Jon Kyl

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Oklahoma (Mr. Inhofe).

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Oklahoma (Mr. Inhofe).

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Oklahoma (Mr. Inhofe).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Arizona (Mr. McCain).

Mr. KYL. The following Senator is necessarily absent: the Senator from Texas (Mrs. Hutchison).

Mr. KYL

Mr. KYL. Mr. President, last week, Clifford May, the president of the Foundation for the Defense of Democracies, wrote in the National Review that the U.S. should renew its focus on the Iranian regime's influence in Iraq. He warned that the success of the surge in Iraq, which both the President and Vice President opposed when they served in this body, could be transformed into a ``bipartisan failure'' if we don't increase pressure on the Iranian regime. Mr. President, I ask unanimous consent to have printed in the Record the article to which I just referred.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Utah (Mr. Bennett), the Senator from Kansas (Mr. Brownback), the Senator from North Carolina (Mr. Burr), the Senator from Wyoming (Mr. Enzi), the Senator from Alabama (Mr. Sessions), the Senator from Georgia (Mr. Isakson), and the Senator from Utah (Mr. Hatch). Further, if present and voting, the Senator from Georgia (Mr. Isakson) would have voted ``nay,'' and the Senator from Utah (Mr. Hatch), would have voted ``nay.''

Mr. KYL

Mr. KYL. Mr. President, recent warnings from Moody's that the United States will have to begin addressing our debt in order to avoid downgrading our triple-A bond rating mean that we have to get serious about doing something about the latest deficit and debt projections. The President's new budget proposal estimates that the Federal deficit for fiscal year 2010 will be roughly $1.6 trillion, the largest in American history. It also projects that the deficit we will accumulate over the next decade will increase the U.S. national debt by $8.5 trillion. By the year to 2020, our total public debt will have surpassed $18 trillion and will make up an astounding 77 percent of gross domestic product. We all agree that this debt poses a major threat to America's future prosperity, and we all agree that slashing debt should be a top national priority. How can we do it? There are four principal ways to reduce government debt: No. 1, inflate the dollar; No. 2, raise taxes; No. 3, cut spending; and No. 4, increase economic growth. Let me briefly discuss each. First, inflation. Inflation is tempting for governments looking to mitigate their debt problem, but its economic consequences are catastrophic. As President Ronald Reagan famously said, inflation is ``as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.'' Although America has not experienced painfully high consumer price inflation since the late 1970s and early 1980s, we all remember what it took to kill that inflation: soaring interest rates and a deep recession, the worst since the Second World War. As former Wall Street Journal editor George Melloan notes in his new book, ``The Great Money Binge,'' inflation is ``a tax no one can escape.'' And it is one that disproportionately hurts lower and middle-income Americans and older Americans with savings. Taxes, a second option for trimming our debt burden, would have to be raised significantly. But, of course, raising taxes is the last thing we should do amid a tentative economic recovery. For evidence of what taxes do to a shaky economy, look at what happened during Japan's lost decade. In the early 1990s, the Japanese experienced a stock market crash, a financial crisis, and a recession. The government took several steps to address the downturn. Among other things, it reduced income taxes. Then, just as the Japanese economy was recovering--thanks partly to these tax cuts--the government raised taxes. The result: Japan fell back into recession. I hope the administration keeps this history in mind before raising taxes at the end of the year, as President Obama has pledged to do. A third way to lower the national debt would be to cut Federal spending, which is always painful for Congress but particularly in a situation such as this one is absolutely necessary. The administration has been touting a temporary spending freeze that would begin next year, but this freeze would apply only to discretionary nondefense spending which comprises a small fraction of the total budget, about 13 percent. Moreover, this freeze doesn't go into effect until the next fiscal year, and it would not apply to the new stimulus bill the Senate will soon take up. There is a lot of waste in government, and we have to look even harder for additional ways to save and be more responsible with Americans' money. Spending less is the only real way to work off the debt in the long term. The fourth way to get out of this debt is through economic growth, but this debt explosion could have a significantly negative impact on our ability to grow by leading to higher interest rates and squelching investment. Economists Carmen Reinhart and Kenneth Rogoff lay hard numbers to this claim in a new paper entitled ``Growth in a Time of Debt.'' They write: When gross external debt reaches 60 percent of GDP, annual growth declines by about 2 percent; for levels of external debt in excess of 90 percent of GDP, growth rates are roughly cut in half. Remember, the President's budget projects debt to reach 77 percent of GDP by 2020. So even though growth could eventually enable us to manage and, over time, reduce and perhaps even eliminate our debt, there is a point at which the amount of debt itself inhibits growth, our ability to grow, and obviously we have to tackle the problem of increasing debt, increasing spending, even if we are to hope to grow our way out of the debt problem we have. Over the long term then, the only way to permanently lower our debt is to hold Federal spending in check and promote strong economic growth such as through lower taxes. This has proven to work time and time again. Whether we look to the 1920s, the 1960s, or the 1980s, history shows us that reducing marginal income tax rates is a highly effective way to stimulate an economic expansion. To that end, I hope the administration decides to make the 2001 and 2003 tax cuts permanent. I also hope it reconsiders its plan to raise taxes on U.S. multinational corporations. The administration argues that many U.S. corporations are keeping their profits overseas. But as the Cato Institute economist Chris Edwards pointed out, the reason that U.S. multinationals are moving their profits abroad is that America has the second highest corporate tax rate in the developed world. Only Japan has a higher rate. Lowering corporate income taxes would spur investment and job creation at home and make us more competitive abroad. Keeping marginal tax rates where they are would enable small business entrepreneurs to begin hiring and expanding. That is the key to recovery and to debt reduction. So, again, strong growth and spending discipline is the only sustainable solution to the debt problem. I urge my colleagues to keep this in mind as we continue to debate this matter. I yield the floor.

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Brownback), the Senator from South Carolina (Mr. DeMint), the Senator from Nevada (Mr. Ensign), the Senator from South Carolina (Mr. Graham), the Senator from New Hampshire (Mr. Gregg), the Senator from Utah (Mr. Hatch), the Senator from Texas (Mrs. Hutchison), the Senator from Kansas (Mr. Roberts), the Senator from South Dakota (Mr. Thune), and the Senator from Louisiana (Mr. Vitter). Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``yea,'' and the Senator from Utah (Mr. Hatch) would have voted ``yea.''

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Brownback), the Senator from South Carolina (Mr. DeMint), the Senator from Nevada (Mr. Ensign), the Senator from South Carolina (Mr. Graham), the Senator from New Hampshire (Mr. Gregg), the Senator from Utah (Mr. Hatch), the Senator from Texas (Mrs. Hutchison), the Senator from Kansas (Mr. Roberts), the Senator from South Dakota (Mr. Thune), and the Senator from Louisiana (Mr. Vitter). Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay,'' the Senator from South Carolina (Mr. Graham) would have voted ``nay,'' and the Senator from Utah (Mr. Hatch) would have voted ``nay.''

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Ohio (Mr. Voinovich), the Senator from Texas (Mrs. Hutchison), and the Senator from Utah (Mr. Bennett).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Utah (Mr. Bennett) and the Senator from Texas (Mrs. Hutchison).

Mr. KYL. The following Senators are necessarily absent: the Senator from Utah (Mr. Bennett), the Senator from Oklahoma (Mr. Coburn), the Senator from Texas (Mrs. Hutchison), and the Senator from Georgia (Mr. Isakson).

Mr. KYL

Mr. KYL. Mr. President, I recommend to my colleagues a Robert Robb column, published in the Arizona Republic, February 3, 2010. In it, Robb points to the massive deficits in President Obama's budget and argues that the administration has no grounds on which to pass the blame. He explains that the deficits President Obama recommends from 2011 on are entirely his own, driven by vast new spending, and that they are far higher than historical deficits. Robb writes that, even though President Obama's budget projects that the recession will be over by 2011, he proposes that Federal spending continue at nearly 24 percent of gross domestic product through 2020, far beyond the historical average of around 20.5 percent. He also points out an enormous increase in the debt as a share of GDP: After the World War II debt was reduced, accumulated federal debt never exceeded 50 percent of GDP until 2009, when it reached 53 percent. Under Obama's recommendations it would grow to 77 percent by 2020. Robb recommends returning spending to its historical average as a means of getting the deficit under control. I ask unanimous consent to have this article be printed in the Record and urge my colleagues to consider the facts and arguments contained in it.

Mr. KYL

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

Mr. KYL

Mr. KYL. Mr. President, during the past few weeks, President Obama has repeatedly professed a commitment to clamp down on out-of-control spending and on deficits. That new development, of course, appeals to many Americans who have become increasingly frustrated with the trillions of dollars in new debt that has been racked up by this administration. The President's newly released budget tells a different story, and it is not one of fiscal responsibility. Just look at the front-page headlines from many of today's morning newspapers and you will see a helpful review of what they think of the budget. The Wall Street Journal: ``U.S. Deficit to Hit All-Time High.'' The Washington Post: ``White House Expects the Deficit to Approach a Record $1.6 Trillion This Year.'' The Washington Times: ``White House Says the Government Will Run Huge Deficits for the Foreseeable Future.'' The publication Politico: ``Five Years, $5.08 Trillion in Debt.'' In other words, this $3.8-trillion budget is another sea of red ink, more of the same record spending and debt that have come to characterize this administration. Let me go over some important numbers. Under the President's budget, the deficit, which is the gap between total revenues and total spending in a given year, will reach a whopping $1.56 trillion for the fiscal year 2010. For fiscal year 2011, the deficit is projected to be $1.3 trillion. That will mark the third year in a row of trillion-dollar- plus deficits, beginning in 2009. These 3 years of deficits are more than the total accumulated debt from George Washington to George W. Bush. The President's budget also virtually doubles the debt held by the public over 5 years and virtually triples it over 10. It exceeds 60 percent of the GDP as a share of the economy this year. That surpasses last year's 50-year high. Interest payments will more than quadruple by the end of the decade, reaching $840 billion in the year 2020. That is $311 billion more than we spend on education, roads, and all other nonsecurity discretionary spending. That is just to pay the interest on the debt. Overall spending will remain well above the historical average as a percentage of GDP. By the end of the 10-year budget window, debt will consume 77.2 percent of our economy. As Congressman Paul Ryan, ranking member on the House Committee on the Budget, pointed out recently, even European Union countries--hardly exemplars of fiscal rectitude--are required to keep their debt levels below 60 percent of their GDP. I wish to mention a finding from a new paper entitled ``Growth in a Time of Debt'' by two economists, Kenneth Rogoff of Harvard and Carmen Reinhart of the University of Maryland. In their paper, they study the relationship between GDP growth and debt, and they find that nations carrying an excessively large debt burden of more than 60 percent of GDP produce a negative effect on short-term economic growth. They write: When gross external debt reaches 60 percent of GDP, annual growth declines by about 2 percent. For levels of external debt in excess of 90 percent of GDP, growth rates are roughly cut in half. This only makes sense because you have less money to spend on those things which provide capital, which provide growth in your economy, because you are paying more and more of your income to service the debt. Remember, our debt will consume 77.2 percent of our economy by 2019. This is important because there are really only four ways to pay down or pay off your debt. The first is to raise taxes. You do not do that when you are in the middle of a recession, and, in fact, it is counterproductive to economic growth in the first place. Second, you cut spending. Well, that is very hard for Congress to do. Third, inflate the currency. Of course, that wipes out savings. It is the least good of the bad alternatives. Fourth, you can grow your way out. Growing your way out is the way to do it, obviously. It is like your family: If you have a lot of debt, you can cut some on spending, sometimes you can make a little more money. You cannot inflate your way out the way the government can. But the preferred way is to grow your way out of debt by, over time, making more money and by being able to pay it down. But there is a point at which, according to these studies, even that does not work--when you have so much debt that you do not have enough money to put back into the system to create the growth we are talking about. And that is what this debt burden and interest cost does. The administration has been touting a spending freeze worth about $250 billion over a decade to help allay concerns about spending and debt, but it does not start until next October. Therefore, to me, it is a little bit like the alcoholic who says: Well, I am going to quit drinking right after I have my next drink. If it is a good idea--and it is--we should begin now. I applaud any move toward fiscal responsibility, but this proposal will really do little to seriously attack the debt and will not even erase the massive debt accumulated during President Obama's first year in office. As columnist Robert Samuelson put it recently, ``Any savings would be mostly a rounding error in the decade's projected deficits.'' The point is, we have to do a lot more than this. Let's remember that the proposed spending freeze only applies to 17 percent of the budget. Programs targeted for the freeze have already seen a 22-percent increase in their annual appropriations in the past 2 years, plus another 25 percent increase including the stimulus. So it is hard to argue that tough choices are being made when you increase these programs by 22 percent, plus another 25 percent, and then say: OK, now I am going to stop. Finally, of course, why propose a budget in February with a more than $1.5 trillion deficit and a spending freeze that will not even take effect until October? Maybe another analogy is, it is like the dieter who wants to start the diet tomorrow but never today. The spending freeze is a good idea. So let's not start it in the future, let's start it with this year's appropriations bills. I would also suggest other stronger measures right now. We can start with the TARP money, for example. Rather than using the TARP money to pay for another stimulus bill, as some of my colleagues have suggested, let's use it to pay down the debt. That money, remember, was borrowed in the first place. We did not have $700 billion lying around. We went to the markets to borrow that, and we have to pay interest on it. A lot of it came from China. We have to pay it back. Let's do that--pay the money back. Do not use it to pay for yet another stimulus program. Remember, it will ultimately have to be paid back. Second, let's end unlimited funding for government-sponsored enterprises such as Fannie Mae and Freddie Mac. Right now these two entities can spend as much as they like even without congressional authority. I find it interesting that when the President, in his State of the Union speech, said we are going to impose a tax on the banks, he was talking about banks that either never took TARP money or banks that have paid it back. The tax does not apply to Fannie Mae or Freddie Mac. They haven't paid back the money. It does not apply to AIG. It does not apply to General Motors. None of them have paid the money back. If we are going to have a tax, impose it on those who haven't paid the money back. Don't put it on those who either never needed the money or didn't take it, but, in any event, who have paid it back. Third, let's rescind unobligated stimulus money. The stimulus has already proven, by most accounts, to be a failure in terms of creating jobs for the money spent. That is even using the administration's own standards to measure its success. Let's use the money that has not yet been spent or obligated to pay down the debt. Again, remember, most of that money has to be borrowed and, therefore, let's not spend it in the first place, thus reducing future debt included in the President's budget. These are just three specific ways, three relatively easy ways that we could employ to start getting hold of spending and debt. I would also like to suggest that those who continue to evoke the spending policies of the last administration become more focused on the future. That is what Americans want us to do. It makes little sense to complain about high spending from a previous era and then make the situation worse, creating a deficit that is four times as much as the biggest deficit in the previous administration and creating a debt burden that is equal to all of the Presidents from George Washington through George Bush. Americans want this administration to confront the massive spending and massive debt it is accumulating in a meaningful way. The budget the President sent to Capitol Hill this morning does not do the job. I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Missouri (Mr. Bond), the Senator from New Hampshire (Mr. Gregg), the Senator from Texas (Mrs. Hutchison), the Senator from Arizona (Mr. McCain), the Senator from Kansas (Mr. Roberts), the Senator from Louisiana (Mr. Vitter), the Senator from Idaho (Mr. Risch), and the Senator from North Carolina (Mr. Burr). Further, if present and voting, the Senator from Idaho (Mr. Risch), would have voted ``nay.''

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Wyoming (Mr. Enzi).

Mr. KYL

Mr. KYL. Mr. President, when I think of what a Federal Reserve Chairman is supposed to do, I think of two key responsibilities: maintaining stable prices and keeping our dollar strong. Unfortunately, Chairman Bernanke's Federal Reserve has not performed well on either count. Consumer inflation, as measured by the Bureau of Labor Statistics, increased 2.9 percent from June to December 2009. Manufacturers' cost of production is up 4.4 percent versus last year; up 5 percent in the past 6 months; and up 9.5 percent in the past 3 months. Other measures of inflation, such as the 5-year, 5-year forward, clearly show an accelerating trend. Inflation is the last thing our economy needs right now. As for the dollar, during the last year, its value dropped more than 10 percent. Much of this weakness is attributable to the Federal Reserve setting short-term interest rates at virtually zero. As such, gold prices have surged, as investors worry that the dollar is no longer a reliable store of value. OPEC has contemplated designating oil in a currency other than the dollar, and foreign economists have suggested that we issue our own government debt in yen, euros, or yuan, rather than dollars. While neither of these actions is likely, it is clear that the Federal Reserve needs to pay greater attention to the dollar's value when making monetary-policy decisions. The preeminence of the dollar is synonymous with American prestige abroad. Nothing represents our Nation's soft power more than its strength. Another chief concern of mine is that, during Chairman Bernanke's tenure, the Federal Reserve and other banking regulators showed an inability to use bank examinations to distinguish between good and bad loans. Before the housing crisis, banking regulators were permitting financial institutions to lend to individuals who obviously did not have the ability to repay the money they borrowed. Had they been more vigilant, the crisis may have been less severe. Now, however, in seeking to be more cautious, bank regulators are making another mistake: They have been telling institutions in my home State of Arizona, and throughout the country, not to make loans to even the most creditworthy individuals and businesses. I have heard numerous stories, from both lenders and borrowers in my State, about bank examiners deciding to downgrade a performing loan because, on paper, the underlying collateral was worth less than its purchase price. As a result, the banks had to either raise more money, which is incredibly difficult, or else the borrower had to contribute more cash to keep from technically defaulting on the loan. Why would we have policies that punish responsible borrowers? Why would it be in our interest to force those who are current on their loans into a situation that could lead to bankruptcy? Doing so makes a bad situation worse and creates problems that ripple through our economy. I am also troubled that Chairman Bernanke refuses to take responsibility for the housing bubble and disputes that the Federal Reserve's lax monetary policy helped create it. As the respected columnist Bob Robb of the Arizona Republic recently explained: [Chairman] Bernanke is intellectually shadow boxing. . . . When a bubble occurs in a commodity which is almost universally purchased using extensive borrowing, such as homes, it's fatuous to claim that easy money doesn't play a significant role. Chairman Bernanke strongly supported this lax monetary policy, and he should own up to its role in the financial crisis. These are all reasons to oppose his renomination or confirmation. Nonetheless, I must vote to reconfirm Chairman Bernanke, simply because I am concerned that another nominee chosen by President Obama would be less independent than Chairman Bernanke and would direct the Federal Reserve's resources to support the administration's policy interests, and, therefore, bypass congressional approval for appropriated funds. This administration has a history of nominating partisan, out-of-the mainstream individuals for key jobs, and replacing Chairman Bernanke would be another opportunity for it to do so. I would hope that if Chairman Bernanke is confirmed, he will take action to remedy the problems I have just addressed. They demand his attention.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. KYL. The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Roberts) and the Senator from Ohio (Mr. Voinovich).

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Roberts) and the Senator from Ohio (Mr. Voinovich).

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Roberts) and the Senator from Ohio (Mr. Voinovich).

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Roberts) and the Senator from Ohio (Mr. Voinovich).