Edward Kaufman

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, if there is no further business to come before the Senate, I ask unanimous consent that it adjourn under the previous order.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, tomorrow the Senate will resume consideration of the tax extenders legislation and conduct up to four rollcall votes beginning at 11 a.m. As a reminder, the filing deadline for second-degree amendments is 12 noon tomorrow; further, under a previous order, the cloture vote on the substitute amendment will occur at 2:30 p.m. tomorrow.

Mr. KAUFMAN

Mr. KAUFMAN. Madam President, it has been just over a year since I took office and since President Obama was sworn in. I think it is a good time and appropriate to reflect on just how far we have come. A year ago, the Presiding Officer and I came into office in the midst of the worst economic crisis since the Great Depression. We had been spiraling deeper and deeper into recession for over a year. Almost three-quarters of a million jobs were lost in the month of January 2009 alone. Our credit markets were frozen, major edifices of our economic landscape had collapsed or were tottering on the brink, from Lehman Brothers to General Motors. Alarms were still ringing. Emergency policies were thrown in to the breach, things were bad, and there was no way to know how much worse they were going to get. We were on the precipice. We could have fallen into the abyss, if not for the extraordinary actions we took. Those actions saved us from another full-blown depression. We are still not out of the woods, of course. Although we have had some good news recently, too many families, too many communities have been hit hard by job losses and falling home values. But we are nevertheless beginning to see evidence that we are finally turning the corner as a nation. While things are still not good, they are no longer getting worse and, in some areas, we have actually seen real improvement. I wish to share with my colleagues some of that evidence. Here I have a chart showing the Dow Jones industrial average since October 2008. We all know it is not always the best indicator of economic health, but since the downturn was precipitated by turmoil in our financial markets, I will start with this. As you can see, the market bottomed out just weeks after the Recovery Act was enacted, and it has been climbing ever since. The chart clearly shows we stopped the free-fall, we stabilized the market, and we are allowing it to grow again. Here is another chart showing the Purchasing Managers Index. This is a survey of purchasing managers who report whether business conditions are better than, the same as or worse than the previous month. A score of 50 means no change, so anything over that should mean the economy is expanding. Anything below indicates the economy is shrinking. In this chart, it is clear business confidence plummeted in the fall of 2008. Only four times in the postwar period has this index fallen so low and never in the last quarter century. We can see it was not until March of last year, right after the Recovery Act took effect, that manufacturing confidence began to return. With other data, we know this occurred as businesses began rebuilding inventories, confident they had weathered the cash crisis of the winter. This next chart shows our GDP growth over the last 3 years, from the beginning of 2007 to the end of last year, the last date for which we have good data. I have added a smoothing line to show the trajectory our economy has taken. As you can see, in 2008, the bottom fell out. It wasn't until last spring that we began to restore order. I will not pretend 6.3 percent growth for one quarter is good enough for me. Without jobs, it isn't. But it is clearly better than what was happening 12 months ago. My last two charts, which address jobs, tell the most important tale. We know from past experience that job growth lags behind economic recovery. This chart shows how long that took in previous postwar recessions. In every single postwar recession, jobs have lagged the economic recovery, whether it is 1 month in July 1908 or 22 months in November 2001 and everything in between. There is a reason for this. Businesses need to use up their existing capacity, and they need to feel confident in the economic climate before they start expanding again. This process can be especially painful following a financial collapse, where businesses and households are forced to pare down their savings and reduce their spending. By doing that, they tamp down economic recovery, reduce spending, and that is why jobs have been slower to return than anyone would like. Also remember, if you are running a company and you have laid off people, that is a very traumatic experience. You don't want to do that again. The worst situation of all is to start hiring people back and then have to lay them off again. Businesspeople, especially those who care, don't want to hire people back until they are sure they can offer them a job they can keep. Can you imagine putting somebody through this twice? It is important to remember this lag. Economists suggest we may be around 8 months into economic recovery, and the jobs are coming. We are 8 months into economic recovery, and the jobs are coming. While the record of recent recoveries is a sobering one, the last chart I have shows the beginning of our good news. With announcements over recent weeks, we have seen that unemployment is stabilized and may even be turning around. We have staunched the bleeding. All those charts show things started picking up right after we passed the stimulus bill. That is not the only thing we did. There were extraordinary efforts to stabilize the financial sector through direct assistance and low interest rates. But passage of the Recovery Act marked the beginning of the turnaround. That is indisputable, looking at the data. Passage of the Recovery Act marked the beginning of the economic turnaround. We cannot be satisfied until we have all our jobs back, until our economy is working for everyone. But one thing we know for sure is that without the Recovery Act, we would be a lot worse off. I wish to stress, this will not be a smooth path back to a healthy economy. There will be good days and bad days, good news and bad news. But these indicators show we have turned the corner, thanks in no small way to Recovery Act money that is still going out. Nationally, nearly 2 million jobs have been saved or created by activities funded by the Recovery Act. This is not something I alone am claiming. Economic experts from Moody's, CBO, Macroeconomic Advisers and more are telling the same story. But that is not all the Recovery Act has done. It has also given a helping hand to millions of Americans out of work by expanding and extending unemployment insurance. Meanwhile, 95 percent of working Americans benefited from tax relief. Under the Recovery Act, 95 percent of all working Americans benefited from the tax relief. State and local governments received badly needed fiscal relief that allowed them to maintain essential services, including health coverage for millions of Americans, and retain workers which kept cops on the beat and teachers in the classroom. We will never know how bad the economy would have been if we had not acted. That is the nature of things. But the charts I have shown all tell the very same story, of an economic free-fall that has been slowed, stopped, and reversed. Do any of my colleagues believe we would be in a better situation today without the Recovery Act? The timeline is clear. The data are clear. The Recovery Act is what brought the economy back. The challenge we faced 1 year ago was a roughly $2 trillion hole in the economy. Consumer spending, fully two-thirds of the whole economy, was in free-fall. Failing to plug the gap would have continued the free-fall or, just as badly, condemned us to a lost decade similar to what Japan saw in the 1990s. During 1990s, the Japanese did not come back with a major effort such as the Recovery Act, and they had GDP level for a decade. You can imagine what that did to revenues, their deficit, and their jobs. That is what we would have been condemned with, if we had not gone with the Recovery Act. Let's tell the truth about how we got here. It is absolutely essential to remember what the situation was 1 year ago when the administration came into office, not to go back and go over things that happened in the past but to make sure we don't do it again and to understand what caused this recession. The circumstances we inherited at the end of 8 years of the prior administration were the worst we have seen in generations. When the Bush administration came to office in 2001, the Federal budget was not only balanced, it was in surplus, in surplus to the tune of $236 billion, the largest surplus in half a century. Remember that. That was not that long ago. We were actually debating how quickly we were going to be free of debt as a country. We were on a path to financial independence, able to save for retirement of the baby boom generation, able to set aside something for a rainy day. That was only 10 years ago. Tragically, that inheritance was squandered. Instead of a surplus of $710 billion that was projected in 2001 for last fiscal year, 2009, we wound up with a $1.6 trillion deficit. I hear my friends on the other side talk about deficits. This $1.6 trillion deficit didn't just develop. It came out of the policies of the last 8 years. Two major factors account for the bulk of this reversal of fortune. First were the economic and budget policies of the last administration which gave no thought to paying for tax cuts or spending increases. We just had a debate about paying for the $10 billion for an employment extension. But we actually passed tax cuts, Medicare, other things that were never paid for that were hundreds of billions of dollars, not $10 billion, hundreds of billions. Tax cuts primarily for the wealthy and the wars in Iraq and Afghanistan together accounted for more than $500 billion of the 2009 deficit and $7.1 trillion over the next decade and none of it was paid for. Second, we had the regulatory failures which permitted, even encouraged, the financial excesses that brought our markets down. They not only permitted it; they encouraged it. There was a feeling you didn't have to do any kind of regulation, only self-regulation. Alan Greenspan himself said he was dismayed self-regulation didn't work. That financial collapse battered our economy, reducing revenues and increasing necessary spending on unemployment insurance, food stamps, and other support programs. Here we are on the floor debating unemployment insurance, food stamps, and other support programs, when in the previous administration, when Congress was controlled by the other side, they didn't talk about these issues that cost over $7.1 trillion. They were not funded. There was no funding for the Medicare prescription drug program. There was no funding for the tax cuts. It is true the budget for next year will not be as close to balance as we all would wish, but I believe that is because of the hand we were dealt. The best way to bring the budget back into order over the long run is to grow our economy. This is something everybody in this building believes in. Our inheritance from the previous administration was tax cuts, overwhelmingly tilted toward those who were already well off, unfunded new entitlement programs, and two wars paid for with borrowed money. All these transformed our country's finances, leading us down the path to where we are now, potentially on the brink of fiscal ruin. Instead of saving for the future, we are borrowing billions from China, Japan and other countries and falling deeper into debt. There are two kinds of deficits, and we have not done a good job explaining this. Economists will agree. There is the deficit you create in good times by profligate spending and tax cuts. That is one kind of deficit. When the economy is going well, you should be building surpluses. However, once you are in the hole, you have to get out of the hole, and that is a different kind of deficit. For that kind of deficit, you need to get the economy moving again because growth is the only way you are going to get out of the hole. President Bush inherited a balanced budget, a vast fiscal surplus projected at the time to be $5.6 trillion over 10 years. Instead, he left office having added nearly $5 trillion to the national debt. That is a swing of $10 trillion. That means the Bush years cost roughly $30,000 for each and every American. I hear people from the other side talk about the deficit. This was a $10 trillion swing starting just 10 years ago and going up 2 years ago. What amnesia. Take a look at what happened. What I am telling you are the facts. We can argue about policy but, in fact, we were in surplus and had a projected $5.6 trillion surplus when President Clinton left office. We ended up with a swing of $10 trillion, adding $5 trillion to the national debt. Those are facts. Senator Moynihan from New York used to say everybody is entitled to their opinion but not to the facts. The facts are, there was a $5.6 trillion projected surplus when President Bush took office, and we are left with a $5 trillion deficit. That adds up to $10 trillion. In fact, it adds up to $10.6 trillion. I think those of us who supported the Recovery Act need to own up to our own mistake: We have done a lousy job of explaining why the Recovery Act was needed and how it is working. We are doing a good job explaining the Web sites, but we have not done the macroeconomic explanation of why you cannot have jobs come back until the economy comes back. You cannot have the economy come back without having the Recovery Act. To start with, I will say I know it increases the deficit in the short term. I don't like it, but that was an unavoidable byproduct. The best long-term solution to our debt problems is not a little frugality that cuts down on growth. It is a robust, healthy, growing economy. That is why most economists believe--when I say ``most,'' I should say the vast majority--that in spite of the short-run deficit hit of the Recovery Act, it will bring us closer to fiscal balance over the long term. I know some of my colleagues on the other side of the aisle will take issue with this statement. I would simply remind them it is economic growth--something they have talked about for years--and economic growth alone, that will get us out of our present mess. There is another mistake we made. As we were diligently working to ensure accountability for the program--and we have done a great job of that; and that is important--and connected specific parts of the Recovery Act to specific jobs created, we have missed the forest for the trees in our explanation. We have lost track of the real objective: to jump-start the broader economy. That is where the jobs are going to come from--the main jobs. While the Recovery Act itself has created or saved 2 million jobs-- independent analysis confirms this--perhaps its most important impact has been the renewed confidence it has given to our economy. I absolutely totally, completely believe that. The jobs will come. The jobs will come. They always lag behind the economy. When the economy goes up, the jobs are not far behind. The charts do not lie. We are rebounding. By returning faith to our consumer economy, the Recovery Act has had a much greater effect than the sum of its parts. To those who opposed the Recovery Act, I ask: What was your plan? Some said--and I presided and listened to the arguments--we should fill a $2 trillion hole in our economy with $200 billion. That was a plan doomed to failure. That is what the Japanese did, and they were faced with a decade of no growth. Economists far and wide said that a $200 billion Recovery Act would have failed to halt a fall into depression. No reputable economists-- none--said this would have taken us from where we were--where we were a year ago, with 730,000 jobs being lost--to a 6-percent growth in gross domestic product for the fourth quarter of last year. We have come a long way in this past year. We have not come far enough yet. We have a long way to go. But I believe to move forward we must remember how bad things were when we began, just how deep a hole we were in, and we are pulling ourselves out of it now. The Recovery Act has done its job and will continue to do its job. Madam President, I yield the floor. Amendment No. 3354 To Amendment No. 3336 (Purpose: To encourage energy efficiency and conservation and development of renewable energy sources for housing, commercial structures, and other buildings, and to create sustainable communities)

Mr. KAUFMAN

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

Mr. KAUFMAN. Madam President, I ask unanimous consent to speak in morning business for up to 20 minutes.

Mr. KAUFMAN. Thank you, Madam President.

Mr. KAUFMAN

Mr. KAUFMAN. Madam President, I have spoken on the Senate floor many times about the importance of transparency in our markets. Without transparency, there is little hope for effective regulation. And without effective regulation, the very credibility of our markets is threatened. But I am concerned that recent changes in our markets have outpaced regulatory understanding and, accordingly, pose a threat to the stability and credibility of our equities markets. Chief among these is high-frequency trading. Over the past few years, the daily volume of stocks trading in microseconds--the hallmark of high-frequency trading--has exploded from 30 percent to 70 percent of the U.S. market. In the past few years, this trading has exploded from 30 percent to 70 percent of the entire U.S. trading market. Money and talent are surging into a high-frequency trading industry that is red hot, expanding daily into other financial markets not just in the United States but in global capital markets as well. High-frequency trading strategies are pervasive on today's Wall Street, which is fixated on short-term trading profits. Thus far, our regulators have been unable to shed much light on these opaque and dark markets, in part because of their limited understanding of the various types of high-frequency trading strategies. Needless to say, I am very worried about that. Last year, I felt a little lonely raising these concerns. But this year, I am starting to have plenty of company. On January 13, the Securities and Exchange Commission issued a 74- page Concept Release to solicit comments on a wide range of market structure issues. The document raised a number of important questions about the current state of our equities markets, including: Does implementation of a specific [high-frequency trading] strategy benefit or harm market structure performance and the interests of long-term investors? The SEC also called attention to trading strategies that are potentially manipulative, including momentum ignition strategies in which ``the proprietary firm may initiate a series of orders and trades (along with perhaps spreading false rumors in the marketplace) in an attempt to ignite a rapid price move either up or down.'' The SEC went on to ask: Does . . . the speed of trading and ability to generate a large amount of orders across multiple trading centers render this type of a strategy more of a problem today? The SEC raised many critical questions in its concept release, and I appreciate that the SEC is going to undertake a baseline review. As its comment period moves forward, I am pleased to report that other regulators and market participants, both at home and abroad, have taken notice of the global equity markets' recent changes, including the rise in high frequency trading. In the United States, the Federal Reserve Bank of Chicago, in the March 2010 issue of its Chicago Fed Letter, argued that the rise of high-frequency trading constitutes a systemic risk, asserting: The high frequency trading environment has the potential to generate errors and losses at a speed and magnitude far greater than that in a floor or screen-based trading environment. In other words, high-frequency trading firms are currently locked in a technological arms race that may result in some big disasters. Citing a number of instances in which trading errors occurred, the Chicago Fed stated: A major issue for regulators and policymakers is the extent to which high frequency trading, unfiltered sponsor access and co-location amplify risks, including systemic risk, by increasing the speed at which trading errors or fraudulent trades can occur. Moreover, the letter cautions about the potential for future high- frequency trading errors arguing: Although algorithmic trading errors have occurred, we likely have not yet seen the full breadth, magnitude, and speed with which they can be generated. There is action internationally as well. On February 4, Great Britain's Financial Services Secretary, Paul Myners, announced that the British regulators were also conducting an ongoing examination of high- frequency trading practices, stating: People are coming to me, both market users and intermediaries, saying that they have concerns about high frequency trading. These developments come on the heels of another British effort targeting so-called ``spoofing'' or ``layering'' strategies in which traders feign interest in buying or selling stock in order to manipulate its price. In order to deter such trading practices, the Financial Services Authority, FSA, announced that it would fine or suspend participants who engage in market manipulation. Noting that some market participants may not be sure that spoofing or layering is wrong, the FSA spokesman said: ``This is to clarify that it is.'' In Australia, market participants are also requesting clearer definitions of market manipulation, particularly with regard to momentum strategies such as spoofing. In a review of algorithmic trading published on February 8, the Australian Securities Exchange called on its regulators to ``ensure that . . . market manipulation provisions . . . are adequately drafted to capture contemporary forms of trading and provide a more granular definition of market manipulation.'' It is critical our regulators understand the risks posed by high- frequency trading both in terms of manipulation and at a systemic level. As the Chicago Fed stated, the threat of an algorithmic trading error wreaking havoc on our equities markets is only magnified by so- called ``naked'' or unfiltered sponsored access arrangements, which allow traders to interact on markets directly--without being subject to standard pretrade filters or risk controls. Robert Colby, the former Deputy Director of the FEC's Division of Trading and Markets, warned last September that naked access leaves the marketplace vulnerable to faulty algorithms. In a speech given at a forum on the future of high-frequency trading, which was cited by the Chicago Federal Reserve's recent letter, Mr. Colby stated that hundreds of thousands of trades representing billions of dollars could occur in the 2 minutes it could take for a broker-dealer to cancel an erroneous order executed through naked access. According to a report released December 14 by the research firm Aite Group, naked access now accounts for a staggering 38 percent of the market's average daily volume compared to only 9 percent--compared to 9 percent--only 4 years ago. That means in just 4 years, what has been determined to be a risky enterprise has increased from 9 percent of the market's average daily volume to 38 percent. That is almost 40 percent of the market's volume being executed by high-frequency traders interacting directly on exchanges without being subject to any pretrade risk monitoring. In January, the SEC acted to address this ominous trend by proposing mandatory pretrade risk checks for those participating in sponsored access arrangements. This move would essentially eliminate naked access, and I applaud the SEC for its proposal. While I am pleased that the SEC has taken on naked access and has issued a concept release on market structure issues, there is much more work that still needs to be done in order to gain a better understanding of high-frequency trading strategies and the risks of front running and manipulation they may create. In the last few months, several industry studies aimed at defining the benefits and drawbacks of high-frequency trading have emerged. While these studies may not be the equivalent of a peer-reviewed academic study, they do have the credibility of real-world market experts, and they begin to shed light on the opaque and largely unregulated, high-frequency trading strategies that dominate today's market. In addition to the Aite Group study, reports by the research group, Quantitative Services Group, QSG; the investment banking firm, Jefferies Company; the dark pool operator, Investment Technology Group, ITG; and the institutional brokerage firm, Themis Trading, all raise troubling concerns about the costs of high-frequency trading to investors and reinforce the need for enhanced regulatory oversight of these trading practices. Last November, QSG analyzed the degree to which orders placed by institutional investors are vulnerable to high-frequency predatory traders who sniff out large orders and trade ahead of them. Specifically, the study concluded that splitting large orders into several smaller ones not only enhances the risk of unfavorable changes in price but also increases ``the chances of leaving a statistical footprint that can be exploited by the `tape reading' HFT algorithms.'' While traders have long tried to trade ahead of large institutional orders, they now have the technology and models to make an exact science out of it. In a study put forth on November 3, the Jefferies Company examined the advantages high-frequency traders gain by colocating their computer servers next to exchanges and subscribing directly to market data feeds. Jefferies estimates that these advantages afford high-frequency traders a 100- to 200-millisecond advantage over those relying on standard data providers. As a result, Jefferies concludes, high- frequency traders enjoy ``almost risk-free arbitrage opportunities.'' A Themis Trading white paper released in December elaborated on Jefferies' conclusion, noting that the combination of speed and informational advantages allow high-frequency traders to ``know with near certainty what the market will be milliseconds ahead of everybody else.'' The studies and papers I have mentioned underscore the need for the Securities and Exchange Commission to implement stricter recording and disclosure requirements for high-frequency traders under a large trader authority, as Chairman Mary Schapiro promised in a letter to me on December 3. We need--and we need now--tagging of high-frequency trading orders and next-day disclosure to the regulators, and we need them now. For investors to have confidence in the credibility of our markets-- and that is absolutely key. America is great because of the credibility of our markets. If we don't have credible markets, we are in deep trouble. It is one of the things that makes America great and unique. For investors to have confidence in the credibility of our markets, regulators must vigorously pursue a robust framework that maintains strong, fair, and transparent markets. I would make five points along these lines. First, the regulators must get back in the business of providing guidance to market participants on acceptable trading practices and strategies. While the formal rulemaking process is a critical component of any robust regulatory framework, so, too, are timely guidelines that bring clarity and stability to the marketplace. Colocation, flash orders, and naked access are just a few practices that seem to have entered the market and have become fairly widespread before being subject to regulatory scrutiny. For our markets to be credible--and it is essential that they remain credible--it is vital that regulators be proactive--rather be reactive, when future developments arise. Second, the SEC must gain a better understanding of current trading strategies by using its ``large trader'' authority to gather data on high-frequency trading activity. Just as importantly, this data, once masked, should be made available to the public for others to analyze. I am concerned that academics and other independent market analysts do not have access to the data they need to conduct empirical studies on the questions raised by the SEC in its concept release. Absent such data, the ongoing market structure review predictably will receive mainly self-serving comments from high-frequency traders themselves and from other market participants who compete for high-frequency volume and market share. Evidence-based rulemaking should not be a one-way ratchet because all the ``evidence'' is provided by those whom the SEC is charged with regulating. We need the SEC to require tagging and disclosure of high- frequency trades so that objective and independent analysts--at FINRA, in academia, or elsewhere--are given the opportunity to study and discern what effects high-frequency trading strategies have on long- term investors. They can also help determine which strategies should be considered manipulative. Third, regulators must better define manipulative activity and provide clear guidance for traders to follow just as Britain's regulators have done in the area of scrutiny. By providing rules of the road, regulators can create a system better able to prevent and prosecute manipulative activity. Fourth, the SEC must continue to make reducing systemic and operational risk a top regulatory priority. The SEC's proposal on naked access is a good first step, but exchanges must also be directed to impose universal pretrade risk tests. If that is solely in the hands of individual broker-dealers, a race to the bottom might ensue. We simply must have a level playing field when it comes to risk management that protects our equities markets from fat fingers or faulty algorithms. Regulators must therefore ensure that firms have proprietary operational risk controls to minimize the incidence and magnitude of any such errors while also preventing a tidal wave of copycat strategies from potentially wreaking havoc on our equity markets. Fifth, the SEC should act to address the burgeoning number of order cancellations on the equities markets. While cancellations are not inherently bad--they can in fact enhance liquidity by affording automated traders greater flexibility when posting quotes--their use in today's marketplace, however, is clearly accessible and virtually a prima facie case that battles between competing algorithms, which use cancelled orders as feints and indications of misdirection, and have become all too commonplace, overloading the system and regulators alike. According to the high-frequency trading firm T3Live, on a recent trading day only a little more than 1 billion of the over 89 billion orders on NASDAQ's book were ever executed, meaning a whopping 99 percent of total bids and offers were not filled. Cancellations by high-frequency traders, according to T3Live, are responsible for the bulk of these unfilled orders. The high-frequency traders that create such massive cancellation rates might cause market data costs for investments to rise, make the price discovery process less efficient, and complicate the regulator's understanding of continuously evolving trading strategies. What is more, some manipulative strategies, including layering, rely on the ability to rapidly cancel orders in order to profit from changes in price. Perhaps excessive cancellation rates should carry a charge. If traders exceed a specified ratio of cancellations to orders, it is only fair that they pay a fee. The ratio could be set high enough so that it would not affect long-term investors or even day traders and should apply to all trading platforms, including dark pools and ATSs, as well as exchanges. The high-frequency traders who rely on massive cancellations are using up more bandwidth and putting more stress on the data centers. Attempts to reign in cancellations or impose charges are not without precedent. In fact they have already been implemented in derivatives markets where overall volume is a small fraction of the volume in cash market for stocks. The Chicago Mercantile Exchange's volume ratio test and the London International Financial Futures and Options Exchange's bandwidth usage policy both represent attempts to reign in excessive cancellations and might provide a helpful model for regulators wishing to do the same. Finally, the high frequency trading industry must come to the table and play a constructive role in resolving current issues in the marketplace, including preventing manipulation and managing risk. In order to maintain fair and transparent markets and avoid unintended consequences, market participants from across the industry must contribute to the regulatory process. I am pleased that a number of responsible firms are stepping forward in a constructive way, both in educating the SEC and me and my staff. I look forward to continue to working with these industry players. We all must work together, in the interests of liquidity, efficiency, transparency and fairness to ensure our markets are the strongest and best-regulated in the world. But we cannot have one with the other--for markets to be strong, they must be well-regulated. So with this reality in mind, I look forward to working with my colleagues, regulatory agencies, and people from across the financial industry to ensure our markets are free, credible and the envy of the world. Madam President, I ask unanimous consent that links to some of the studies I have mentioned be printed in the Record.

Mr. KAUFMAN

Mr. KAUFMAN. Madam President, I ask unanimous consent to speak in morning business for up to 5 minutes.

Mr. KAUFMAN

Mr. KAUFMAN. Madam President, I rise again to pay tribute to one of our Nation's great Federal employees. From the day of its creation as the first executive department in 1789, the State Department has carried out the important work of American diplomacy, pursuing peaceful relations between the United States and other nations around the world. When our role as a world power grew in the late 19th century, our diplomats became peacemakers among nations. Since the end of World War II, we heavily invested our time, treasure, and human capital in the preservation of global peace during a time wrought with potential for war and mass destruction. Today, in the aftermath of the Cold War and the September 11 attacks, our State Department personnel, and our Foreign Service officers in particular, work tirelessly to promote the American values of liberty and international cooperation. Stationed in every region, they daily endure risks to their health and safety. They leave behind family and a familiar culture. These talented and dedicated men and women are the living embodiment of President Kennedy's declaration that, while we must never negotiate out of fear, we must never fear to negotiate. Those in the Foreign Service must pass a rigorous examination and be prepared to serve in any of our 250 posts around the world. They have jobs as consular officers assisting Americans abroad, political or economic officers analyzing trends in foreign countries and promoting U.S. interests, management officers running our embassies or public diplomacy officers who share the story of America with foreign audiences. The most senior and successful diplomats may become ambassadors, the public face of our Nation and the President's personal representatives abroad. One distinguished Ambassador whose career exemplifies the work of our Foreign Service is Anne Patterson. A native of Arkansas, Anne studied at Wellesley College and the University of North Carolina. She first joined the Foreign Service in 1973 as an economic officer. Her initial postings overseas included Saudi Arabia and the United Nations offices in Geneva, Switzerland. From 1991 to 1993, Anne served as the State Department's Director for Andean Countries and later was appointed Deputy Assistant Secretary for Inter-American Affairs. In 1997, Anne was nominated and confirmed as Ambassador to El Salvador, where she served for 3 years. She became our Ambassador to Colombia in 2000. While escorting the late Senator Paul Wellstone on a visit that year to a rural town, an explosive device was found nearby by local security forces. That incident underscores the reality of the many dangers our Foreign Service officers face while serving overseas. Anne returned to Washington in 2003, where she served as deputy inspector general for the State Department. The following year, she was appointed Deputy Permanent Representative to the United Nations in New York. After U.N. ambassador John Danforth resigned in January 2005, Anne became acting ambassador, representing the United States at the United Nations. She continued to serve in that role for 6 months. From 2005 to 2007, Anne led the State Department's Bureau of International Narcotics and Law Enforcement Affairs. In May 2007, after Ambassador Ryan Crocker left Islamabad to take up his post in Iraq, President Bush nominated Anne to serve as our Ambassador in Pakistan. She continues her work in Islamabad to this day, representing our Nation at a time of great importance with the United States-Pakistani relationship. During the times I have had the honor of visiting her and our Embassy officials in Pakistan, I have been impressed by her dedication to furthering Americans' priorities in that country, to protecting our national security interests, and to managing our talented team on the ground. The life of a Foreign Service officer is not easy. Anne and her husband and her two sons and stepdaughter can attest that Foreign Service families face many challenges during a career of living overseas and moving frequently. In addition, Foreign Service families must make significant sacrifices to serve in dangerous locales, such as Pakistan, Afghanistan, and Iraq, where there are restrictions on bringing spouses and children to post. These officers serve in the face of great hardship, not for financial reward but for the satisfaction of serving the United States of America, protecting its interests, and promoting peace among nations. I hope my colleagues will join me in recognizing the enormous contribution made by Ambassador Anne Patterson and all those who serve in the Foreign Service and the State Department. I yield the floor and suggest the absence of a quorum.

Mr. KAUFMAN

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

Mr. KAUFMAN. Madam President, I ask unanimous consent to speak as in morning business for up to 5 minutes.

Mr. KAUFMAN. Madam President, I yield the floor and suggest the absence of a quorum.

Mr. KAUFMAN

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

Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in morning business.

Mr. KAUFMAN. Thank you. (The remarks of Mr. Kaufman pertaining to the introduction of S. 3043 are printed in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. KAUFMAN. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I rise once again to recognize one of America's great Federal employees. I have spoken before about the values that bind our Nation's public servants together. One of the most fundamental of these is sacrifice. We see this quality each day in the men and women who serve in uniform, both in the military and in law enforcement. They put themselves in harm's way to keep us all safe and protect our freedoms and way of life. Those who work in civilian roles also routinely take risks to their safety when performing their jobs, including the many Federal employees posted overseas and at our borders. This week, sadly, our Nation mourns the loss of a truly outstanding public servant who was killed last Thursday in the tragic attack against an office building in Austin, TX. Vernon Hunter was a 27-year veteran of the Internal Revenue Service and before that served for two decades in the U.S. Army. Earlier this month, I honored an IRS employee who made it possible for tens of millions to file their taxes electronically. At that time I spoke about how our IRS employees continually work hard to make it easier and less stressful for Americans to pay their taxes. Vernon was one of the great IRS managers who helped process tax filings and resolve issues for taxpayers. He had a reputation for being kind and full of life. He always wanted to help people solve their problems. His biography reads like a lesson in service and sacrifice. A native of Orangeburg, SC, Vernon enlisted in the U.S. Army after graduating from high school. He served two combat tours in Vietnam, at the same time facing discrimination at home when he was turned away from an all-White boarding house despite wearing the uniform. Vernon remained in the Army for 20 years, after which he worked for a short time in the private sector. However, as do many of our great Federal employees, he believed he had always been called to serve his Nation, and he returned to Federal employment nearly three decades ago when he began working for the IRS. Last week, Vernon lost his life when a small plane appeared out of the clear morning sky and struck his office building. The pilot also died in an act of apparent suicide, leaving behind a lengthy manifesto condemning corporations, the government, and singling out the IRS. Although 13 people were injured, Vernon was the only person killed in the violent explosion that ensued. Loyal, dedicated public servants such as Vernon bravely put themselves at risk each and every day through the mere act of doing their jobs. The attack in Austin was, of course, presaged by the Oklahoma City bombing and the anthrax attacks of 2001. Civilian Federal employees know there is always a risk. Many pass through metal detectors each morning coming to their offices. Mail is screened and emergency drills rehearsed. A Federal office building is a place of both dedicated work and unwitting risk in the name of service to country. Vernon, tragically, epitomized both. Vernon was 68 years old and is survived by his wife Valerie who also works for the IRS in the same office building, along with six children and stepchildren, seven grandchildren, and a great-grandchild. According to his son, Vernon was planning to retire from the IRS and go back to school. He wanted to teach children with special learning needs. Vernon was also an active member of the Greater Mountain Zion Baptist Church in Austin where he ushered and where his funeral will be held tomorrow. I hope my colleagues will join me in honoring Vernon Hunter and expressing our condolences to his family, friends, and those who worked with him at the IRS. He made the ultimate sacrifice in service of our Nation.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I am proud to cosponsor a bill Senator Snowe introduced today to conduct a study on the technical policy decision-making process and the availability of technical personnel at the Federal Communications Commission, or FCC. Professionals in the STEM fields of science, technology, engineering, and mathematics have always been our Nation's problem solvers. They help us solve great challenges in energy, health, security, and transportation. Their innovation creates jobs, jobs that will continue to lead us on the path to economic recovery. Still, the number of STEM professionals in some of our government's most critical agencies has been declining. In 1948, the FCC had 720 engineers on staff. Today, while communications technologies have become increasingly complex, it has fewer than 300 engineers. Over the years, there has been a shift in the FCC from hiring engineers to hiring professional staff, resulting in a shortage of network engineers. What is more, a high proportion of these experienced engineers are eligible to retire within the next few years. That means that, as communications technology continues to change the way we engage our world, the FCC may face a critical shortage. This legislation proposes a study by the National Academy of Sciences to address these issues. Specifically, the study will examine the FCC's technical policy decisionmaking, including if the FCC has the adequate resources, processes, and personnel in place to evaluate properly and to account for the technical aspects of the Commission's rulemaking process. It will also examine the current technical personnel staffing levels and FCC recruiting and hiring processes of technical staff and engineers. Finally, the study will provide recommendations to improve each of these areas. It is critical that we include engineers in our Nation's technical policy and decision making, at the FCC and across the government. I am pleased that this study will explore the implications and offer recommendations for the decline of engineers in this important agency and I urge my colleagues to join me in supporting Senator Snowe's efforts.

Mr. KAUFMAN. Mr. President, I rise today to support the Engineering Education for Innovation Act, or E-squared for Innovation Act. I am proud to cosponsor this bill with Senator Gillibrand, introduced today, along with Senators Snowe, Cantwell, Klobuchar, and Murray. This bill will help us meet the engineering education challenges I have often spoken about on the Senate floor by awarding, planning, and implementation grants to States to integrate engineering education into their K-12 curriculum and instruction. It also funds the research and evaluation of all such efforts. I believe we are at a crucial moment for science, technology, engineering, and math, or STEM education. Today's engineers have a central role to play in developing the innovative technologies that will help our economy recover and promote real job growth. In turn, we must promote policies and programs that help to generate greater interest in STEM and actually lead to the production of a greater number of engineers. Last year, the National Academy of Engineering and National Research Council released their seminal report on engineering in K-12 education. According to their report, K-12 engineering education can improve student learning and performance in science and math and increases students' technological literacy. It can also increase awareness of the engineering profession and boost student interest in pursuing a career in the field. The report stressed the need for greater coordination among key stakeholders to develop common definitions and grade level appropriate goals for engineering education. It also emphasized the need for more research on the impacts of engineering education and potential models for implementation. The E-squared for Innovation Act seeks to address these recommendations in three ways. First, the legislation awards planning grants to State educational agencies to review any existing engineering education resources in the State and to develop implementation plans to integrate K-12 engineering education into curriculum and instruction. Grantees must coordinate these activities with a number of partners, including the Governor's office, institutions of higher education, teachers and administrators at public elementary and secondary schools, and other relevant players in the State. Second, the E-squared for Innovation Act provides implementation grants to State educational agencies to carry out a number of activities, including developing academic standards, curricula, and assessments that include engineering; recruiting and training qualified teachers to deliver engineering education; and investing in afterschool engineering education programs. Priority will be given to applicants who serve a significant percentage of student populations underrepresented in engineering. Third, the bill charges the Institute of Education Sciences with conducting research and evaluation on the grants awarded. These studies will determine the effectiveness of the programs and activities at improving student achievement in STEM education and assess how successful programs can be replicated. The E-squared for Innovation Act is supported by a diverse list of 77 organizations. To name a few, supporters include the National Center for Technological Literacy, the American Society for Engineering Education, the Delaware Foundation for Science and Mathematics Education, IBM, Intel, the University of California, the National Society of Black Engineers, and the American Society of Mechanical Engineers--just to name a few. I am truly amazed but genuinely pleased at the wide-reaching support for this bill. Norm Augustine, former CEO of Lockheed Martin, expressed strong support for the E-squared for Innovation Act, adding: One of the many reasons our nation does not seem to attract young people into engineering is that many seem to have no idea what an engineer does. Although we attempt to teach math and science in K-12, seldom do we expose students to engineering. Many in my home State recognize this problem and, consequently, support for STEM programs is growing in Delaware. Governor Jack Markell recently launched a STEM education council in Delaware to bring together teachers, business leaders, curriculum specialists, higher education representatives, and others to focus on innovative STEM programs and curricula that engage young people in Delaware in STEM education. The council will assist in Federal grant applications for STEM-related programs and support effective professional development programs in STEM areas. In STEM-focused schools across Delaware, students are learning how to extract DNA from fruit, build robots that can throw balls, perform forensic investigations, make ``slime'' and lip balm, and more. It is through these types of comprehensive, hands-on activities that we will get young people interested in tackling and learning STEM subjects and eventually pursuing engineering jobs. The E-squared for Innovation Act is just the kind of program we need to bolster these activities in Delaware and ensure more students nationwide have access to these exciting engineering opportunities. I cannot stress enough how much I believe this Nation is at a crossroads in STEM education and that this is our opportunity to push forward and create an environment that will cultivate and encourage our next generation of engineers. They will foster the research and innovation that will help us solve challenges such as clean drinking water, lifesaving cures for cancer and disease, renewable energy, affordable health care, and environmental sustainability. Our country is counting on these future engineers, and the E-squared for Innovation Act is a step in the right direction to support and encourage them.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I am proud to cosponsor a bill Senator Snowe introduced today to conduct a study on the technical policy decision-making process and the availability of technical personnel at the Federal Communications Commission, or FCC. Professionals in the STEM fields of science, technology, engineering, and mathematics have always been our Nation's problem solvers. They help us solve great challenges in energy, health, security, and transportation. Their innovation creates jobs, jobs that will continue to lead us on the path to economic recovery. Still, the number of STEM professionals in some of our government's most critical agencies has been declining. In 1948, the FCC had 720 engineers on staff. Today, while communications technologies have become increasingly complex, it has fewer than 300 engineers. Over the years, there has been a shift in the FCC from hiring engineers to hiring professional staff, resulting in a shortage of network engineers. What is more, a high proportion of these experienced engineers are eligible to retire within the next few years. That means that, as communications technology continues to change the way we engage our world, the FCC may face a critical shortage. This legislation proposes a study by the National Academy of Sciences to address these issues. Specifically, the study will examine the FCC's technical policy decisionmaking, including if the FCC has the adequate resources, processes, and personnel in place to evaluate properly and to account for the technical aspects of the Commission's rulemaking process. It will also examine the current technical personnel staffing levels and FCC recruiting and hiring processes of technical staff and engineers. Finally, the study will provide recommendations to improve each of these areas. It is critical that we include engineers in our Nation's technical policy and decision making, at the FCC and across the government. I am pleased that this study will explore the implications and offer recommendations for the decline of engineers in this important agency and I urge my colleagues to join me in supporting Senator Snowe's efforts.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I rise today to support the Engineering Education for Innovation Act, or E-squared for Innovation Act. I am proud to cosponsor this bill with Senator Gillibrand, introduced today, along with Senators Snowe, Cantwell, Klobuchar, and Murray. This bill will help us meet the engineering education challenges I have often spoken about on the Senate floor by awarding, planning, and implementation grants to States to integrate engineering education into their K-12 curriculum and instruction. It also funds the research and evaluation of all such efforts. I believe we are at a crucial moment for science, technology, engineering, and math, or STEM education. Today's engineers have a central role to play in developing the innovative technologies that will help our economy recover and promote real job growth. In turn, we must promote policies and programs that help to generate greater interest in STEM and actually lead to the production of a greater number of engineers. Last year, the National Academy of Engineering and National Research Council released their seminal report on engineering in K-12 education. According to their report, K-12 engineering education can improve student learning and performance in science and math and increases students' technological literacy. It can also increase awareness of the engineering profession and boost student interest in pursuing a career in the field. The report stressed the need for greater coordination among key stakeholders to develop common definitions and grade level appropriate goals for engineering education. It also emphasized the need for more research on the impacts of engineering education and potential models for implementation. The E-squared for Innovation Act seeks to address these recommendations in three ways. First, the legislation awards planning grants to State educational agencies to review any existing engineering education resources in the State and to develop implementation plans to integrate K-12 engineering education into curriculum and instruction. Grantees must coordinate these activities with a number of partners, including the Governor's office, institutions of higher education, teachers and administrators at public elementary and secondary schools, and other relevant players in the State. Second, the E-squared for Innovation Act provides implementation grants to State educational agencies to carry out a number of activities, including developing academic standards, curricula, and assessments that include engineering; recruiting and training qualified teachers to deliver engineering education; and investing in afterschool engineering education programs. Priority will be given to applicants who serve a significant percentage of student populations underrepresented in engineering. Third, the bill charges the Institute of Education Sciences with conducting research and evaluation on the grants awarded. These studies will determine the effectiveness of the programs and activities at improving student achievement in STEM education and assess how successful programs can be replicated. The E-squared for Innovation Act is supported by a diverse list of 77 organizations. To name a few, supporters include the National Center for Technological Literacy, the American Society for Engineering Education, the Delaware Foundation for Science and Mathematics Education, IBM, Intel, the University of California, the National Society of Black Engineers, and the American Society of Mechanical Engineers--just to name a few. I am truly amazed but genuinely pleased at the wide-reaching support for this bill. Norm Augustine, former CEO of Lockheed Martin, expressed strong support for the E-squared for Innovation Act, adding: One of the many reasons our nation does not seem to attract young people into engineering is that many seem to have no idea what an engineer does. Although we attempt to teach math and science in K-12, seldom do we expose students to engineering. Many in my home State recognize this problem and, consequently, support for STEM programs is growing in Delaware. Governor Jack Markell recently launched a STEM education council in Delaware to bring together teachers, business leaders, curriculum specialists, higher education representatives, and others to focus on innovative STEM programs and curricula that engage young people in Delaware in STEM education. The council will assist in Federal grant applications for STEM-related programs and support effective professional development programs in STEM areas. In STEM-focused schools across Delaware, students are learning how to extract DNA from fruit, build robots that can throw balls, perform forensic investigations, make ``slime'' and lip balm, and more. It is through these types of comprehensive, hands-on activities that we will get young people interested in tackling and learning STEM subjects and eventually pursuing engineering jobs. The E-squared for Innovation Act is just the kind of program we need to bolster these activities in Delaware and ensure more students nationwide have access to these exciting engineering opportunities. I cannot stress enough how much I believe this Nation is at a crossroads in STEM education and that this is our opportunity to push forward and create an environment that will cultivate and encourage our next generation of engineers. They will foster the research and innovation that will help us solve challenges such as clean drinking water, lifesaving cures for cancer and disease, renewable energy, affordable health care, and environmental sustainability. Our country is counting on these future engineers, and the E-squared for Innovation Act is a step in the right direction to support and encourage them.

Mr. KAUFMAN

Mr. KAUFMAN. I move to reconsider the vote, and I move to lay that motion on the table. The motion to lay on the table was agreed to. The bill, H.R. 2847, as amended, was passed. (The bill will be printed in a future edition of the Record.)

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I am going to speak today once more on my weekly tribute to great Federal employees. Before I begin, I wish to say that I was quite moved by the Republican leader's speech today about Kyle Simmons. I don't know Kyle Simmons, but I must say that over the 19 years I was a chief of staff and for over a year that I have been a Senator, I recognize Kyle Simmons and so many good chiefs of staff I have known over the years. The way the Republican leader described Kyle Simmons just brought back so many memories of great people in the Senate, but especially chiefs of staff who do everything in the office from opening the door in the morning to closing it at night, to worrying about everything from the interns to the CEOs of corporations in their home States, and labor leaders. So I wish to add my voice to say I am so proud of folks who have worked in the Senate and especially, because of personal experience, those who have been chiefs of staff. I cannot speak of a better letter than the one that was written from Kyle Simmons to Billy Piper to explain what it is to be a great Senate staffer and a great chief of staff.

Mr. KAUFMAN

Mr. KAUFMAN. Now I wish to speak about another great Federal employee. Across the country, Americans are receiving their W-2 forms and taking stock of their finances in advance of April's tax filing deadline. For families, the ritual of filing income taxes repeats itself each year, and, admittedly, it isn't very much fun. Taxes have been an emotional and thorny subject in American history ever since colonial patriots rallied around the cry of ``No Taxation Without Representation.'' Indeed, though federal tax rates for personal income are low compared to most other developed countries, complaining about paying taxes remains one of our national pastimes. This is understandable. It is linked to the strong national attitude in our country that taxpayers' money should never go to waste. When Americans grumble about taxes, I believe it is not because they oppose them in general; rather, it is because they want to make sure that their money is spent wisely, fairly, and without unnecessary waste. One of the chief complaints about taxes in years past was that filing was a time-consuming and confusing process. Many can remember those days sitting in front of a pile of forms and receipts, punching away at a calculator, pencil in hand, and a 1040-form covered in eraser marks. Thankfully, because of this week's honoree, most Americans--more than 95 million filers--avoided this headache last year by filing their taxes electronically. Terrence Lutes was awarded the 2005 Service to America Medal for Citizen Services for leading the development of the Internal Revenue Service's e-File program. Terry, who spent nearly 30 years working at the IRS, served as associate chief information officer for IT Services before retiring five years ago. E-File not only makes it easy for taxpayers to file online and receive a refund in as little as ten days; it also cuts processing costs by 90 percent compared to paper filing. This benefits the taxpayers two-fold. They save time and energy individually and reduce the amount of their own money spent collecting their taxes. Terry, who holds degrees from Eastern Kentucky University and the University of Colorado, first became involved with electronic filing in 1996. As the head of the IRS's Electronic Tax Administration, he became the government's evangelist for online tax filing. E-File had been available for years, but it was costly for the IRS to operate and difficult for taxpayers to navigate. While redesigning the e-File system, Terry and his team focused on creating innovative public-private partnerships to reduce--and eventually eliminate--the direct cost to the taxpayer of filing online. He oversaw a workforce of over 6,500 employees, and carefully managed a budget of $1.5 billion. Terry cultivated relationships with software companies and tax-preparation businesses, and the results paid off. In 2005, when Terry retired after a long and distinguished career in public service, more than half of all tax returns were filed online for the first time. Today, this number continues to rise. For most Americans, what used to be a stressful experience is now fast, simple, and less expensive. Thanks to Terry, the way Americans pay their taxes is forever changed. Oliver Wendell Holmes, Jr., one of the great Supreme Court justices of the early twentieth century, once said that ``taxes are the price we pay for a civilized society.'' I am glad to know that great Federal employees such as Terrence Lutes at the IRS continue to work hard every day ensuring that our tax collection system is as efficient and responsive as possible. When I go online to file my own tax return this year, I will be thinking of these outstanding public servants at the IRS and all who work in the Federal government.

Mr. KAUFMAN. I thank the Chair. (The remarks of Mr. Kaufman, Mr. McCain, and Mr. Lieberman pertaining to the submission of S. Res. 415 are printed in today's Record under ``Morning Business.'') (The remarks of Mr. Kaufman pertaining to the submission of S. Res. 417 are located in today's Record under ``Submitted Resolutions.'')