator Thune for his courtesy. Mr. President, I wish to speak a little bit here on this debt ceiling issue because it is critical. It is critical because of the size of it. We as a nation are running up debt at a rate we have never seen in history. The budget which we are presently functioning under will add approximately $1.4 trillion of debt from last year and potentially another $1.2 trillion next year. Under the budgets that were brought forward by the President, it looks as though we are going to have $1 trillion in deficits every year for the next 10 years. That is an expansion of our debt at a rate we have never seen before, except in a time of war. What is the implication of that? Nobody understands what $1 trillion is. I don't understand what $1 trillion is. It is very hard to conceptualize $1 trillion. So I wish to try to put it in context. We know for a fact that certain nations get into trouble when they allow their debt to get so large that their economy doesn't have the capacity to pay it down in an orderly way. We are regrettably seeing that today in Greece. There are other nations in Europe that appear to have the same types of problems, including Ireland, where their national debt, their sovereign debt, has gotten so large they are basically in a position where their capacity to pay it off is at risk. So the value of that debt gets adjusted by the marketplace and it becomes much more expensive for those nations to borrow, and at some point, even, potentially they can't borrow and they end up in what amounts to a national bankruptcy. That has never been a threat to us as a nation because we have always had a vibrant economy, and because the dollar, ironically, is the currency of world reserve, we have been able to basically what is known as monetarize our own debt. There have always been people out there willing to lend to us as a nation because they have always presumed that the United States, because of our resilience, because of our economic strength, will always pay our debt, and that is why Treasurys are considered to be one of the safest investments in the world, or traditionally have been. That has been a great strength of our Nation, of course, to have this sort of integrity to our currency and to our ability to repay our debt. However, on the course we are presently pursuing, all of that is going to be called into question and called into question much sooner than we had expected, I suspect, or anybody had anticipated who had looked at this objectively 2 or 3 years ago. We know there are certain thresholds that generate huge warning signs where red flags go up and say, your Nation is in trouble. A couple of those thresholds have actually been adopted by the European Union as they have looked at their membership and said, What is the proper deficit of an industrialized nation? What is the proper public debt ratio to GDP of an industrialized Nation? In Europe what they say is, You can't be a member of the European Union if your deficits exceed 3 percent of GDP and your debt exceeds 60 percent of GDP, your public debt. Well, our deficits are around 12 percent of GDP right now. They will ultimately go down, but there is no time in the next 10 years where they are projected to fall below 5 percent of GDP under President Obama's budgets. Our public debt is going to cross that 60 percent of GDP threshold probably within the next year. So arguably, as I said before on this floor, we would not be able to get into the European Union if we wanted to, because we would not meet their standards for fiscal responsibility as a nation. That is pretty serious. What is even more serious is there is no end in sight to this. We are looking at a deficit and debt situation which will continue to expand and become even more and more problematic for us as a nation for as far as the eye can reasonably see which, for the purposes of discussion around here, is about 10 years. We know that the public debt-to-GDP ratio, under the President's budget as proposed last year before this health care bill was taken up--and I would argue that this health care bill is going to radically aggravate the public debt issue in the outyears, and there will be debate about that because CBO will debate that point, but I don't think all the pay-fors will ever occur--independent of that, we know that under the budget as it is presently presented, the public debt is going to exceed 80 percent of GDP--80 percent of GDP--by the year 2019. In fact, there are some estimates that say it will exceed 100 percent of GDP before we hit 2020. Those are intolerable situations. What is the practical implication of our adding that much debt through deficit spending over the next few years to our economy? A few things occur, and they are undeniable. They will occur on the path we are presently on. The first thing that will occur is it will be much harder for us to sell our debt because nations will start to say-- people around the world, including our own public, I suspect, will start to say, Can they really pay that back. When they cross that 60- percent threshold, which is basically a key tipping point on the ability of a nation to manage itself, and they start heading up towards 80, 90, 100 percent of GDP as the public debt ratio, can they really pay back their debt? People are going to say, Well, I am not so sure. I am going to charge them a fairly significant premium before I am going to lend them any money. So the cost of our interest will go up dramatically. In fact, it is projected that in the year 2019, interest on the public debt alone will exceed $800 billion a year. That is more being paid out in interest which goes to people all over the world-- people in China, people in Saudi Arabia, all over the world--that interest will be higher than any other item of Federal spending. What a waste of money that is. What a waste of money that is. What a misuse of money. All of that money could be used for something constructive in the United States--building infrastructure, building schools, assisting education, whatever. If you are going to spend it, why would you spend it on interest? So we will be in a position where it will be harder for us to sell our debt. Actually, we will probably get to a position fairly soon--and I am willing to bet on this; I won't be in this Congress at the time, but before we hit the year 2020--where we will actually have to take some radical step as a nation in order to deal with our debt. Because if we allow it to go up under its present scenario, it becomes totally unsustainable. It is like a dog chasing its tail; it can't get there. We can't pay down the debt. The practical implications of that are twofold: Either, No. 1, you inflate the economy and devalue the currency, and that is a very harsh thing to do to the American public because it devalues their savings and it makes it harder for the economy to be productive or, No. 2, you radically raise taxes to try to reach the obligations of the debt, and that also dramatically impacts the economy. It makes us less productive. It means less jobs will be created. Either one of those scenarios, or only one of those two scenarios, or maybe a combination will occur if we continue on our present course, which means that the next generation will actually have a lower standard of living than our generation. It means it will be much more difficult for the next generation of Americans to buy a house, send their kids to school, buy a car, to live the quality lifestyle we have had as a nation. In fact, it will be the first time in history, if we stay on our present course, that one generation has handed to another generation a lower standard of prosperity and quality of life. It is inexcusable to do that. It is unacceptable. Nobody in this body who has a public responsibility to the next generation--and we all have that responsibility--should do that to our children. So what are we going to do to address it? Well, put very simply, we need to stop spending so much money. That is the bottom line. We need to stop spending so much money. Under the projections in this budget as it presently exists and was passed in this Congress, over my objection and over the objections of everybody on this side of the aisle, it is projected that we are going to be in a situation where, as I said, there will be $1 trillion deficits for as far as the eye can see and the size of government spending will go from 20 percent of GDP up to about 24, 25 percent of GDP if the health care bill is also passed. That will be the highest level of Federal spending that has occurred in this government since World War II. We have never had those types of levels of spending. So it is not a revenue issue--although right now it is a revenue issue because, obviously, right now the economy is in a recession--but over the long run it is not a revenue issue. Mr. President, I ask unanimous consent for an additional 2 minutes.

Mr. GREGG. It is a spending issue. It is not a revenue issue. It is primarily a spending issue. The fact is that we are spending a great deal more than we can afford as a nation, and this government has committed to a great deal more than we can afford. So we need to do something on the spending side of the ledger. There is going to be a series of proposals brought forward by our side, and Senator Thune is going to offer one in a minute, to try to get to the issue. They won't solve the whole problem, but they will at least make significant steps down the road of restraint and show that we are starting to get serious about it, and they are reasonable ones. Senator Thune: End TARP. End TARP. We don't need it anymore. We should take those dollars and put them toward debt reduction. Freeze discretionary spending. That will be Senator Sessions' amendment, or something like that. Rescind some of the stimulus spending that is going to occur after 2011; that may be one of our amendments. I know Senator Coburn is going to suggest a series of other issues. All of these are steps in the right direction. So I think on our side of the aisle the basic philosophy is this: It is irresponsible to increase the debt ceiling if you don't do something responsible about addressing what is driving the debt ceiling, which is spending. So we are going to suggest a series of initiatives around here that we believe are responsible on the issue of controlling spending, and I hope those initiatives will be passed so we can begin to put this country back on the road toward fiscal responsibility. Mr. President, I yield the floor. Again, I wish to thank the Senator from South Dakota for his courtesy and the Senator from Montana as well. I suggest the absence of a quorum.

Mr. GREGG

Mr. GREGG. I understand I will be yielded time off the leader's time?

Mr. GREGG. Mr. President, I want to speak a little today about this issue of the tax burden the Reid bill is putting on people with incomes under $250,000, $200,000. We all know the President said he was not going to allow taxes to increase for people who have incomes under those numbers. We know there are all sorts of proposals in the Reid bill which significantly increase taxes. We also know there are a lot of proposals in the Reid bill that significantly increase fees. We also know there are a lot of proposals in the Reid bill which will significantly increase premiums--all of which people under $200,000 pay. Why is this? Primarily it is because, if you look at the Reid bill, it exponentially increases spending and grows the size of government. Government is increased by $2.5 trillion under the Reid bill when it is fully phased in. It goes from 20 percent of our gross national product--that is what government takes out today in spending--up to about 24 percent of our gross national product, a huge increase in the size of government. When spending increases like this, at this type of explosive rate, there are a couple of things that occur. One of them is that taxes also go up. It is like day following night. If you are going to increase the size of the government at this rate, you are going to have to significantly increase taxes--whether you call them fees or whether you call them premium increases or whether you call them outright taxes. That is what is happening. That is because the goal is to grow the government dramatically. That is the goal. When you grow the government, you inevitably increase the taxes. In fact, in this bill it is estimated, when it is fully put into place, that there will be about $1.6 or $1.7 trillion in new taxes. There is also, when it is fully phased in, about $1 trillion of reduction in Medicare spending. We have had a lot of discussion on that matter on the Senate floor. I have been here a number of times talking about that. But the burden of taxation goes up in order to allegedly pay for these new entitlements. Why do the taxes have to go up? Because when you increase spending this way you have to pay for it--or you should pay for it. This bill attempts to do that by raising taxes dramatically. But the presentation that you can get all this tax revenue out of people who are making more than $200,000 a year simply doesn't fly. It doesn't pass the commonsense test. It is like saying when you cut Medicare $1 trillion you are not going to affect benefits. We heard for a week from the other side of the aisle that no Medicare benefit cuts would occur with $1 trillion of Medicare cuts. Of course, that is not true. We just heard yesterday from the Actuary--the President's Actuary, by the way, the Actuary of CMS--that when you make these significant reductions in provider payments under Medicare, which is where most of the savings occur, that means there are fewer providers who are going to be able to be profitable. In fact, 20 percent of providers will be unprofitable under the Reid bill as scored by the Actuary for CMS, and, as a result, providers will drop out of the system. Clearly, that will affect benefits to seniors because they will not be able to see providers because they will not exist anymore. It is like telling somebody--someone said; the Senator from Nebraska, I think, said--you can have keys to the car, but there is no car. In this instance there will be no providers or many fewer providers. Along with that problem there is this claim--along with that claim that was totally inaccurate, which is that Medicare benefits will not be cut--there is this claim that these new revenues to pay for this massive expansion in spending are going to come from just the wealthy. Again, we have independent sources that have taken a look at this, in this case the Joint Tax Committee. They have concluded that is not the case. That is not the case at all. The argument from the other side of the aisle is we have all these tax credits in here which, when you balance them out against the tax increases, meaning that people earning under $200,000--because some will get tax credits, some will get tax increases, but they balance out so there is virtual evenness, so that the tax credits in the bill to subsidize people who do not have insurance today mostly are balanced by the tax increases on people earning under $200,000. Of course, if you are one of the people earning under $200,000 who doesn't get the tax credit, that doesn't mean a whole lot. Your taxes are going up. But more importantly, Joint Tax has taken a look at this, and by our estimate, what Joint Tax has said is essentially this: 73 million families, or about 43 percent of all returns under the number of $200,000, people with incomes of under $200,000, will, in 2019, have their taxes go up. So there is a tax increase in this bill, and it is very significant on people earning under $200,000. In fact, if you compare that to those people who will benefit from the tax credit, what it amounts to is for every one person who is going to benefit from the tax credit, three people earning under the income of $200,000 will see their taxes go up. That is a real problem, first, because it significantly violates the pledge of the President when he said: I can make a firm pledge no family making less than $250,000 will see their taxes increase--not your income taxes, not your payroll taxes, not your capital gain taxes-- not any of your taxes. That is what the President said. That pledge is violated by the Reid bill, violated very fundamentally for the 73 million people whose incomes are under $200,000 and whose taxes go up. So it clearly is not a tax-neutral event for middle-income people. It is a tax increase event for a large number of middle-income people. Forty-three percent of all people paying taxes whose income is under $200,000 will have their taxes increased. What is the thought process behind this? The thought process essentially seems to be we are going to explode the size of government, we are going to dramatically increase the taxes on the American people, and somehow that is going to make life better for Americans. I do not see that happening. I don't see that happening. We know from our experience as a government that growing the government in this exponential way probably is going to lead to people having a tougher time making ends meet because their tax burden is going to go up. Discretionary dollars they might have used to send their kids to college or they might have used to buy a new house or they might have used to buy a new car or they might have just simply saved--those discretionary dollars they don't have anymore because they come to the government to fund this massive explosion in programs and this increase in the size of government. I think we do not need to look too far to see how this model does not work. All we have to do is look at our European neighbors. This idea that you can Europeanize the economy, that somehow if you grow the government you create prosperity, that is what is basically behind this philosophy: You grow the government, you create prosperity. That does not work. We know that does not work. All we have to do is look at our neighbors in Europe who have used that model to find out and conclude that does not work. It would make much more sense to put in place an affordable plan, one which did not raise the taxes of 73 million people who file income taxes under the income of $200,000, 43 percent of the people paying taxes. It would make much more sense not to grow the government in this extraordinary way that we know we cannot afford and that we know ends up passing on to our kids a country which has less of a standard of living than we received from our parents. So I hope we take another look at all the taxes in the bill, recognizing that the commitment the President made on the issue of taxes is not being fulfilled by this bill, and go back to the drawing board and reorganize it so we can come closer to what the President wanted, which was a bill that did not raise taxes; which was a bill that did insure everyone; which was a bill that did create an atmosphere where if you wanted to keep your present insurance, you could keep it; and which was a bill that turns the curve of health care costs down. None of those four goals of the President are now met in the bill. In fact, according to his own Actuary and according to Joint Tax, for all four of those goals, just the opposite occurs. The number of people uninsured remains at 24 million people, the cost curve goes up by $235 billion, taxes go up for 73 million people, and we end up with 17 million people who have insurance today in the private sector losing that insurance. So I believe we should take another look at this bill and try to do a better job. Mr. President, I yield the floor.

Mr. GREGG

Mr. GREGG. I thank the Senator from Tennessee for opening this discussion on the issue of Medicaid. But I did want to ask a couple questions relative to what the Senate leader just said about the bill that is before us. We have to remember the bill that is before us--all 2,074 pages, as I understand it--is not the bill we are going to actually consider. There is somewhere in this building a hidden bill, known as a managers' amendment, which is being drafted by one or two or three people on the other side of the aisle, and which is going to appear deus ex machina on our desks fairly soon. We do not know what is in it. A lot of the people on the other side do not know what is in it. The press does not know what is in it. The American people do not know what is in it.

Mr. GREGG. The President does not know what is in it. Nobody knows what is in it. But they are designing this bill, which is going to be represented to expand Medicaid even further and to also offer the ability to people age 55 and over to buy into Medicare, which is going to have a huge impact. But what the Senator from Nevada said, which I want to ask the Senator from Tennessee about, is, he said this bill before us--this 2,074-page bill, which we know is what we are working off of--is going to reduce health care costs. Is it not true that the President's Actuary--the Actuary for CMS, who is the President's Actuary--sent us a letter last week which said that health care costs in the first 10 years would go up by $235 billion? The majority leader also said people will be able to keep their insurance. Is it not true that the President's Actuary said millions of people will lose their own insurance under this bill? Further, is it not true, in the area of Medicare, that the President's Actuary actually said that the expansion in Medicare and the Medicare cuts in this bill that are before us in the Democratic bill would actually lead to a massive reduction in the number of providers for Medicare; that up to 20 percent of the providers in Medicare would become unprofitable and therefore they would have to leave Medicare, making Medicare unavailable to people because there would be no recipient? Didn't the Actuary also say, in the area of Medicaid--and I am quoting--``it is reasonable to expect that a significant portion of the increased demand for Medicaid would'' be difficult to meet, particularly in the first few years, and that is because providers would no longer be profitable and would have to leave the business of providing--doctors groups, hospitals, small clinics? Are not all those three points true relative to what the President's Actuary has told us--not us, not the Republican side but what the President's Actuary said? And don't all three points contradict the representations of the majority leader?

Mr. GREGG. Mr. President, I thank all of the Senators here for their comments. I say this--and I think the Senator from Tennessee was alluding to this at town meetings--this expansion of Medicaid isn't good for people. It is not good for people on private insurance. Their insurance will go up, and a lot of employers will have to drop insurance because it is too expensive. It is not good for people getting Medicaid because the number of providers willing to see them will go down. That is what the Actuary tells us, and that is what common sense also tells you. When you are only paying 60 percent of the cost of seeing somebody, people will stop seeing them. It is not good for everybody in all those red States up there on the chart because their taxes will go up because the States are going to get the bill for this. States can do nothing but raise their taxes. So it is not good for people and not good for health care in this country, in my opinion.

Mr. GREGG

Mr. GREGG. Madam President, I ask unanimous consent to speak for 15 minutes.

Mr. GREGG. Madam President, I appreciate the explanation of the Senator from South Dakota of the effects of the bill on small business--especially the description of the gimmicks played in the bill in order to make it look fiscally responsible, which it is not--the fact they use 10 years of revenues in Medicare cuts to offset 5 to 6 years of spending and then they claim somehow it is in balance. I wish to turn to another part of the bill. I think it is important to recognize it is not our side so much that is representing the failures of the bill. It is actually the administration itself. The administration's Actuary came forward with a letter analyzing the Reid bill. You have to remember the Reid bill isn't necessarily the bill. This is sort of like a ``where is Waldo'' exercise here. We have a bill called the Reid bill--it is 2,074 pages--which we got 10 days ago. It took 8 weeks to develop it, in camera, by Senator Reid and a few of his people. Now we are told there is going to be a new bill. Nobody has seen it. Nobody on our side has it. I understand most Members on the other side have not seen it, but it is supposed to be a massive rewrite of the Reid bill. We can only project what that is through news reports. News reports are not very good. They represent they are going to expand Medicaid which will be a massively unfunded mandate to States and lead to letting people into a system that is fundamentally broken, and you are going to let people buy into Medicare age 55 and over. Medicare is insolvent today. It has $35 trillion of unfunded liabilities on the books, and they are going to let people buy into Medicare. What sort of sense does that make? It means that seniors who are on Medicare--and, by the way, Medicare gets cut significantly under this bill--will find Medicare under even more pressure when you put people into it. Turning from those two obvious problems to the potential bill that we have not seen but will be asked to vote on before the week is out, it appears, I want to turn to this actuary report done by the CMS Actuary who works for the Department of HHS and whose job it is to evaluate this bill. He works for the President. He is a Federal employee. He is in the administration. The CMS made a number of points. Remember, when we started down this road, the President said he wanted to do three things, all of which I agreed to: One, he wanted to expand coverage so uninsured would get covered. Two, he wanted to bend the outyears cost curve of Medicare and of health care generally in this country so we could afford it. And three, he wanted to make sure if you had insurance, you get to keep it. If you like your insurance, if you like the employer plan you have, you get to keep it. What did the Medicare Actuary--this is not the Republican side, this is an independent, fair analysis of the Reid bill--what did they say on these three points the President held up as his test for what health care should be? On the issue of whether this bill bends the outyears cost curve-- which we have to do, by the way. If we do not get health care costs under control, there is no way we are going to get our Federal budgets under control. What did the Actuary say: Total national health care expenditures under this bill would increase by an estimated $233 billion during the calendar period 2010 to 2019. Instead of going down, they go up. The chart that Senator Thune showed is totally accurate. There is no bending down of the outyear health costs. There are a lot of reasons for that, and I will go into it in a second. Primarily they did not put provisions in the bill I would support and should have been in this bill, such as malpractice abusive lawsuit reform, such as expanding HIPAA so companies can pay people to live healthier lifestyles--if you stop smoking, your company could pay you; if you lose weight, your company could pay you--which is not in this bill, which would have bent the cost curve down. Those were taken out of the bill because the trial lawyers opposed the first one and the unions opposed the second one. On the second point the President set out as his test, which was there would be coverage for everybody who is uninsured, what did the Actuary say after he looked at this bill? There are 47 million people uninsured. Some people say there are 50 million. The Actuary said after this bill is completely phased in, there will still be 24 million people uninsured. So for $2.5 trillion--that is what the cost of this bill is when it is totally phased in--for the creation of a brandnew entitlement, for cuts in Medicare which will be $1 trillion over the 10-year period when the bill is fully phased in, $\1/2\ trillion in the first 10 years, $1 trillion when phased in, $3 trillion of Medicare cuts in the first 20 years--for that price, $2.5 trillion, what do you get? You still get 24 million people uninsured. Why? Because they set the bar so high on the insurance level people still cannot afford to get into it and people will be pushed out of their private insurance. That is the third point. The President said if you like your private plan, you get to keep it. That was his third test. I agree with that. I agree with all these tests. We should bend the outyear cost curve and get everybody covered. The third test is if you like your private insurance, you get to keep it. What does the Actuary say? Once again, the Actuary works for the President through HHS. The Actuary says 17 million people will lose their existing employer-sponsored insurance; 17 million people will be pushed out of their private plans into this quasi-public plan. Why is that? Because the way this bill is structured, there is so much cost shifting that is going on as you put people in Medicaid, which only pays about 60 percent of the cost of health care of a person getting Medicaid, and you put more people into Medicare, which only pays about 80 percent of what it costs to take care of a Medicare recipient, that difference--that 40 percent in Medicaid, that 20 percent in Medicare-- has to be picked up by somebody else. The hospitals have to charge the real rate of what it costs them. The doctors have to charge the real rate of what it costs them to see that patient. So they put that cost on to the private sector. They put it on to private insurance. So the private sector is subsidizing, the person who gets their insurance through their company is subsidizing the cost of the person who goes into Medicaid or the cost of the person who goes into Medicare. In fact, today, the private sector is subsidizing the Medicare recipient and the Medicaid recipient through the cost of their insurance by almost $1,700 a year. Madam President, $1,700 a year of your private insurance, if you are insured by an employer plan, is to pay that gap in reimbursements, that underreimbursement for people who are under Medicaid and under Medicare. When you put more people into Medicaid--and this bill assumes 15 million people are going to go into Medicaid--and you put more people into Medicare and this bill puts people age 55 and over into Medicare, you end up with even more people being subsidized. Who pays for it? Private insurance. So private employers, especially small businesses, see their insurance price going up. They cannot afford it. They figure it is cheaper to pay a penalty, a tax, essentially, under this bill than to keep their insurance for their employees. They have to say to their employees: Sorry, folks, you have to go over to the quasi-public plan. Seventeen million people, the President's Actuary has estimated. There is another point that the President's Actuary makes here. It is critical because this Reid proposal is devastating to a program which is also under severe stress, and that is Medicare. We know today that because of the retirement of the baby boom generation, which doubles the number of retired people in this country from 35 million to 70 million, which generation will be fully retired by 2016, 2017, 2019, we know today that because of the demands of that generation for health care there is a $38 trillion--that is trillion with a ``t''--unfunded liability in Medicare. In other words, there are $38 trillion of costs we know we have to pay but have no idea how we are going to pay it. No idea. The insurance system does not support it. That program is under a lot of stress right now as it stands. As it stands, it is under a lot of stress. But when you start cutting that plan even further, which is what is proposed in this bill--under this bill there is approximately a $500 billion cut in the first 10 years for Medicare, $1 trillion in the second 10-year period when it is fully phased in, and $3 trillion over the 20 years. When you cut Medicare beneficiaries by those amounts and you eliminate essentially Medicare Advantage for probably a quarter of the people who get it today, providers can no longer afford to provide the benefits to their recipients, to the Medicare patient. They cannot make a profit. Again, you are going to say, oh, that is just a Republican throwing out some language here. No, it is not. That is the Chief Actuary of the President of the United States say saying that. Let me read to you: Because of the bill's severe cuts to Medicare, ``providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and might end their participation in the program (possibly jeopardizing access to care for beneficiaries).'' That is a quote from the President's Actuary. The Actuary suggests that approximately 20 percent of all Part A providers--that is doctors, hospitals, and nursing homes--would become unprofitable as a result of the Reid bill. What happens when you become unprofitable? You close. People will not be available to deliver the care to the senior citizens under this proposal. The representation from the other side of the aisle is, oh, we don't cut any Medicare benefits. They cut Medicare benefits from Medicare Advantage, but what they do is cut provider groups. If you don't have somebody who is going to see you, you can have all the benefits in the world and it is not going to do you any good. That is clearly a very significant cut in benefits. It is not me saying this. It is the Actuary saying this. Madam President, how much time do I have remaining?

Mr. GREGG. So this is a critical point, that under this bill, the Medicare Actuary has said four major things: first, that it doesn't bend the cost curve down, it bends it up. Second, it leaves 24 million people uninsured when fully implemented. Third, 17 million people will lose their private insurance and be forced into quasi-public plans. And fourth, there are a lot of providers of Medicare who are going to go under and, therefore, will not be available to provide Medicare. That is not constructive to the health care debate. How should we do this? I will tell you some things we should do that are not in this bill, things which are sort of a step-by-step approach, rather than this massive attempt written in the middle of the night, dropped on our desks for 8 days, 10 days, or for however long. Why don't we try to take a constructive, orderly approach? We know there are sections of insurance reform that can occur across State lines. We know we can do things if we set up the proper coverage scenario for preexisting conditions so people do not lose their insurance because of a preexisting condition. We know there is a lot of market insurance reform that can be done. We also know if we curtail or at least limit abusive lawsuits, we can save massive amounts of money. We know there is $250 billion of defensive medicine practiced every year in this country. CBO scores it as a $54 billion immediate savings just like the plans they have in Texas and California, which work. Why isn't it in this bill? The trial lawyers didn't want it. We know if we say to employers you can pay more to employees in the way of cash benefits if they stop smoking, get mammograms when they should, get colonoscopies when they should, reduce weight so they are not subject to obesity issues--if you do that, you get huge cost savings. Some employers, such as Safeway, have already proven that. Why don't we do that under this law? Because labor unions don't want that law, which was actually in the bill passed out of the HELP Committee, but it was out of this bill. We know there are certain diseases that drive costs in this country-- obesity, Alzheimer's. Why not target those diseases rather than this massive bill, $2.5 trillion bill which our kids cannot afford? Change the reimbursement system so we reimburse doctors for quality and value rather than quantity and repetition. Things such as that can be done. If you want to insure everyone, which I do, you can follow the suggestion I and other people have made around here. Let people buy into a catastrophic plan, especially the young and healthy, people between the ages of 20 and 45. They don't need these gold-plated plans or bronze-plated plans which have excessive amounts of mandated coverage in them. They don't need them. What they need is a plan that says if they are severely injured or they contract a very difficult disease, they are going to have coverage so their responsibility of care does not fall on the rest of the country. That can be done. There are a lot of specific things that can be done to improve our health care system without this quasi-nationalization effort which is going to expand the size of the government so dramatically by $2.5 trillion that there is no possible way our kids are going to be able to afford the debt that is going to come on to their backs as a result of this because this will not be fully paid for, in my opinion. Certainly, we can at least look at the points made by the Actuary of the President who has disagreed with four of the core proposals in this bill, saying they do not meet the tests which were set out for good health care reform and say in those areas: Let's go back and take another look; let's start over again; let's do it right. That is our proposal. Let's do it right rather than rush this bill through. Remember, most of the programs in this bill do not start until 2014. So why do we have to pass it before Christmas, especially when we have not even seen the final bill? It makes no sense at all. Listen to the Actuary of the President and let's get this right. Madam President, I yield the floor.

Mr. GREGG

Mr. GREGG. Is the Senator from Arkansas seeking recognition?

Mr. GREGG. Mr. President, I still have the floor. I was just asking a question.

Mr. GREGG. Mr. President, I ask unanimous consent to be allowed to speak for up to 10 minutes and then that the Senator from Arkansas be recognized, and then we will come back to this side.

Mr. GREGG. Mr. President, reserving the right to object, I understand that is in addition to Senator Wyden's request, which is that I should begin with my first 10 minutes, then we would go to the Senator from Arkansas, then we would go to Senator Wyden, and then we would go to the outline as represented by the majority leader.

Mr. GREGG. Mr. President, thank you very much. Mr. President, I rise to speak a little bit about this health care bill. I know there has been a lot of discussion of it already today, but I think it is important--very important--that as this health care bill comes forward, we know what it says. Unfortunately, we received this 2,074-page health care bill about 8 days ago, after it had been worked on for 8 weeks in camera, behind closed doors by the Democratic leadership. We have only had 8 days to look at it. We now hear there is going to be a massive revision of it-- a massive revision--that is going to involve potentially expanding Medicare to people who are aged 55. Medicare is already broke, by the way. It is broke. It has a $38 trillion unfunded liability. And we are going to add another 10 million people, maybe, into Medicare? That makes no sense at all. But what I think is important is that what we know so far has been reviewed by a lot of different people, but some of them have not been all that objective. So there was a request made to CMS, which is an arm of the administration--therefore, one would presume it was not necessarily biased toward the Republican side of the aisle; in fact, maybe just the opposite; I do not think it is biased at all, hopefully; but if there was bias here, it certainly would not be Republican--to review the proposal of Senator Reid. Let me read to you what the CMS conclusion is--some of them--on the Reid bill. According to the CMS Actuary: ``The Reid bill increases National Health Expenditures'' by $234 billion during the period 2010 to 2019. Why is this important? Well, it is pretty darn important because we had representations that the purpose of this health care reform was to decrease, to move down, health care costs. Now we find this bill, as scored by the CMS Actuary, significantly increases the national health care expenditures. Secondly, they concluded that ``the Reid bill still leaves an estimated 24 million people . . . uninsured.'' Twenty-four million people--that is almost half of the uninsured today. Why is that important? We were told the purpose of this health reform exercise was to, one, insure everybody; two, bend the health care costs down; and three, make sure that if you have your own health care that you like, you do not lose it. Well, on two counts, it appears the Reid bill clearly fails that test and gets an F--on the issue of bending health care costs down and on the issue of insuring everyone, according to CMS, an independent group. Third, it says: The new fees for drugs, devices, and insurance plans in the Reid bill will increase-- Increase-- prices and health insurance premium costs for customers. This will increase national health [care] expenditures by approximately $11 billion per year. So instead of bringing health premiums down, as was represented by the President--he said it was going to go down by $2,100 per family-- your health care premiums are going to go up. What happens when health care premiums go up? People stop giving you health care insurance because they cannot afford it. Employers cannot afford it. So on the third issue, will you lose your health insurance if you like it, yes, you will. Yes, you will because the price of your health insurance is going to go up under the Reid bill. There are a couple other points they make which are fairly important here: The actuary's analysis shows that claims that the Reid bill extends the solvency are shaky. They are ``shaky''--the claims that it extends the Medicare trust fund solvency. Quoting further: Moreover, claims that the Reid bill extends the Medicare HI Trust Fund and reduces beneficiary premiums are conditioned on the continued application of the productivity payment adjustments in the bill, which the actuary found were unlikely-- That is their concept, ``unlikely''-- to be sustainable on a permanent annual basis. . . . So the idea that this bill somehow assists Medicare--by the way, this bill cuts Medicare by $\1/2\ trillion, almost, in the first 10 years. When it is fully implemented, it cuts Medicare by $1 trillion in a 10- year timeframe, and over the next 20 years, it cuts Medicare by $3 trillion. The idea that this is going to somehow help Medicare is fraudulent on its face, according to the Actuary. ``Fraudulent on its face'' is my term. It is ``unlikely'' to accomplish that. Then it goes into this issue of the CLASS Act, which we have heard so much puffery about how wonderful this CLASS Act is, which is basically another Ponzi scheme, as it was described by the chairman of the Budget Committee, not myself. The Actuary said: The Reid bill creates a new long term insurance program (CLASS Act) that the CMS actuaries found faces ``a very serious risk''-- This is their term, ``a very serious risk''-- of becoming unsustainable as a result of adverse selection by participants. . . . In other words, only people who are probably going to need long-term care are going to opt into this program. So this plan will basically not be able to pay the costs of the benefits it is proposing because they will not have funds coming in to support the people who need it because there will be no larger insurance pool of healthy people who are using the program. Only the people who need the program will use it. So the CLASS Act representations we have heard around here have been debunked by this CMS report. This is not our side saying these things. It is not our side saying that the cost of this bill will drive up the cost of national health care. It is not our side saying there are 24 million people left uninsured when this is fully implemented. It is not our side saying premiums will go up when this bill is fully implemented. It is not our side saying the CLASS Act will be a seriously unsustainable program. It is not our side saying Medicare will not be benefited by this program. In fact, it will be negatively impacted by this program. It is CMS saying that, an independent Actuary--not that independent; an arm of the administration. The administration's Actuary is saying it, not our side. So I think it is legitimate to have some serious concerns about this bill. The CMS report goes on and says: The CMS actuary noted that the Medicare cuts in the bill could jeopardize Medicare beneficiaries' access to care. Now, that is serious. That is serious. It found that roughly 20 percent of all Part A providers--hospitals-- would become unprofitable--20 percent of all Part A providers, such as hospitals, would become unprofitable within the next 10 years as a result of the proposals in the Reid bill. Well, I know ``profits'' is a bad word on the other side of the aisle, but the simple fact is, if you do not have profit in a hospital, the odds are pretty good you are going to go out of business. You are going to go out of business because you cannot pay the costs of operating that hospital. Even nonprofits have some sort of cushion in order to make it through. Now we have the CMS Actuary telling us that 20 percent of the hospitals in this country are going to go into a negative cashflow and are going to become unprofitable as a result of what this bill proposes. Well, colleagues, Senators, why would we vote for a bill which increases the cost of health care for the country and does not bend the health care cost down, which leaves half the people in this country who are uninsured still uninsured, which raises the premium costs for Americans, which puts the Medicare system at risk, which will put hundreds of providers at risk, hospitals, and which creates a brandnew entitlement which is not sustainable? And those conclusions are come to by the CMS, the independent CMS Actuary. Why would we want to put that type of program in place? Of course, we should not. Listen, this 2,074 pages of bill--it was put together haphazardly. It was just sheets of paper stuck together. It ends up costing us $2.5 trillion overall. Every page costs us about $1 billion. Obviously, it was not well thought out because the CMS Actuary looked at it and said it is not well thought out. It does not accomplish its goals. So rather than moving forward with the bill, why don't we just step back and start doing things we know are going to work? Why don't we start doing a few things around here we know are going to work? I know the Senator from Oregon is on the floor, and he happens to be the sponsor of a bill which actually would make some progress in the area. Why don't we--I would be willing to step back and start from his bill because his bill at least makes sense. If it were scored by the CMS Actuary, it would not come out like this. They would not be saying that people would be uninsured, that the price of health care was going to go up and that Medicare was going to go into a disastrous strait and create an unsustainable entitlement. So we have ideas around here that do work or are fairly close or at least have the foundation to work. Why don't we use those rather than this bill? That is my only point. This bill is ill thought out, and that is not my conclusion, that is the only conclusion you can come to when you look at the CMS Actuary's evaluation of it. Mr. President, I appreciate the courtesy of the Presiding Officer, and I especially appreciate the courtesies of the Senator from Arkansas.

Mr. GREGG

Mr. GREGG. Will the Senator yield for a question on that point?

Mr. GREGG. I certainly respect that the Senator from Montana worked very hard to have a bipartisan initiative here, but this bill we are dealing with has no bipartisanship to it at all. Was this not written in camera behind closed doors for 8 weeks by the majority leader? Was there a Republican in that room at any time? And we have now been on it for what, 8 days or something, while they wrote it for 8 weeks. And furthermore, is there not rumored to be floating around this Congress somewhere, in some room, again--that we have not been invited to--a major rewrite of this bill called the managers' amendment, which supposedly is going to expand coverage to people under Medicare to 55 years of age, with Medicare already being bankrupt, and already cannot afford the people they have on Medicare? It is going to expand it. We have not seen it. Yet this is going to change this bill fundamentally and change health care fundamentally. Is that bipartisan? I ask the Senator from Wyoming if that is the case? Was this bill written in a bipartisan manner? Were any Republicans in the room? Did it go through a committee process? Was it amended? Did it not take 8 weeks to write it, and it has now been on the floor for 8 days, and all of our amendments are being pushed to the side? And are we not hearing about a massive--a massive--rewrite of this bill that is going to appear deus ex machina from the majority leader's office and fundamentally change the way health care is delivered in this country? Is that going to be bipartisan?

Mr. GREGG. Mr. Leader, if I might ask a question through the Chair.

Mr. GREGG. On that last point, it does seem there is a slowdown occurring on amendments. As I understand it, we have four or five very substantive amendments dealing with taxes, dealing with employer mandates, that we are ready to go to, and we are ready to vote on; is that not correct?

Mr. GREGG. I hope at some point today maybe we should propound a unanimous consent setting those four items up for votes on Saturday and Sunday.