Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, as chairman of the Budget Committee, I regularly comment on appropriations bills that are brought to the Senate for consideration and present the fiscal comparisons and budgetary data. I believe it is useful to expand that practice, when required, for authorization bills that we consider. S. 2766, the national Defense authorization bill for fiscal year 2007, is, of course, one of the most important bills the Congress brings up on an annual basis. As Senators know, the Budget Committee does not enforce the levels of the authorizations of appropriations contained in the bill, even though they constitute the vast majority of programs and projects addressed. Ultimately, those authorizations of appropriations only spend money once the Appropriations Committee acts on its Defense bill. But there is another category of spending in the Defense authorization bill which the Budget Committee does enforce because passage of this bill and its signature by the President would create automatic spending. By that, I mean the direct spending or mandatory spending provisions in the bill. According to a Congressional Budget Office estimate of June 9, 2006, S. 2766 as reported increases budget authority for mandatory spending by $458 million in fiscal year 2007 and $1.508 billion over the next 5 years. Corresponding outlays are $307 million in fiscal year 2007 and $1.416 billion over the next 5 years. Mr. President, I ask unanimous consent that a table of direct spending for S. 2766 excerpted from CBO's official cost estimate be printed in the Record.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that I be allowed to proceed as if in morning business for up to 25 minutes, and that after I have spoken Senator Nelson of Florida be recognized.

Mr. GREGG. Mr. President, I move to reconsider the vote, and to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GREGG

Mr. GREGG. Mr. President, I rise to introduce a bill which is sponsored by myself and 20 other Members of the Senate. The purpose of this bill is to put some control over spending--or at least put procedures in--to allow us as a Congress to begin to control spending. I think we all recognize that in the short run we are headed toward a budget that looks like it may actually move toward balance. We have seen some very significant, positive gains. A deficit that was supposed to be about $425 billion this year is down to about $300 billion, and it may well go below that. That does not solve our problem even though we have gotten things moving the right way because in the outyears we face a fiscal crisis. That is reflected in this chart. The fact is, there is facing this country a situation where we have a generation known as the baby boom generation which is such a large generation that it has basically overwhelmed the systems of America at each point in its evolution. It started out in the early 1950s and late 1940s. It overwhelmed the school systems it was so big. As it moved forward in the 1960s, it created the civil rights movement, and in the 1980s and 1990s it created the greatest prosperity in the history of our country as a result of its size and productivity. But now that generation is beginning to retire. It will start to retire in the year 2008. It will be fully retired by the year 2020. It will be the largest retired generation in the history of our Nation by a factor of two. There will essentially be 70 million people retiring during that period. What are the implications? The implications are rather severe for our Nation's fiscal policy, and especially for our children. All of our retirement systems in this Nation--Social Security, Medicare, Medicaid--all our major safety nets were built around the concept created by FDR, Franklin Delano Roosevelt, that there would always be many more people working than retiring. In fact, in the early 1950s there were about 12 people working and paying into the Social Security system for every one person taking it out of Social Security. Today there are about three and a half people working for every one person who is retired. By the years 2020 to 2025, there will only be two people working for every one person taking out of the system. That means this pyramid concept goes to a rectangle, and our children and our grandchildren who will then be the working people in America will not be able to support the benefit structure which is in place for the retired. This chart reflects the dramatic effect of this situation rather starkly. The blue line represents what percent of gross national product the Federal Government usually spends. Historically, since World War II, the Federal Government has spent about 20 percent of the gross national product. The red line represents three programs in the Federal process: Social Security, Medicare, and Medicaid. The red line grows dramatically beginning in about the year 2008 and proceeds at an exponential rate of growth, so that by the years 2025 to 2028 those three programs alone will actually cost more than 20 percent of the gross national product of America. What does that mean? It means if we were to spend the historic amount we have spent on the Federal Government, those three programs would use up all that money and there would be no money available for education, for national defense, for laying out roads, for health care for everyone else, other than those who are retired, or for anything else the Federal Government is supposed to do. Everything would have to be spent on Social Security, Medicare, and Medicaid. It does not stop there. It continues up at a rather dramatic movement. The point, of course, is that our children will have to pay the cost. They will find themselves confronted with a dramatic increase in tax burden unless we address the cost of those programs from the spending side. The point, also, is we really cannot tax our way out of this problem. We cannot possibly raise taxes high enough to keep up with the cost of these programs and still have a viable country. If we did that, we would eliminate the ability of our children to buy a new home, to send their kids to college, to even buy cars. The lifestyle of an American, our children and our grandchildren, would be dramatically reduced-- their quality of life--were we to raise taxes to try to keep up with this rate of growth of spending. Again, it is not a revenue problem; it is a spending problem. That is important to stress. In fact, if you look at the revenues over the last few years, this reinforces this point. Revenues dropped precipitously at the beginning of this President's term for two reasons. One, we had the largest bubble in the history of the world, the Internet bubble, back in the late 1990s, where we were essentially producing false income, paper returns through the issuance of stock which wasn't backed up by productive companies. This bubble burst, and it was the biggest bubble in history, bigger than the tulip or south seas bubble. And the effect of it was to cause our economy to retrench. Then we had the attack of September 11, which dramatically impacted our psyche as a nation. Obviously, it had a horrific effect in the area of loss of lives, but it had a dramatic effect on our economy. Those two back-to-back events basically forced a significant drop in revenues. So President Bush came in and said: Let's try to get out of this recession--and it was a shallow recession but would have headed a lot deeper--by cutting taxes and giving people an incentive to be more productive. We have heard a lot from the other side about how it is terrible we cut taxes at the beginning of this administration. But what those tax cuts did was create an atmosphere where people who wanted to be entrepreneurial, who wanted to go out and take risks, who were willing to put their own personal efforts and their dollars behind an effort to be productive, and, thus, create jobs, did exactly that. Then the economy started to recover. We had 39 straight months of recovery. We had one of the largest expansions of the post-World-War II period. The practical effect of that is that we have created more economic activity, created more jobs, and created more revenue to the Federal Government. So in the last 2 years, the revenue to the Federal Government has actually jumped greater in a 2-year period than at any time in the post-World- War II period. Each of the last 2 years has had historic increases of revenues for the Federal Government. We are at a point where revenues are essentially at the same place they would be over history as a percent of gross national product. We are essentially generating about the same amount of revenue we have always generated to the Federal Government. The other side of the aisle says: Let's raise taxes some more. That is not going to help because we are already generating as much revenue as we usually generate. We are doing it the right way, with a fair tax system, telling entrepreneurs to make jobs and create risks. We have created jobs and given revenues to the Federal Government. The real issue is, you have to be willing to address spending, which is what the chart shows. A group on our side of the aisle said: How do you do this? Probably the way to do it is to put in place a series of processes in the Senate and in the House, which basically forced the Congress to address the public policy issues of reducing the rate of growth and spending for the Federal Government. This is very difficult for an elected body. We know it is a natural tendency of an elected body to spend more money because people come to you and say: We need this for that. Usually the stories are compelling and the purposes are good. The simple fact is, we cannot afford to spend all the money that people want to spend, and we need to have some mechanisms around here which energize an atmosphere of producing fiscal responsibility, delivering government that is efficient, delivering government that is effective, delivering government that people get what they expect, and, also, get their dollars used efficiently and effectively to produce a government that works. So we are suggesting a program that basically renews, redesigns; it reforms, it rebuilds the Federal system relative to how we are going to spend money and makes sure we spend it effectively so we give people an affordable government, something that delivers the type of services they need but does it in a way that can be afforded. That is our goal. Our goal, essentially, is to contain spending so that we are able to deliver quality government and still pass on to our children a government that is affordable, a tax burden they can afford that won't overwhelm them and will give them the opportunity to have as good a life as we have had. The proposal we have come up with has a variety of different elements to accomplish this. First, we follow the ideas put forward by the President, which has eight basic elements. It is a very extensive reform package, renewal package, redesign package, rebuilding package. The first element is what I call fast-track rescission. I suppose that is too technical. The President calls it the line-item veto. But it says the President has the opportunity to look at bills we have passed in the Senate and say: Listen, we do not need to spend money on that item. That is really an item of earmark, or maybe you might call it pork, or it is just simply not what we need. It is not what the American people have to have their dollars spent on. He gets to put together a package of items, and he sends them to us. He says: These are the items I don't think we need. We think the American people don't need them. We don't think the Government can afford them, and you, the Congress, can take another look at them and vote them up or down. Fast- track rescission. We have to take the vote. It is an opportunity for the executive branch to have a say and for the legislative branch to take a second look. We have done it in a way so neither branch is prejudiced as to our constitutional role which is very important. The second thing we have done is we have reinstated statutory caps. What is that? It means that we say every year how much the Federal Government is going to spend and we lock it down so that if we spend over that amount we have to go back and cut somewhere else to bring us down to that number. What has happened around here, we have said we are going to spend X dollars. That is called a cap. But we have not had any enforcement mechanism behind the cap. Those lapsed in 2002. So when we exceed the cap, you get 60 votes and people say: Fine, we will spend the money anyway, even though we said we were not going to spend that much money, and it is ignored. This puts in place a system where we have to be responsible to the number we set out as to what the Federal Government should spend. It is basically truth in budgeting and forces budgeting to be effective and responsive. The third item we put in, we reduce the deficit so it will move to zero by 2012. This is done by saying essentially this: The deficit today is X percent of gross national product. We are going to say that the deficit should be dropped as a percent of gross national product every year until we get to about 2012 where we expect it to be basically no deficit. If we exceed those numbers--in other words, if the deficit exceeds that percent of gross national product which we set out in the bill--and these numbers are historical numbers and they are obtainable numbers. In fact, in the first 2 years, the numbers we have set out are basically above where the actual deficit looks like it will hit, and it is about the third and fourth year we may have some issues to keep the deficit moving down--but if the deficit is not moving down, we put in place a process called reconciliation, directed at entitlement spending. The problem we have as a Federal Government isn't the discretionary side of the ledger. That is spending that occurs every year. Every year you have to spend X dollars on defense, X dollars on education, and you can make a choice regarding how much you will spend here, how much you spend there. Nondefense spending in those accounts has been flat for the last few years, essentially flat if you factor in inflation. The real growth of the Federal Government has been in these accounts that are entitlement accounts, mandatory accounts which I had on the first chart, three of the major ones. They represent, along with the Federal debt, about 60 percent of Federal spending. What this bill says is that essentially you have to go back and take a look at those accounts if we are not meeting our deficit targets and bring them into line so we will meet those deficit targets. Now, in order to help accomplish this, this proposal also includes an entitlement commission. There have been a lot of commissions around here and everyone is a little tired of commissions. This commission is different. This commission says take a look at the entitlement accounts of the Federal Government, report back to the Congress, and Congress must act on your proposal. We actually put in place a policy procedure to try to correct the entitlement issue. Then we put in place a budgeting procedure which allows us to legislate changes if the entitlement improvements are not accomplishing our goals. The purpose is to make these entitlement programs affordable for our children while they still maintain a quality lifestyle for those who are retired. That can be and should be able to be accomplished. But it takes a Congress being willing to step up to the plate and doing it. So far, we have not been willing to do that. We have been burying our head in the sand on that issue. Another element in this proposal is a BRAC commission, a proposal from Senator Brownback, which essentially looks at the whole Government, independent of the Defense Department, which was looked at under its own BRAC commission. And if you recall, it looked at the entire Defense Department and decided what the Defense Department needed and didn't need and set up a package and we voted on it as a package. This is a ``BRAC Commission'' for the Government with very strong, thoughtful people being appointed to the Commission, the same way the BRAC Commission was set up relative to the Defense Department. We will be able to take a look at functions of the Government which maybe should be eliminated or reduced or significantly changed. It is a good proposal. It is also a proposal that includes biennial budgeting--an idea that is strongly supported by the Senator from Alabama, Mr. Sessions, who is managing the bill on the floor right now, and the Senator from New Mexico--so we can have a budget process where we are not always looking at the budget every year and everybody spinning their wheels around the budget but, rather, having a year where we develop a budget and a year where we do a lot more oversight. That is the theory behind that, so we can become more efficient. Finally, it has reforms to what is known as the reconciliation process. The reconciliation process is the teeth under which we accomplish savings in the budget process. But it can also, unfortunately, be used for expanding spending if it is not handled properly. So these reforms make it clear that reconciliation is primarily for the purposes of controlling spending, not of expanding spending. So the goal is simple. The goal is to put in place a package which will allow us as a Congress to step up and address the issue of overspending. That is why we call it SOS, ``stop overspending.'' The purpose of that goal is to be able to pass on to our children a government that is affordable, that continues to deliver the services people expect, continues to give high-quality services but does it in an affordable way so our children's quality of life is not overwhelmed by the burden of a government that is trying to support a retired generation that is huge. Again, I must stress, that you cannot do this on the tax side. You cannot solve the issues of the deficit, you cannot solve the issues of entitlement concerns on the tax side. There is simply too much programmatic commitment in the pipeline to accomplish that. Let me give you a couple numbers to highlight that fact. The General Accounting Office--the comptroller of the Government--has told us there is presently pending relative to entitlement responsibility for retired people an obligation which we don't know how we are going to pay for-- that is called an unfunded liability--of $46 trillion; and that is ``trillion'' with a ``T.'' So that is $46 trillion of responsibility that we have put on the books in costs that we don't really know how we are going to pay for. I don't know what $1 trillion is. It is very hard to comprehend $1 trillion. But just to put it in some sort of context, since the beginning of this country, since our Revolution, we have paid something like $43 trillion in taxes. So all the taxes paid since this country started would not pay for the bills we have on the books for our upcoming retired generation. Or to put it in another context, if you took all the assets owned in America today--all the cars, all the homes, all the stock, all the small businesses, all the big businesses--and totaled them up, their total is about $47 trillion in net value. So we have on the books a liability that is essentially the same as the net worth of our Nation. That is a serious problem, and you cannot deal with that problem by simply raising taxes. The other side of the aisle has not put forward any substantive ideas in this area relative to spending. They have suggested a proposal called pay-go, which is a stalking-horse for tax increases. Fine. That is their position: We should raise taxes to address all problems. But we know from the numbers that are now coming in at the Treasury that we are already taxing Americans at a level which is at our historic level, our traditional level, and that revenues to the Federal Government are jumping significantly because of the good tax policies we have in place, the fair tax policies we have in place. So we know you cannot solve this problem by continuing to raise taxes on the American people. The total tax burden to the American people today, including State, local, and Federal, is almost at a historic high. How much higher can you put that tax burden on the American people? No, you cannot do it on that side of the ledger. In fact, what we have proven is you generate more revenues by giving people an incentive to be productive and to go out and create jobs by having a fair and reasonable tax rate rather than jumping tax rates to the point where people have a disincentive to be productive and thus start to reduce revenues to the Federal Government. That was proven by John Kennedy, confirmed by Ronald Reagan, and now confirmed again by George W. Bush. It should be accepted policy around here, but it is rejected by the other side of the aisle, which still subscribes to this 1930s philosophy of governance, which is that you can always raise taxes to meet any problem. No. The problem is that we need to be willing to step up and address spending. This package, if it were to pass in its entirety--I hope the other side will not obstruct it coming to the floor. We hope to mark it up in Budget next week and report it out, and hope the other side will let us take it up. Let's have a free-flowing debate out here on the floor about how you address this issue. The outyear threat to our children--which is a function of the fact there is a baby boom generation floating around here that is huge--is not going to go away and is going to demand significant services which will cost a dramatic amount of money. Our proposal is comprehensive and extensive. It is a rebuilding, retooling approach toward how we manage this Congress and especially our budgets. It is a constructive approach, one that is committed toward delivering an affordable and effective government and a government that does not overburden our children and our grandchildren with taxes. So it will lead to a balanced budget, and it will lead to a government that is affordable. I thank all my colleagues who have joined me in this effort, and I do hope we can move it forward.

Mr. GREGG. Mr. President, I yield to the Senator from Alabama.

Mr. GREGG. No.

Mr. GREGG. Absolutely not. In fact, under most scenarios, the current rate of spending on almost all of these major programs--such as Medicare, Social Security, and Medicaid--would rise significantly; they just would not rise as fast. Medicare, for example, would probably, over this 5-year period, rise by about 40 percent, instead of 43 percent--something like that. Those are numbers off the top of my head, but those are the types of numbers we are talking about. You are talking about increased spending but at a slower rate and affordable.

Mr. GREGG. Mr. President, the Senator from Alabama is absolutely right. We do not have to cut anywhere. All we have to do is slow the rate of growth so it is an affordable rate of growth because the compounding effect of slowing these rates of growth is huge.

Mr. GREGG. Mr. President, the Senator from Alabama is correct. The rate of growth of revenues to the Federal Government last year was about 14 percent. This year, through the first 6 months, it was about 11 percent and continues to grow dramatically. That is a function of the fact that we now have a tax policy which encourages people to go out and take risks and create jobs, which creates revenue.

Mr. GREGG

Mr. GREGG. Mr. President, I rise to introduce a bill which is sponsored by myself and 20 other Members of the Senate. The purpose of this bill is to put some control over spending--or at least put procedures in--to allow us as a Congress to begin to control spending. I think we all recognize that in the short run we are headed toward a budget that looks like it may actually move toward balance. We have seen some very significant, positive gains. A deficit that was supposed to be about $425 billion this year is down to about $300 billion, and it may well go below that. That does not solve our problem even though we have gotten things moving the right way because in the outyears we face a fiscal crisis. That is reflected in this chart. The fact is, there is facing this country a situation where we have a generation known as the baby boom generation which is such a large generation that it has basically overwhelmed the systems of America at each point in its evolution. It started out in the early 1950s and late 1940s. It overwhelmed the school systems it was so big. As it moved forward in the 1960s, it created the civil rights movement, and in the 1980s and 1990s it created the greatest prosperity in the history of our country as a result of its size and productivity. But now that generation is beginning to retire. It will start to retire in the year 2008. It will be fully retired by the year 2020. It will be the largest retired generation in the history of our Nation by a factor of two. There will essentially be 70 million people retiring during that period. What are the implications? The implications are rather severe for our Nation's fiscal policy, and especially for our children. All of our retirement systems in this Nation--Social Security, Medicare, Medicaid--all our major safety nets were built around the concept created by FDR, Franklin Delano Roosevelt, that there would always be many more people working than retiring. In fact, in the early 1950s there were about 12 people working and paying into the Social Security system for every one person taking it out of Social Security. Today there are about three and a half people working for every one person who is retired. By the years 2020 to 2025, there will only be two people working for every one person taking out of the system. That means this pyramid concept goes to a rectangle, and our children and our grandchildren who will then be the working people in America will not be able to support the benefit structure which is in place for the retired. This chart reflects the dramatic effect of this situation rather starkly. The blue line represents what percent of gross national product the Federal Government usually spends. Historically, since World War II, the Federal Government has spent about 20 percent of the gross national product. The red line represents three programs in the Federal process: Social Security, Medicare, and Medicaid. The red line grows dramatically beginning in about the year 2008 and proceeds at an exponential rate of growth, so that by the years 2025 to 2028 those three programs alone will actually cost more than 20 percent of the gross national product of America. What does that mean? It means if we were to spend the historic amount we have spent on the Federal Government, those three programs would use up all that money and there would be no money available for education, for national defense, for laying out roads, for health care for everyone else, other than those who are retired, or for anything else the Federal Government is supposed to do. Everything would have to be spent on Social Security, Medicare, and Medicaid. It does not stop there. It continues up at a rather dramatic movement. The point, of course, is that our children will have to pay the cost. They will find themselves confronted with a dramatic increase in tax burden unless we address the cost of those programs from the spending side. The point, also, is we really cannot tax our way out of this problem. We cannot possibly raise taxes high enough to keep up with the cost of these programs and still have a viable country. If we did that, we would eliminate the ability of our children to buy a new home, to send their kids to college, to even buy cars. The lifestyle of an American, our children and our grandchildren, would be dramatically reduced-- their quality of life--were we to raise taxes to try to keep up with this rate of growth of spending. Again, it is not a revenue problem; it is a spending problem. That is important to stress. In fact, if you look at the revenues over the last few years, this reinforces this point. Revenues dropped precipitously at the beginning of this President's term for two reasons. One, we had the largest bubble in the history of the world, the Internet bubble, back in the late 1990s, where we were essentially producing false income, paper returns through the issuance of stock which wasn't backed up by productive companies. This bubble burst, and it was the biggest bubble in history, bigger than the tulip or south seas bubble. And the effect of it was to cause our economy to retrench. Then we had the attack of September 11, which dramatically impacted our psyche as a nation. Obviously, it had a horrific effect in the area of loss of lives, but it had a dramatic effect on our economy. Those two back-to-back events basically forced a significant drop in revenues. So President Bush came in and said: Let's try to get out of this recession--and it was a shallow recession but would have headed a lot deeper--by cutting taxes and giving people an incentive to be more productive. We have heard a lot from the other side about how it is terrible we cut taxes at the beginning of this administration. But what those tax cuts did was create an atmosphere where people who wanted to be entrepreneurial, who wanted to go out and take risks, who were willing to put their own personal efforts and their dollars behind an effort to be productive, and, thus, create jobs, did exactly that. Then the economy started to recover. We had 39 straight months of recovery. We had one of the largest expansions of the post-World-War II period. The practical effect of that is that we have created more economic activity, created more jobs, and created more revenue to the Federal Government. So in the last 2 years, the revenue to the Federal Government has actually jumped greater in a 2-year period than at any time in the post-World- War II period. Each of the last 2 years has had historic increases of revenues for the Federal Government. We are at a point where revenues are essentially at the same place they would be over history as a percent of gross national product. We are essentially generating about the same amount of revenue we have always generated to the Federal Government. The other side of the aisle says: Let's raise taxes some more. That is not going to help because we are already generating as much revenue as we usually generate. We are doing it the right way, with a fair tax system, telling entrepreneurs to make jobs and create risks. We have created jobs and given revenues to the Federal Government. The real issue is, you have to be willing to address spending, which is what the chart shows. A group on our side of the aisle said: How do you do this? Probably the way to do it is to put in place a series of processes in the Senate and in the House, which basically forced the Congress to address the public policy issues of reducing the rate of growth and spending for the Federal Government. This is very difficult for an elected body. We know it is a natural tendency of an elected body to spend more money because people come to you and say: We need this for that. Usually the stories are compelling and the purposes are good. The simple fact is, we cannot afford to spend all the money that people want to spend, and we need to have some mechanisms around here which energize an atmosphere of producing fiscal responsibility, delivering government that is efficient, delivering government that is effective, delivering government that people get what they expect, and, also, get their dollars used efficiently and effectively to produce a government that works. So we are suggesting a program that basically renews, redesigns; it reforms, it rebuilds the Federal system relative to how we are going to spend money and makes sure we spend it effectively so we give people an affordable government, something that delivers the type of services they need but does it in a way that can be afforded. That is our goal. Our goal, essentially, is to contain spending so that we are able to deliver quality government and still pass on to our children a government that is affordable, a tax burden they can afford that won't overwhelm them and will give them the opportunity to have as good a life as we have had. The proposal we have come up with has a variety of different elements to accomplish this. First, we follow the ideas put forward by the President, which has eight basic elements. It is a very extensive reform package, renewal package, redesign package, rebuilding package. The first element is what I call fast-track rescission. I suppose that is too technical. The President calls it the line-item veto. But it says the President has the opportunity to look at bills we have passed in the Senate and say: Listen, we do not need to spend money on that item. That is really an item of earmark, or maybe you might call it pork, or it is just simply not what we need. It is not what the American people have to have their dollars spent on. He gets to put together a package of items, and he sends them to us. He says: These are the items I don't think we need. We think the American people don't need them. We don't think the Government can afford them, and you, the Congress, can take another look at them and vote them up or down. Fast- track rescission. We have to take the vote. It is an opportunity for the executive branch to have a say and for the legislative branch to take a second look. We have done it in a way so neither branch is prejudiced as to our constitutional role which is very important. The second thing we have done is we have reinstated statutory caps. What is that? It means that we say every year how much the Federal Government is going to spend and we lock it down so that if we spend over that amount we have to go back and cut somewhere else to bring us down to that number. What has happened around here, we have said we are going to spend X dollars. That is called a cap. But we have not had any enforcement mechanism behind the cap. Those lapsed in 2002. So when we exceed the cap, you get 60 votes and people say: Fine, we will spend the money anyway, even though we said we were not going to spend that much money, and it is ignored. This puts in place a system where we have to be responsible to the number we set out as to what the Federal Government should spend. It is basically truth in budgeting and forces budgeting to be effective and responsive. The third item we put in, we reduce the deficit so it will move to zero by 2012. This is done by saying essentially this: The deficit today is X percent of gross national product. We are going to say that the deficit should be dropped as a percent of gross national product every year until we get to about 2012 where we expect it to be basically no deficit. If we exceed those numbers--in other words, if the deficit exceeds that percent of gross national product which we set out in the bill--and these numbers are historical numbers and they are obtainable numbers. In fact, in the first 2 years, the numbers we have set out are basically above where the actual deficit looks like it will hit, and it is about the third and fourth year we may have some issues to keep the deficit moving down--but if the deficit is not moving down, we put in place a process called reconciliation, directed at entitlement spending. The problem we have as a Federal Government isn't the discretionary side of the ledger. That is spending that occurs every year. Every year you have to spend X dollars on defense, X dollars on education, and you can make a choice regarding how much you will spend here, how much you spend there. Nondefense spending in those accounts has been flat for the last few years, essentially flat if you factor in inflation. The real growth of the Federal Government has been in these accounts that are entitlement accounts, mandatory accounts which I had on the first chart, three of the major ones. They represent, along with the Federal debt, about 60 percent of Federal spending. What this bill says is that essentially you have to go back and take a look at those accounts if we are not meeting our deficit targets and bring them into line so we will meet those deficit targets. Now, in order to help accomplish this, this proposal also includes an entitlement commission. There have been a lot of commissions around here and everyone is a little tired of commissions. This commission is different. This commission says take a look at the entitlement accounts of the Federal Government, report back to the Congress, and Congress must act on your proposal. We actually put in place a policy procedure to try to correct the entitlement issue. Then we put in place a budgeting procedure which allows us to legislate changes if the entitlement improvements are not accomplishing our goals. The purpose is to make these entitlement programs affordable for our children while they still maintain a quality lifestyle for those who are retired. That can be and should be able to be accomplished. But it takes a Congress being willing to step up to the plate and doing it. So far, we have not been willing to do that. We have been burying our head in the sand on that issue. Another element in this proposal is a BRAC commission, a proposal from Senator Brownback, which essentially looks at the whole Government, independent of the Defense Department, which was looked at under its own BRAC commission. And if you recall, it looked at the entire Defense Department and decided what the Defense Department needed and didn't need and set up a package and we voted on it as a package. This is a ``BRAC Commission'' for the Government with very strong, thoughtful people being appointed to the Commission, the same way the BRAC Commission was set up relative to the Defense Department. We will be able to take a look at functions of the Government which maybe should be eliminated or reduced or significantly changed. It is a good proposal. It is also a proposal that includes biennial budgeting--an idea that is strongly supported by the Senator from Alabama, Mr. Sessions, who is managing the bill on the floor right now, and the Senator from New Mexico--so we can have a budget process where we are not always looking at the budget every year and everybody spinning their wheels around the budget but, rather, having a year where we develop a budget and a year where we do a lot more oversight. That is the theory behind that, so we can become more efficient. Finally, it has reforms to what is known as the reconciliation process. The reconciliation process is the teeth under which we accomplish savings in the budget process. But it can also, unfortunately, be used for expanding spending if it is not handled properly. So these reforms make it clear that reconciliation is primarily for the purposes of controlling spending, not of expanding spending. So the goal is simple. The goal is to put in place a package which will allow us as a Congress to step up and address the issue of overspending. That is why we call it SOS, ``stop overspending.'' The purpose of that goal is to be able to pass on to our children a government that is affordable, that continues to deliver the services people expect, continues to give high-quality services but does it in an affordable way so our children's quality of life is not overwhelmed by the burden of a government that is trying to support a retired generation that is huge. Again, I must stress, that you cannot do this on the tax side. You cannot solve the issues of the deficit, you cannot solve the issues of entitlement concerns on the tax side. There is simply too much programmatic commitment in the pipeline to accomplish that. Let me give you a couple numbers to highlight that fact. The General Accounting Office--the comptroller of the Government--has told us there is presently pending relative to entitlement responsibility for retired people an obligation which we don't know how we are going to pay for-- that is called an unfunded liability--of $46 trillion; and that is ``trillion'' with a ``T.'' So that is $46 trillion of responsibility that we have put on the books in costs that we don't really know how we are going to pay for. I don't know what $1 trillion is. It is very hard to comprehend $1 trillion. But just to put it in some sort of context, since the beginning of this country, since our Revolution, we have paid something like $43 trillion in taxes. So all the taxes paid since this country started would not pay for the bills we have on the books for our upcoming retired generation. Or to put it in another context, if you took all the assets owned in America today--all the cars, all the homes, all the stock, all the small businesses, all the big businesses--and totaled them up, their total is about $47 trillion in net value. So we have on the books a liability that is essentially the same as the net worth of our Nation. That is a serious problem, and you cannot deal with that problem by simply raising taxes. The other side of the aisle has not put forward any substantive ideas in this area relative to spending. They have suggested a proposal called pay-go, which is a stalking-horse for tax increases. Fine. That is their position: We should raise taxes to address all problems. But we know from the numbers that are now coming in at the Treasury that we are already taxing Americans at a level which is at our historic level, our traditional level, and that revenues to the Federal Government are jumping significantly because of the good tax policies we have in place, the fair tax policies we have in place. So we know you cannot solve this problem by continuing to raise taxes on the American people. The total tax burden to the American people today, including State, local, and Federal, is almost at a historic high. How much higher can you put that tax burden on the American people? No, you cannot do it on that side of the ledger. In fact, what we have proven is you generate more revenues by giving people an incentive to be productive and to go out and create jobs by having a fair and reasonable tax rate rather than jumping tax rates to the point where people have a disincentive to be productive and thus start to reduce revenues to the Federal Government. That was proven by John Kennedy, confirmed by Ronald Reagan, and now confirmed again by George W. Bush. It should be accepted policy around here, but it is rejected by the other side of the aisle, which still subscribes to this 1930s philosophy of governance, which is that you can always raise taxes to meet any problem. No. The problem is that we need to be willing to step up and address spending. This package, if it were to pass in its entirety--I hope the other side will not obstruct it coming to the floor. We hope to mark it up in Budget next week and report it out, and hope the other side will let us take it up. Let's have a free-flowing debate out here on the floor about how you address this issue. The outyear threat to our children--which is a function of the fact there is a baby boom generation floating around here that is huge--is not going to go away and is going to demand significant services which will cost a dramatic amount of money. Our proposal is comprehensive and extensive. It is a rebuilding, retooling approach toward how we manage this Congress and especially our budgets. It is a constructive approach, one that is committed toward delivering an affordable and effective government and a government that does not overburden our children and our grandchildren with taxes. So it will lead to a balanced budget, and it will lead to a government that is affordable. I thank all my colleagues who have joined me in this effort, and I do hope we can move it forward.

Mr. GREGG. Mr. President, I yield to the Senator from Alabama.

Mr. GREGG. No.

Mr. GREGG. Absolutely not. In fact, under most scenarios, the current rate of spending on almost all of these major programs--such as Medicare, Social Security, and Medicaid--would rise significantly; they just would not rise as fast. Medicare, for example, would probably, over this 5-year period, rise by about 40 percent, instead of 43 percent--something like that. Those are numbers off the top of my head, but those are the types of numbers we are talking about. You are talking about increased spending but at a slower rate and affordable.

Mr. GREGG. Mr. President, the Senator from Alabama is absolutely right. We do not have to cut anywhere. All we have to do is slow the rate of growth so it is an affordable rate of growth because the compounding effect of slowing these rates of growth is huge.

Mr. GREGG. Mr. President, the Senator from Alabama is correct. The rate of growth of revenues to the Federal Government last year was about 14 percent. This year, through the first 6 months, it was about 11 percent and continues to grow dramatically. That is a function of the fact that we now have a tax policy which encourages people to go out and take risks and create jobs, which creates revenue.

Mr. GREGG

Mr. GREGG. Will the Senator yield?

Mr. GREGG. Will the Senator allow me to propound a unanimous consent request for the purpose of getting time? I ask unanimous consent that upon all time being yielded back or all time being used relative to the supplemental, that I be recognized for 15 minutes under morning business.

Mr. GREGG. I withdraw my request, then. I find that to be a request that has very little relevance.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that after I speak Senator Dorgan be recognized, and then that Senator Vitter be recognized.

Mr. GREGG. Mr. President, I rise to speak a little about the supplemental appropriations bill, which is now pending. I want to begin by congratulating the Senator from Mississippi, Mr. Cochran, for the extraordinary job he did in producing this bill. When it left the Senate, it was around $105 billion. It comes back to us from conference at $94.2 billion or $94.3 billion--I forget the exact number. It was not easy to bring it down from the Senate position to what was acceptable to the President and to the House. It was really a result of Senator Cochran simply saying that we are going to make these difficult decisions and we are going to have a bill that meets the conditions the President laid down for our spending responsibility. He deserves a great deal of congratulations and respect for having accomplished that. Within the bill, he has included also an issue which I am interested in as chairman of the Budget Committee. It is what is called a ``deeming resolution.'' It sets the amount of money that can be spent on the discretionary side of the budget. That is those accounts that we appropriate, on which we spend every year, and which are automatic expenditures for things like education and some of the health care accounts and national defense are some of the big ones, as is homeland security. This deeming resolution has set a number of $873 billion, which I think is a very responsible number, which the President sent up in his budget, and the number the House had in their budget. It wasn't the number that left the Senate when we passed our budget. One of the Senators who spoke before me from the other side was upset that the number that passed the Senate was not included in the deeming resolution, which is a fairly ironic position for anybody to take since they voted against the budget as it left the Senate. In any event, the deeming resolution as it is in this budget is the number that was agreed to between the Republican leadership of the Senate and the House, and it was the number that the President felt was appropriate. It will be a difficult number to obtain, there is no question. It represents significant fiscal restraint. It is a clear marker that we are going to try to restrain the rate of growth of the discretionary side of the budget, which is critical to putting in place fiscal responsibility. I think it is important for people to know that, yes, we presently have a very large deficit. But this deficit is coming down rather precipitously from where it was projected to be 6 months ago. It was projected that we would have a deficit of well over $400 billion. We are projecting this year that it will be in the $300 billion range. That is a very positive move in the right direction. Part of that move is a function of the fact that we have started to control the rate of growth of the Federal Government, independent of our needs relative to fighting the war on terrorism and Katrina, which are events that we need to simply spend money on because of the catastrophe of Katrina and because of the need to have our troops in the field and have what they need to be adequately supported. Another reason the budget deficit has come down so much in the last few months is because our revenues are coming in as a result of the President putting into place, and the Republican Congress supporting the effort, economic policies which energized the economy dramatically--putting in place a tax policy that is fair to entrepreneurs and risk-takers in this country. We have seen people who are willing to go out and take risk, taking action that creates taxable events. Specifically, they have created new companies, created new economic activity and new jobs. As a result of those things, revenues are jumping dramatically. We have seen the largest revenue increase in the last 40 years, I believe, in this last year; and the year before that, we saw a historic revenue increase. The Federal Government is back to essentially where they were, in a historical context, over the last 20 years as a percent of gross national product. Those revenues had dropped precipitously over the last 3 years because of the breaking or bursting of the Internet bubble and the attack of 9/11, which caused a recession. So we are seeing the economy come back. We are seeing 5.3 percent growth, which is extraordinary. We are seeing a job situation where we have virtually full employment. According to the economists, when you get down to an unemployment level below 5 percent, you are basically talking about full employment. We have seen this as a result of this expansion of the economy that has now been going on for 39 straight months, or something like that. We have seen a huge jump in revenues, and the effective result of that is that the deficit is coming down also. In fact, if you were to take out the cost of fighting the war against terrorism and the cost of paying for the Katrina tragedy, we would essentially be functioning on what would be statistically considered to be almost a balanced budget. We would be at a historic low relative to the deficit as a percentage of the gross national product over the last 20 years. So we are moving in the right direction. By putting in place this deeming resolution 873, we are asserting we are going to be aggressive to try to control the rate of growth on the discretionary side. That is all positive and good, and it largely comes about because we have very strong leadership on the Appropriations Committee through Chairman Cochran and his commitment to fiscal discipline. Another issue I wish to talk about and put the issue in the correct context so people understand what is actually happening is the issue of border security because there has been a lot of confusion as to how much money we are spending on border security, where we are spending it, and what it is being spent on. I have the good fortune of chairing the Homeland Security Subcommittee of the Appropriations Committee. As chairman of that subcommittee, I suggested we put in the supplemental as an emergency item--not as an emergency item, we paid for it--$1.9 billion, the purpose of which would be to pay for capital items which were in dire need by Customs, the Border Patrol, and the Coast Guard. These are items such as airplanes--Customs is flying 20 or so P-3s, and they were all grounded a month ago because they are 40 years over their useful life and they have serious structural issues that have to be checked all the time or they have the potential of serious structural issues-- new helicopters because the helicopters are 20 years past their useful life; new cars to be used on the border because the Border Patrol goes through cars rather rapidly because of the harshness of the terrain in which they have to use them; sensors; and unmanned vehicles. With the Coast Guard, it is fast boats to be used to make sure our shorelines are protected from people coming across who shouldn't be coming across and maybe want to do us harm. These are all capital items. The reason I suggested we do capital items is because I didn't want to create an outyear cost which we couldn't afford to pay for under the present budget system, but I did want to take off the table items I knew we were going to spend money on if we were going to have an effective Border Patrol, to have an effective Customs agency, and to have an effective Coast Guard. The White House looked at that number and said they really didn't want to do that. Instead, they shifted over and said: Let's do operational items, and they decided to take, of that $1.9 billion, about $800 million and spend it putting the National Guard on the border, and the balance of the money they basically used to project the hiring of new people and the addition of beds for detention, both of which I support, but both of which create certain issues, and that is what I want to talk about briefly--the issues created by the supplemental and what will occur in the followup appropriations bills of Homeland Security so everybody knows the playing field that is being defined. The practical effect of this supplemental is, yes, there will be money in place to hire an additional 1,000 agents. We already had money in the pipeline to hire an additional 1,500 agents this year. It takes about 40,000 applications before you can get 1,000 agents. It is not easy to hire them. Then you have to train them, and you have to have a physical facility to train them, which we have in New Mexico. But that facility doesn't have the capacity to train 2,500 agents a year; maybe 2,000 but not 2,500. It is unlikely we can hire an additional 1,000 agents before the end of this fiscal year--maybe 300 or 400, maybe even 500. But I will agree that by putting the money in now, we accelerate what we planned to do next year, which is to hire another 2,000 agents. So we are accelerating that event, if that is the goal. Secondly, the proposal basically prefunds bedspace which should be funded and creates an outyear cost as a result of that and does a series of other operational things and actually some capital items with which I totally agree, such as technology investment and unmanned vehicle investment. But the practical effect of doing it this way is we create what is known as a budget tail or an expense in the outyear which we are going to have to pick up, and that is the point I wanted to make today in as factual a way as I can because it is a very big issue we are going to have to deal with as a Congress, and that is this: The President sent up a budget proposal for next year, 2007, which was essentially $32 billion, rounded up. That request had an assumption of 1,500 new agents, 1,500 new agents we put in this year would be paid for, and then an additional assumption of another 1,500 agents, I believe, on top of that for next year. It also had in it a request that part of the money, the $32 billion, be paid for by raising the airline fee which people pay as a tax when they get on an airplane basically to fund the increase in the border security activity, primarily with the Border Patrol agent expansion, of $1.2 billion. That proposal of $1.2 billion had been sent up 2 years ago, and it was rejected out of hand. Why? Because the chairman of the authorizing committee, in what I think is a fairly legitimate view of the issue, said: You shouldn't be raising the tax of people getting on airplanes for the purpose of protecting the borders. The airplane tax should go to TSA and FAA and things which are used to make air transportation safer, but it shouldn't tax the airline transportation industry, specifically the passengers, to fund border activity. When it was sent up again this year, it was basically dead on arrival, which the administration knew it would be. It wasn't a surprise because they had gone through this before. Actually, what they sent up was a request for about $32 billion in spending but funding for about $30.8 billion in spending, which means there was a $1.2 billion gap. That will be difficult to fill in, in and of itself, were that the only problem. But in order to fill that, basically Senator Cochran, as chairman of the full committee, is going to have to take it from some other committee to give it to my Homeland Security Subcommittee to pick up that $1.2 billion, if he is generous to do that or believes it is the right policy. He will have to take it from somebody else. I assure you, whomever he takes it from is not going to be all that appreciative of having lost $1.2 billion. That would be a major hurdle to begin with. Now throw on top of that $1.2 billion shortfall the fact that in this bill, they have forward- funded 1,000 agents plus a lot of other operational expenses, and they have not funded the Coast Guard costs of what is called their fast boat or the expansion of their coastal protection efforts. They have taken the $600 million we intended to use to do that and spent it on the National Guard. And we have created approximately--the number fluctuates on what one deems to be capital and doesn't deem to be capital. My guess is we are somewhere in the range of $1.4 billion in operational expenditures which are now put in the pipeline which are not funded for the year 2007. In addition, the administration tells us--and I would agree with this if we could do it--in the 2008 budget, they are going to ask for 3,500 new agents so that we can ramp up as quickly as possible to the ultimate goal, which is 20,000 agents. It is possible by the 2008 period that we will have the training facilities at a position where we can hire 3,500 agents. It is also possible that we could get 100,000 applications or 120,000 applications or so, whatever it would take to get 3,500 people. So that is a possibility. But the implications of that are significant in the form of cost. What does this put at risk? All these costs have been put in the pipeline in a manner which is basically upfronting operational costs but not taking off the table capital needs. The practical implications of the $1.2 billion, if it is not found by Senator Cochran--and I am not asking him to. I think if the administration is going to take this position, if they are going to make their bed, they ought to be asked to sleep in it. If Senator Cochran cannot find that $1.2 billion, the practical effect is we could not maintain the funding for the 1,000 agents that have just been put in the supplemental. We also could not add the new 1,500 agents we would need in order to fund what we expected to do in the 2007 bill. We would have to reduce technology and science and sensor technology by about $100 million. We would have to limit infrastructure construction, especially fence construction, by about $100 million. We would have to reduce detention expansion capability by about 6,700 beds. We would have to reduce fugitive operations, where we try to find these people and get them out of the country, by about $60 million. We would be unable to forward-fund the effort to get the IDENT and the EFIS systems to communicate with each other for the purpose of a U.S. visit, which is absolutely critical. That is where you come across the border, and they fingerprint you. They take two fingerprints of you. By taking 2 fingerprints of you, they can't communicate with the FBI database which has all the criminals in it because that database requires 10 fingerprints. So essentially we are limiting our capacity to figure out who is coming across the border as it relates to the FBI database. There is a protocol where they try to get the worst people and make it work, but the fact is, we have tens of thousands of fingerprints that are not able to be adequately vetted. That would have to be put off. The need to come up with a card with biotics attached to it so we could have a tamperproof identification system would probably have to be put off because we couldn't pay for that. That is a big one. These items would have to be put off, plus the Coast Guard--and this really frustrates me--the Coast Guard, in order to build out the fleet they need--and they are functioning under old boats, a lot of old boats, and they have helicopters which are not properly structured, many of them, most of them, the vast majority of them are not armed-- build out program to get things right and get positioned correctly to protect our coastline, instead of being completed in 2015, which was our goal under our supplemental request, will end up being completed in 2023 or 2024 and cost more money to do it because of the spread out. So we are facing a lot of very serious issues as to what we will be able to fund and how much we will be able to fund under the present game plan or blueprint as it is set out for this year and next year as a result of this supplemental. I thought it was important to come down to the Chamber and try to lay out the specifics because at some point, we are going to have to face up to the reality that there is a disconnect between what is being proposed and what is being paid for. This is not going to work. Mr. President, as chairman of the Budget Committee, I regularly comment on Appropriations bills that are brought to the Senate for consideration and present the fiscal comparisons and budgetary data. Because of its importance, I will also follow that practice for the pending conference report. The conference report to accompany the Emergency Supplemental Appropriations bill for fiscal year 2006, H.R. 4939, provides $94.430 billion in budget authority and $24.327 billion in outlays in fiscal year 2006 for contingency operations in Iraq, Afghanistan, and the global war on terrorism; relief from Hurricane Katrina; other emergency assistance; border security; and avian flu. Of these totals, there are no mandatory funds included. $143 million in outlays in the conference report are not designated emergency; these outlays will count against the discretionary allocation for regular appropriations for fiscal year 2006. The budget authority in the conference report is within the level of the President's request of February 16, 2006, when adjusted for avian flu. It is also $14.468 billion less than the Senate-passed bill, which clearly demonstrates significant progress in conference with respect to conforming the measure to the initial request. Mr. President, I ask unanimous consent that a table displaying the Budget Committee's estimate of the bill be inserted in the Record.

Mr. GREGG. Mr. President, I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to pay tribute to U.S. Army CPT Douglas A. DiCenzo, of Plymouth, NH, a brave American who has made the ultimate sacrifice in service to our country. Douglas, or Doug to his family and friends, graduated from Plymouth Regional High School in 1995. While there, he gave us a glimpse of the characteristics that would later make him a remarkable soldier. He was a scholar-athlete in the truest sense. He exemplified leadership as class president, captain of both the football and wrestling teams, and an all-state offensive guard for the State champion Bobcat football team. Daniel Webster said, ``God grants liberty only to those who love it, and are always ready to guard and defend it.'' In this spirit, after high school, Doug earned an appointment to the U.S. Military Academy at West Point, NY. Upon graduating with his fellow cadets as a second lieutenant with the Class of 1999, he earned an assignment as an Army infantry officer. Subsequently Doug completed the arduous infantry officer, Army Airborne, and Ranger courses. Next came a tour of duty to Fort Wainwright, AK, 2nd Battalion, 1st Infantry Regiment, beginning as a platoon leader with B Company, Mortar Platoon Leader for Headquarters and Headquarters Company, executive officer for C Company and then battalion maintenance officer. Then, in July 2004, Doug was assigned to Headquarters, V Corp in Germany and a year later was assigned to command the 150 soldiers of C Company, 2nd Battalion, 6th Infantry Regiment 2nd Brigade, 1st Armored Division, based in Baumholder, Germany. In November 2005, he deployed with his unit to Kuwait, and then Iraq, in support of Operation Iraqi Freedom. Tragically, on May 25, 2006, this brave soldier, along with a comrade from his unit, was killed during combat operations in Baghdad, Iraq, when an improvised explosive device detonated near his military vehicle. Captain DiCenzo's awards and decorations include the Bronze Star, Purple Heart, Army Commendation Medal with two Oak Leaf Clusters, Army Achievement Medal with three Oak Leaf Clusters, National Defense Service Medal, Iraq Campaign Medal, Global War on Terrorism Medal, Army Service Medal, Overseas Service Ribbon, Combat Infantry Badge, Expert Infantryman Badge, Parachutist Badge, Ranger Tab, Army Presidential Unit Citation, and Army Valorous Unit Award. Patriots from the State of New Hampshire have served our nation with honor and distinction from Bunker Hill to Baghdad--and U.S. Army CPT Douglas A. DiCenzo served in that fine tradition. Captain DiCenzo was a well-respected and natural leader who exemplified the principles of the U.S. Military Academy at West Point--duty, honor, country. This optimistic, passionate, and patriotic American demonstrated the virtues extolled in the Cadet Prayer, ``Encourage us in our endeavor to live above the common level of life. Make us to choose the harder right instead of the easier wrong, and never to be content with a half truth when the whole can be won. Endow us with courage that is born of loyalty to all that is noble and worthy, that scorns to compromise with vice and injustice and knows no fear when truth and right are in jeopardy.'' CPT Douglas DiCenzo was dedicated to serving his country in these chaotic and violent times because he thought it was his duty to do this. My heartfelt sympathy, condolences, and prayers go out to Doug's wife Nicole and their 18-month-old son Dakin, as well as to Doug's parents, Larry and Cathy, his brother Daniel, and his family and friends who have suffered this grievous loss. The death of Doug, only 30 years old, on a battlefield far from New Hampshire is also a great loss for our State, our Nation, and the world. Although he will be sorely missed by all, his family and friends may sense some comfort in knowing that because of his devotion, leadership, sense of duty, and selfless dedication, the safety and liberty of each and every American is more secure. May God bless CPT Douglas A. DiCenzo. Private Benjamin J. Slaven

Mr. GREGG

Mr. GREGG. That will still be on our time, as I understand it. If the Senator is agreeable, I suggest that at 6:20 she be recognized for 5 minutes.

Mr. GREGG. Mr. President, I apologize to the Senator, but Senator Sessions advised me he wants me to be completed by 6:10.

Mr. GREGG. Mr. President, I rise today to support the effort which is being pursued in the Senate in a bipartisan way, I certainly hope, to rid ourselves of the death tax, especially as it applies to smaller estates. The death tax makes virtually no sense from a standpoint of tax policy. Before I was elected to the Senate and before I got into public office, I was an attorney. At the time, I went back to graduate school for 3 years and got a graduate degree in tax policy and taxation, an LLM, as it is called. One of the areas I specialized in at that time was estate tax planning. It always seemed ironic to me that this was the only tax that was energized not by economic activity--in other words, usually when you are taxed, you do something that generates economic activity. You have a job so you have income; you make an investment and make a sale of that investment, so you have capital gains. Whatever it is, it is an economic event that you energize, that you initiate, and it has generated some sort of income to you. The death tax is the only tax we have which has nothing to do with economic events. It just has to do with an unfortunate luck of the draw. You are crossing the street and you get run over by a postal truck and die, which is enough of an action to upset your day, and then the IRS comes by and they run over you again. So you end up not only having your day totally ruined because you got run over by the postal truck to begin with, but then your family has their day ruined because they not only lost you, but they suddenly have to pay this huge tax if you are an entrepreneur. The problem is that it hits most discriminatorily that small entrepreneur in our society who basically creates jobs--the small business person--a person who has made an investment and built an asset throughout their life. Maybe it is people who go out and start a restaurant, maybe employ 10, 15, 20 people; people who go out and start a printing business or make an investment in real estate, an apartment, build housing for people. They are just getting going, they don't have a whole lot of assets, and they are not very liquid usually--in fact, these folks are not liquid at all because it is mostly tied up in real estate--and suddenly they have this traumatic event with the key person in the family dying who maybe built this business and then they get hit with a tax. Not only is it a tax which has nothing to do with economic activity, it is actually a tax which has the ironic and unintended consequence, I presume--but it is exactly what happens--of actually crushing economic activity and reducing economic activity and, in many cases, costing jobs because the small family business or the farm, which was being operated by this sole proprietor, in most instances, or this small family unit, suddenly can't find itself capable of meeting the costs of paying the estate tax--it didn't ever plan for that or if they did plan for that the cost of planning for that was pretty high--and so they have to sell their assets which usually means the people they employ are at risk or maybe they have to just close down the whole operation. So the economic activity contracts, and instead of having a business that might have been growing, you end up with a forced sale, the practical effect of which is you contract economic activity. First you have this really incomprehensible concept that you are going to tax people not for economic gain, but simply because they had a terrible thing happen, which is they died, maybe accidentally, and then you are going to say that instead of encouraging economic activity, which is what the purpose should be of our tax laws, you are actually going to create a tax which contracts economic activity. So it is discriminatory, inappropriate, and irrational, and on top of that, to make things worse, the United States has the third highest estate tax, death tax rate of the industrialized world. In fact, our rate is so high that we are even above--and this is hard to believe--we are even above France. When you get above France in an area of taxation, you have really started to suffocate economic activity, entrepreneurship, and creativity because they are sort of the poster child for basically how to make an economy nonproductive and encourage people not to work and basically be a socialist state. This whole concept of a death tax, first, makes no sense from the standpoint of tax policy; it is not generated by economic events, and it makes no sense from the standpoint of economic policy because it usually leads to contraction of growth rather than expansion of growth. And it certainly makes no sense that the United States, which should be a bastion of the promotion of entrepreneurship and a bastion of supporting family farmers, the family restaurant, the family gas station, the family entrepreneur, is taxing those families at a rate which is higher than the French do. There is a proposal--in fact, really there is a series of proposals-- in the Senate today and the next few days which will allow us to put in place a more rationalized approach to the death tax. To get to that point, we have to have, it appears, a cloture vote on full repeal, which was the House position. But three or four of our colleagues have put forward ideas that do not involve full repeal--I support full repeal--but these are more modest approaches. Senator Kyl has been leading the effort in this area. Senator Baucus appears to be pursuing this effort. Senator Snowe, I know, is pursuing it. There are options floating around the Congress--the Senate specifically--which, hopefully, can be pulled together and moved forward. It truly is time to do this. We need to put in place a clear statement of what the tax policy is going to be if you have the unfortunate experience of being run over by a postal truck. And it should be a clear statement that if you are a small entrepreneur with a family-type business or a farm, that your family is not going to be wiped out by the IRS coming in on top of this terrible event and taking basically a disproportionate and inappropriate share of your assets and basically contracting and eliminating your business and putting your family's livelihood at risk. The reason we need to do it now, even though most of this won't take effect until 2010, I can tell you as an estate tax planner before I took this job, before I got into public service, you need that lead time to do it right. You just can't overnight plan for tax policy. You have to have lead time, you have to have a clear statement of what the tax policy is going to be, and consistency is critical. Putting this in place now so it will be effective in 2011, which is what most of the proposals are, is absolutely essential if we are going to have an effective reform of this death tax law which we presently have. Mr. President, I see the Senator from Alabama is in the Chamber. I yield the floor.