Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, I yield 15 minutes to the Senator from Arizona.

Mr. GREGG. Mr. President, I thank the Senator from North Dakota for his presentation. I wanted to respond to a couple of items. I think they go to the essence of the issue here. First, the vast majority of the Senator's time has been spent discussing the President's budget. We are not voting on the President's budget. I will admit that the blueprint for our budget was based off of a large percentage of what the President proposed. But there are very significant items the President didn't have in his budget that we have in ours. Specifically, as to this argument that there is no funding for the war, our budget has funding for the war. We have a reserve fund of $50 billion, the purpose of which is to pay the cost of the war in the next budget. No, it doesn't have reserve beyond that because, hopefully, we will be out of the war when 2007 rolls around. Even if it is not, it is appropriate to wait until the 2007 budget before we go forward with another reserve account, when we will have a more accurate estimate. But the $50 billion for 2006 is reasonable. Progress is being made there. It is very interesting that folks in this body who for so long have criticized the President for pursuing terrorism through the war in Iraq, which has been one of the primary issues in the fight on terrorism--now when things are going fairly well, they are suddenly complaining we are not putting in the money to fight the war in Iraq. Things in the Mideast, as a result of this President standing up and following through in the face of a lot of naysayers and second-guessers and Monday morning quarterbacks and folks who simply don't have confidence that we as a nation can project liberty across the globe-- those naysayers have found that maybe they were wrong. They are not willing to admit it yet, but an election in Iraq was a huge success; the Palestinians holding an election, a huge success; movement toward peace between Palestine and the Israeli Government, a huge success; Syria pulling out of Lebanon, a huge success with people in the streets demonstrating for peace. Egypt is moving toward an election--not necessarily the most open election--freeing the No. 1 dissident and opposition party leader just this weekend. Democracy seems to be making progress in that part of the world, and with that we are undermining the breeding grounds of fundamentalist Islam which has targeted America because we stand for freedom around the globe, and because we stand for women's rights, because we stand for a market economy. We are making progress. Now they want to have it both ways. They want to say Iraq was terrible, wrong, and should not have occurred, even though things are progressing there and it looks as if there is an end in sight. Then they say, Now you have to budget for 5 years from now to be in Iraq because that is what we are planning to do, when, of course, that is not what we are planning. These are one-time items, the fighting of the war in Iraq. It should not be built into the defense base. We did not build it in because 2 or 3 years from now, when we are no longer in Iraq, I don't want the defense base inflated by that number. I want it accurate according to what the Defense Department calls for relative to its needs. So we put in the $50 billion for fighting the war in Iraq. So when the Senator from North Dakota talks about the failure to address the issue of reserving for the war in Iraq, he is referring to the President's budget, not the budget that is before us. On the issue of Social Security, the Budget Committee doesn't address Social Security. That is by law. There will be a lot of talk about it on the floor, but we have no authority to do anything in Social Security. The idea that we should actually account for Social Security, when the Democratic Party has said they are not going to do anything on Social Security--they are going to bury their head in the sand on it and walk in lockstep on Social Security, relative to burying their heads in the sand, so that the likelihood of moving legislation through this body is significantly less because it takes 60 votes to move it through here. When you are facing that type of stonewalling on a critical issue that should be addressed, why would anybody put it in the budget when, first off, we are not supposed to address Social Security? Why would they put it in the budget when you cannot legally put it in? And even if you could, why would you put it in in the face of that type of opposition, especially when it is such a fluid situation? On the issue of revenues hemorrhaging, again, the Senator from North Dakota referred to charts with red lines going here and there. They were the President's numbers, they were not the budget numbers. The budget has basically not taken that tack. We have talked about the 5- year window, and it is an accurate discussion of that 5-year window. What is important to note, however, from the proposals from the other side is that there is no proposal, no budget being brought forward. There is a lot of criticism about the budget but no budget being brought forward. As the Senator from North Dakota said in the markup: Listen to our amendments to see our budget structure. Fine, we will listen to their amendments. I note that in the markup, when the Democratic Senators had the opportunity to put forward a budget, they did not. But they did put forward a lot of amendments. They put forward about 10 or 12 amendments on just about everything from worthless programs, such as ATP, to programs that have value but we have not necessarily figured out how we are going to pay for them, such as CDBG. In the total, their amendments added up to $229.8 billion of new spending, and then their amendments added up to either $244.9 billion of new taxes or $276.9 billion of new taxes, depending on how you account for the tax on the top income people in this country. They did put forward a proposal. It was their budget, and it was your classic tax-and-spend budget, $229 billion in new spending and $244 billion or potentially $270 billion in new taxes. Why is it important to mention that? It is important, first, because that is the definition they gave to their budget, but it is also important to understand the difference of opinion here. You cannot on one hand talk about need for fiscal responsibility when on the other hand you are proposing $229 billion of new spending. You cannot discipline the Federal Government by raising spending. The American people are not a fundamentally undertaxed people. The American people pay a lot of taxes. The concept that you can continue to raise taxes and continue to spend money does not work. You have to discipline the spending side of the ledger. We have done it. Granted, we have not done it as well as I would like; I would like us to slow spending a lot more, but we have done it. We have frozen nondefense discretionary, we slowed the rate of defense discretionary to 4.5 percent, and we did not stick our little toe in the water, but we came to the water's edge and looked down at the issue of entitlement accounts, specifically Medicaid. That is what is important about this debate. This is the essence of the budget, the question of how we deal with Medicaid. The Senator from North Dakota and I agree on this subject--we agree on a number of issues, but what we agree on is that the outyear issue in this country is entitlement spending, and at the essence of that issue is health care spending. And there are two accounts, Medicare and Medicaid. The Senator was correct, this budget does not address Medicare. Hopefully we will do it later on. But it does address the other major leg of this problem--there are three legs to this issue; it does not address Social Security--and that is Medicaid. The three legs are Medicare, Medicaid, and Social Security. This is the essence, this is the point of this question: You cannot tax your way out of this problem. You cannot raise taxes enough on the next generation that they will ever be able to afford the present programmatic activities we have on the books in the area of retirement benefits in this country. You cannot do it. We are not as a nation going to physically be able to do it, and this chart is the essence of that point. I do not use a lot of charts because sometimes they do not show up, but in this case, I am going to use this chart. The historic spending of the Federal Government is 20 percent. If You get much over 20 percent, you have put in a tax rate which people cannot absorb. They do not make enough money to pay for it and still have a decent lifestyle. It reduces productivity and job creation if you start taxing people at rates over 20 percent, even over 18 percent, for that matter. The cost of Medicaid, Social Security, and Medicare, by the year 2027, 2028, will absorb 20 percent of America's spending; 20 percent of the GDP of this country will be spent on those programs. And it keeps going up. So you cannot possibly raise taxes enough. You could confiscate the wealth of every American in the top two brackets, which may be a proposal that will come at some date from the other side of the aisle--that was a proposal before Ronald Reagan was President when the 70-percent rates were in effect--and you still could not pay for the cost of these programs. The only way you can handle this is to begin to get ahold of the rate of growth of these programs, to put in place some structure that will control the rate of growth of these programs. Social Security is being addressed in a forum outside this budget, in a debate outside this budget, although it is going to be brought into this budget--the debate will, the substance will not. With respect to Medicare, last year we passed the Part D program and, therefore, there is a desire to let that percolate until we figure out how that shakes out before we move on that. The last leg of the stool is Medicaid. This budget begins a minor effort in the area of Medicaid. As I said in my opening talk, there is $14 billion of restraint in growth on a $1.12 trillion spending package, reducing the rate of growth from 41 percent to 39 percent over the next 5 years, all of which can be done without impacting the quality of services and, in fact, I suspect we will run into a lot of Governors who think it can be done and improve the quality of service by giving them more flexibility in how they distribute the benefits amongst their people in the States more efficiently than being subject to a lot of strings out of Washington. This Medicaid issue is the core question and, of course, we look forward to the Democratic response to that, whether there will be a position that Medicaid reconciliation should be knocked out of this bill and a majority on the other side votes for it, or all on the other side of the aisle, for that matter. The Senator from North Dakota also addressed this issue of borrowing. This issue needs to be touched on briefly because it is a big issue. The value of the dollar as the currency that is basically the currency of the world is one of our great benefits as a nation. It has been weakening. The dollar has been weakening. The practical effect of a weaker dollar, of course, is that we export more goods. There is a lag time, so we have not seen it immediately, but over time, we will see more goods exported, and also the cost of oil being $55 a barrel undermines the ability to export, the ability to offset that trade balance. We cannot afford to have the dollar weakened too much. We cannot afford it for a lot of reasons, not the least of which is the need to have capital flowing into the United States. We want capital from around the world coming to the United States. I do not find it objectionable that the people of Japan find it safer to invest in the United States than in Japan. That says something about the strength of our economy. I do not find it objectionable that the people of France, when they look around the world and decide where they want to put their money, do not want to put it in some company in France but want to put it in a company in America. I think that is probably a pretty good sign that we have a pretty darn strong economy and a place where people feel they can invest and invest safely and get a decent return. But their willingness to continue to do that means the dollar cannot depreciate against the franc they put in here or against the yen they put in here. It is that simple. If you are going to invest a yen--say 1 yen is worth 50 cents, something like that; I do not know what the yen is today; it is nowhere near that--you are not going to want to invest if that dollar is going to weaken so that when you take your yen back out, you have lost money simply on the exchange rate, even though you may have made a good investment in the United States. So having the dollar drop precipitously is a huge problem for us, but it is not a problem from a standpoint of exports, and it is not a problem right now of people willing to invest here. Those are signs of good economic values. But it is a problem if, over the long run, it causes the dollar to weaken to a point where people do not feel comfortable investing here because they feel they will lose money in the exchange rate, even though they may make a good investment. Critical to maintaining the confidence of the international community in the dollar is, quite simply, our willingness as a Federal Government to be fiscally disciplined. They are looking at this budget process and they are saying, hold it. If the position of the Democratic Party is that the way we get fiscal discipline is by spending an extra $229 billion over the next 5 years, that is not discipline. Fiscal discipline means one contracts--or not contracts; we never contract. At least the rate of growth of Federal spending in core accounts is slowed down. Yes, we are fighting a war, but those are one-time expenditures and they will be over. When they are over, they will be taken out of the base. They will not even be in the base, hopefully. So we do need to put in place some mechanisms which will say to the world markets and our own financial markets, yes, the Federal Government is serious about disciplining the rate of growth. Two of those key elements are, one, a strict cap on spending on the discretionary side, which is in this bill, 3-year caps enforceable with a 60-vote point of order, and two, a move on entitlement issues so that we restrain the growth of the entitlements through reconciliation. Both of those elements are in this bill. The time restraints are not as big as I like, but they are there. Yet, as I listen to the other side of the aisle, all I hear about from their amendments is, let us knock those restraints out, let us shoot through those restraints, let us lift that cap, let us knock out those reconciliation instructions, and let us spend more money. We will raise taxes to do it, but we are going to still spend more money. That is not disciplining the Federal Government, and it is not going to improve the value of the dollar if we do that. So this issue of borrowing is a complex one, but it does make a statement about where we are as a matter of policy, and if we wish to improve the value of the dollar, we need to pass a budget that has fiscal restraint in it. I yield the floor.

Mr. GREGG. Mr. President, I assume the time is being allocated relative to speakers by the side for which they are speaking.

Mr. GREGG. Mr. President, I will briefly comment on a couple of things the Senator from North Dakota said. I agree with his view of the charts of the senior Senator from North Dakota--or maybe he is the junior Senator; actually, I think he is the senior Senator; I never figured it out because he took a year off and came back. But, in any event, I agree with his view of the charts and I want to identify myself with the Senator's thoughts on the Senator's charts. Independent of that, the Senator got into quite a discussion about Radio Marti and how they wanted $8 million for a new plane and so on. We are going to hear about a lot of amendments brought up on the floor which are targeted on specific discretionary spending activity the Federal Government is pursuing. They have no relevance to what is happening here in this budget debate because the budget has no specific impact on programmatic activity on the discretionary side. All we do as a Budget Committee is send to the Appropriations Committee an upper- line number, in this case $843 billion, which becomes an enforceable number. The Appropriations Committee then takes that number unilaterally, and I assure you with virtually no input from the Budget Committee, and divides that between the different subcommittees in what is known as a 302(b) allocation. The President sends up his proposal, which again we are not signing on. This is not the President's budget. The President does not sign this budget. We as a Congress do this budget. It is a resolution of the Congress. We have used the President's budget as an outline off of which to develop some of our positions, but the President's budget, again, is a statement of where the President would go on these programs. The final decision on these programs is going to be made by the committee of jurisdiction, which will be the authorizing committee and the subcommittees of the Appropriations Committee. All we do as a Budget Committee is say: You, Mr. Appropriations Committee, have this amount of money to spend. You can allocate it wherever you want amongst your different programmatic activities. So for Members to come out here and offer a resolution to increase veterans funding or to increase funding for education or to increase funding for highways, all that does as an amendment is raise the amount of spending which we do. It goes over the cap. There is no obligation under such amendments for that money to be spent where the sponsors of the amendment allege they are going to spend it. Not at all. There is no way to tie the hands of the appropriators or the authorizers, and there should not be. That is their responsibility. The point we make as a Budget Committee is that we give a top-line number, and then we expect, and we know, that the Appropriations Committee and, to some extent, the authorizing committees, within that number will make their decisions as to how best to spend the money. You will have a fight of priorities. And that is the way it should be. But any amendment on this floor which says I am going to increase Radio Marti or I am going to increase veterans funding is actually an amendment which is simply saying I am going to increase general spending of the Federal Government. I am going to raise that top line. I am not going to live by that cap. That cap doesn't work for me. I want it to be higher. I want to spend more money. That is what that amendment says. And it does not say that money is going to go to that program which they allege they want to spend more money. I think this is an important point to make. I intend to make it over and over because we are going to hear amendment after amendment which is specific to some program and in which there will be no impact on that program if it were to pass. In the Budget Committee, there were offered about 13 different amendments by the other side of the aisle, totaling about--more than 13 amendments, but the amendments that spent money totaled up to about $229 billion. They would have raised the cap $229 billion. On the other side, they would have raised taxes by $240 billion or $250 billion. I lost track of how much money they were going to tax and spend. But not one of those amendments would have had the practical effect of actually moving money into the programmatic activity that they claimed it would have gone into. It would have simply freed up money to go above the cap, except in the rare instances where those amendments were targeted on reserve funds, in which case they are treated differently. But, again, they would end up raising the cap in all those reserve fund accounts. So it is important to understand what we are dealing with here as a budget technically, which is that we are dealing with top-line numbers on the discretionary side and the specific numbers that we give to the different authorizing committees on the reconciliation side. The rest of it is a lot of good show and good press releases, but not a heck of a lot more.

Mr. GREGG. Mr. President, today we begin discussion of the Federal budget, which is, of course, one of the primary functions we are supposed to do as a governing body in the Senate and the House. Interestingly enough, under the rules of the Congress, something which I don't think most people recognize, the President has no official role in the budget. It is a document which is produced by the Senate and the House. It is called a resolution. The President doesn't sign it. The President sends up his budget, but his budget is not officially part of the process in the sense that he signs the final document. In a unique way, the Budget Act puts on the Congress the responsibility of doing a budget. Now, the President has sent up a budget. Of course, he is the leader of our party and of the country. As such, we have given it very significant credibility and have actually tracked it quite closely in the budget which was produced by the Budget Committee. Before we begin the specifics of the discussion on the budget, I want to thank the members of the Budget Committee for pursuing a very efficient and professional markup last Thursday. I especially thank members on my side, who were there for all of the votes. It is the only committee in the Senate that requires that you actually be there and physically vote versus using a proxy. They participated aggressively in the debate. I also thank the ranking member, Senator Conrad, and the members of his party for expediting the process. They had a lot of amendments they wanted to put forward. They put them forward in an extraordinarily professional and effective way. As a result, we were able to move through the process and debate issues which are critical to the Nation. A lot of issues are raised by the budget because it touches everything. There are two basic issues which I think our budget attempts to address. The first, of course, is how you control spending, how you make sure that you do the most with the dollars you have, but that you don't demand of the American people more dollars than they can afford to pay through taxes, and that you not end up passing on to your children and your children's children significant deficits, that you not borrow excessively in order to fund the Government. The short-term issue which that involves is the fact that we have, for the last few years, been running very significant deficits. Those deficits are, in my opinion, a function of two basic events. The first is that in the late 1990s, we saw the largest economic bubble in the history of the world. A bubble is an inflation of the market, a perversion, really, of the market and a period where you essentially find that the economics of the times, specifically the ability to issue stock through IPOs, through creation of corporations, is creating artificial value, that the stock is not supported by real value. It is actually a form of printing money, for all intents and purposes. In the history of the world there have been a lot of these bubbles. The two most significant ones were the tulip bubble in Holland and the South Seas bubble involving the English investment in South Seas companies. As a percentage of the economy in the world at that time, they were huge bubbles and they led to significant economic disruption and negative events. They were nothing compared to the Internet bubble. When the Internet bubble burst, as all bubbles do--especially economic bubbles--there was a significant downturn in the economy, and a huge recessionary event was generated. Explosion of that bubble was also followed by, obviously, the attacks of 9/11. They had a massive impact on us. Obviously, we lost many lives and it changed the whole culture of our country. But the economic impact was also dramatic. The economy slowed dramatically as a result of the attack. We had to reorient the Federal Government activity and we had to significantly, dramatically ramp up our commitment to national defense, homeland defense, make massive capital expenditures that we had not anticipated making in the area of homeland defense. Not only did the economy slow, which means revenues slowed, but spending had to go up dramatically as a result of that. The effect of that was we headed toward a recession, went into a recession, and revenues of the Federal Government dropped precipitously and spending went up to fight the war on terrorism. Some would argue that the deficits were also a function of President Bush's decision to reduce taxes during this period. I argue the opposite. I would say that the decision to reduce taxes, especially taxes on people's income, was one of the best economic decisions of the period, because it meant more money was left with consumers and, as a result, the economy had more money in it and, as a result, people were able to spend more money and, as a result, the recession was shallowed out. There would have been a much more severe, dramatic, and damaging recession had those tax cuts not gone into place. We are seeing now, as a result of those tax cuts, their benefit, which is that the economy is coming back in an extremely strong way and revenues are starting to grow with equal strength. Last year, they grew at 9.5 percent. This year, they will grow by about 7 percent. For the foreseeable future, Federal revenues are going to grow over 6 percent, which is a function of the fact that we have changed the way taxes are collected in this country, so we are incentivizing people to go out and be productive and spend money to create jobs and, as a result, we are seeing more economic activity and we are seeing more revenues come in because there are more taxes being collected from the economic activity. Two of the most successful tax cuts during this period were, in my opinion, the dividend rate cut and the capital gains cut, both of which led specifically to dramatic increases in Federal revenue. The capital gains rates have seen huge jumps in revenues at the Federal level, which are a function of the fact that people who had been sitting on economic growth and assets, capital gains, had just been sitting there. They didn't want to pay the tax, so they were sitting on the assets. With the capital gains cut, people said I can now sell this asset and reinvest. That has two very positive economic effects. The first is it means more revenues for the Federal Treasury. Those gains would not have occurred without that rate cut because there would have been no sale and no taxable event. Second is that the money generated from those sales is being reinvested more efficiently in the economy because people are taking cash and reinvesting it in a way that it will earn more money. Therefore, you are creating more jobs as a result of putting more capital more efficiently back into the marketplace. The same could be said for the dividend cut. For years, corporations in America had basically piled up dividends, piled up resources, and not paid them out to their stockholders because it was a double tax. First, they are taxed on profits at the corporate level at 32, 35 percent; and then when we pay out the profits out, the individual taxpayer who happens to be an owner of the company, most of whom are working Americans and have that ownership through their pension plan-- truck drivers, restaurant people, people who work in manufacturing facilities--then pay another tax because they are hit with the tax as the money is paid out in the form of tax on dividend income--double taxation, rates from 50 to 70 percent as a result of double taxation. So we cut the dividend rate. The practical effect of that was to say to corporate America, you can now pay your stockholders, most of whom are working Americans, who have a 401(k) or a pension plan--you can pay the Americans who have invested in America through the stock market a dividend and you are not going to have to pay a punitive double tax event. You are going to still pay double tax, but it will not be as punitive as before. The effect of that was major corporations did pay dividends. Microsoft alone, I think, paid out a $32 billion one-time dividend--a massive dividend payout. The effect of that was to, I think in and of itself, create a 1-percent growth in the economy of the U.S.--or the net worth of America, I think is the term that should be used--but a huge benefit that was to Americans across the board who invested in Microsoft. Millions of Americans working in technology jobs and in restaurants and working in the military, who had stock through their 401(k) or through various other investments, suddenly got this payment which managed to increase significantly their personal wealth and which they could then use to reinvest, which they have, or which they could use to consume, which they have, and as a result the economy is growing faster than at any time since the mid-1990s. It grew 4.4 percent in the last quarter. We have the lowest unemployment in years. All of this is a function of having made the right decisions at the right time on the issue of cutting taxes. That brings me back to the deficit. Now, the one cloud on our horizon--there are actually two, and they are both tied to the fact that the Federal Government is spending more than it is taking in in the short term and long term. In the short term, that deficit is large. By historical terms, it is not the largest we have had, but it is a large deficit. It is one that must be reduced in the short term. In the long term, we have a much more significant problem. We know there are already on the books Federal programs, specifically in the area of retirement, that are going to radically expand the cost of Government in the next generation. Those programs, which are Social Security, Medicare, and Medicaid, are targeted on benefiting retired people. We have in this country today a demographic specific that cannot be denied. That is this: There are a lot more people headed toward retirement than has ever occurred in the history of America. The baby boom generation, the largest generation in America's history, is now headed toward retirement. They will begin to retire in 4 years. When that generation begins to retire, it is going to overwhelm the retirement system. This generation is so large that it has overwhelmed every system it has ever hit. In the early 1950s, it overwhelmed the country to make baby carts and cribs. In the late 1950s, it overwhelmed education through elementary schools having to be built. In the 1960s, it changed the culture by moving forward in civil rights and women's rights, and the war in Vietnam became a major issue. As we moved into the 1970s and 1980s and 1990s, it has been the most productive generation in American history and, as a result, has caused America to jump ahead in the area of personal wealth and economic opportunity. Now this generation heads for retirement and it is going to take on a retirement system--Medicare, Medicaid and Social Security--which was never structured to deal with this size of a generation. All of these major retirement systems were designed with the concepts of the 1940s and 1950s. The Franklin Roosevelt approach, the genius of Roosevelt in the area of retirement systems, was that he and other people understood you could support a pretty decent retirement system as long as you had a lot more people working than retired. Back then, there were 16 people working for every person who was retired. Those 16 people would pay a little bit of their income to make sure the person who is retired had a decent lifestyle. That was the right approach. Today, we have 3\1/2\ people working for every one person who is retired. The result is that we can still support the system. But by the late 2020 period--or the mid-2020 period, when the baby boom generation is fully retired, we go from a pyramid to a rectangle, where there will be two people retired for every person working. The practical effect of that is those two people working for every one person retired are going to have to bear a massive increase in taxes in order to support that one person who is retired. It is a simple fact of statistics. If you had 16 people supporting 1 retired person--16 people working for 1 retired--and you go down to 2 people working for every 1 retired, it is obvious those 2 people are going to have to bear a much higher burden than the 16. And we have at the same time significantly increased the benefit structure for retired people. The practical effect of this is, the young people here as pages are going to go out and get jobs--and I am sure they are all going to get jobs and be well employed Americans--they are going to find their payroll taxes to support my generation will have to double--double. Their quality of life, therefore, will be radically reduced because they will not have the extra spending power to send their kids to college. They will not have the extra spending power to buy a nicer house. They will not have the extra spending power to have a good life of maybe taking a vacation. They will have to give up all that to pay taxes to support my generation in its retirement. In fact, there is today on the books, according to the Comptroller General of the United States, Mr. Walker, $44 trillion--that is trillion dollars; it is hard to conceive what a trillion dollars is but, believe me, it is a lot of money--$44 trillion of unfunded liability which the next generation has already been told they are going to have to pay because our generation has already put the laws in place to require it. And of that $44 trillion, $26 trillion, over half of it, about 60 percent of it is directly tied to health care costs-- Medicare and Medicaid. They are huge numbers, massive numbers. To put in context, the entire net worth of America, if we took everything America owns today, is only $47 trillion, and yet we have $44 trillion of debt on the books. Put it in another context, if you take all the taxes paid in American history since George Washington crossed the Potomac, came over here and started this Capitol, $43 trillion, and yet we have a $44 trillion debt on the books and almost the vast majority of it is health care debt required to pay for senior retirement. These are huge numbers we are placing on our children. To put it in another context, today the Federal Government consumes about 20 percent of the gross national product of the United States, all the Federal Government--that is national defense, that is education, that is environmental protection, that is Social Security, it is health care, everything, put it all together and historically it has been about 20 percent of the gross national product. By the year 2025, if you just take Social Security, Medicare, and Medicaid--those three programs alone--they will absorb over 20 percent of the gross national product and will be going up. It will mean we are going to put the Federal Government in a historic position: we cannot spend any money on national defense; we cannot spend any money on education; we cannot spend any money on environmental protection, roads, or anything else because it will all have to be spent on this retired class. What is the point of all this? The point is this: The short-term deficit is a problem, and we have to address it. But the long-term threat to our economy created by these entitlement programs, known as Social Security, Medicare, and Medicaid, is even more dramatic, and we need to do something about it. We have an obligation to do something about it. That is our job as people who have been sent here by our States to look at an issue which we know is coming at us, an issue of public policy of such significance, and try to reduce its impact, try to make it a more positive event, try to make it an affordable event for our children and our children's children. So the President's budget which was sent up has attempted to address both these issues. He has first attempted to address the short-term deficit and, second, to address this outyear problem of the entitlement spending. He has also, outside the budget, taken on one of the major entitlement issues, which is Social Security--how to make that system solvent so that it gives decent benefits to those who are retired, but also affordable so that young people, when they pay into the system, which they have to, will get something back on their investment. You have to give him credit. He stepped into dangerous political waters, but it is appropriate that we address the Social Security issue, and I congratulate him for that. But the budget is not about Social Security because the law does not allow the budget to address Social Security. The budget is about the other elements of Federal spending. The Federal budget, as brought forward today, tracks fairly closely the President's proposals. It does not reconcile taxes as much as the President asks or might have wanted, and it does not reduce the rate of growth of entitlements as much as he may have wanted, but generally it tracks the proposals the President has put forward. In the short term, the budget that has been brought forward will reduce the deficit by half. That is over the next 5 years. In the long term, this budget begins to address one of the three key elements of the question of how we try to make the retirement benefits for my generation more affordable to our children, specifically in the area of Medicaid. Let me go back and go through a few specifics, and then I will turn the rostrum over to the Senator from North Dakota who has been generous to sit through all of this. On the spending side, to try to get the deficit under control, what this budget does is essentially sets a top number. The Budget Committee does not have the authority to develop programs. We are specifically excluded from that authority. We can make suggestions, but both the Appropriations Committees and authorizing committees that are separate from us ignore our suggestions almost as a matter of course. The only place they cannot ignore us is the upper line number. So we have set what is known as a hard number at the top. On the discretionary side, discretionary spending making up about 30 percent of Federal spending, about half of which is defense spending, we have set the top number at $843 billion. This number represents about a 4.5-percent increase in defense spending, and it represents basically a hard freeze on nondefense spending. The defense number may seem large, but actually it is significantly less than what the Defense Department originally planned as part of their spending program. Their ox has been gored, and if you do not believe that, all you have to do is walk outside this room and you will run into six or seven defense lobbyists who say they need more money for more programs to deal with the Defense Department. On the nondefense discretionary side, it is obviously a hard number, a firm number where we are freezing. We raise that number a little bit in the next 2 years but not much. It is more than what the President asked for, but not a great deal. We cap these numbers with something called a budgetary cap, and that is the key. We essentially say that any Member of this Congress--this Senate anyway--who believes that a committee exceeded the allocation which it will get in the area of discretionary spending--is spending more, in other words, than this top line number as it is distributed amongst committees--that any Member who believes that has happened may come to the floor of the Senate, object to that spending, and get a vote of 60. A supermajority must be voted in order to go forward with that spending. It is a pretty strong budgetary tool for enforcement, and that is in this budget. So we have put in place stringent discretionary controls. On the entitlement side, we cannot control entitlements with anything other than changes in entitlements. There is this philosophy of something called pay-go. It has no impact on entitlements unless we create new entitlements. The existing entitlements are the problem. They represent about 57 percent of Federal spending, and nothing can control that. They can grow as much as they want, and there is no budgetary way to affect them unless we go back to those entitlements and say to the committees that have jurisdiction over those entitlements: Take another look; see if there is some way we can save some money. And that is what we have done here. It is not as much as the President asked. He asked we do $62 billion in net number. We have done about $32 billion of entitlement control. It is called reconciliation. Essentially, the key elements of this reconciliation bill involve the PBGC, which is a Pension Benefit Guaranty Corporation, which needs to be reformed. It is a huge outyear liability for us as a nation. It is massive because so many of these companies that have gotten into trouble have pension funds which are underfunded. This bill tries to begin the process of reforming them, and that is a major positive public policy step of this legislation, not mentioned much by anybody, but it is a big one. Second is Medicaid reform. This needs to be put in context because there are a lot of people running around here today who are saying: We cannot cut Medicaid; we cannot cut Medicaid. To begin with, we are not cutting anything in the entitlement accounts. That is the nature of the beast. Medicaid spending in the next 5 years will be approximately $1.12 trillion without any action. With this action, Medicaid spending will be about $1.11 trillion, a little bit more. We are suggesting a 14-percent reduction in the rate of growth of Medicaid spending over the next 5 years off a $1.1 trillion base, which means we are suggesting about a 1-percent reduction in the rate of growth of Medicaid. Medicaid at that period will grow at about 39 percent instead of 41 percent. So we will still have a 39-percent rate of growth in Medicaid instead of 41 percent. Remember, large functions of Medicaid today need reform and that reform will not impact the quality of care given to people. A significant amount of dollars in Medicaid today is used for general funds for operations of States. We have serious problems with the way pharmaceuticals are distributed under Medicaid. We have serious problems with the way insurance is handled under Medicaid. There is a whole series of items where we can save money in Medicaid, and this is a minuscule amount of restraint in growth that we are proposing, and will not impact at all--in fact, probably will improve--the delivery of service by giving Governors more flexibility to do more creative things. That is our plan: to work with the Governors, to reach an agreement, take that agreement to the Finance Committee, and have a concept put forward where the Governors are comfortable--many of the Governors are comfortable--with a change which will give them significantly more flexibility with a little less rate of growth in the dollars. It is a very doable event. The idea that it is not doable, the idea that anybody would stand up here and say we cannot cut Medicaid's rate of growth by $14 billion off a $1.12 trillion base implies to me that individual does not have any interest in our children or our children's children's future because if we do not get a handle on the health care accounts in this country--and this is just a minuscule attempt to do that--we are essentially passing on to our children a no-win situation where they will never be able--never be able--to pay the cost of the retired population because we are going to grow so much and there are going to be so many of us. If you deny this change, you are basically denying that you are willing to take on your responsibility to govern, and you are going to kick that can down the road and at some point simply not going to be able to kick it any further. It is simply going to be a bill passed on to our kids. This is not a big change. In fact, it is a marginal change at best. To describe it as ``marginal'' is probably even an exaggeration. But it has certainly engendered enough run-and-hide policies around here so one would think it was big. That is the entitlement side: $32 billion of reconciliation instructions over the next 5 years on a base of something like--I have forgotten what the base is--$8 trillion, something like that. I have lost count of what the base is, making that $32 billion adjustment on, but it is huge. The last item of this budget, of course, is tax reconciliation. That is a point of legitimate contest between two parties. One party likes to raise taxes, and one party thinks people ought to keep their money and spend it themselves. The simple point is, we do not believe we should raise the taxes that have already been put in place at certain rates. For example, we believe we should extend the R&D tax credit, the tuition tax credit, the dividend rate, the capital gains rate, and the small business tax expense. And that is what this package of reconciliation numbers involves, extending all of those. There is an irony to the Congress. The irony is this: Spending programs never die. They never die. They go on and on. This alleged pay-go concept does not have any impact at all on them. If it is on the books, it keeps going. But if there is tax rate or a tax proposal that has been put in place, they do lapse. They have to be reauthorized. So it suddenly becomes inappropriate to do that. It is called fiscally responsible to have to pay for that, and yet there is no attempt to pay for the extension of the entitlement programs, no attempt to justify those at all. Inconsistency, ironic, and, to say the least, it takes the attitude that the people's money is not their own, that the people's money is Washington's. It is our money, you should not have it anyway. Let us have it and we will spend it for you. That is basically the philosophy behind this approach to governance. Well, it is not my philosophy. I believe we should maintain a low tax burden on people, or as low as we can afford. Let us remember that the tax revenues are going up dramatically all through this: 9\1/2\ percent last year, 7 percent this year, 6\1/2\ percent next year. The tax revenues are going up. The traditional level of taxes in this country has been about 17.9 percent of gross national product. We are going to hit that number before this 5 years is over. Sure, we are starting at a low base, but we are starting at a low base because we went through a recession and an attack on 9/11. Now we are headed back up and revenues are headed up because people are productive and they are taking the risk necessary to create jobs because they know their return will be higher as a result of the tax rates being reasonable. So this concept that we should not be reconciling any taxes is a philosophical difference. That is all there is. So that is the budget we have prepared, what we brought forward. It is a budget which reduces the deficit over the next 5 years, puts in place stringent enforcement on the discretionary side, addresses the entitlement side through minor reconciliation efforts, addresses the taxes which may expire in this window. I would note as an aside that the big fight on taxes occurred last year, and the big fight on taxes is going to occur next year because last year we had some major taxes expire, specifically the marriage tax penalty and the child credit. Next year, the window of the budget will pull in the rate reduction, which will expire, and the death tax, which will go back up if we do not do something. Next year we will have a big tax fight, I am sure, but this year is a lull period. Every tax that is being considered under reconciliation is a tax proposal that has a fair amount of support, whether it is the R&D tax credit, the dividend, the capital gains. These are not the biggies. These are good policy items that should be extended. The tax fight is a lot more smoke than fire in this budget, but it has taken on a personality of its own, and so I presume we will pursue it again. In any event, as I mentioned, the budget controls discretionary spending with a hard cap. It tries to address the entitlement accounts growth but most specifically addresses the one health care account we are able to address, which is Medicaid--Medicare being off the table for this year as a result of passage of the drug bill last year--and addresses tax reconciliation. There are three elements to it. If it is passed, it will lead to the first budget since 1996 which fires with real bullets on the issue of controlling spending at the Federal level, and that is the most important point I want to end on. This is a real budget in the area of pushing forward some fiscal responsibility by having reconciliation instruction on the entitlement accounts. The discretionary caps are also essential. They have lapsed because we did not have a budget last year, and if we are going to get control over discretionary spending, we need them. So for the first in a long time we have a budget that is serious about disciplining spending. I presume there are going to be a lot of amendments brought forward on this floor to try to get around it because people do not like to address the spending side of the ledger. They would rather spend money. It is much easier. The people who get the money are the most active in saying the money has to be spent. The people who support spending restraint tend to be less vocal. It is human nature to want to accommodate the people who come to our offices and say, I have to have this money for this program or this money for that program. So spending tends to go up, never goes down. This budget attempts to at least restrain it so it is affordable, and that is what is critical--putting forward a budget which is legitimate and which attempts to restrain spending so we can begin the process of passing on to our children a fiscally healthy nation. I thank the Senator from North Dakota for his courtesy in putting up with this long talk, and I thank the President pro tempore for his courtesy in sitting through it. I yield the floor.

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

Mr. GREGG. Mr. President, I will briefly respond to a couple of points raised by two of the prior speakers, the Senator from Oregon and the Senator from Massachusetts, relative to the Medicaid issue. It is critical to understand this issue in the context of Medicaid spending generally and more importantly in the context of the type of reform being proposed here by the President and through the President's lead counsel and promoter on this, Governor Leavitt, the former Governor of Utah, now head of HHS. One would think from listening to the other side, especially the Senator from Oregon and the Senator from Massachusetts, that we were creating a scorched-earth policy against all poor children in America by initiating some sort of Medicaid reform. The hyperbole is rather excessive and does not comport with the numbers or with the actual proposal. This chart reflects the rate of growth of Medicaid over the next few years on an annualized basis. Today we spend $191 billion in Medicaid. Under the proposal being put forward, we will spend $256 billion on Medicaid in the year 2007. That compares with the projected rate of growth of Medicaid of $260 billion for Medicaid. In other words, over a 5-year period, the actual reduction in rate of growth will be almost negligible by the terms of what the Federal Government looks at relative to numbers. It is obviously a big number, but it is still not, compared to the overall number, a large number. In fact, it is about 1 percent in the reduction of the rate of growth. To cite the numbers again, over the next 5 years we will spend $1.12 trillion on Medicaid. The President has suggested we try to find $14 billion, that we restrain that rate of growth by $14 billion, which means a 1-percent reduction in the rate of growth, which is hardly dramatic and certainly not scorched earth, to say the least. Members can only accept that type of hyperbole if you are not willing to accept the facts of what has actually occurred. That rate of growth will therefore be a 39-percent rate of growth over this period of time compared with what would have been a 40-percent rate of growth had we not made this reduction in the rate of growth. Hardly dramatic in terms of the overall context of either the program or the Federal budget, but anyone would think it was devastating. To make this type of an adjustment, are we going to have to impact programs for children? No. Are we going to have to impact programs for senior citizens who want to go in nursing homes and who are poor? No, we do not have to impact either of those. There are at least seven or eight elements of the Medicaid Program that, working with the Governors, we could change which would significantly improve the delivery of service and, at the same time, reduce the rate of growth of Medicaid to come up with these numbers. Right at the top--everyone is familiar with it--is intergovernmental transfer taxes. Basically, what has happened for the last 12 years is that States have used Medicaid money through an intergovernmental transfer tax where they essentially spend money on the nursing home, they send Federal money to the nursing home, tax the nursing home, take the money from the nursing home, leave the nursing homes with a small percentage of what they were actually paid under the Federal program, take the balance off--sometimes 90 percent of it--put it into the general funds operation of the State and then run back to the nursing home another small percentage so that in the end the State government uses 80 or 90 percent of these funds for general operation accounts, for running the State government, but not for helping people who are on the Medicaid system. That is a game that has been played. Every Governor knew 5 years ago this process was going to come to an end. And, in fact, there was a glidepath set up under the Clinton administration because the Clinton administration had about the same frustrations with this approach as the Bush administration did, a glidepath for basically weaning the States from this process of using Medicaid money for general operations accounts. That glidepath was supposed to end about 2 years ago, maybe 3 years ago now. It did not. It has continued to bump along this process of taking money from Medicaid to fund general operations. This administration is suggesting we put an end to it. It may not be the approach the administration takes, but if it were to take that approach, that would be $5.5 billion potentially of the $14 billion number. One of the other approaches which might be considered would be to limit the Medicaid pharmaceutical reimbursement to the average sales price plus some percent, say 6 percent. That is a reasonable approach, basically saying you cannot pay more for pharmaceuticals than the average price being paid out there plus some percentage. That would save $5.2 billion. So you already have over $10.2 billion worth of savings if you took those two. And you don't have to take those two because there are about six more. You can close the loophole that permits managed care organizations to avoid Medicaid rules. That is about a $1.2 billion number. That is not going to hurt anybody out there other than the folks who have been gaming the system, again, the insurers in this case, through managed care systems. You could permit States to require additional copays. That is also a reasonable approach, quite honestly, because there are a lot of folks out there who could afford additional copays. It would be up to the States to set that policy. That would save significant amounts, probably $2, $3 billion. You could give States greater flexibility to allow them to use SCHIP to apply their benefit structure around. This issue of flexibility could actually, in this case, end up expanding coverage to many more kids while still probably saving the States money, depending on how the States manage this. That could be a significant savings. There are literally, as I mentioned, 7, 8, maybe 10 different proposals out there which would get you the $14 billion without having any impact at all--any impact at all--on the number of kids covered by Medicaid or the number of people going into nursing homes, other than maybe expanding the numbers, because you have given Governors more flexibility with the dollars they will presently have. And most Governors will use it more efficiently and create more money. One other issue I think Governors would like to address and could address is this whole situation of gaming the system. A lot of people are spending down. You can go on a Web site, especially in Florida, and you can see where they will tell you how to get rid of your assets so you can become a ward of the Federal Government and your assets are passed on to somebody else who happens to be a friend or family member, which is hardly fair to the rest of the taxpayers in this country who are then going to have to take care of you because you have decided to game the system with a spend-down proposal. So the programmatic activity is clearly available. And how is this going to be approached? Well, essentially, we have suggested this $14 billion number. To put it in context, here is a chart that shows the $1.1 trillion that is going to be spent over the next 5 years. Here is the $14 billion. You can't see it on the chart because it is a very small line, but that number would be what we would ask the Finance Committee to reduce in the rate of growth of spending in the Federal Medicaid account. So they drop from 40 percent to 39 percent over the next 5 years. To reach that number, how are they going to do it? I don't know how they are going to do it. But in meeting with Governors and in meeting with Governor Leavitt, it became very clear that there is, I believe, a willingness to develop a consensus as to how to approach this issue, and there is a genuine desire to do it. There is a genuine desire to accomplish this. I suspect that before the Finance Committee marks up--and we actually put some flexibility on timing here relative to reconciliation so the Finance Committee will have time to work with the Governors--there will be a consensus position amongst many of the Governors, hopefully bipartisan--I suspect it might be bipartisan--as to how to set up this programmatic activity necessary to restrain the rate of growth in Medicaid and still deliver more services to more kids and more elderly who are moving into nursing homes. This will mean that although this bill states a number, it does not set the policy, but the policy will instead be set working in conjunction with the Governors, with Governor Leavitt leading the effort, and then working with the Finance Committee. But why is the number so important? Why is it so important to have a reconciliation instruction rather than virtually saying to the Finance Committee, go ahead, you take care of this, you can do it on your own? Well, it is so important because without a number to drive the process, without a reconciliation instruction driving the process, nothing is going to happen. That is the nature of the beast. That is what happens. If we do not have some forcing mechanism, some catalyst to get everybody in a room together to say, well, we better do something because we have to act, nothing is going to happen. Equally important, obviously, anything such as Medicaid reform is going to be very hard to get 60 votes on because there are a lot of folks around here who tend to be scared of their own shadow and don't want to vote on something that is going to put them in a position where they would actually have to make a reduction in the rate of growth of spending of anything, especially Medicaid. So it is critical to get to where we need to go. It will first be the catalyst which energizes the Governors coming together--they already are coming together, but it actually energizes an agreement, I believe. And it will give the Finance Committee the necessary guidance. Why is this so important? Well, I return to the chart that is the essence of the argument around this debate of this budget, which is, what are we going to do about the outyear crises which we are facing as a nation? What are we going to do about the fact that our generation, when it retires, is going to have placed such a huge demand on our children that they simply are not going to be able to afford the decent lifestyle we have? This chart puts it in stark terms. The Senator from North Dakota has a lot of charts that appear to be stark, but this is a truly stark chart because it makes it very clear that these three elements of the Federal Government--Medicaid, Medicare, and Social Security, the three retirement elements--will be unaffordable and will make the Federal Government inoperable within about 20 years from now unless we start to address it. I wish Medicare were on the table. It is not. And maybe next year we can do that. But we are transitioning into a new Medicare system with the Part D drug program and people did not want to take on that issue right at this time. And I hope Social Security will be discussed at some point by the Senate and we will act on that. But that cannot be done by the budget because the budget does not have that authority. That leaves us one more option, one place where we can actually make a conscientious effort to try to get something going in the area of addressing the outyear costs of this Nation, and that is Medicaid. That is why every time somebody comes to this floor and talks about how this Medicaid number is inappropriate and is going to have a dastardly effect on some poor and suffering population, I am going to rise and point out that is a lot of baloney, that the simple fact is the numbers point out just the opposite. This is a very small restraint in the rate of growth of one of the three most critical programs we have in the area of entitlements. All the restraint which is proposed in this reconciliation instruction can be accomplished by addressing the provider groups and addressing better management of the system and addressing the fact that States have been gaming the system. Amendment No. 142 Mr. President, I have a unanimous consent request. I send a technical amendment to the desk. This has been agreed to on both sides. I ask that the amendment be agreed to by unanimous consent.

Mr. GREGG. I yield the floor.

Mr. GREGG. Madam President, I ask unanimous consent at 5:30 today the Senate proceed to a vote in relationship to the Bingaman amendment, with no amendments in order to the amendment prior to the vote.

Mr. GREGG

Mr. GREGG. Mr. President, I am pleased to support S. 250, the Carl D. Perkins Career and Technical Education Improvement Act of 2005. The product of a true bipartisan effort, this bill reauthorizes and strengthens the federal investment in career and technical education programs, which touch students of all ages in communities across the Nation. I commend Senator Enzi for his extraordinary leadership on this issue. His dedication to creating opportunities for lifelong learning and ensuring that students of all ages have the skills they need to succeed in higher education and in the workforce is reflected throughout this bill. Nearly every student in America enrolls in at least one career and technical education class during high school, and millions of adults update their skills at the postsecondary level each year. Career and technical education provides increasingly rigorous, relevant learning that prepares students for success in postsecondary education and in a wide array of occupations. Given that a majority of jobs created over the next decade will require skills that only a relative few workers currently possess, it is important that we provide opportunities for students and workers to gain the skills they need to secure and succeed in these jobs. In many communities, including those in my own State of New Hampshire, innovative career and technical education programs are helping to fill pressing workforce needs, including in fast growing fields like technology and health care. High school students in health science programs may earn CPR and, first aid certifications and gain valuable clinical experience in hospitals and nursing homes, as well as enroll in certified nursing assistant programs. Through Project Running Start, high school students can earn community college credit in a variety of disciplines. New Hampshire Community Technical College in Nashua offers programs ranging from an FAA-approved aviation technology program to a telecommunications program in partnership with Verizon. Such opportunities at both the secondary and postsecondary level are constantly expanding, offering students more options than ever before. Career and technical education programs are also helping alleviate shortages of skilled workers in certain industries, such as the automotive industry. The Automotive Youth Educational Systems program, which operates in New Hampshire and 44 other States, is widely regarded as a successful education and business partnership, and has been praised by both the Department of Labor and the Department of Education. The AYES program affords high school juniors and seniors the opportunity to gain valuable experience as interns working alongside skilled auto technicians who serve as mentors. Upon graduation, this work experience then translates into high-skill, high-wage, high-demand jobs for students. The Carl D. Perkins Career and Technical Education Improvement Act of 2005 would strengthen career and technical education programs in a number of ways. Among the improvements are stronger accountability provisions, increased flexibility for States, and greater emphasis on the integration of academic and technical course content, on connecting programs with business and industry to ensure that students gain relevant skills, and on building pathways from secondary to postsecondary programs and the workforce. All of these efforts will help ensure that students acquire the tools and knowledge necessary to acquire and excel in high-skill, high wage occupations. S. 250, which I am pleased to cosponsor, stands as an example of what is possible when we work in a bipartisan way in good faith. I would like to thank Senator Kennedy and my colleagues on the other side of the aisle for their commitment to career and technical education and for helping move the reauthorization process forward. This bill was also crafted with significant input and support from the career and technical education community, which helped us refine and improve the legislation. The result is a work product of which we can all be proud. I look forward to the bill's final passage.

Mr. GREGG

Mr. GREGG. Mr. President, today I am pleased to be joined by Senators Kennedy, Mikulski, Harkin, Bingaman, Reed, Murray, Lincoln, Kerry and Durbin in introducing the Public Safety Employer-Employee Cooperation Act of 2005. This legislation would extend to firefighters and police officers the right to discuss workplace issues with their employers. With the enactment of the Congressional Accountability Act, State and local government employees remain the only sizable segment of workers left in America who do not have the basic right to enter into collective bargaining agreements with their employers. While most States do provide some collective bargaining rights for their public employees, others do not. Studies have shown that communities which promote such cooperation enjoy much more effective and efficient delivery of emergency services. Such cooperation, however, is not possible in the States that do not provide public safety employees with the fundamental right to bargain with their employers. The legislation I am introducing today is balanced in its recognition of the unique situation and obligation of public safety officers. The bill requires States, within 2 years, to guarantee the right of public safety officers to form and voluntarily join a union to bargain collectively over hours, wages and conditions of employment. The bill protects the right of public safety officers to form, join, or assist any labor organization or to refrain from any such activity, freely and without fear of penalty or reprisal. In addition, the legislation prohibits the use of strikes, lockouts, sickouts, work slowdowns or any other action that is designed to compel an employer, officer or labor organization to agree to the terms of a proposed contract and that will measurably disrupt the delivery of services. Under this legislation, States would continue to be able to enforce right-to-work laws which prohibit employers and labor organizations from negotiating labor agreements that require union membership or payment of union fees as a condition of employment. The legislation also preserves the right of management to not bargain over issues traditionally reserved for management-level decisions. All States with a State bargaining law for public safety officers that grants rights equal to or greater than the rights provided under this bill would be exempt. The bill also gives States the option to exempt from coverage subdivisions with populations of less than 5,000 or fewer than 25 full time employees. Labor-management partnerships, which are built upon bargaining relationships, result in improved public safety. Employer-employee cooperation contains the promise of saving the taxpayer money by enabling workers to offer input as to the most efficient way to provide services. In fact, studies have shown that States that give firefighters the right to discuss workplace issues actually have lower fire department budgets than States without those laws. The Public Safety Employer-Employee Cooperation Act of 2005 will put firefighters and law enforcement officers on equal footing with other employees and provide them with the fundamental right to negotiate with employers over such basic issues as hours, wages, and workplace conditions. I urge its adoption and ask unanimous consent that the text of this bill be printed in the Record.

Mr. GREGG

Mr. GREGG. Mr. President, today I am pleased to be joined by Senators Kennedy, Mikulski, Harkin, Bingaman, Reed, Murray, Lincoln, Kerry and Durbin in introducing the Public Safety Employer-Employee Cooperation Act of 2005. This legislation would extend to firefighters and police officers the right to discuss workplace issues with their employers. With the enactment of the Congressional Accountability Act, State and local government employees remain the only sizable segment of workers left in America who do not have the basic right to enter into collective bargaining agreements with their employers. While most States do provide some collective bargaining rights for their public employees, others do not. Studies have shown that communities which promote such cooperation enjoy much more effective and efficient delivery of emergency services. Such cooperation, however, is not possible in the States that do not provide public safety employees with the fundamental right to bargain with their employers. The legislation I am introducing today is balanced in its recognition of the unique situation and obligation of public safety officers. The bill requires States, within 2 years, to guarantee the right of public safety officers to form and voluntarily join a union to bargain collectively over hours, wages and conditions of employment. The bill protects the right of public safety officers to form, join, or assist any labor organization or to refrain from any such activity, freely and without fear of penalty or reprisal. In addition, the legislation prohibits the use of strikes, lockouts, sickouts, work slowdowns or any other action that is designed to compel an employer, officer or labor organization to agree to the terms of a proposed contract and that will measurably disrupt the delivery of services. Under this legislation, States would continue to be able to enforce right-to-work laws which prohibit employers and labor organizations from negotiating labor agreements that require union membership or payment of union fees as a condition of employment. The legislation also preserves the right of management to not bargain over issues traditionally reserved for management-level decisions. All States with a State bargaining law for public safety officers that grants rights equal to or greater than the rights provided under this bill would be exempt. The bill also gives States the option to exempt from coverage subdivisions with populations of less than 5,000 or fewer than 25 full time employees. Labor-management partnerships, which are built upon bargaining relationships, result in improved public safety. Employer-employee cooperation contains the promise of saving the taxpayer money by enabling workers to offer input as to the most efficient way to provide services. In fact, studies have shown that States that give firefighters the right to discuss workplace issues actually have lower fire department budgets than States without those laws. The Public Safety Employer-Employee Cooperation Act of 2005 will put firefighters and law enforcement officers on equal footing with other employees and provide them with the fundamental right to negotiate with employers over such basic issues as hours, wages, and workplace conditions. I urge its adoption and ask unanimous consent that the text of this bill be printed in the Record.

Mr. GREGG

Mr. GREGG. Mr. President, we are on the bill, I take it.

Mr. GREGG. Mr. President, first, it was a pleasure to hear the presentation by the chairman of the Judiciary Committee and the ranking member relative to the bankruptcy bill, which is an extraordinarily important piece of legislation, which has been to the floor before--in fact, too many times. Hopefully, this year we will pass it and send it to the President to be signed. I congratulate the Judiciary Committee for bringing it out. Certainly, it is a piece of legislation that is very important to the commerce of our country and needs to be passed. The Budget I wanted to speak about another subject--specifically, the budget of the United States and the fiscal policy, as we are presently dealing with the funding of the Federal Government. Within the next 3 weeks, hopefully, we will take up a budget in committee and here on the floor of the Senate. The budget is a blueprint of where we are going as a country relative to our spending policies and fiscal policies. What is important to remember is that the budget is just an outline. It doesn't get into too much specific detail of how we function as a Government but, rather, it sets goals that we as a Government wish to pursue in the area of policy relative to spending and relative to taxes. What we need to focus on, I believe, this year--and I believe Congress did focus on it, and certainly the President did in his budget, which is a very laudable document, and it does focus specifically on these issues--there are two things: the deficit, as we confront as a Nation the short-term liabilities, and what we confront in the long-term. The deficit in the short term is having an unfortunate impact on our country. It arises for a lot of reasons. I argue that it arises for two primary reasons. First is that in the mid and late 1990s, we started to run very significant surpluses in this Nation as a result of an economic boom known as the Internet bubble--a bubble that is an aberration on the economic landscape. There have been other major bubbles in our history. It is basically when people have created artificial money. The Internet bubble was probably the largest bubble in the history of the world. In many instances, it was an artificial expansion of the economy relative to real productivity and growth. That bubble collapsed, as they do. As a result of that collapse, the economy slowed dramatically, and the revenues to the Federal Government dropped significantly. The second major cause, obviously, of the deficits we confront today, in my opinion, was the fact that we were attacked on 9/11. We are at war, and as a nation we must fight that war with every tool we have available, and that means fully arming and manning our soldiers. Also, it means regearing ourselves as a nation, retooling as a nation. We have had to make what I would call significant investments in our national security, both in the homeland area, bringing first responders up to speed, in the area of protecting ourselves from biological, chemical, or potentially nuclear attacks, and in the area, obviously, of rearming and retooling our military and our intelligence community across the country and the globe. It has been extremely expensive for us as a nation, but it is money we must spend because we have been attacked, we are at war. There are people who wish to do us harm in the most heinous way. They want to kill Americans simply because they are Americans. They wish to destroy our culture and Nation because they don't like our freedoms, they don't like the fact that we are prosperous. Those people are still out there, and they must be found and brought to justice, and, most importantly, kept from attacking us here in America. That is a commitment we have made as a nation, and this President has pursued that with a focus. So we went through a period of significant surpluses in the late 1990s to a period of deficit. That deficit has been rather large. We are now as a nation trying to address that fact. The deficit in the short term is having deleterious effect on our Nation. It is obviously causing us to pass on to our children the debts for the operation of today's Government. You are basically borrowing from the future, and the people who are going to have to pay that are your children, not you, because that note becomes due not in your lifetime--well, maybe in your lifetime--but 10, 15 years from now. Who has to pay it? The people who work 10, 15 years from now, in their taxes. They have less money to keep because they have to pay more taxes. So we are borrowing from our children's future to pay for this deficit. Second, it is having an impact on our economy internationally. The dollar is weakened in large part because the international community looks at our deficit and says we are not doing a heck of a lot about it. So we need to address the short-term deficit, and I will get to the specifics of that, how we have done that. But the President's budget has attempted to do that. That is an important public policy issue. The second largest public policy issue we have is the question of how we deal with the long-term liabilities of our country, liabilities that already exist. What does that mean? We have basically put in place today a large number of Federal programs that we have to pay for today because these programs survive for as far as the eye can see--infinity. We know they are going to cost money. Most of these programs--the most expensive ones, called entitlements--deal with making sure that people who are retired have a decent lifestyle. This has been a great benefit to our Nation--Social Security, Medicare, Medicaid. These programs have truly improved the quality of life of the American population, especially those who are retired. But as we look into the future, we see huge and very complicated and difficult problems for us as a country as we try to maintain those programs and make sure that people who are retired have a decent lifestyle. What is driving this major concern, this huge cost which we are going to face as a nation, is a fact which has never existed before in our history. It is called demographics. After World War II, the largest expansion ever in our population occurred. More children were born during a period from about 1946 to about 1955 than at any other period in American history. It is called the baby boom generation. That generation was so large--and I happen to be a member of it--that it totally restructured every lifestyle event it impacted. As children, that generation caused a massive expansion in schools. As college students, that generation created the huge social concern of the sixties, in the area of rights of African Americans and minorities and the rights of women and, of course, with regard to the issue of how Vietnam was fought. In the seventies and eighties, as that generation went into the workplace, it became the most productive engine of economic wealth this country had ever seen and continues to be a producer of economic wealth. Now that generation is headed toward retirement, and we know, because everyone is alive today, that generation will be the largest retired generation in the history of our country. We know the benefits structure which we have put in place to help senior citizens through retirement so they can live a decent lifestyle is also in place. When those two merge--this huge generation and that benefits structure called Social Security, Medicare, and Medicaid--it is going to put dramatic demands on our society in the area of costs to pay for the benefits which are in place. Think of it this way: Almost all the retirement programs we have-- Social Security and Medicare especially--were designed with the genius of Franklin Roosevelt. His policy essentially said there will always be many more people working than those retired. So the working Americans can always support the retired Americans. It was always perceived there would be a pyramid. In fact, in 1950, there were about 16 Americans working for every 1 American retired. That meant programs such as Social Security and Medicare not only generated money to support those who were retired, they actually generated more money than needed to support the people who retired. That is happening today even. But the number of people retiring compared to the number of people working has been changing. It has gone from 16 in 1950 down to about 3\1/2\ today. And further into this century, as the baby boom generation retires, it will drop to 2 people working for every 1 person retired. There is where the problem is. We go from a pyramid to essentially a rectangle. It becomes pretty obvious, if you only have two people working to pay for one person retired, those two people are going to have to pay a lot more in taxes to support that one person retired than if we have 10 people working or 3\1/2\ people working, as we have today. So this creates a huge what is called unfunded liability, contingent liability. We do not know how we are going to pay for this in the outyears. We do know the problem is going to exist, but we do not know how we are going to pay for it. I want to give you some context of this problem because it is so massive, and we should be so concerned about it. Entitlements--which basically is what I am talking about, which is Social Security, Medicare, and Medicaid--represent this orange bar on this chart as a percentage of Federal spending. One will see today that orange bar is approximately 56 percent of the Federal Government, with defense spending being about 18 percent of the Federal Government, nondefense spending about 18 percent of the Federal Government, and interest on the Federal debt being about 7 percent. When the baby boom generation is headed to full retirement, beginning about the year 2015--actually, it starts in the year 2008--there is an explosion in the entitlement spending as a percentage of Federal spending. Defense spending does not change much, discretionary spending does not change much, but retirement spending jumps to 64 percent of the Federal Government. In fact, if it continues on its present track, spending to support Social Security will create this massive problem for us as a nation, which I have alluded to, which is we will have so many programmatic demands placed on the younger working Americans that their taxes will have to go up radically in order to pay for this. This chart shows it pretty clearly. The historic spending levels of the Federal Government since the year 1960 have been right around 20 percent. That is historic spending. That is all Federal spending in the post-World War II period. But entitlement spending as a percentage of gross national product has always been--or up until now--fairly flat-- not flat, going up, but still staying within the 5 to 10-percent range. However, beginning in the year 2008, it starts to climb precipitously. By the year 2030, Medicare and Social Security spending will be 20 percent of the gross national product. By the year 2040, it will exceed that and be 25 percent of the gross national product. We will essentially be spending more on those two programs alone within a few years, about a decade and a half to two decades, than we spend today on the entire Federal Government. What does that mean? It means either at that point you do not have any part of the Federal Government--you do not have national defense, you do not have any education programs, you do not have any environmental programs--or you have to jump the tax rates dramatically to pay for Social Security and Medicare expenditures. What is the implication of this other than we are headed toward clear fiscal disaster? One of the implications is if this graph were carried out to its logical conclusion, the tax rate on working Americans--my children, your children, and our grandchildren--will have to be doubled to support the system. Another implication is that there is, according to the Comptroller General, approximately $44 trillion of potential liability over the natural lifetime of Social Security, which is deemed to be 75 years, or Medicare. Mr. President, $44 trillion--that is trillion, and I do not even know what a trillion is, but that is what it is--$44 trillion of costs which we have no idea how we are going to pay. We have no idea at all. It is called unfunded liabilities, $44 trillion. To try to put this in perspective: If you take all the taxes paid into the Federal Government since the beginning of America, all the taxes paid into the Federal Government in U.S. history, that represents $38 trillion. We are talking about a liability that exceeds that number. We are talking about a liability that would actually be about the same as the present value net worth. That is the present value number, by the way. It means it is discounted to today's dollar, which actually would be almost the same as the present net worth of every American. The present net worth of every American is about $47 trillion. The present liability of just the Medicare and Social Security funds--with not even Medicaid included in this--is $44 trillion. So essentially we would have to use every dollar of every American, every asset of every American to pay this. We can see the problem is astronomical, so large, in fact, that many are burying their heads on the issue and saying it does not exist, which is a very unique approach to the problem. Obviously, we are not going to solve it this year or in the next couple of weeks. But what we can do in the next couple of weeks as we address the budget is try to start addressing these two major issues. One is the short-term deficit; the other is this long-term, looming problem which we confront as a nation. And that brings us back to the budget process and why it is important. It is important because it is the blueprint off which we can begin this process of addressing these huge public policy issues. If we do not address them now, it is like that old television ad, you can pay me now or you can pay me later. When you pay later, the cost is going to be basically unacceptable because if we wait until 2008 or 2015 to start addressing these issues, we are essentially going to have to do something extraordinarily precipitous. We are either going to have to radically cut the benefits of seniors who are retired or we are going to have to radically increase the taxes on our children and their children's children, meaning their quality of life is going to be reduced significantly. The President sent up a budget which begins the process of trying to address some of these core issues. On the first issue of the deficit, he has proposed a budget which reduces in half the deficit over the next few years. You can see he takes it from about 4.5 percent of GDP, the deficit. That is what we need to look at because the actual numbers do not relate to what their effect is on the economy. The deficit was projected to be about 4.5 percent of gross domestic product back in 2004, down to approximately 1.3 percent of gross domestic product in 2009, 1.5 percent in 2009, 1.7 percent in 2008, or he reduces it in half. I would be the first to say that in that estimate, especially the 2008 number, there is no accounting for the war. The war is a one-time item, hopefully, or two-time item. We do not expect the war to go on forever. In fact, by 2008, we hope the war to be over relative to Iraq and Afghanistan. It will not be built into the base, and we expect it will not be. These numbers may be inaccurate in that they may be off in not accounting for the war. But the point is, when you go from 4.5 percent to 1.7 percent, that should still be able to be accomplished whether we are at war, with accounting for the war correctly. We can reduce this deficit, and the President has proposed this. How has he proposed it? He proposed to do it in a series of ways, but there is a consistency within his proposal, which is this: Basically, he said we have to get fiscal discipline in place. We have to be responsible for how much money we spend, and in order to accomplish that, we are going to have to reduce the rate of growth--we never actually cut spending--reduce the rate of growth of Federal spending right across the board. So he has essentially proposed goring everybody's ox, and maybe that is the way we have to approach something like this. He suggests we freeze nondiscretionary defense spending, which is going to be difficult, but it is something we have to do. He suggests the defense core budget not rise as fast as it is projected to rise. We are already hearing discussions from many of the defense subcontractors and contractors around the city that they cannot live with that number. So I guess it must be stepping on some toes out there. He is suggesting in the entitlement accounts--and this is the most important--that we begin to reduce the rate of growth; not cut them but reduce their rate of growth. That is a courageous step but a step that has to be taken. The only accounting he did not address, quite honestly, was Medicare because of his recent enactment of the Medicare reform bill which I guess they would like to play out a little while before they move into that account. Everybody else has been impacted. He has put in place and suggested a series of enforcement mechanisms which will allow us to accomplish this type of a budget, and we intend to put in even more to accomplish this because the numbers mean nothing if they are not enforceable. As we move forward in this debate--I see the Senator from Utah is here. He wished to speak at 3 o'clock, and I have gone past my time. I will come back to the topic again and talk a little bit about the tax side of this. As we move forward in this debate, it is critical we understand that we are facing these two huge public policy issues: the need to bring under control the short-term deficit but even more importantly the need to address the long-term entitlement reform question. I should mention on that point that not only did he address the entitlements, such as Medicaid and some others within the budget, but he has set forth a proposal to address Social Security. That is a courageous act, and that, of course, is one of the key components of any sort of major entitlement reform. We must address the issue of Social Security. The President has stepped up to the plate, so to speak, to move forward with a plan which will put in place fiscal discipline. As the Senate moves forward, it is our responsibility to pursue this course also, to put in place a budget which is fiscally responsible and which addresses not only the discretionary side of the ledger but the entitlement side of the ledger. That is going to be our challenge. It is very doable. All it takes is a willingness to stand up and recognize that if we do not do it, we will be passing on to our children a nation which does not guarantee them as high a quality of life as we have had because of the burden of taxation which we will be placing on them. It is our responsibility to move forward in this area, and I look forward to the next few weeks as an opportunity to debate and discuss these proposals even further. I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent I be allowed to speak for up to 10 minutes on the bill.

Mr. GREGG. Mr. President, first I rise to congratulate the Senator from Wyoming for assuming the chairmanship of the HELP Committee and moving forward on this exceptionally important piece of information, the Genetic Information Nondiscrimination Act of 2005. Quickly moving this legislation forward shows the priority the Senator from Wyoming places on straightening out our medical situation in this country, making delivery of health care more affordable, more thoughtful, and in this case free of discrimination. This is the first civil rights act, really, of this century, for all intents and purposes. It is a major commitment to people of our country that they will not be discriminated against on the basis of their genetic code. Last year we celebrated the discovery by Dr. Watson and Dr. Crick of the double helix. Then we also celebrated the fact that NIH had mapped the human genome, that the DNA project was completed. Those were huge milestones which have had an exceptional impact on the quality of health care in this country. They will continue to have an expanding impact; the breadth and depth of influence on how we deliver health care and how people's health care is affected within our Nation cannot even be predicted. That is because, if you can define what your genetic code is, you can obviously make huge strides toward curing diseases which might potentially afflict anyone. But this new science also created issues for us, public policy issues. One of the big public policy issues it created is the issue of discrimination based on your genetic code. Everybody has this problem-- or has this benefit--or has this situation. We all have genes. This is a universal issue. It is something that impacts everyone. So Congress has taken a long and indepth look at how we should address this from a public health policy standpoint, working in a very bipartisan way under the leadership of Senator Enzi. Prior to that, I was chairman of this committee and we worked on this very aggressively with help across the aisle, of course, of Senator Kennedy and members of the Democratic leadership on the committee. Then, outside the committee itself, Senator Frist and Senator Snowe and others have played a major role in making sure that what we did in this area was thoughtful and had a purpose and accomplished the goal. The goal was to make sure that discrimination did not occur in the science of the human genome and that the science of the use of this information that genetics was going to produce could be best implemented so we didn't end up retarding the development and implementation of new cures. The goal was to address the concerns of people relative to their genetic history and the potential it has for them as they move forward in their lives so they are not impacted negatively by acts of discrimination which might chill people's willingness to use this genetic information or even obtain this genetic information in their interfacing with the health community. This act is an effort, after a tremendous amount of work, to thoughtfully and intelligently address the issue of how we effectively promote the use of genetic information. It actually encouraged people to take advantage of this new science rather than have an atmosphere where people are limited or are discouraged from taking advantage of this new science. We know, unfortunately, that the potential is there, and it has actually occurred. We have instances--a few, I admit, but there are specific instances--of discrimination occurring as a result of the person's genetic history or potential genetic history in the area of employment and in the area of health insurance. This is where this bill addresses those concerns. It specifically addresses the issue of health insurance underwriting, and it specifically addresses the issue of employment. Its impact is that health insurance plans will not be able to deny eligibility for an employee into a health plan based on genetic information, and it prohibits health insurance plans from charging higher premiums based on an individual's, or his or her family's, genetic information. It is very important. It also does not allow an individual health insurance employer to request genetic information or to use a person's genetic information in their decisions on the hiring and firing of an individual. It recognizes that all individuals, whether they are healthy or sick, and all medical information, whether genetic or otherwise, should be afforded the same protection under the law. And that is a critical point. The practical implication of it is, if you have a family history where you sense or may think there may be a problem that you have because of your genetic makeup and you are not going forward and being tested, your willingness to see a doctor to see if that genetic problem may actually exist for you is not going to be limited because you are not going to be concerned with the fact, if that information comes forward or is obtained that it might be used to limit your ability to get a job, keep a job, or get health insurance, or keep health insurance, or, alternatively, that your children or children's children might also, if the genetic information is confirmed, be subject to discrimination for work or for obtaining insurance. It will allow people to be much more aggressive in using this brand new science to assist them in getting their health in order and making sure that people and their children are properly screened for what can be produced from genetic information. This is going to be such a hugely valuable tool for our society and for people. There should be nothing in our society which says to people you really can't afford to do this, because if you take this type of test, you see this doctor, if you have this type of review, you are going to find out something that might lead to your quality of life being dramatically reduced because you lose your job or you lose your insurance. The legislation is appropriate. Those who questions its need, do so out of legitimate concern that it is a new Government law, new Federal legislation, and they do not see that the problem exists, I guess, in many instances or, if it does exist, they don't think it is significant enough to address. To those folks, I would simply say this: Yes, the problem does exist. Yes, we have instances of discrimination occurring both in the workplace and in the insurance industry. They have been limited but, more importantly than that, this is a science which holds such tremendous potential for dramatically improving the way we deliver health care as a society that we do not want anything to stand in its way to chill its use or to undermine the willingness of Americans to participate in studies of themselves or their families or their genealogy which might undermine the advantage which this new science gives them in getting better health care. It is an appropriate piece of legislation. I think it puts the emphasis in the right place, which is reasoned and appropriate in how we handle genetic information and we avoid discrimination in the use of that information. Again, I congratulate Senator Enzi for setting this out as the first item he has moved out of the HELP Committee under his chairmanship. It reflects his commitment to making sure health care in this country is not only of a better quality, but that the science that backs up health care continues to be robust as it pursues cures for all Americans. I yield the floor.

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

Mr. GREGG

Mr. GREGG. Mr. President, pursuant to rule XXVI, paragraph 2 of the Standing Rules of the Senate, I am submitting for publication in the Congressional Record a copy of the Rules of the Senate Committee on the Budget. I ask unanimous consent they be printed in the Record.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to remember and honor Cpl Timothy Gibson of Hillsborough, New Hampshire for his service and supreme sacrifice for his country. Corporal Gibson demonstrated a willingness and dedication to serve and defend his country by joining the United States Marine Corps. Just as many of America's heroes have taken up arms in the face of dire threats, Tim dedicated himself to the defense of our ideals, values, freedoms, and way of life. His valor and service cost him his life, but his sacrifice will have spared millions from lives of tyranny and sorrow. Tim graduated from Merrimack High School in Merrimack, NH in 2000 and enlisted in the Marine Corps on April 9, 2001. He then reported to Marine Corps recruit training and subsequently received further training as a rifleman in the infantry. Upon completion of this training, he became a member of 1st Battalion, 3rd Marine Regiment, 3rd Marine Division, III Marine Expeditionary Force, Marine Corps Base Hawaii. From this unit's home base in Hawaii, he would later deploy to Iraq in pursuit of those who would threaten our way of life. Tragically, on Januaury 26, 2005, Cpl Gibson gave his last full measure for our Nation when the CH-53E helicopter he was in crashed near Ar Rutbah, Iraq. Throughout his short career, Tim earned a series of accolades which testify to the dedication and devotion he held for the Marine Corps, his fellow Marines, and his country. Tim's hard work and dedication contributed greatly to his unit's successes and placed him among many of the great heroes and citizens that have given the ultimate sacrifice for their country. Tim was recognized for his service by the Combat Action Ribbon, the Marine Corps Good Conduct Medal, the Global War on Terrorism Service Medal, the Sea Service Deployment Ribbon, Second Award, and the National Defense Service Medal. He was also the recipient of a Certificate of Appreciation, a Letter of Appreciation, and Meritorious Mast for his performance above and beyond expectations while in the Marine Corps. My condolences and prayers go out to Tim's family, and I offer them my deepest sympathies and most heartfelt thanks for the service, sacrifice, and example of their Marine, Cpl Timothy Gibson. Tim exemplified the words of Daniel Webster who said, ``God grants liberty only to those who love it, and are always ready to guard and defend it.'' Because of his efforts, the liberty of this country is made more secure.

Mr. GREGG

Mr. GREGG. Mr. President, I am rising to discuss the budget as presented yesterday to the U.S. Congress and to the American people by the President of the United States. Let me begin by saying I think the President has been courageous. He has stepped forward and addressed some of the most critical problems that we have as a nation, one of them being the fact that we are running excessive deficits, another one being the proper prioritization of our spending in a time of fiscal restraint. It is appropriate, as the President has proposed, that we return to a period of fiscal restraint so that we do not end up passing on to our children massive amounts of debt, and so that we can assure the international community and our own people that we are going to live in a fiscally responsible way as a Government. That is what the President's budget has proposed. I think it is important, before we address the specifics of the budget, to talk a little bit about the context in which this budget is sent to us. Remember, when this President took office we were headed into a fairly significant recession. It was a recession that had arisen out of the most rapid economic expansion in our history. It was called a bubble, and was appropriately defined as a bubble, the Internet bubble of the late 1990s. When that bubble broke, it was very likely and it would be historically consistent if we had gone into an extraordinarily deep recession. But the President of the United States had the foresight at the beginning of the recession to propose to the Congress, and the Congress supported it, a fairly significant tax cut which was able to shallow out the recession. That is the classic approach to addressing a recession, in trying to move out of recession: cut taxes so you create more economic activity. You leave more revenues at home with the people, allow them to spend more of their own money, and as a result you come out of the recession more quickly. And that is exactly what happened. Today we are seeing a robust recovery. We are seeing a very low jobless rate. I think it is down to 5.2 percent, in fact. Even though there was a significant revenue reduction, a tax cut in the first term of this Presidency, we are now seeing revenues growing at an extremely robust rate: Last year, 9.2 percent, this year they are going to grow by 6.5 percent, it is projected next year at 7 percent, and so on into the future. As a result of his economic policies, we are seeing a recovery. In addition to being confronted with a recession, he was, of course, confronted with the fact that the United States was attacked, attacked mercilessly by evil people. The damage caused by that attack was not only personal loss, which was dramatic and obviously horrible, but it was also economic loss, having a significant impact on our economy and, as a result, causing us in the Federal budget to specifically have to spend a lot of money we hadn't anticipated spending fighting the war, and also having an impact on our revenues as a Federal Government. The President has been prosecuting this war against terrorism in an extremely aggressive and appropriate way and the results are pretty obvious. We have not been attacked, now, for almost 3 years. We invaded Iraq to change a totalitarian, despotic regime, and we have been successful there. We have seen an extraordinary event there, the elections which just occurred. Afghanistan is on the road to democracy. The success in the war on terror cannot be denied. We are making significant progress, but it is still a war we need to fight and we need to expend considerable resources to accomplish that. So there has been this dual pressure put on our Federal Government: first a recession, and, second, fighting a war on terror that had not been anticipated when this President came into office but has been well handled by this President since he has been in office. As a result, we now confront some significant fiscal questions that we must address. Having put in place the tax cut, which has caused very strong economic recovery and which is starting to show significant revenue increases, and having pursued a course of fighting a war that has cost us a great deal of money, we now must make decisions on how we properly balance our fiscal house in Washington. The President has suggested we do that essentially by looking at all functions of the Federal Government and trying to address them in a comprehensive, thoughtful way, and at the same time in a fiscally responsible way. There are two issues we confront in the area of fiscal responsibility. The first, of course, is the short-term deficit. How do we get this deficit down? How do we reduce its size so we do not end up taking bills that we are incurring today and passing those bills on to our children to pay tomorrow. The President has put forward a budget that reduces the deficit in half over the next 4 to 5 years. That is an extremely aggressive timetable, but it is one which is very doable. The President has put forward an aggressive and effective outline to accomplish that. The second thing this administration has proposed is to address the outyear issue, which is even a bigger problem for us as a nation. This is a function of the huge population in this country called the baby boom population. We are going to see a massive shift in the demographics of this country. Beginning in the year 2008, the baby boom population will start to retire. It is the biggest population segment of our society, and the pressure that it will put on the systems that support our retirement, people who are in retirement, will be dramatic, both in the area of Social Security and in the area of health care. As a nation we have had a very strong commitment to senior citizens, ever since the days of FDR. We can take great pride in the success of that commitment, and we intend to continue that commitment, but the whole genius of the Social Security system, and to a large degree the Medicare and Medicaid system, was the concept it would always be a pyramid; that there would always be a lot more people working than would be those taking out of the system; that there would be many people paying into the system to support individuals who are on retirement. In 1950, for example, there were 12 people paying into the Social Security system for every 1 retired person supported by that system. Today it is about 3.5 persons paying into the retirement system for every 1 taking out of that system. But because of the size of the baby boom generation, beginning in the year 2008 those numbers change dramatically, and by 2016 there will only be 2 people paying into the system for every 1 taking out, and we go from a pyramid to essentially a rectangle and it is simply not supportable in its present form. The practical effect of that is that those children who will be working, our children and our grandchildren whom we want to see have a better lifestyle, those two people will have to pay a much higher burden of taxation in order to support that one person who is retired unless we do something about that, unless we address that issue. So the issue is, do we want to pass on to our children a system that we know will not work, or that we know will put them in a position where they have to pay so much in taxes that their lifestyle will be less favorable than ours has been or will we address this issue today and start to get ready for that retirement boom, that large demographic shift, and as a result taking the burden off our children and grandchildren to a certain degree and assuring them that they also have a retirement system that works? The President has not only suggested a budget which in the short term addresses the deficit by reducing it by half over 4 years, as I mentioned, he has also stepped forward on this critical issue and suggested we do need to address these major entitlement programs. And he has made proposals in the area of Social Security that have been hotly debated here and that will continue, obviously, to be a subject of considerable consideration. In this budget he has specifically addressed the issue of entitlement spending, especially in the area of health care and Medicaid, and in a number of other areas such as agriculture. It is those entitlement programs which we as a Congress have an obligation to try to fix today so that they do not end up bankrupting our children and our children's children tomorrow. The importance of this is highlighted by this chart behind me, the effect of entitlements on the spending of the Federal Government. If you look at this chart, the orange line is entitlement spending, the yellow line is defense spending, the red line is nondefense discretionary spending, and the bright red line is interest. You can see that in the year 2000, entitlement spending was about 55 percent of the Federal budget. This year it will be about 56 percent. By the year 2015 it will be 64 percent of the Federal budget. As a result, it will essentially absorb all the revenues of the Federal budget--all the revenues of the Federal budget--unless we address these programs today so we have them in order so they do not put that type of pressure on our Federal budget and on our children who have to pay the costs of that budget through their tax burden in the future. That is why reforming Social Security is so important. It is why this budget is such a positive step, a step in the right direction toward reforming the way we, as the Federal Government, operate. That is why I congratulate the President for it. What the President has proposed is essentially a budget which, for lack of a better term, gores everybody's ox. He essentially has said: Listen, if we are going to get our fiscal house in order, we can have no sacred cows. Everybody's programs have to be on the table. We have to look at every program and prioritize in those programs. Yes, there is a significant increase in defense spending, but the increase in the defense spending is not as great as it had been projected it would be. In other words, the President has looked at the base, the defense spending base, and actually reduced that. If you don't believe me--you don't have to believe me on that. All you have to do is listen to some of the folks outside this building who advocate defense spending for programs they support. We are already hearing from a number of defense contractors, a number of people in the activity of supporting the Defense Department, that their contracts are being impacted because the defense budget has been reduced from what it was projected to be. The President has put defense on the table. Obviously, he has put nondefense discretionary on the table; that is, all the other spending on the discretionary side in that he has limited the increase in these accounts to about 1 percent less than the rate of inflation. He has picked priorities. He has named 150 programs that he is either willing to reduce or actually eliminate. That is a courageous step on his part. The Congress doesn't have to stick with those priorities. There are some programs I have concerns about, which everybody else in this Chamber has talked about--this program or that program. But we have to acknowledge the basic goal of limiting nondiscretionary to an increase of 1 percent, which is a reasonable goal. And within that increase, we as a Congress can set the priorities. We don't have to accept all 150 programs the President sent up here as his suggestion for places where we cut or where we will reduce programs. We can pick other programs, but we do have to pick. That is our responsibility in governance. We have to be willing to step up to the table and say yes, there are priorities in times of a tight fiscal process. We have to make some difficult judgments, and those judgments should be subject to a limitation--a number on which we all agree. And, in my opinion, the President has picked a reasonable number, which is about a 1-percent rate of cut in these accounts. In the entitlement area, the President has also said we have to slow the rate of growth of entitlements. This chart, as I mentioned, shows that as being an absolutely critical decision. It is about time we do. He, of course, has suggested an entire national debate on the issue of Social Security. It is not part of this budget. In the Budget Committee, I don't have much impact on Social Security. It is outside our purview. But he also has been willing to step forward on a number of other entitlement programs--specifically Medicaid, where he has made a suggestion which I think makes a lot of sense as a goal. He essentially said, Governors, we will give you an increase that you can use for the purposes of bringing more kids into the Medicaid Program, which is what our goal should be under Medicaid, but the increase isn't going to be as great as you want. However, at the same time, we are going to give you dramatically more flexibility on how you spend that money. I don't know a Governor who is worth his or her salt in this country today who wouldn't be willing to get a little less money with a lot more flexibility and feel they can do a lot more effective job of delivering that money and getting services out to people who need Medicaid. I think it is a good proposal, the type of proposal we should embrace and say that is probably going to be very good policy. In any event, the difficulty of slowing the rate of growth of Medicaid and giving more flexibility to the Governors is one which I think we as a Congress can move forward and hopefully can be part of the budget. I don't get to make the decisions as Budget chairman. I don't get to make any decisions. The leader may make decisions, and the Senator in the chair. But as Budget Committee chairman, I theoretically put forward a budget--sort of a blueprint, the mark that people work off of for the rest of the year. The Budget Committee comes out with top-line numbers. Then it is up to the Finance Committee to do the mechanics of how that number is going to work. The President has laid out those specific ideas. But the Finance Committee is led by some very creative people. Senator Grassley is one of the most creative people around. He has a talented group of people who may come up with a different way to approach this. But we should be able to agree that the rate of growth of those entitlements should be slowed. The same is true in other entitlement accounts which the President has addressed. I congratulate him for that. There are two issues which have received a fair amount of attention from the press, and from the naysayers who gather around this Capitol talking about fiscal discipline, trying to use this basically as a straw-dog argument. I always ask these folks, Where is your idea? Where are you going to make your difficult decisions for controlling spending? You don't usually get that answered. What you usually get is this: He doesn't include the issue of the war costs; or, he doesn't account for his tax cuts; or, the tax cuts are too high. Let us address both of those issues. First, on the war costs, the war costs should not be in the basic budget. They should be accounted for, and we are going to account for them. They should be very visible and transparent, and they will be. But these are not one-time items. Unfortunately, they are not. They are certainly two- or three-time items, and they won't be occurring 4 or 5 years out. This is a 5-year budget. The war will be over, hopefully, within a year or a year and a half when our need to put a lot of money into Iraq will drop dramatically. It is looking like that may be the case after these elections. We don't want to build into the base of the Defense Department the war costs so that 5 years from now we are giving the Defense Department all the money they are spending in Iraq as part of their base, because they are not going to need it. This argument that the war costs are not included is a straw dog. It simply is not a good approach to fiscal accountability. It is appropriate that we account for it, and we will. It is appropriate that it be highlighted, and it will be. But it shouldn't be built into the base of the budget if 3 or 4 years from now we would be spending a lot of money on defense which was spent on the Iraq war and it should not be spent any longer on defense; it should be spent on something else or returned to the taxpayers in tax cuts, which gets me to the second issue. You can't have it both ways, but some of our colleagues would like that. You cannot be opposed to the tax cut 2 years ago and then say taxes need to go up this year when the numbers show pretty distinctly two things. One, as I mentioned earlier, because of the tax cut the recession was shallower, more people got back to work quicker, more people had money in their pockets to spend sooner, and as a result the economy recovered faster. Two, tax revenues are up. They are up dramatically, and they are projected to continue to go up. They are up by 9.2 percent last year, 6.5 percent this year, and headed toward 7 percent next year. They are headed to continue to grow at that type of compounding for the foreseeable future, which means tax revenues are headed back to their historical place as a percentage of gross national product, which is about 7.9 percent; and they are getting there because we have more economic activity as a result of having put in place tax laws which create an incentive for capital formation--jobs and economic activity. The tax cuts are working in generating more revenue. If you were to raise taxes now on top of this embryonic economic recovery we are experiencing, you would flatten the recovery. And as a result, you would probably be reducing revenue rather than raising revenue because the economy would start to slow down. It would be the absolute wrong policy. I await with great anticipation a budget from the other side of the aisle. I certainly hope they will put one out this year. They did not put one out when they were in charge of this place, and they didn't put one out last year, or the year before. I await with great anticipation to see the tax increases they will actually bring forward. Maybe they will be the same taxes or the exact same policy which we saw from Senator Kerry when he was in charge--not in charge. I should not say that, but when he was running for President. His proposal was to raise taxes on the highest income Americans and then spend the money, the net effect of which he was going to spend $1 trillion more than he would take in which would have aggravated the deficit by $1 trillion. That is, of course, a policy which, if those on the other side of the aisle want to continue to debate, we look forward to debating. The bottom line is this: The President has proposed a stringent, responsible budget which moves us toward reducing the deficit by half in the next 4 years. That is what we need to do. More importantly, the President has stepped forward on the key issues of the outyears--specifically Social Security and entitlement spending--to try to address so we can assure our children do not end up having to pay so much in taxes in order to support us in our retirement years when they cannot live as good and as full of a life as we have had. I congratulate the President on his budget, and I look forward to working with this Congress in passing such a budget and moving toward fiscal responsibility in this country. I thank the Chair. I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I yield myself such time as I may consume under morning business up to 10 minutes.

Mr. GREGG. I take it we are in morning business, Mr. President?

Mr. GREGG

Mr. GREGG. Mr. President, it is a pleasure to rise today in support of a native son of Texas. The Senator represents Texas so well in this Chamber. Alberto Gonzales, as has been outlined by many of the speakers, is an American success story. What an incredible story. There is no point in plowing ground that has already been plowed numerous times, but still it is nice to see this happen. It is nice to see someone of such extraordinary capability rise to such success. It is the American way to reward ability. We as a nation open our arms to people who are productive, concerned citizens who are willing to give of themselves not only to produce a better life for them and their family but also to produce a better life for their fellow citizenry, which is exactly what Judge Gonzales has done. With his talent he could have simply gone out and made a huge amount of money. The dollars that might have been available to him in private practice, it is hard to anticipate how much that would be, but it would have been considerable. Instead, at considerable financial sacrifice, I suspect, he has been willing to participate in public service. He has excelled at it both as a judge in Texas and as a counsel to the President in Washington. Now he has been put forth as the nominee of the President to serve as Attorney General. I think it is an unfortunate reflection of the partisanship on the other side, to be very honest, that his character has been impugned, that his purposes have been impugned, that his integrity has been questioned, and that his record of commitment to public service has been brought into question, not necessarily, I think, because of what he has done, because what he has done has been as an extraordinarily successful public servant and exceptional justice, an exceptional counsel to the President, but simply because I believe Members on the other side wish to highlight their political differences, using Judge Gonzales as their stalking-horse to accomplish that, and have been willing to attempt to undermine such an American success story for the purposes of promoting what amounts to petty political gain. It is unfortunate, unfortunate indeed, because the office of Attorney General has a tradition in this Nation, and especially in the post- World War II period, of being an office which has always had appointed to it high-quality individuals who have been very close to the Presidency. That also is a logical choice. I think it is important to focus on that fact, that the Attorney General's position, in the post-World War II period at least, has been a position which has come to play a little different role than maybe it has historically played in the sense that it has been a position where Presidents have chosen people who they have had absolute personal confidence in, not people who necessarily are chosen because they balance a political ticket or political theme or regional need. The importance of having an Attorney General in whom a President has confidence has been the critical element of choosing that individual. I guess the best example of that, of course, is the Presidency of John Kennedy, when he chose his brother Robert Kennedy, who clearly had very little experience. He had, of course, been counsel for hearings here in the Senate dealing with corruption and labor corruption issues involving the Teamsters Union, but he had not had a great breadth of experience. He was a fresh face, to be kind, in the area of public policy. He was chosen by President Kennedy, which was a choice of significant implications in that the President of the United States would actually choose his brother to serve as Attorney General. It turned out to be a great choice. Robert Kennedy was probably one of the strongest and most effective Attorneys General, certainly of that period, who drove a great deal of the important issues that were decided in the area of civil rights and in the area of fighting corruption, especially organized crime, organized crime in labor union activity. The reason that Robert Kennedy is sort of the prototypical appointment in the post-World War II period is because it reflected the fact that the President, President John Kennedy, felt so strongly that he needed in the Attorney General's position someone in whom he had absolutely unequivocal confidence and who was going to be there as an assistant and as a force to carry forward his policies. That attitude has moved forward throughout this period. Attorney General Reno, who I had the opportunity to work with extensively during her term in office, initially started out in that role also, I believe. Certainly John Ashcroft has had that position. Now, in sort of a restatement, in a way, of the Robert Kennedy role, President Bush has chosen his closest legal adviser, Alberto Gonzales, who has a much stronger resume than Robert Kennedy had but who has the same historic position in that he is going to be able to carry forth the decisions of this President and operate as a confidant of this President in a manner which is uniquely important to the Attorney General's role. Obviously, the Attorney General has an obligation to be the law enforcement officer of our Nation, to be a fair arbiter, to be a spokesperson who has integrity on issues, and to speak clearly to the administration of what is right and wrong, and how it should move forward effectively on issues, in a way that does not compromise the administration. Judge Gonzales has done that. He has done that time and time again in his role as White House Counsel. He understands his new role as Attorney General in that context. But the attacks on Judge Gonzales do not go to this role, they go more to a disagreement which people from the other side have over this administration's policy relative to Iraq in an attempt to bootstrap Judge Gonzales's nomination into a major confrontation on the issues of whether we are doing correct things in Iraq. That, to me, is inappropriate relative to the confirmation process. There is no question we should debate Iraq. That should be a matter of open and continuous debate in this Senate. It is the most important international policy issue we have going on today. I have no hesitation about debating it. But I do not believe we should use an individual who is a nominee for a major office within the Cabinet as a stalking-horse for the purposes of making attacks on the Presidency, unless there is some clear relationship there. In this case there is none that is so substantive and appropriate that it rises to the level of opposition of the Attorney General nominee, in my opinion. The individual we have before us as a nominee, Judge Gonzales, is such a unique and extraordinary success story, who so eloquently defines the American dream, as we all love to profess to our different constituencies, to talk about how people succeed in attaining the American dream. Whenever I go into a classroom, especially an elementary or middle school classroom, I talk about how you can be anything. All you have to do is work hard, stay in school, study hard, and make a commitment to being an honest person, a person who has high values, and a person who is committed to working hard, and you can accomplish just about anything. That is what we say to our youth in this country. That is what we say to people who come to our land as immigrants. Judge Gonzales personifies that statement. For some Members of this Senate to be taking such a negative approach in addressing his nomination, and defining his individual characteristics as not fulfilling those concepts of the American dream is, I think, a disservice to the people who, like Judge Gonzales, have succeeded in America. This is a unique person whom we are very fortunate to have as a nominee to be Attorney General of the United States. His confirmation will stand as a statement of opportunity to tens of thousands, hundreds of thousands, potentially millions of Americans, especially Americans who have come here from Hispanic cultures, that America is a land of opportunity, that the American dream does exist for you, that if you work hard, that if you are a person of integrity, that if you commit yourself to your goals, you can succeed, and America will reward you in that success and acknowledge it. So I believe very strongly that the choice of Judge Gonzales is an extraordinarily strong one, that it is consistent with the tradition of Attorney General choices in the post-World War II period, and that, more importantly, it is a statement by this President that he understands the American dream is personified in Judge Gonzales, and that it should be rewarded and should be respected. Mr. President, I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to remember and honor LCpl Adam R. Brooks of Manchester, NH for his service and supreme sacrifice for his country. Lance Corporal Brooks demonstrated a willingness and dedication to serve and defend his country by joining the United States Marine Corps. His enthusiasm and devotion to service were indicated early on by his decision to enlist in the Delayed Entry Program which obligated him to the Marines well before he graduated from Central High School in 2003. Just as many of America's heroes have taken up arms in the face of dire threats, Adam, too, dedicated himself to the defense of our ideals, values, freedoms, and way of life. His valor and service cost him his life, but earned him a place on the roll call of honor within the pantheon of heroes this country has produced. Adam reported to recruit training at Marine Corps Recruit Depot Parris Island in August 2003. Following his basic training, he volunteered for and received further training as a rifleman in the infantry. Upon completion of this training, he became a member of 1st Battalion, 2d Marines, 2d Marine Division. From this unit's home base in Camp Lejeune, NC, he would deploy to Iraq in pursuit of those who would threaten our way of life. Tragically, on November 28, 2004, Lance Corporal Brooks gave his last full measure for our Nation during combat with the enemy in the Babil Province of Iraq. Throughout his short career, Adam earned a series of accolades which testify to the dedication and devotion he held for the Marine Corps, his fellow Marines, and his country. Adam's hard work and dedication contributed greatly to his unit's successes and cemented his place as a participant in the great endeavor known as America. Adam was recognized for his service by the Purple Heart Medal, the National Defense Service Medal, the Global War on Terrorism Expeditionary Medal, and the Sea Service Deployment Ribbon. My condolences and prayers go out to Adam's family, and I offer them my deepest sympathies and most heartfelt thanks for the service, sacrifice, and example of their Marine, Lance Corporal Adam R. Brooks. Adam exemplified the words of Daniel Webster who said, ``God grants liberty only to those who love it, and are always ready to guard and defend it.'' Because of his efforts, the liberty of this country is made more secure. Specialist Alan J. Burgess

Mr. GREGG. Mr. President, the United States of America was founded on a passion for freedom, personal liberties, and equality for all its citizens. In a fierce battle for freedom and independence, the citizens of this new world cast off the shackles of tyranny and built for themselves a land of hope and promise. So fervently held were the beliefs and ideals of this country, that a son of New Hampshire, General John Stark, reminded us of the price of our liberties with his admonishment to ``live free or die.'' The heroes and Founding Fathers of that long ago time have been joined by another noble son of New Hampshire, SPC Alan J. Burgess of Landaff. It is in his memory that I rise today to honor Alan for his service and supreme sacrifice in the continuing defense of this country and for his relentless defense of freedom. Specialist Burgess demonstrated a willingness and dedication to serve and defend his country by joining the National Guard after this country was attacked in September 2001 and we had begun the task of destroying the enemies of our country. Just as many of America's heroes have taken up arms in the face of dire threats, Alan too dedicated himself to the defense of our ideals, values, freedoms, and way of life. His valor and service cost him his life but earned him a place on the roll call of honor within the pantheon of heroes this country has produced. Following basic training, Alan joined his comrades in 2nd Battalion, 197th Field Artillery Brigade, Army National Guard as a military policeman and began training for his deployment to Iraq in support of Operation Iraqi Freedom. From this unit's home base in Woodsville, NH, he would deploy in March 2004 to Iraq in pursuit of those who would threaten our way of life. During his all too brief career, Alan accumulated a significant list of accolades and experiences which testify to the dedication and devotion he held for the Army, his fellow soldiers, and his country. Alan's expertise contributed greatly to his unit's successes and cemented his place as a participant in the great endeavor known as America. Alan was recognized for his service by the Bronze Star Medal, the Purple Heart Medal, the Good Conduct Medal, the National Defense Service Medal, the Global War on Terrorism Expeditionary Medal, the Global War on Terrorism Service Medal, the Army Service Ribbon, and the Army Reserve Overseas Service Ribbon. I offer Alan's family my deepest sympathies and most heartfelt thanks for the service, sacrifice, and example of their soldier, Specialist Alan Burgess. Alan exemplified the words of Daniel Webster who said, ``God grants liberty only to those who love it, and are always ready to guard and defend it.'' Because of his efforts, the liberty of this country is made more secure. Specialist Daryl Davis