Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, obviously, I rise to express some differences of opinion with the prior two speakers, but I want to speak more generally on the issue of where we stand relative to the financial markets. But if ``doing better'' is to follow the proposals of Senator Obama, which have been estimated by a very legitimate estimating source to include over $300 billion of new spending annually on new programs that are unpaid for, I do not think that is doing better. If ``doing better'' is to follow a path where we raise taxes on the American people, especially small businesses, I do not think that is doing better. If ``doing better'' means you approach an issue which is as deep and as significant as what we confront today in the financial markets with a lot of partisan rhetoric about the failure of the Bush administration to make the stock markets function correctly, when this Congress has been controlled by the Democratic Party for 2 years and had more than ample opportunity to address the restructuring of the regulatory entities, and, in fact, proposals were made to restructure Fannie Mae and Freddie Mac, which were rejected by Members from the other side of the aisle, by legitimate leadership on our side of the aisle on that issue, that is not better. The Nation today confronts a very significant fiscal issue. The finance houses of New York are in disarray, the credit markets are locked down, and the American people and the world generally are very concerned about their assets and how they are protected and whether they are going to be able to continue to be liquid and viable. It is not constructive for the Senator from Rhode Island to come to the floor and start pointing to the Clinton years as showing a huge run-up in the stock market and the Bush years as showing a flat stock market, and in the process ignoring the Internet bubble of the late 1990s, which drove the stock market down radically in 2001 and led us into a recession. That run-up occurred under the Clinton years and, obviously, they benefited from that, and the Bush years, regrettably, got socked with a recession. That is not constructive. It is not constructive to put charts up that claim an economic recovery has not occurred since the Internet bubble burst and the 9/11 attacks occurred. In fact, over the last 6 years, Federal revenues were up until about 5 months ago when we hit this significant economic slowdown. Federal revenues had reached historic highs. We had seen 3 years of the greatest increase in Federal revenues in the history of this country as a result of tax law that encouraged entrepreneurship, encouraged people to do things which are taxable. Job creation was pretty significant too. Over 8.5 million jobs were created over that time period. Yes, jobs have been lost, and that is not good, in the last few months. But to put that in the context of a partisan atmosphere which says this is all the functioning of an administration, when Congress controls the purse strings and Congress controls a large part of the policy and Congress is controlled by the Democratic Party, is inappropriate, in my opinion. Furthermore, if you want to look for culprits, the real culprit of this economic disorientation we are going through is that credit was made too easy for too long and, basically, borrowing became an inexpensive event, almost a zero-cost game because of the interest rates which the Fed maintained over a long period of time at such a low level--the Federal funds rate--and, as a result, these dead instruments which were written on real estate were written in a way that basically neither looked at the underlying asset or equity value to support that debt instrument nor looked at the fact in the outyears--as those instruments required reasonable return through interest increases-- whether the borrower could support them. So we have had this huge dislocation, this meltdown in the subprime market, which is being followed on by other real estate instruments. So it is not constructive, and it is certainly a reflection of a lack of leadership when the only answer on the other side of the aisle is to come forward and start claiming they are pure and this side or the President is not, when, in fact, there is more than enough blame to go around as to how we got into this situation. The Federal Reserve deserves a lot of that. We in the Congress deserve a lot of it for not doing our job in oversight. And, obviously, the administration deserves a lot of it. But it is not unilateral in its placement, to say the least. So how do we get out of this? Well, I think, first off, we ought to acknowledge that an aggressive effort is being made by the Treasury Secretary and by the Chairman of the Fed to try to control the damage. When they have seen entities such as Freddie Mac and Fannie Mae or entities such as AIG--whose failure would have a systemic effect which would roll through the financial markets of the country, destabilizing not only those businesses but also banks down the road and, in the end, Main Street, and cost Main Street jobs, and cause tremendous disruption on Main Street--they have stepped in and stepped in aggressively. I respect what they have done, and I have supported what they have done. The markets have also, basically, to some degree, reflected the fact that at least in the Fannie Mae and Freddie Mac area, this was the right action. They still have not digested the AIG issue. While we are on the AIG issue, I think it is important to point out that we have heard the statement that it is an outrage that $85 billion is going to be put in to basically take over this insurance company-- the largest in the country. Well, first off, that money does not come from the Federal Treasury. It comes from the Federal Reserve. The only way it is going to appear on our books, on the Federal Government's books relative to the budget of the United States is if the Federal Reserve pays us less in profit than they annually pay us--and they annually pay us about $25 billion--because of the cost of that action. Secondly, what the Federal Reserve did was not bail out AIG. They wiped out, for all intents and purposes, the stockholders. All you need to do is look at the primary stockholder in that company, whose net worth dropped by $5.8 billion--which is the report I saw yesterday--as a result of this action. That is a pretty deep loss: a $5.8 billion individual loss. In addition, it is likely the senior debt will lose their position, and it will be wiped out. What will happen is that the parts of that company are going to be sold off in an orderly way, and it is very likely a large part, if not all, of that $85 billion will be recovered and the Federal Reserve won't end up with any cost on its books and may actually make some money on this action. But in the process, more importantly, they will have done an orderly unwinding of that company so you do not have a meltdown of that company, which would lead to a downstream, catastrophic event for literally hundreds of banks in this country--small banks, especially--that have used the AIG insurance to basically solidify the capital on their books. If those banks fail--and they might well have failed if AIG had gone down in an implosion--then Main Street would be affected and jobs would be lost and people would be dramatically impacted. So this was an effort to pay some money now up front in order to avoid big damage down the road. In my opinion, it was an effort that had to be taken. But for Members of the other side of the aisle to come here and start pounding their chests about how outrageous it is that $85 billion is being spent in this manner, either they do not understand the issue and understand what happened here or they are misrepresenting the issue and in a way that is truly not constructive to settling the markets or to getting a resolution that will be positive. We still have an issue, and it is fairly significant. The issue is that the underlying credit in the mortgaged area--mortgage-backed securities--is locked up. It is virtually impossible to move these securities off the books because nobody knows the value of these securities. As a result, the marketplace is not working correctly and you cannot move money and you cannot make loans and you cannot get economic activity and thus you cannot create jobs. The engine of our economy has always been our real estate industry. So we as a government have to be thinking about how we should address that. It may take some significant creativity. I respect the chairman of the Banking Committee in the House who has openly said maybe we should take another look at something like the Resolution Trust Corporation which we had in the 1990s. This may be the type of vehicle we have to take a look at. But to accomplish that, we have to have a mature approach. We have to have an approach that is not a juvenile, partisan attack coming from the other side on initiatives which might constructively resolve this or at least should be debated in an atmosphere where there is some sort of seriousness about the debate besides hyperbole and political advantage trying to be scored. I am willing to acknowledge and openly acknowledge that I respect the fact that Congressman Frank has put this concept on the table. It would be nice if somebody on the other side of the aisle who had spoken today--and I did not hear anybody--had come forward and said they respected the fact that the Secretary of the Treasury had been willing to take some aggressive action to try to stabilize Fannie Mae and Freddie Mac and AIG for the betterment of this country and our economy, but all we are hearing is hyperbole, unfortunately. It is time we had some adult reflection on this around here. Yes, it is an election year. Mr. President, I ask unanimous consent for an additional minute.

Mr. GREGG. Yes, it is an election year, and we know it is a Presidential year. We know everybody is trying to score points. What we are dealing with here is so big and so important to every American-- basically, the fiscal solvency of our Main Streets and the fiscal solvency of the banks that support Main Street--that we can't allow ourselves--or we should not allow ourselves--to devolve into this type of hyperbole and partisanship. It would be nice if people around here would be willing to sit down and acknowledge that there are thoughtful ideas coming at this and there are creative ideas, but they are also going to be controversial; and that in the atmosphere of high partisanship, which I have heard this morning on this floor, we are not going to be able to discuss intelligently thoughtful, creative, and bold ideas because they are going to be savaged by petty partisanship. We have a job before us as a Congress. Clearly, the Secretary of the Treasury is engaged and the Chairman of the Fed is engaged, and I hope the Congress will get engaged fairly soon, as well, in a substantive and positive way. I yield the floor.

Mr. GREGG

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

Mr. GREGG. Madam President, I wish to return to the issue which has been the topic of the day--and should be, obviously--and that is the stress on the financial systems in the United States. Earlier in the day, I asked why we couldn't have an adult discussion of this subject rather than a lot of hyperbole and partisanship. I doubt it was my comments that energized it. In any event, the Senator from New York, Mr. Schumer, did come down and make a couple of points on how he thought we could proceed. I wish to comment on those specific points and elaborate a little bit. First off, the term ``Resolution Trust Corporation'' has been thrown around a great deal. I am, as I mentioned earlier today, rather familiar with that term because I was Governor of the State of New Hampshire at the time that we had the real estate meltdown in the Northeast and the Resolution Trust Corporation came in, as well as the FDIC under Chairman Seidman. Chairman Seidman did an extraordinary job, by the way, for us. We had to reorganize our banking system. The assets fell into the hands of the Resolution Trust Corporation, which then proceeded to dispose of those assets which basically had caused the banking system to fail in the Northeast and earlier in the Texas area. I think that vehicle was appropriate to that time. I think what we are hearing today in the term ``resolution trust'' is the concept, not the specifics of that vehicle. Thus, when Senator Schumer said it was inappropriate for Senator McCain to throw out the concept of resolution trust as an approach to addressing this extraordinarily critical matter, I think he may--I don't know, I can't speak for Senator McCain--I suspect Senator McCain's purpose was to talk about the concept of a government entity, such as the resolution trust, which comes in and basically relieves the pressure on the financial markets by creating value under assets which nobody at the present time can value. That is what we need. That is exactly what we need. I would not dismiss the idea out of hand. I would simply say it is a term of art now versus a specific structure, and the term of art is essentially stating that the Federal Government does have a role potentially of coming in and putting value on assets which cannot be valued by the market and which are locked down and which have caused the whole credit market in the Nation to freeze down. That is what has happened today, of course, in these mortgage-backed securities. Nobody knows the value of the security underlying the mortgage-backed security and, therefore, it is impossible to sell them and, therefore, the fluidity of the economy has been disrupted and, in fact, we are seeing a freezing of the economy as these securities hold in place instead of being traded. What has been suggested, and actually, interestingly enough, appears to be the suggestion of the Senator from New York, is we create some sort of structure which allows the Federal Government to step in and essentially put value underneath these mortgage-backed securities by using the good faith and credit of the American taxpayer to essentially set a price for those. He suggested a couple ways of doing this. Let me comment on those suggestions because I think they are worth commenting on. First, as the price of doing this, he suggests we should change the bankruptcy laws, a proposal debated here at some length earlier in the year, so bankruptcy courts would have the right to write down mortgages in bankruptcy. That is an appealing idea on its face because most of these mortgages are going to be written down anyway. But the issue becomes, what is the cost of that on the marketplace. If the mortgage underwriter knows there is a potential that the mortgagee may file bankruptcy and that mortgage may be adjusted significantly in bankruptcy, then the cost of that mortgage is going to go up and go up a lot because it is going to have to cover the premium and some actuarial estimate of how many mortgages might end up in bankruptcy, might end up being written down. As we know, bankruptcy doesn't deal with secured assets such as a mortgage in the sense it doesn't write them down. The secured assets come first. This proposal has its upside from a standpoint of being attractive to a way of getting these mortgages performing again. But it has the downside of probably creating a much higher price for mortgages in the marketplace in the initial offerings. Of course, what we want to do is make mortgages more readily available in a sound and reasonable way, not in a speculative way, the way they were in the last few years under the subprime system. There may be a way to do this. I wouldn't close the door to it. I simply say, in looking at this, we have to be realistic and recognize that the cost of writing mortgages in this way will go up, and there may be a way to keep that price from being excessive by limiting the availability of that option. So I am willing--not that it is my role, but I would certainly think it is something to look at. The second idea the Senator suggested was that we allow the Federal Government to basically buy into troubled banks and get what I presume would be equity back by creating a new entity, a new agency to do that. That is also an interesting idea, and I respect the fact he brought that idea forward. I suggest that is a long, complicated exercise, however, and we are not in a period where we have a whole lot of time. What we need is something that is going to make sense soon and give us some fluidity in the marketplace reasonably quickly. Probably the only way we are going to accomplish that is to pursue a course of the Federal Government injecting itself into the process by purchasing mortgage-backed securities in some manner, maybe through one of the agencies we have already gotten possession of--Freddie Mac, Fannie Mae, or one of our other agencies--and taking them off the books of these entities and reselling them in some way that recoups value to the taxpayer. That gets liquidity into the process, and it hopefully gets a stability into the pricing mechanism for these mortgage-backed securities which are at the core of our problem. Honestly, if we had done this or taken this type of route with stimulus 1, where we used $160 billion, we probably could have abated this entire problem or at least muted it significantly because that is a lot of money, $160 billion. If we had not handed it out in $600 increments to everybody to be spent to buy a television made in China so the Chinese benefited from it--we didn't benefit from it--instead, if we had put it on the problem, which is the mortgage issue and the fact there was a lot of debt nonperforming and where you couldn't ascertain the value and use it to settle out that part of our economy, we might have made great strides earlier, and we might not be where we are today, which is in such dire straits. I think it is good at least that the topic has been opened, and I congratulate Senator McCain for being willing to stick his toe into this rather choppy water and do it in a way that isn't in the tradition of what one would call classic conservative politics. He is basically suggesting we might need to look at a major initiative through the Government to stabilize the situation. That is a departure. He should be congratulated for being strong enough, creative enough, and mature enough to be willing to step into that direction. I wish, quite honestly, Senator Obama was saying something similar. Senator Obama continues to talk, unfortunately, in hyperbole on this issue, sort of out here on some other planet, relative to the reality of the on-the-ground problem. At least Senator McCain is talking about the problem in a mature, substantive way. Obviously, the ideas haven't totally evolved or developed yet, but he is opening a dialog that I think is very constructive to the question of how we get to a solution, as Senator Schumer, quite honestly, did in his proposal. As I said, I have outlined what I think is the point to begin the dialog. This may all be moot anyway because there is significant rumor that the Treasury and the Fed are moving much faster than the Congress, which should not be a surprise, which they usually do. That is why we have them. The Treasury did a good job, in my opinion, on Freddie Mac and Fannie Mae, and the Fed did the right thing with AIG. Another issue that has been raised, however, that is giving us some problems is the short-selling issue. There has been a lot of discussion about short selling, how it has been predatory and inappropriate. It is true. There is no question but that naked short selling is a serious problem. I congratulate the SEC for pursuing aggressive rules on the equity side of naked short selling so people have to cover what they are doing. But when you do an event on short selling on the equity side, it opens short selling on the debt side. If a short seller thinks a company is a target and they are going to go after that company, a person who is approaching this from a very predatory approach on the equity side and the equity side is shut down by the SEC or, more importantly, by financial houses, with the British action which basically bars short selling from financial houses until the beginning of next year, then that short seller is probably going to move over to the debt side. Spreads jump dramatically, and the practical effect of that is it becomes virtually impossible for people to borrow money because the spreads are so high, and that is an equally contracting event. It makes commercial paper very hard to move. I do hope that as we look at the short-selling issue, we not only look at the equity side but we also look at the debt side. In that arena, there are a lot of different ideas that have been suggested. One that I heard is that you should--and I don't know that this works, but I think it is worth throwing out--is that you have to look at the credit default swap arena and have more transparency so people know what the risks are and they know what the value is and they know what is going on in this arena. That can be done through creating some sort of clearinghouse along the lines of what we do with S&P futures. That has been a suggestion. Maybe that is the way to go. In any event, we cannot fix half of this equation, in my opinion, and expect the markets to not adjust in a way that actually continues the retardation of the markets or the retardation of the economy because of the lack of transparency on the debt side as to who owns what and what the spreads are. Not the transparency on the spreads but the fact that people are not going to be able to get commercial paper because the spreads will be too high as a result of the short selling. I am not talking about eliminating it. I am not even talking about chilling. I am talking about making it more transparent, and that I think will be very helpful. In any event, it seems to me at least we are getting some good and positive discussion on these issues around here, which is a change, and hopefully we can continue on this track. It may be that the Congress will be out of session before anything can be done, and that may actually be good, too, if we don't have anything good to do. But as a practical matter, I think we have to maintain our flexibility as a government, and we have to be willing to support those who are trying hard in this area to try to get our markets back operating at some level of normalcy, specifically the Secretary of the Treasury and the Chairman of the Fed. And we should not try to hyperbolize this issue and create an atmosphere where the well of opportunity to look at things that are different and creative, maybe outside the tradition of the ideology of one side or the other, is poisoned by excessive partisan discussion. Madam President, I yield the floor, and I suggest the absence of a quorum.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to express my thanks for the 250 hard-working men and women of the New Hampshire Veterans Home in Tilton, NH, and to join them, and the other State Veterans Homes across our Nation, in celebrating the 120 year partnership between the Federal Government and State Veterans Homes. Our Nation has a proud history of looking after its warriors even after the loud sounds of battle have been pacified. Since 1890, the New Hampshire Veterans Home has served in this fine tradition by providing care and comfort for thousands of men and women who have sacrificed so much to preserve our freedom and protect our country and State. The commitment and outstanding contributions of past Commandants, members of the board of managers, staff, and many volunteers to the welfare of New Hampshire veterans is truly extraordinary. Today, the New Hampshire Veterans Home continues to improve and uphold its value by assuring access to affordable, professional, and quality nursing care in a community setting that cultivates learning, growth, and optimal quality of life. I look forward to building upon the good relationship between our Nation's State Veterans Homes and the Federal Government and again join in celebrating this milestone of service to our Nation's heroes.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent to speak in morning business for 15 minutes, and after I have completed my speech, Senator Cornyn be recognized for 15 minutes.

Mr. GREGG. I ask the Chair to notify me when I have used 10 minutes.

Mr. GREGG

Mr. GREGG. Mr. President, there is no question there is a serious problem out there relative to the financing of already let contracts in road construction and that it is unfair to those people who have had those contracts and those people who are working on those projects that they should be blindsided by the fiscal irresponsibility of the Congress. But it is also inappropriate to the taxpayers of the United States that we should correct this problem in a way which does even more egregious harm to the future of this country by significantly expanding the deficit. Just yesterday, we learned that the deficit of the United States has doubled under this Congress. It has gone from $163 billion to $407 billion. This is a huge increase in the deficit. What does the deficit mean? We are passing debt on to our children which they all have to pay for. Now we are going to, with this bill, add another $8 billion to that deficit--$8 billion. That is big money. Eight billion dollars would run the State of New Hampshire for at least 2 years, probably for 2\1/2\ years, so it is a lot of dollars. So this decision, the way it is being executed, the way we are approaching solving the problem of the highway trust fund running short of funds, although it needs to be done--we need to address the issue of let contracts. The way we are trying to correct the problem is the wrong way. We shouldn't be adding to the deficit to do this. This is pretty much a self-inflicted wound, and it is really an intentionally self-inflicted wound. When the SAFETEA bill was passed, it was passed with the knowledge--the open knowledge, which was pointed out on this floor by a number of us--that the revenues in the highway trust fund, which would come from gas tax and which had always paid for highway construction, were not going to be enough to meet the largess of that bill. The avarice of our colleagues to spend money far outweighed the money that was coming into the trust fund. We knew that in the term of SAFETEA that this was going to happen, that the lines were going to cross and that the trust fund would be depleted. That depletion was accelerated, obviously, by the fact that energy prices went up and people, rightly and appropriately, started to aggressively conserve their use of gasoline, and that was good for the country and good for ourselves in dealing with this issue of gas prices. However, it had the effect of reducing the revenues into the trust fund. So the day of reckoning, which was inevitable under the original SAFETEA bill, was accelerated and, according to the administration, occurred sort of out of the blue because 2 weeks ago they were saying they would have vetoed a bill such as this that added to the deficit, and now they are saying they support it. So they reversed their position on the basis of information they received in the last 2 weeks about the status of the trust fund. Why was the original SAFETEA bill so out of whack? Well, it was out of whack because it included 6,000 earmarked special projects--some of which were listed by my colleague from South Carolina, Senator DeMint-- which totaled $24 billion of spending, which we didn't have money to pay for, yet we put them on the books anyway. Then, a year ago or so, when we could have contracted those projects, we went by lapsing those projects which nobody wanted to pursue--$1 billion worth--we decided not to. We decided instead to expand projects and add even more projects. There has been a representation that this $8 billion raid on the general fund by the highway fund is just a repayment for a loan that occurred in the late 1990s, as it is represented--1998, I believe it was--when the highway trust fund allegedly transferred $8 billion to the general fund. Well, that is truly a straw dog argument because those monies never had any practical effect on Federal spending or the Federal deficit--that transfer, that event--but this event does. This is real dollars. This event is a real $8 billion increase in the deficit. Somebody is going to have to pay for it, and the people who are going to have to pay for it basically are these young men and women right here who are serving us as pages. When they get out--they are juniors in high school, and when they get out of high school and go to college, which I am sure they all will, when they graduate they are going to start a job, and when they start that job they will find there is a big tax bill, and a large chunk of that tax bill is going to be for debt we are running up here today. So 8, 10, 12, 15 years from now, when they are starting to make their living and trying to raise their children, trying to send their kids to college, trying to buy their first home, they are going to be limited in what they can do. Why? Because they are going to have to pay a huge amount of taxes for costs which are being incurred right here today by adding to our deficit, and this is $8 billion of our costs that we are putting onto the next generation. This is not the correct way to do it. There are ways to pay for this. There are ways to do this that do not involve that. The cleanest would be to simply borrow the money--not from the general fund but from the mass-transit accounts which have the money--and that was what the administration suggested. It was rejected by the House because the House didn't want to be responsible. Now we are in this tight timeframe, and it is claimed that we can't have any amendments here in the Senate. We simply have to take care of this. Actually, there is some legitimacy to the tight time argument, but it doesn't mean we shouldn't have any amendments to discuss this. I proposed an amendment, Senator DeMint proposed an amendment, and Senator Coburn. My amendment was to try to avoid this in the future by reinstituting rules around here which used to discipline our spending but which were, in the dark of night, eviscerated by those who wanted to spend a lot of money we don't have out of the highway trust fund. Two rules--one, that this should have a scoring event and should be subject to pay-go. How can a group of folks around here who carry a pay-go flag around as if it is the banner of fiscal responsibility say that pay-go shouldn't apply to a transfer which is going to create an $8 billion deficit--an $8 billion add-on to the deficit? Inexcusable. That was part of my amendment, to make pay-go applicable here. The second part was to reinstitute what is known as the Byrd Rule. Byrd developed language which said that as the trust fund--as it became apparent that the trust fund monies were not going to meet trust fund obligations, you reduce the obligations, and that was called the Byrd Rule. It was the responsible way to govern. You pay as you go. As money comes in, you spend the money. If you have a trust fund that funds a project, as that trust fund has money to pay for that project, you spend the money to pay for that project. But when SAFETEA was passed, everybody knew that a lot more money was being promised than was going to come in, so a little game was played in the middle of the night: Let's put a knife into the Byrd Rule. Let's cut it in half. Let's eviscerate it. That is exactly what happened. So I am just suggesting that we reinstitute the Byrd Rule. It won't apply to this event, but at least prospectively it will. Fiscal responsibility--that is all I am asking for. Unfortunately, it has been represented that we can't take up any amendments because we have to do this in a matter of hours or else these contracts can't go forward. Well, we could obviously have taken up the amendments. Clearly, we are going to spend 2 hours debating this. I only wanted 15 minutes to debate my amendment. It clearly could have been done in this 2-hour period. No, the issue was that we didn't want to take up any amendments that might make people have to take a hard vote. That was the issue: a hard vote on fiscal responsibility, on the issue of putting pay-go back in place and putting the Byrd Rule back in. So, using the leverage of people being put out of work and contracts which had been let not being paid for, the other side has been able to successfully get around making those hard votes. I recognize the eccentricity of the situation, but it still doesn't look well, and it is not correct. At some point, we are going to have to face up to this, you know. One generation should not do this to another generation. One generation should not constantly run up the debt on the next generation and take credit for the spending today which they are not willing to pay for. It is just not right. As a politician running for reelection, I shouldn't say: Oh, I got this project for my State, we are going to build this program right here, and then not be willing to say I was willing to pay for it also; instead, say: Oh, well, as to paying for it, I am going to let my children and my grandchildren, my neighbors' children and my neighbors' grandchildren worry about that problem. I am just going to do the project and take credit for it. So what we are doing here is totally inappropriate from a fiscal standpoint, but obviously the timing of this is such that we are not going to get these votes. I intend to return to this amendment. I will find someplace to stick it on, and then everybody will have to vote on this, hopefully, at some point in the future. Mr. President, I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, yesterday the CBO gave us their estimates of what the deficit is going to be and what the deficit for next year will be, and it is not good news. The deficit has more than doubled. It is projected now to be $407 billion. That is up from about $160 billion. That has all occurred under the leadership of this Democratic Congress. Obviously, the administration takes significant responsibility, but the Congress, under the law, under the Constitution, controls the purse strings, and the Congress has the control over the check writing of the Government. As a result, the first responsibility for fiscal restraint and fiscal discipline is with the Congress, and it has failed that test. It is hard to imagine how the deficit could jump this much in this short period of time. Most people will say it is the result of the war--or people on the other side will say that. It is not. This jump in the deficit, to the extent it was controllable from the Federal Government's standpoint--in other words, it wasn't caused by the slowdown in the economy--was purely a function of increased spending on nondefense--not purely but was significantly increased by spending on nondefense activities and a dramatic increase in spending. The problem is that not only is this deficit now at $400 billion and going up under this Congress, but the outyears are even more severe that the risk for us as a nation is even more dramatic from the standpoint of fiscal policy because looming over the horizon is the problem with entitlement spending which will expand dramatically as the baby boom generation retires and where we already know there is more than $60 trillion of unfunded liability. What has this Congress's response been to this situation? It is the worst record in the last 20 years. One appropriations bill--one appropriations bill--freestanding, has been passed in the last 2 years, the Defense appropriations bill last year. There have been Omnibus appropriations bills passed. Then this year, we are going to pass, it looks like, not an Omnibus appropriations bill but simply a continuing resolution; a complete abdication, a complete abandonment of the budget process, of the responsibility--the first responsibility of the Congress, other than defending the country--of setting up a fiscal process for managing the taxpayers' dollars has occurred under the leadership of this Democratic Congress. It is truly the worst record in the last 20 years. Nothing like this has happened where so much that Congress is supposed to do has not been done. No appropriations bills have been brought to the floor of the Senate, and no appropriations bills have passed the Senate and the House. None. We are supposed to pass 12 bills. None have been passed. The debt has gone up over $1 trillion, $1 trillion added to the debt in the last 2 years. The deficit has doubled, and yet there has been no effort at all not only to do the day-to-day responsibility of managing the Government, which, after all, is the responsibility of the Congress, by passing appropriations bills, but to address the issue of the looming crisis in our entitlement accounts--no effort to address entitlement reform or even at the margin to try to control the rate of growth of entitlement programs. Even the most simple ideas which are reasonable and could have been accomplished have not been pursued, ideas such as making wealthy people pay for some portion of their Part D premium. Today, Warren Buffett, who qualifies for a drug benefit under Medicare, does not have to pay for any of that or pays only a marginal amount of that cost compared to what he should be paying as a high- income individual. That adjustment has been ignored. Ideas such as that which make sense that would at least save us some money have not even been brought forward; zero effort in the area of Medicare reform, in the area of Medicaid reform, and in the area of entitlement reform by this Congress, zero effort in the area of controlling spending. Not one program has been reduced, not one program has been eliminated, not one program has been adjusted downward. Everything has gone up and up and up. Thousands of earmarks have been proposed, thousands--7,000 or 11,000, I have forgotten the number. Senator Coburn knows it off the top of his head. But it is so many you can't even keep track of them. It is a true dereliction of duty by this Democratic Congress the way the fiscal house of this country has been managed. They do debt, they do deficits, and they do nothing, and they deserve a D minus when it comes to managing our fiscal house. It is unfortunate because all these costs which we are running up represent radical increases in borrowing which means dramatic burdens for our children and our grandchildren as they have to pay these bills when they come due in the outyears instead of paying as we go, which is the appropriate way to proceed with spending. We are simply borrowing from our children. In fact, the pay-go rules, which were supposed to discipline spending, have been waived, adjusted, and gamed time after time to the point where over $399 billion under this Congress has been spent or put on the books as an obligation which should have all been subject to a pay-go point of order. But those pay-go points of order have been adjusted, waived, or gamed so they did not even get raised or, if they did get raised, they got run over by the majority in this Congress. So the rules which this Congress put in place to try to discipline spending and which we so often hear chest beating about from the other side of the aisle--I am for pay-go--have been eviscerated. I call it ``Swiss-cheese go.'' It has no relevance at all any longer because the spending around here occurs in a manner which is profligate and there is no attempt to adjust spending to reflect revenues, to attempt to bring down the deficit. In fact, the deficit is now double. It is not good news for the American taxpayer. Here we are in a situation where we are facing some very serious fiscal times, and we ought to at least be able to discipline our budgets in a more effective way. We ought to at least do the business of the Congress, which is to pass appropriations bills which are within the budget rather than pass supplemental emergencies which are outside the budget. This is a problem, and it is a significant problem. It is brought about in large part because this Congress has failed to do its job of managing the fiscal house or even taking up the bills which are supposed to manage the fiscal house. There is another subject I want to touch base on--I see the majority leader is here and as a courtesy, I will proceed to those comments so I don't take up too much of his time--and that is the issue of the highway trust fund needing to be replenished to meet obligations which it has incurred. A little bit of history is important, if the majority leader will allow me to proceed briefly to outline the history. We passed something called SAFETEA back in 1995. That bill set out highway spending which was supposed to be paid for from the highway fund, which the highway fund is paid for by gas taxes. But that bill was intentionally structured--intentionally structured--so that the spending would exceed the income. We knew one day during the term of that bill--people thought it would be later in the process--the highway trust fund would be spent out and there would be a problem. Why do we know that? Because that bill included 6,000 earmarks totaling $24 billion which we knew were not going to be able to be totally paid for by gas tax revenues even if the gas tax revenues had maintained themselves.

Mr. GREGG. I thank the Chair. What happened was that the gas tax revenues have fallen because of the increase in gas prices and the American people's appropriate effort to try to conserve their use of gasoline. So the day of reckoning has come earlier, much earlier, than expected, but we knew there was going to be a day of reckoning because the bill was structured to fail. All these 6,000 projects that were put in there, $24 billion of spending we knew was not going to work or be paid for under the present bill. So now the suggestion is that rather than pay for them in a responsible way, we should raid the general fund, take that money and use it in the highway trust fund. The highway trust fund has always been a separate entity. The whole purpose of the highway trust fund was to fund highways and have them have their own stream of revenues to fund them and to not commingle those funds with the general fund. The argument has been made--and it is a straw dog argument of the most extraordinary level--that back in 1998, the highway trust fund lent $8 billion to the general fund, and they are just trying to recover that now as an accounting event. That puts a whole new spin on the concept of accounting. Even the people who did Enron's internal accounting would have found that one a hard sell. That was a movement in 1998 of nothing more than paper. This event is a real addition to the Federal debt of $8 billion. This is real money; that had no real money involved. This has a real effect; that had no real effect involved. So that argument is truly a straw dog argument put out there to try to legitimize a raid on the general fund in order to settle up the highway fund. Now, I know I am going to lose this fight, and I am not trying to stop the fight. I am not trying to stop the event. I haven't suggested we need 60 votes to go through this. What I have suggested--and I will ask unanimous consent to accomplish this--is that we simply have two amendments: One--mine--would put back in place pay-go rules and the Byrd rule prospectively--so it doesn't even affect this event--so this doesn't happen again. Both of those should be disciplining events on how we fund roads, and it is the right procedure. It is not an outrageous request to proceed that way. The other is the Coburn-DeMint amendment, which says that any money that is taken out of the highway fund will be used for building roads or bridges, as I understand it, and not be used for things such as bike paths and basketball arenas. So those are the two amendments; that those amendments be brought up, debated, and voted on in a very short and very constricted timeframe and then we have a final passage vote. The majority leader has asked for an amendment to his proposal, so if either one of these proposals were to pass, it is going to go back to the House. The argument that this is going to slow the process doesn't really have legs because, first off, we may lose both our amendments, but even if we don't lose them, the majority leader has proposed a unanimous- consent request which has an amendment in it, and that amendment will pass because, in effect, it is an effective date amendment. But that will send it back to the House and it will have to be done again, anyway. So as a practical matter, these proposals aren't going to slow the process. It does seem to me it is reasonable to have two amendments and then final passage or three amendments and then final passage rather than just one amendment and have final passage, and do it all within a framework that has a reasonable timeframe.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that the Finance Committee be discharged and the Senate proceed to the immediate consideration of H.R. 6532, the highway trust fund bill, under the following agreement: that the Baucus amendment at the desk changing the enactment date be agreed to and the only other amendments in order be the Gregg amendment on budget discipline and the Coburn on nonessential projects, the text of which is at the desk, with 30 minutes of debate on each amendment and 1 hour on the bill equally divided in the usual form. I further ask unanimous consent that upon disposition of the amendments and following the use or yielding back of the time, the bill, as amended, be read a third time and the Senate proceed to a vote on passage without any intervening action. I further ask unanimous consent that no points of order be waived by virtue of this agreement. So the maximum amount of time that would be involved here would be 2 hours, and then there would be a vote on final passage.

Mr. GREGG. Mr. President, might I inquire of the majority leader----

Mr. GREGG. Mr. President, I ask unanimous consent to proceed for 2 minutes to enter into a dialog with the majority leader and that it not affect the 15 minutes that has been reserved for the Senator from Texas.

Mr. GREGG. Might I inquire of the majority leader, 2 days ago, the majority leader--yesterday--proposed a unanimous-consent request, and I didn't note in that request that he had a recorded vote involved. Also, if I heard his statement correctly, if the Senator from North Dakota were to agree to my amendment, would he be willing to place it into this amendment?

Mr. GREGG. Well, I suspect the Senator knows the position of the Senator from North Dakota well.

Mr. GREGG. Mr. President, I would like to talk to the majority leader about that. I yield the floor.

Mr. GREGG

Mr. GREGG. Reserving the right to object, if the majority leader will allow me to take a minute or so to explain the theory behind the objection, it is this. Essentially, the highway fund was set up with the highway trust fund and road construction to be paid for with revenues from gas receipts. This will be one of the first occasions when the highways' construction will be paid for by taking the money out of the general fund. The only problem is we don't have any money in the general fund. This money will have to be borrowed from our children. It makes no sense from our fiscal responsibility to set this precedent. There are many other ways this can be paid for in a responsible way. Therefore, I do not believe we should start a precedent of borrowing from the general fund in order to pay for highway construction, which historically has been paid out of the highway trust fund. Therefore, on behalf of myself and Senator DeMint, I will be objecting. But I would like to say this. I believe that with a reasonable number of amendments, probably no more than three, and a very tight timeframe, we can address the issues about which I am concerned and about which Senator DeMint is concerned. They would be relevant issues, I would hope. We would run them by the majority leader so he could be reasonably comfortable with their relevance. Mine obviously would be related to paying for it in a more responsible way than borrowing it from our children. At this time, I have to object.

Mr. GREGG. I appreciate the enthusiasm of the Senator from California for her position. I don't think it accurately reflects my position. When you are voting for war costs, you are voting for supporting soldiers in the field. Basically, there is a big difference between the obligation of a Federal government to defend the Nation and support soldiers in the field and the obligation of the Federal Government to borrow from our children in order to do construction which should be paid for from taxes which go into the highway trust fund. That is a fairly significant difference. In fact, the two, as a matter of public policy, have basically no touch point. The issue is, the highway trust fund does not have enough money in it right now to pay for the costs which have been obligated as a result of construction commitments. We knew 3 or 4 years ago, when we passed the highway bill, that as a very practical matter we were setting up this scenario because we put in place thousands--actually, tens of thousands--of projects in that bill which we knew could not be paid for under the projected cash flows into the highway trust fund. We knew this point was going to occur when we passed that bill. So now we are here, and suddenly we hear these statements: Well, I am sorry, we are out of money. So we have to go into the general fund--which doesn't have any money, by the way--and take money out of the general fund and put it in the highway trust fund in order to pay for these costs. Well, who pays for that? That is borrowed debt. That is debt on debt. Our children pay for that. The purpose of the highway trust fund was to build roads and to do it in a fiscally responsible way. If the highway trust fund does not have enough money to build the roads that are proposed, then you either, A, get more money into the highway trust fund; B, take the money from someplace else that is part of the trust fund, such as the mass-transit fund, which was the proposal of the administration initially and which makes probably the most sense here; or, C, you raise more money for the highway trust fund, something I do not happen to support, but that is the responsible way to approach this. You do not go into the general fund and set a precedent of borrowing from the general fund for the purposes of funding the highway trust fund because all that means is our children will get the bill and you will set up a scenario where the next time we get the highway bill, there will be even more projects in it because people will know the relevance of the highway trust fund, and the revenues coming into it, has no relationship to the number of projects you put in the bill because they will know that the precedent has been set that you can raid the general fund for the purposes of the highway trust fund. This is not good policy. It is not good fiscal policy. It has nothing to do, by the way, with funding troops in the field. Now, the Senator from California alleges that I am supporting funding Iraq. By the way, I am not. Iraq reconstruction--I actually put the language in the appropriations bill which stopped money from going for Iraq reconstruction. So don't accuse me of something I didn't do. I have supported funding the troops, but I do not happen to believe we should be sending any more money to the Iraq Government. I think they should be sending us more money, if we get down to the basics here, for all the money we have spent on reconstruction, especially the money that has been stolen. But, in any event, that is a red herring. The issue here is whether we are going to set the terrible precedent of using general fund money to fund the highway trust fund because, believe me, once you open that floodgate, there is no end to it--no end to it--and the next time we get a highway bill around here, there will be no end to the amount of spending that is involved. Now, I understand the construction industry is not really too concerned about that. I mean, they want those dollars and they want them now. If they get access to the general fund, they are probably pretty excited about that. But it is terrible policy. Remember, these projects will not be terminated. The spend-out will continue. It will continue at a slower rate. As money comes into the general fund, it gets spent out of the general fund. That is called--wow, a surprise-- pay as you go. Now, I hear a lot from the other side of the aisle about pay as you go. Well, this is the ultimate test of pay as you go. We should be paying for highway construction as we go or, alternatively, if you really want to start raiding different funds, you should raid within the highway trust fund. There are significant dollars in the mass- transit fund. You could take that money and put it in the highway trust fund if you really wanted to be consistent about funding the transportation needs of this country or, as I said earlier, you could raise the taxes, which I do not happen to support, to go into either one of those funds in order to make this a more responsible fiscal action. But what we are setting here is a precedent that makes no sense at all from a standpoint of fiscal policy. The majority leader is absolutely right. We have been spending money around here in a very profligate way, and regretably it has not been a partisan event, it has been bipartisan. There has been a lot of money spent here that should not have been spent. But that doesn't justify creating a new precedent which will create significant debt for our children, on top of debt which already exists, when we know that is not the policy that was set up under the highway trust fund. Now, if the theory of the chairman of this committee is that the highway trust fund is essentially a nonexistent event, that it is basically something that is there, it is a political statement--you know, the gas taxes should come in and be spent, but if we run out of gas taxes, we go into the general fund--if that is the position of the majority, the chairman of the committee, which appears to be the position, well, then let's abolish the highway trust fund. Let's abolish it. Let's put the gas tax into the general revenue base, and then you can argue, effectively, that it should come from general funds for construction--not necessarily a good policy. In fact, it moves away from good policy. If we wanted a good policy, we would actually have a much more structured capital budget around here, and we would fund it from independent sources such as gas taxes. So we have a difference of opinion. It is a difference of opinion, however, that is pretty significant because it goes to the question of, How does a government spend money when it runs out of money? Does it borrow the money? Does it raise taxes or does it slow its spending to meet its income? And I would suggest that the best way to approach this is to slow spending to meet incomes. The second way to address this is to keep the integrity of the highway trust fund by moving funding around within the highway trust fund. The third way to address this is to raise taxes, which I do not support. But absolutely the worst way to address this is to essentially make the highway trust fund a nonevent, neutralize it, neuter it, and essentially merge it with the general fund, which is what is going to happen as a practical matter if this bill goes forward in this form. Now, I suggest to the majority leader, since I do not have the votes to sustain my position--I recognize that--the influence of the various forces that want to get this money is pretty significant, as always happens around here anyway, but in this case it is even more significant since the White House has changed its position just this week. But I have suggested that we take up this bill, we spend a couple of hours on it, allow myself and Senator DeMint--I think Senator DeMint told me he wanted two amendments--I cannot speak for him, but I believe that is what he said--and that they would be relevant to earmarks, and my amendment would be relative to a better way to pay for this, which would be to pay for this by the transit fund or, alternatively, set up some sort of structure where the general fund gets paid back. But in any event, we could set aside a couple of hours here sometime this week and do it. I mean, we can do that on unanimous consent. I think it is a reasonable way to approach it, and as a very practical matter, it would give those of us who think a fiscally responsible approach at least requires a vote on it the chance to vote on it. I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I thank the Senator from Texas. I wanted to join with him today in addressing this issue because at least in New Hampshire--and I suspect it is true in Texas, too, even though maybe in a different way--the No. 1 issue on the minds of the people is the cost of energy. They are concerned about it when they fill up their car with gasoline, but they are even more concerned about it heading into the winter. People in New Hampshire anticipate winters. We know it is coming. There is not much we can do about it. It is coming. We also know that 60 to 70 percent of the homes in New Hampshire--maybe more--are heated by oil. The price of oil that has to be put in the tanks in order to heat homes has doubled or tripled. A lot of families in New Hampshire, low-income families, but also moderate income families, are going to be extraordinarily stressed to try to meet that energy need and the price of that energy. There are a lot of things that you can maybe do to change your lifestyle. You can maybe drive a little less. Maybe you can take a bus; not so much in New Hampshire because there are not a lot of city areas that have bus districts, although we do have some. But you can adjust your driving. You can downsize your car so you use less gasoline. But if you have a home and you have a family, there is nothing you can do about it. You have to heat that home. You have to stay warm in the winter when the temperature is at zero or even minus degrees and the wind chill is certainly at minus degrees. To do that takes a lot of energy and takes oil. So people are scared. They are scared about how they are going to heat their homes. I believe my No. 1 responsibility as their representative in Washington is try to do something about bringing down the price of that energy. How do we do that? In my opinion, we do it by at least voting in the Senate on the issue of expanding our supply in the United States, with American energy, while also conserving more. Yet we have been blocked now. As the Senator from Texas points out, this will be the seventh time the Democratic Party and the Democratic leadership has tried to move the Congress and the Senate off the issue of trying to bring down oil prices, bring down gasoline prices by expanding American sources and American production by allowing us to drill offshore, by allowing us to use oil shale, by allowing us to expand nuclear power, by allowing us to put an effort into the development of electric cars, by doing a whole series of things. Seven times now the Democratic leadership here has said, no, they do not want to hear about this. They want to talk about issues that are important, but they are nowhere near the importance, at least to my constituents, of what it costs them to fill up their gasoline tanks and what it is going to cost them to fill up their oil tanks this winter. I cannot think of a higher priority as a Congress than to take up this Energy bill and have some votes on these very important issues of whether we open more drilling offshore, whether we use more oil shale, whether we expand our efforts to try to bring online nuclear powerplants, whether we continue our efforts to try to expand electric cars. The Senator from Texas hit the nail on the head. We need to act on these issues, and we should stop this obfuscation which is occurring on the other side of the aisle on this issue. We should get to the essence of the issue, which is produce more American energy.

Mr. GREGG. The Senator makes a truly excellent point. If we want to address the fear low-income people have about the cost of their energy to heat their home, bring down the cost of energy. Address the systematic problem. LIHEAP is an important program. It is a critical program for us in New England. But it is the bandaid. It is not going to the symptom. The symptom is the price of the energy, so that is why we need to vote on it.

Mr. GREGG

Mr. GREGG. The Senator from Texas has been one of the best advocates on the floor for balance, which is what we need. The American people understand the basic common sense of an issue, which is we need to use all the different options we have at hand. We are a nation with great creativity, great ability to be innovative. We are also willing to push the envelope, to try to use technology to improve our situation. Not only do we need to find more, we need to use less. We need also to use our great strength in technology to advance our cause of delivering more American energy. Nuclear power is a classic example of that. We basically created nuclear power, the concept of it, and how to use it in a positive way. Yet for the last 27 years, because of the adamant and, in my opinion, inappropriate opposition of the most activist environmentalist groups in this country, we have not had a new nuclear powerplant application approved. New Hampshire, ironically, was the last State to bring online a nuclear powerplant. That occurred in the late 1980s. That nuclear powerplant was resisted by the Democratic leadership in the State and by the activist environmentalists in the State at a level which was basically civil disobedience. Thousands of people were arrested at the site where the plant was being built. It was delayed for almost 15 years. The cost of it quadrupled--it went up by a factor of 10, I think. What happened in the end was the plant came online. What has happened since the plant has been online? It has produced safe, clean, reliable energy--not only for the people of New Hampshire but for the people of all the Northeast because it is producing so much energy it actually exceeds New Hampshire's needs. As a result, we have had an energy source which has saved us from having to buy thousands and thousands-- millions of barrels of oil. We should be doing that across the country.

Mr. GREGG. That is a good question and it is very important. Nuclear power is clean. It addresses the issue of global warming. It is the most effective energy we have for that. It has no emissions which basically go into the atmosphere and aggravate the issue of global warming, so it is the type of power we want. It is safe and it is ours. We do not have to buy it from some other country. It is very logical we should be aggressively pursuing nuclear power. Again, you have to appreciate the fact that the other side of the aisle and the leadership of the other side of the aisle, especially Senator Obama, are opposed to expanding the nuclear option for our Nation which, in my opinion, is cutting off your nose to spite your face. This is a very safe and usable form of energy which addresses the issue of global climate change in a positive way by still giving Americans American-purchased energy.

Mr. GREGG. He also said, did he not, that we need to use everything. He didn't say don't use drilling; he said we have to drill everywhere we can in the United States, we have to use wind, we have to use solar, we have to use nuclear, we have to use everything, because we have to stop sending $700 billion, as the Senator from Florida mentioned, to people who do not like us--Venezuela and Iran. Let's keep it here, where we can use it to build our economy.

Mr. GREGG. Well, the point the Senator makes is extraordinarily valid. But there is an ancillary issue here, which is, not only do we need the energy to try to increase supplies and reduce the price, but it seems incomprehensible that we would not want to put in place programs which would relieve us from sending Americans' hard-earned dollars, you know, folks who are working every day, sending those dollars to Venezuela and Iran and other countries which hate us and want to do us harm. It seems that common sense would want us to produce American energy if we have American energy available to us and we can produce it in an environmentally sound way rather than send the money overseas.

Mr. GREGG. The simple answer is that it does not produce any more energy. Yes, there is probably speculation in the market. Yes, we should have more transparency and more enforcement to make sure the market is not being abused. But that is not going to produce any more energy. We know there are 2.5 billion people between India and China, and they are starting to have much more high-quality lives, and so they are starting to buy cars, they are starting to buy motor scooters, they are starting to use energy. As a result, the demand for energy is accelerating dramatically. That is 2.2 billion more people than we have in the United States. So the simple math of it shows us we have to find more energy and we have to use less energy. That is why amendments brought to the floor which are directed at finding more energy--such as oil shale, drilling offshore, and nuclear--need to be addressed. We need to discuss them. I cannot understand why the other side of the aisle refuses to do that. I asked my staff to put together a chart which would summarize this in the most simple and stark way. Here is the chart. It is a big zero. It is a zero. Zero amendments are being allowed here. Zero new oil is being produced as a result of that. Zero new gas, zero new nuclear plants. Until we have some amendments on this floor which allow us to address these issues, we are still going to have zero as being the answer of the other party to how you produce more oil and more energy. It is not right. We should be getting down to the issue of what the American people want, which is to get the price of energy down by producing more and using less and producing more American energy rather than buying it from other countries that do not like us.