John McCain

Mr. McCAIN

Mr. McCAIN. Mr. President, I say to my friend from Arizona, the situation of Secretary Napolitano, former Governor, whom I respect and admire enormously, is a classic example of it is not where you stand, it is where you sit because when Secretary Napalitano was Governor of Arizona, she made fervent pleas for reimbursement for the State of Arizona for our law enforcement problems dealing with immigration and for 3,000 additional Guard troops to be sent to the border. Senator Kyl and I wrote a letter back on April 9 asking for a decision concerning troops to the border. We still have not received an answer. Perhaps what the President announced yesterday a half hour after discussing the issue with Senator Kyl and me and yet not mentioning that decision might be made to send 1,200 troops to the border--you have to laugh. It is in the spirit of bipartisanship. I hope in the case of our Secretary of Homeland Security that we could see some restoration of the same zeal she held as Governor of the State of Arizona to secure our borders and advocate for the necessary assets to achieve that goal.

Mr. McCAIN. I think 3,000. I know we are taking a lot of my colleagues' time. I ask my colleagues and the American people to understand what we are facing in Arizona. I ask the American people and my colleagues to understand the frustration that the Governor and the legislature of Arizona felt about the conditions we have tried to describe on the floor of the Senate that exist, that cry out for Federal intervention, that they did not receive that assistance from the Federal Government so, therefore, they acted. That law, by the way, upon examination certainly does not call for racial profiling. In fact, it expressly prohibits it. I would urge my colleagues to read the law. I have a copy and would be glad to provide them a copy of it. But I hope my colleagues and the American people understand the reason why the legislature acted, the reason why we are here on the floor today asking for additional assistance is because of the plight of human beings, both the residents of my State who are there legally, whose security is being threatened, in some cases on a daily basis-- those who live in the southern part of our State--and also for those individuals who are being transported across our border by these cruel coyotes and who are being terribly mistreated. There are human rights violations of the most terrible kind. I hope we can all come together, recognizing this is a serious problem. It is not just a problem for Arizona, it is a problem for the Nation. We have a requirement to secure our borders. That is the obligation of every Nation. We happen to be, unfortunately, the State that suffers the most because of these insecure borders, but this spreads throughout the country. The drugs don't stop in Arizona; they go all over the country. The individuals who are smuggled in, all of them don't stop in Arizona; they go all over the country. We need to help the Government of Mexico in their struggle against these drug cartels, but we also have to take the measure--which can probably help the Mexican Government as much as anything else--of getting our border secured. I want to assure my colleagues that those of us from border States, once we get our border secured, stand ready to address these other issues that need to be addressed. But if we don't get our border secured, a year, 2 years, 10 years from now we are going to be faced with the same problem over and over with a population of people who have come to our country illegally. I ask not only for the votes of my colleagues on these amendments, but I ask for their compassion and understanding about a human rights situation that cries out for us to address as Christians and as individuals who are motivated by Judeo-Christian principles. Mr. President, I thank my colleagues, and I yield the floor.

Mr. McCAIN. Mr. President, may I engage in a colloquy with my friend from Wyoming for 1 minute?

Mr. McCAIN. I understand the Senator from Illinois was talking about Arizona and the border. I wonder if the Senator from Illinois has ever been to the Arizona border. He has?

Mr. McCAIN. Yes.

Mr. McCAIN. It is pronounced Nogales.

Mr. McCAIN. And I have been there many times. It is obvious the Senator from Illinois, even though he has been there, has no conception of what the people who live in southern Arizona are suffering under with hundreds of thousands of illegal immigrants and human smugglers and drug smuggling going through our State. I am glad he is such an expert--he and the Senator from New Jersey-- on the issue of the terrible problems that afflict our State and our need to try to get our borders secure, which every citizen has the right to expect. I thank my colleague for yielding. Tribute to Shawn Whitman

Mr. McCAIN. Mr. President, bringing the issue back to my home State of Arizona, I ask my friend, Senator Kyl, who has, along with me, traveled extensively to the southern part of our State, many of the residents of the southern part of our State, particularly those who are ranchers who live near the border, basically do not have a secure existence. They have people crossing their property illegally. They have home invasions. They have wildlife refuges on the border being trashed because of the overwhelming human traffic and the garbage and the items that are left behind. I have talked with ranchers' wives who said they could not leave their children at the bus stop. I want to be very clear. Many of these illegal immigrants are just people who want to come and get a job. But the change over the last few years is that they are escorted by these coyotes who are also associated with the drug cartels who are amongst the most cruel and inhuman people in the world. When people criticize the law in Arizona as being discriminatory, where is their concern for the individuals who are being escorted by these coyotes who inflict on them the worst abuses, terrible abuses? They bring them to Phoenix. Phoenix is the No. 2 kidnaping capital in the world. No. 1, Mexico City. No. 2, Phoenix, AZ. Can my colleagues understand why the people of Phoenix are upset? They bring them to these drop houses, they jam them into these homes, and they hold them for ransom. Then once they get the money, sometimes they let them go, sometimes they ask for more money. In the meantime, they are suffering under the most inhumane conditions. When the advocates for ``legal immigration'' are up, I say: Where is your compassion for the people who are being so terribly abused that the coyotes are bringing in the most inhumane fashion across our border and kept in the most inhumane fashions? Isn't that an argument to secure the border? Isn't that an argument to stop this human trafficking? They are unspeakable things. I will not on the floor of the Senate talk about some of the stories I have heard. We have a situation in the southern part of our State where the residents are living in a state of, if not fear, certainly deep concern and insecurity. Then we have this terrible human trafficking tied to the drug traffickers who are committing the most terrible human rights abuses.

Mr. McCAIN. Mr. President, I will point out another aspect of this issue. We are proud in my home State of our Spanish heritage. Spanish was spoken before English was in the State of Arizona. We believe our culture and our life and our State have been enriched by the influx of Hispanic citizens. We want that to continue, but we want it to continue legally. In a broader sense, we want everyone in the world to have an opportunity to come to our country legally. If we did secure our border, then everybody has an equal opportunity, rather than it be by geography. Let me point out something, of which I am not sure my colleagues are totally aware. The sophistication of these human smuggling rings and drug cartels is beyond description. They have the latest equipment. They have the latest communications. They have the latest weapons. They have a network of informers and a network, unfortunately, of corruption that is of the highest sophistication. Their operations are extremely sophisticated operations which are quite successful. But there are areas and measures that have been taken in certain parts of our border that show we can secure our border. What we need is the manpower, the technology, the assets, and the funding to get our borders secured. The State of Arizona, unfortunately, has become a funnel for this illegal human trafficking and drug cartels to the point where it has threatened the security of its average citizens. I hope my colleagues will understand this is a humanitarian issue. This is an issue that cries out for the compassion of all of us so that we can give everyone in the world an opportunity to come to this country, but also to give our citizens a chance to live lives of security that makes them able to enjoy the rights and privileges that American citizens everywhere should enjoy, even if they live on our southern border.

Mr. McCAIN. I would say to the distinguished chairman, if there is a unanimous consent agreement concluded, I would be more than happy to be interrupted. I know that business in the Senate needs to proceed. I am proud to be joining forces with my colleague from Oklahoma, Dr. Coburn, to insist that we stop burdening our children and our grandchildren with massive debt. We have before us today a supplemental appropriations bill totaling nearly $60 billion, most of it not paid for, simply being added to the ever growing debt, to be paid for by future generations of Americans. If we are serious about our commitment to reduce our debt and eliminate our deficit, then Congress needs to start making some tough decisions about our national priorities and we need to start now. Dr. Coburn is seeking a vote on one of two reasonable amendments, both of which would fully offset the cost of this bill. Yesterday, Dr. Coburn very eloquently laid out his reasons for offering those two amendments. Essentially our fiscal situation is extremely perilous and we can no longer afford to approve any new Federal funding without eliminating wasteful and unnecessary spending in other areas. Mr. President, a kind of bizarre thing happened yesterday. In the middle of his speech and his argument before the Senate, Dr. Coburn yielded the floor to the majority leader who proceeded to file cloture on this bill after only 1 day of floor consideration and not a single vote on any amendment. So on a $60 billion bill, most of it not paid for, we are now going to, without a single amendment having been voted on, be voting on a bill, in fact, that will not be paid for. As my colleagues know quite well, the editorial page of the Washington Post is by no means a conservative, right-leaning, penny-pinching bunch, but even they are perplexed about what we are doing here. Yesterday, in an editorial entitled ``Congress as Usual: There's an election coming. Time to spend,'' the Post wrote: All across the Western world, fiscal stimulus is starting to give way to fiscal consolidation. In London, the new British government has announced $8.6 billion in immediate budget cuts. In Paris, French President Nicolas Sarkozy is negotiating to raise that country's retirement age. In Madrid, Spanish civil servants are facing a 5 percent pay cut, followed by a wage freeze. Even Italy is talking about tightening spending. And don't get us started on Greece. Only in Washington, it seems, is the long awaited ``pivot'' to fiscal restraint nowhere to be seen. As the mid-term elections draw near, Congress is considering a passel of new spending, necessary and otherwise, most of which won't be paid for. Sadly, the Washington Post hit the nail on the head and the bill before us is the perfect example of Congress's inability to deal with the very serious fiscal realities that are facing this Nation. Under this supplemental, DOD receives $33.7 billion for operations in Afghanistan, Iraq, and Haiti. The bulk of this money, $24.6 billion, is for operations and maintenance, and much needed other funding. The remainder of the DOD funding is for military personnel costs and other equipment. Some say the fiscally responsible way to pay for our war costs is to increases taxes. We disagree. The American people, particularly our soldiers and their families, are sacrificing enough already. It is time for Congress to start making some sacrifices and forgo the earmarks and other special deals to help provide our troops with the support and equipment they need. The first amendment of Dr. Coburn saves taxpayers $59.6 billion by doing the following: freezing raises, bonuses, and salary increases for Federal employees for 1 year; collecting unpaid taxes from Federal employees, $3 billion; reducing printing and publishing costs of government documents, $4.4 billion over 10 years; reducing excessive duplication, overhead, and spending within the Federal Government, $20 billion; eliminating nonessential government travel, $10 billion over 10 years; eliminating bonuses for poor performance by government contractors, $8 billion over 10 years; repealing the Energy Star Program, $627 million over 10 years; eliminating an increase in foreign aid for international organizations, $68 million; limiting voluntary payments to the United Nations, $10 billion over 10 years; striking unnecessary appropriations for salaries and expenses of a government commission Congress ignored, the Financial Crisis Inquiry Commission, 1.8 million; rescinding a State Department training facility that was not requested by the community where it is to be constructed, $500 million. On the second amendment we can save taxpayers $60 billion by cutting budgets of Members of Congress, by disposing of unneeded, unused government property, auctioning and selling unused and unneeded equipment, rescinding unspent and uncommitted Federal funds, $45 billion. We have ways we can cut spending. We have ways we can reduce the government, in the first amendment, by nearly $60 billion, and in the other one by $60 billion. In a letter to Speaker Pelosi in April of last year, President Obama wrote: As I noted when I first introduced my budget in February, this is the last planned war supplemental. Since September 2001, the Congress has passed 17 separate emergency funding bills totaling $822.1 billion for the wars in Iraq and Afghanistan. After 7 years of war, the American people deserve an honest accounting of the cost of our involvement in our ongoing military operations. Quoting from the President's letter of April of last year: We must break that recent tradition and include future military costs in the regular budget so that we have an honest, more accurate, and fiscally responsible estimate of Federal spending. And we should not label military costs as emergency funds so as to avoid our responsibility to abide by the spending limits set forth by the Congress. The President emphasized, again quoting from his letter to the Speaker of the House: After years of budget gimmicks and wasteful spending, it is time to end the era of irresponsibility in Washington. I could not agree more. That is why I am disappointed to see yet another supplemental spending bill designated as an emergency without offsets. Dr. Coburn and I agree with what the President said last year. ``After years of budget gimmicks and wasteful spending, it is time to end the era of irresponsibility in Washington.'' That is precisely what we are seeking to do with these two amendments. In the past 2 years, America has faced her greatest fiscal challenges since the Great Depression. When the financial markets collapsed, it was the American taxpayer who came to the rescue of the banks and the big Wall Street firms. But who has come to the rescue of the American taxpayer? Certainly not Congress. So what has Congress done? By enacting inexplicable policies that can only be described as generational theft, we have saddled future generations with literally trillions of dollars of debt. Since January of 2009, we have been on a spending binge the likes of which this Nation has never seen. In that time, our debt has grown by over $2 trillion. We passed a $1.1 trillion stimulus bill. Remember the assurance that unemployment would be at a maximum of 8 percent? Now it is 9.9. We passed a $2.5 trillion health care bill. The American people are still angry about that. The President submitted a budget for next year totaling $3.8 trillion. We now have a deficit of over $1.4 trillion, and we just passed, a week or so ago, the $13 trillion debt mark which amounts to more than $42,000 owed by every man, woman, and child in America. This year the government will spend more than $3.6 trillion and will borrow 41 cents for every $1 it spends. Unemployment remains at 9.9 percent and, according to forbes.com, a record 2.8 million American households were threatened with foreclosure last year. That number is expected to rise to well over 3 million homes this year. With this bill, we are poised to tack another $60 billion onto the tab. I travel a lot around my State. I know all of my colleagues do. Every place I go I meet county supervisors, city councilmen, mayors, elected officials from all over the State. I talk to the Governor, the legislature. They make tough decisions. The city of Phoenix had to cut its budget by some 30 percent last year, a very tough decision. Meanwhile, we increased domestic spending by 20 percent. What is the difference between the city of Phoenix and us in the Capitol? We print money. A debt of $1.4 trillion this year, estimated to be $1.5 trillion this year, how can we continue this? These two amendments by Dr. Coburn can achieve a significant savings, $60 billion in each. That is $120 billion that both of these amendments could save the taxpayers. Wouldn't it be wonderful to show the taxpayers that maybe we are going to do something like cutting the budget, cutting our budgets? Wouldn't it be nice to tell the American people we are going to eliminate nonessential government travel? Couldn't we at least freeze bonuses? We have an opportunity to show the American people we are going to tighten our belts a little bit, too; that we care about generational theft; that we care about future generations of Americans. I know some of these measures will not be popular, but Dr. Coburn has never been one who has tried to win a popularity contest. What Dr. Coburn has tried to do is steer the American people on a path to some kind of fiscal solvency so we can stop this terrible generational theft we are committing. The greatness of America, certainly one of her greatest attributes, is we have handed on to every generation a better one than the one they had before them. That has been the great wonder and beauty of America. With these kinds of debts and deficits, what can we pass on to our children and grandchildren? I applaud Senator Coburn not only for this effort but many of the other efforts he has made. I am pleased to join him. I hope my colleagues will understand that the American people are angry and frustrated. Look at the latest polling numbers--we do read polls. Do you want to reelect your Member of Congress? What is our approval rating? It is 14, 13, 12 percent. We are down to blood relatives and paid staffers. The point is, let's send a message to the American people we are serious. Yes, there are tough decisions and tough things that are embodied in this legislation. I urge my colleagues to at least take a look at them and consider putting this Congress and this Nation on a different path. I yield the floor.

Mr. McCAIN

Mr. McCAIN. I have a parliamentary inquiry.

Mr. McCAIN. What is the parliamentary situation at the moment?

Mr. McCAIN. I understand the Senator from Louisiana wants to speak and then the Senator from Wisconsin. I ask unanimous consent that following the Senator from Louisiana, following the Senator from Wisconsin, that I be put in line to speak for purposes of offering an amendment.

Mr. McCAIN. I amend my unanimous-consent request that the Senator from Louisiana, followed by the Senator from Wisconsin, followed by me, followed by the Senator from Texas, all to speak, and if the Senator from Hawaii agrees, for purposes of proposing amendments which requires setting aside the pending amendment.

Mr. McCAIN. Madam President, I ask unanimous consent that the pending amendment be set aside and call up amendment No. 4214. And I thank the distinguished managers of the bill.

Mr. McCAIN. Madam President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. McCAIN. Madam President, the amendment would fund the immediate deployment of 6,000 National Guard troops to the U.S.-Mexico border to provide additional security since the situation on the border has greatly deteriorated during the last 18 months. The National Guard troops would remain on the border until the Secretary of Defense, in consultation with the Governors of Arizona, California, New Mexico, and Texas, determines that the Federal Government has achieved ``operational control'' of the border. Since I put this amendment together, we have been informed that the President will be asking for an additional $500 million to support border security and up to 1,200 National Guard to be sent to the border. I appreciate that. I think it is a recognition of the violence on the border which has been really beyond description in some respects, particularly on the Mexico side. I appreciate the additional 1,200 Guard being sent, as well as an additional $500 million, but it is simply not enough. We need 6,000. We need 3,000 across the border and an additional 3,000 National Guard troops on the Arizona-Mexico border. I say that because of my many visits to the border, my conversations with the Border Patrol, and the time it will take to train an additional 3,000 troops just for the Arizona-Mexico border. I have colleagues waiting with other amendments, but I hope my colleagues appreciate the extent of the violence on the Mexican border and the dramatic increase in that violence that has taken place over the last several years. There was a time not that long ago that someone who wanted to come across our border illegally could do so if they were fortunate and would come across by themselves. That is no longer possible. We now have highly organized human smuggling rings and drug cartels that are working together. They are using the same routes, and unfortunately the so-called central corridor, the Arizona-Mexico border, has been where a great degree of violence and certainly a preponderance or a majority of human smuggling and drug smuggling has taken place. I would refer two numbers to my colleagues. Last year, in the Tucson sector of the Arizona-Mexico border, there were over 1.2 million pounds of marijuana intercepted on that border, to the point where I was told that the U.S. attorney didn't prosecute anything less than 500 pounds of marijuana intercepted. One other number: Last year on the Tucson sector of the Arizona-Mexico border, 241,000 illegal immigrants were apprehended trying to cross the Mexico-Arizona border. If you figure we catch one out of four, one out of five illegal immigrants who are coming across, that is about a million people, a million illegal immigrants coming across the Tucson sector, destroying people's property, destroying our wildlife refuges, and causing an environment of total insecurity amongst the citizens who live in the southern part of my State. I understand the controversy associated with the legislation that was passed by the Arizona Legislature and signed by the Governor. By the way, that legislation is less severe than Federal law--certainly nothing like the Mexican law regarding treatment of illegal immigrants--and it has been badly mischaracterized by administration officials who have admitted they haven't even read the bill. But the important aspect here is that I support that legislation because the Arizona Governor and Legislature acted in frustration because of the Federal Government's failure to carry out its responsibilities to secure our border. Again, 1.2 million pounds of marijuana, 241,000 illegal immigrants, and then the situation is compounded by the incredible violence--22,000 Mexican citizens have been murdered on the Mexican side of the border in the last 3 years in the struggle between the Mexican Government and the drug cartels. It was predicted by many of us, as we saw this violence increase, that sooner or later it was going to spill over the border or affect American citizens. Three American citizens were killed on the Mexican side of the border as they made their way home to the United States. In March, a third-generation Arizona rancher was found dead on his property near the Mexican border, reportedly shot by a suspect who may have illegally entered our country. So the point is, this violence is at such a level that it makes a compelling argument for us to secure our border. I understand the liberal media and the mainstream media who have talked about our situation in Arizona. Most of them have never been within about 100 miles of the border. But the point is that the citizens in my State deserve the right to live a secure existence--not to be threatened, not to have their property overrun, not to have their homes broken into. A mother came to me at a townhall meeting and said: I am afraid to drop my children off at the school bus stop. This violence on the border is unspeakable. It is one of the least reported aspects of this whole issue, and I still am puzzled as to why. People are beheaded and their bodies hung at the overpass in Tijuana. A wedding took place not long ago, and the drug people came in and took the groom, his brother, and a nephew, and their bodies were found a few hours later. A young man who was part of the capture of one of these drug lords was lionized by the Mexican Government, and his whole family was murdered. This is a degree of brutality that threatens the very existence of the Mexican Government. I am proud we are working with the Mexican Government. I hope all of our colleagues understand we have spent over $1 billion. The corruption level that exists in Mexico today reaches to the highest levels of government. So really the only institution the government can rely on is the army. When we send the Guard to the border, we are told the presence of the Guard has an effect on these drug cartels. By the way, the drug cartels are watching everything on the border. They have the most sophisticated communications. They have sophisticated intelligence capability, and they are very efficient in their organization. So the Guard troops on the border in the past have had a very salutary effect. That is why we need 6,000 of them until such time as we can train additional Border Patrol and customs people to address this issue. So I wish to emphasize to my colleagues that we should not forget, to start with, that it is the United States of America that is creating the demand for these drugs, and at some point we have to address that issue too. But in the meantime, this violence that is taking place in Mexico on the Mexican side of the border, which has spilled over on our side, can only get worse until these drug cartels are brought under control and the human smugglers are brought under control, and that will only take place when our border is secure. We can secure the border. The Yuma sector, as my colleague from Arizona has pointed out, has taken measures, including incarceration of illegal immigrants, including increased fencing and surveillance. By the way, UAVs are a very important part of this equation. So we have been able to drastically reduce the illegal activity, both drug and human smuggling, in the Yuma sector of the border. My colleague from Texas will testify that in, I believe it is the McAllen sector of Texas, there has been significant and dramatic improvement. In San Diego, there is dramatic improvement. So those who feel we can't secure our border, there are great examples of our ability to do so with people, with fences, and with technology. We can do these things. We have to get an additional 6,000 troops to the border before there are more tragedies such as happened with Rob Prince, the rancher from Arizona, or the deputy all the way up in Pinal County, some 50 miles from the border, who was shot in the stomach, in pursuit of one of these drug people, with an AK-47. So I urge my colleagues and I urge all Americans to understand that we in Arizona didn't want to have this law passed by the legislature. It was done out of frustration because of the Federal Government's failure to exercise its responsibility. It is a Federal responsibility, something that the Secretary of Homeland Security emphasized in a letter, when she was Governor of the State of Arizona, on March 11, 2008. It says: Clearly, Operation Jump Start has been highly effective--on and on about how important the help in insuring the border and bringing the Guard to the border has been. That is true today. So the Arizona Legislature and Governor did not wish to pass this legislation. It was enacted because the people of Arizona had an insecure border and live, in many cases, in an insecure environment. An obligation we have to all of our citizens is to allow them to live in a secure environment. By the way, this law the Arizona Legislature passed is far less severe in many respects than the Federal law and certainly far different from the law in Mexico, which is very stringent in its provisions and penalties for illegal immigration. So we need relief in our State. We need relief in many places across the border. The drug cartels have to be stopped. Working with Mexico, I believe we can, over time, bring the border under control and rid the scourge of these drug cartels and these human smugglers. Let me finally say, because I know my colleagues are waiting, that the treatment of human beings by these coyotes, these human smugglers, is atrocious, unspeakable. They take them and they pack them into-- well, the other day, a U-Haul rental truck was apprehended. Sixty-seven human beings were packed inside. They take them to these drop houses. They hold them for ransom, and then after they are ransomed, sometimes they mistreat them even further. The human rights abuses that are taking place in these human smuggling rings is atrocious beyond description. That alone should compel us to get our borders secure and to provide for a legal system of immigration into our country. We welcome immigrants. We welcome our Hispanic heritage. We cherish it. Spanish was spoken in our State of Arizona before English. But we have to get the human smuggling and drug cartels under control because the security of our citizens and our Nation depends on it. So I urge my colleagues to support the amendment. I yield the floor.

Mr. McCAIN. Madam President, I reserve the right to object too. I have been here a long time. That is the first time I have seen that from the Senator from New Jersey. If that is the way we are going to do business here, this place will grind to a halt. I think it is discourteous of the Senator from New Jersey to do that. This place exists and runs mostly on comity. I hope that does not become a practice here or it will be practiced on this side as well.

Mr. McCAIN

Mr. McCAIN. Mr. President, it is with regret that I come to the floor to announce my opposition to this piece of legislation. I express regret not because this is somehow a good bill with a few flaws serious enough to warrant a no vote--I express regret because this bill is an abysmal failure and serves as yet another example of Congress' inability to tackle tough problems and institute real, meaningful and comprehensive reform. In the past 2 years America has faced her greatest fiscal challenges since the Great Depression. When the financial markets collapsed it was the American taxpayer who came to the rescue of the banks and big Wall Street firms--but who has come to the rescue of the American taxpayer? Certainly not Congress. So what has Congress done? By enacting policies that can only be described as inexplicable generational theft--we've saddled future generations with literally trillions of dollars of debt. Since January of 2009 we have been on a spending binge the likes of which this nation has never seen. In that time our debt has grown by $2 trillion. We passed a $1.1 trillion ``stimulus'' bill. We spent $83 billion to bail out the domestic auto industry. We passed a $2.5 trillion health care bill. The President submitted a budget for next year totaling $3.8 trillion. We now have a deficit of over $1.4 trillion and a debt of over $12.9 trillion. Unemployment remains at almost 10 percent. And, according to Forbes.com, a record 2.8 million American households were threatened with foreclosure last year, and that number is expected to rise to well over 3 million homes this year. And how has the Senate responded to this crisis of staggering debt, catastrophic job loss and unimaginable foreclosure rates? Did the majority take on the special interests? Did they seize the opportunity to develop a bill that goes right to the heart of the problem and make serious, meaningful and comprehensive reforms? Nope. They punted. Out of pure political expediency, they shrugged their shoulders and kicked the can down the road and left the tough decisions for an unluckier group of Americans. It is clear to any rational observer that the housing market has been the catalyst of our current economic turmoil. And it is impossible to ignore the significant role played by the government-sponsored enterprises--GSEs--Fannie Mae and Freddie Mac. The events of the past two years have made it clear that never again can we allow the taxpayer to be responsible for poorly-managed financial entities who gambled away billions of dollars. Fannie Mae and Freddie Mac are synonymous with mismanagement and waste and have become the face of `too big to fail'. A May 6th editorial in the Wall Street Journal stated: Fan and Fred owned or guaranteed $5 trillion in mortgages and mortgage-backed securities when they collapsed in September 2008. Reforming the financial system without fixing Fannie and Freddie is like declaring a war on terror and ignoring al Qaeda. Unreformed, they are sure to kill taxpayers again. Only yesterday, Freddie said it lost $8 billion in the first quarter, requested another $10.6 billion from Uncle Sam, and warned that it would need more in the future. This comes on top of the $126.9 billion that Fan and Fred had already lost through the end of 2009. The duo are by far the biggest losers of the entire financial panic--bigger than AIG, Citigroup and the rest. From the 2008 meltdown through 2020, the toxic twins will cost taxpayers close to $380 billion, according to the Congressional Budget Office's cautious estimate. The Obama Administration won't even put the companies on budget for fear of the deficit impact, but it realizes the problem because last Christmas Eve it raised the $400 billion cap on their potential taxpayer losses to . . . infinity. Moreover, these taxpayer losses understate the financial destruction wrought by Fan and Fred. By concealing how much they were gambling on risky subprime and Alt-A mortgages, the companies sent bogus signals on the size of these markets and distorted decision-making throughout the system. Their implicit government guarantee also let them sell mortgage- backed securities around the world, attracting capital to U.S. housing and thus turbocharging the mania. During the debate on this financial reform bill, we heard much about how the U.S. Government will never again allow a financial institution to become too big to fail. We heard countless calls for more regulation to ensure that taxpayers are never again placed at such tremendous risk. Sadly, the bill before us now completely ignores the elephant in the room--because no other entities' failure would be as disastrous to our economy as Fannie Mae's and Freddie Mac's. Yet the majority chose not to address them at all in the bill before us. There have been numerous warnings about the mismanagement of both Fannie and Freddie over the years. In May of 2006, after a 27 month investigation into the corrupt corporate culture and accounting practices at Fannie Mae, the Office of Federal Housing Enterprise Oversight--OFHEO--the Federal regulator charged with overseeing Fannie Mae--issued a blistering, 348-page report which highlighted the culture of corruption which was rampant at Fannie Mae. The report stated things such as: Fannie Mae senior management promoted an image of the Enterprise as one of the lowest-risk financial institutions in the world and as ``best in class'' in terms of risk management, financial reporting, internal control, and corporate governance. The findings in this report show that risks at Fannie Mae were greatly understated and that the image was false. During the period covered by this report--1998 to mid- 2004--Fannie Mae reported extremely smooth profit growth and hit announced targets for earnings per share precisely each quarter. Those achievements were illusions deliberately and systematically created by the Enterprise's senior management with the aid of inappropriate accounting and improper earnings management. A large number of Fannie Mae's accounting policies and practices did not comply with Generally Accepted Accounting Principles (GAAP). The Enterprise also had serious problems of internal control, financial reporting, and corporate governance. Those errors resulted in Fannie Mae overstating reported income and capital by a currently estimated $10.6 billion. By deliberately and intentionally manipulating accounting to hit earnings targets, senior management maximized the bonuses and other executive compensation they received, at the expense of shareholders. Earnings management made a significant contribution to the compensation of Fannie Mae Chairman and CEO Franklin Raines, which totaled over $90 million from 1998 through 2003. Of that total, over $52 million was directly tied to achieving earnings per share targets. Fannie Mae consistently took a significant amount of interest rate risk and, when interest rates fell in 2002, incurred billions of dollars in economic losses. The Enterprise also had large operational and reputational risk exposures. Fannie Mae's Board of Directors contributed to those problems by failing to be sufficiently informed and to act independently of its chairman, Franklin Raines, and other senior executives; by failing to exercise the requisite oversight over the Enterprise's operations; and by failing to discover or ensure the correction of a wide variety of unsafe and unsound practices. Fannie Mae senior management sought to interfere with OFHEO's special examination by directing the Enterprise's lobbyists to use their ties to Congressional staff to (1) generate a Congressional request for the Inspector General of the Department of Housing and Urban Development (HUD) to investigate OFHEO's conduct of that examination and (2) insert into an appropriations bill language that would reduce the agency's appropriations until the Director of OFHEO was replaced. So what steps were taken by the Congress to punish Fannie Mae for such deliberate manipulation and outright corruption at that time? Basically: none. And nothing is done to rein them in under this bill either. Just this morning the Heritage Foundation wrote the following: There is still nothing in this bill that addresses the perverse incentives and moral hazard that is created when the federal government sticks its nose into the housing market. Last year, the two financed or backed about 70 percent of single-family mortgage loans. They hold about $5 trillion in their investment portfolios. Both are losing money fast, with those losses being covered by the U.S. taxpayer. Last month, Freddie announced it had lost $8 billion in the first quarter of 2010 and would be asking for another $10.6 billion in taxpayer help. Not to be outdone, Fannie announced an $11.5 billion loss and asked for another $8.4 billion from taxpayers. That's atop the nearly $145 billion of your dollars that Fannie and Freddie have already received. Fannie and Freddie alone prove this bill does nothing to end ``too big to fail.'' Fannie and Freddie should be partly wound down, the rest broken up and sold off--not replaced, reformed, or rejuvenated. The Dodd bill does none of that. As my colleagues know, I offered a good, common-sense amendment designed to end the taxpayer-backed conservatorship of Fannie Mae and Freddie Mac by putting in place an orderly transition period and eventually requiring them to operate--without government subsidies--on a level playing field with their private sector competitors. Unfortunately that amendment was defeated by a near-party-line vote. The majority, however, did offer an alternative proposal to my amendment. Was it a good, well thought out, comprehensive plan to end the taxpayer-backed free ride of Fannie and Freddie and require them to operate on a level playing field with their private sector competitors? Nope. It was a study. The majority included language in this bill to study the problem of Fannie and Freddie for six months. Wow! Instead of dealing head-on with the two enterprises that brought our entire economy to its knees--entities which have already cost taxpayers over $145 billion in bailouts--the Democrats want to study them for 6 more months. It is no wonder the American people view us with such contempt. Additionally, I cosponsored an amendment with my colleague from Washington, Senator Cantwell, to ensure that we never again stick the American taxpayer with another $700 billion-plus tab to bailout the financial industry. If big Wall Street institutions want to take part in risky transactions--fine. But we should not allow them to do so with federally insured deposits. Paul Volcker, a top economist in the Obama administration and former Federal Reserve Chairman, wants the nation's banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. Congress and the administration should accept this and shield commercial banking from Wall Street's wild ways. ``The banks are there to serve the public,'' Mr. Volcker said, ``and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties'' and ultimately fails. The amendment we offered precluded any member bank of the Federal Reserve System from being affiliated with any entity or organization that is engaged principally in the issue, flotation, underwriting, public sale or distribution of stocks, bonds or other securities. Essentially, commercial banks may no longer inter-mingle their business activities with investment banks. It is that simple. Since the repeal of the Glass-Steagall Act in 1999, this country has seen a new culture emerge in the financial industry: one of dangerous greed and excessive risk-taking. Commercial banks traditionally used people's deposits for the constructive purpose of main street loans. They did not engage in high risk ventures. Investment banks, however, managed rich people's money--those who can afford to take bigger risks in order to get a bigger return, and who bore their own losses. When these two worlds collided, the investment bank culture prevailed, cutting off the credit lifeblood of Main Street firms, demanding greater returns that were achievable only through high leverage and huge risk taking, and leaving taxpayers with the fallout. When the glass wall dividing banks and securities firms was shattered, common sense and caution went out the door. The new mantra of ``bigger is better'' took over--and the path forward focused on short-term gains rather than long-term planning. Banks became overleveraged in their haste to keep up in the race. The more they lent, the more they made. Aggressive mortgages were underwritten for unqualified individuals who became homeowners saddled with loans they couldn't afford. Banks turned right around and bought portfolios of these shaky loans. Sub-prime loans made up only 5 percent of all mortgage lending in 1998, but by the time the financial crisis peaked in late 2008, they were approaching 30 percent. Since January 2008, we have seen 264 state and national banks fail. In my home State of Arizona, eight banks have shut their doors, leaving small businesses scrambling to find credit from other banks that may have already been overleveraged. Banks sold sub-prime mortgages to their affiliates and other securities firms for securitization, while other financial institutions made risky bets on these and other assets for which they had no financial interest. As the market grew bigger, its foundation became shakier. It was like a house of cards waiting to fall. And fall it did. In October 2008, the financial system was on the brink of collapse when Congress was forced to risk $700 billion of taxpayer dollars to bailout the industry. These financial institutions had become too big to fail. In fact, the special inspector general of Troubled Asset Relief Program--TARP--testified before Congress last year that ``total potential Federal Government support could reach $23.7 trillion'' to stabilize and support the financial system. Ironically, some of these ``too big to fail'' institutions have now become even bigger. A recent editorial from the New York Times stated: The truth is that the taxpayers are still very much on the hook for a banking system that is shaping up to be much riskier than the one that led to disaster. Big bank profits, for instance, still come mostly courtesy of taxpayers. Their trading earnings are financed by more than a trillion dollars' worth of cheap loans from the Federal Reserve, for which some of their most noxious assets are collateral. They benefit from immense federal loan guarantees, but they are not lending much. Lending to business, notably, is very tight. What profits the banks make come mostly from trading. Many big banks are happy to depend on the lifeline from the Fed and hang onto their toxic assets hoping for a rebound in prices. And the whole system has grown more concentrated. Bank of America was considered too big to fail before the meltdown. Since then, it has acquired Merrill Lynch. Wells Fargo took over Wachovia. And JPMorgan Chase gobbled up Bear Stearns. If the goal is to reduce the number of huge banks that taxpayers must rescue at any cost, the nation is moving in the wrong direction. The growth of the biggest banks ensures that the next bailout will have to be even bigger. These banks will be more likely to take on excessive risk because they have the implicit assurance of rescue. The Federal Government has set a dangerous precedent here. We sent the wrong message to the financial industry: you engage in bad, risky business practices, and when you get into trouble, the government will be there to save your hide. It amounts to nothing more than a taxpayer- funded subsidy for risky behavior. The consolidation of the banking world was also riddled with conflicts of interest, despite the purported firewalls that were put into place. If an investment bank had underwritten shares for a company that was now in financial trouble, the investment bank's commercial arm would feel pressure to lend the company money, despite the lack of merits to do so. This amendment would have eliminated some of these conflicts. It is time to put a stop to the taxpayer financed excesses of Wall Street. No single financial institution should be so big that its failure would bring ruin to our economy and destroy millions of American jobs. This country would be better served if we limit the activities of these financial institutions. Banks should accept consumer deposits and invest conservatively, while investment banks engage in underwriting and sales of securities. In an op-ed titled ``Bring Back Glass-Steagall,'' Wall Street Journal columnist Thomas Frank summed up the situation very nicely recently when he wrote: One of these days, we will finally dispel the `New Economy' mysticism that beclouds this issue and begin to think seriously about how to re-regulate the financial sector. And when we do, we may find the answer involves some version of the idea behind Glass-Steagall--drawing a line between banks that the government effectively guarantees and banks that behave like big hedge funds, experimenting with the latest financial toxins. Hopefully, that day will come before Wall Street decides to take another headlong run at some attractive cliff. Unfortunately, our amendment was defeated by a procedural motion and was not even brought up for a vote. Again, I regret that I have to vote against this bill. I assure my colleagues, and the American people, that if this were truly a bill that instituted real, serious and effective reforms--I would be the first in line to cast a vote in its favor. But it is not. It serves as evidence of a dereliction of our duty and a missed opportunity to provide the American people with the protections necessary to avert yet another financial disaster. They deserve better from us.

Mr. McCAIN

Mr. McCAIN. Mr. President, I call up amendment No. 3839 and ask for its immediate consideration and ask to set aside pending amendments.

Mr. McCAIN. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. McCAIN. Mr. President, before we continue, I know the distinguished chairman of the Banking Committee and the manager of the bill want us to move forward. I understand that. As we speak, I am compiling a list of those who want to speak on the amendment on this side. I assure him we will try to get a time agreement completed as soon as possible. I ask my colleagues on this side of the aisle who want to speak on this amendment to call the cloakroom so we can get that done. Mr. President, I ask unanimous consent that Senators Burr, Hutchison, and Roberts be added as cosponsors of this amendment.

Mr. McCAIN. Mr. President, I apologize to my colleagues for giving them false information a couple of days ago. It is not $125.9 billion that we are now pouring into Fannie and Freddie; it is up to $145 billion that is now being poured in--$145 billion. I remind my colleagues again that last Christmas Eve at 7 p.m. was when the Treasury Department decided to lift the cap, which had been at $400 billion. It is now up--$145 billion. Here we are addressing financial regulatory reform and not looking at $5 trillion of toxic assets that have already spent $145 billion off budget. It is off budget. Incredible. My distinguished friend from Connecticut pointed out yesterday--he says I want a little revisionist history. He says the House financial committee passed bipartisan legislation. It stalled in the committee over here despite the support for it. The Republican-controlled committee then passed a bill and never filed it, never brought it up for a vote here on the floor of the Senate in 2005. That was my friend Senator Dodd's statement yesterday. The fact is--a little revisionist history--on April 1, 2004, the Senate Banking Committee passed the bill, the Federal Housing Enterprise Regulatory Reform Act. All 12 Republicans voted for it. All Democrats, including the distinguished chairman, voted against it, according to the Record. So neither bill was taken on the floor because, as we know, we don't move forward with legislation if it is blocked by the other side. Then Senator Dodd went on to say: I became chairman of the Banking Committee in 2007. We arrived at 2008. We had a significant number of hearings. In the summer of 2008, the Banking Committee passed a comprehensive bill--et cetera, et cetera. The Housing and Economic Recovery Act was finally enacted on July 30, 2008. Just 39 days later, Fannie Mae and Freddie Mac were placed into conservatorship. I remind Senator Dodd that back in 2006, there was a group of us, in response to an inspector general's report, who said we need to fix it and fix it now, and that was blocked by the other side. Senator Dodd said: If you think the market took a plunge last Thursday, adopt the McCain amendment. It is a reckless amendment. What is reckless is the status quo. What is reckless is to totally ignore $5 trillion in toxic assets, already $145 billion of the taxpayers' money being spent. It is reckless for us to go to the American people and say we are fixing the problem that caused the financial meltdown and yet we are ignoring Fannie and Freddie. We are ignoring the trillions of dollars of toxic assets. And don't worry, we will address it later on. That is what the distinguished chairman is going to say--we will address this later on. Later on? Later on? When we have this already done? And it is not on budget. Remarkable. What the amendment says is that the conservatorship has to end in 24 months. We will give them 2 years to figure all this out. It is reckless, in my view, to say we are not addressing these trillions of dollars in toxic assets, the hemorrhaging of $145 billion already of taxpayers' dollars, on which there is no expert who believes we will ever see a return. Finally, I would like to quote the Wall Street Journal editorial of this morning that says, ``$145 Billion and Counting. Fannie and Freddie lose it all for you.'' The editorial says: These efforts to support the Obama anti-foreclosure program resulted in a doubling of loan modifications compared to the previous-- Let me start from the beginning. Fannie Mae yesterday announced its 11th consecutive quarterly loss--$11.5 billion--and asked for another $8.4 billion in taxpayer assistance. They lost that. They are asking for $8.4 billion. That puts us well over $150 billion. Fannie Mae is the Cal Ripken of bad real-estate deals, reliably pouring taxpayer money into the housing market. Granted, Fannie faces tough competition from its toxic twin, Freddie Mac, which last week announced its own request of another $10.6 billion from taxpayers. Once the checks from the Treasury clear, Fan and Fred will have consumed a combined $145 billion in taxpayer cash, and the end is nowhere in sight. Both companies warned of further losses triggering more government assistance, which is now unlimited after a 2009 Treasury decision. The losses are unlimited because the companies are now run by the government not to make money, by deliberately subsidizing housing. In yesterday's press release, CEO Mike Williams didn't even pretend that he's running a profit- making business. ``In the first quarter, we continued to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing effort to keep people in their homes,'' he said. These efforts to support the Obama anti-foreclosure program resulted in a doubling of loan modifications compared to the previous quarter. Ramping up modifications makes perfect sense in the upside- down world of Fannie Mae. The company also announced that most of the loans it modified in the first three quarters of 2009 had gone delinquent again within six months. Does anyone get that? Most of the loans that were modified--at the cost of $100-and-some billion of taxpayers money--have gone under again, have gone delinquent again within 6 months. The Wall Street Journal goes on: Talk about an exciting business opportunity. In case anyone still hasn't gotten the joke, the company also clarified yesterday that its directors ``are not obligated to consider the interests of the company'' unless the government tells them to do so. The real joke is that the Obama Administration and Senator Chris Dodd have collaborated on a financial regulatory reform bill that includes no reform of Fan or Fred. Senators should rectify this embarrassment as early as today by voting for John McCain's amendment to end this most costly of all bailouts. My question to the distinguished chairman is, even if he doesn't accept any of the statements I made, is it true that there are trillions of dollars in toxic assets and, if so, what are we going to do about it and when? If not on this bill, where? The cynicism out there amongst the American people is at the highest level I have ever seen it in the many years I have been privileged to serve. To go to the American people and say we are going to take measures which will prevent another worldwide fiscal meltdown and we are not going to address trillions of dollars in toxic assets we have already poured $145 billion into--they lifted the cap on Christmas Eve at 7 p.m, so they think it is going to be in excess of $400 billion over time, and nothing in this piece of legislation, nothing in it has anything to do with Fannie Mae or Freddie Mac. Don't be surprised at the cynicism of the American people. I want to tell the manager, because he was not here, that I am trying to get a list of speakers, get time agreements and give him a time agreement at least on this side as soon as possible. I yield the floor.

Mr. McCAIN. Mr. President, before I yield to Senator Thune, in response to Senator Dodd's statement, I am incredulous that we would somehow believe Fannie and Freddie were not among the prime reasons for this financial meltdown. Peter Wallison, who is a fellow in financial policy studies at the American Enterprise Institute and is a leading expert on banking and securities regulation, has written extensively about this issue and says: The roots of the financial crisis date back to 1993, when Fannie Mae and Freddie Mac-- With the encouragement, by the way, of Members of Congress, including the passage of the Community Reinvestment Act, which basically forced people to give home loan mortgages to people who could never pay them back--he goes on to say-- began stocking up on subprime mortgage assets and other risky loans while reporting them as prime. The agencies' conflict of interest between lending to low-income borrowers and minimizing risk-taking activity may be to blame for their behavior, however, it is certain that the government's failure to properly regulate the enterprises has created one of the worst policy disasters in history. On Christmas Eve, when most Americans' minds were on other things, the Treasury Department announced it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history. That is the view of most economists. How in the world someone as knowledgeable as the distinguished chairman of the committee does not recognize this is one of the prime reasons for the failure, this is one of the prime reasons why 48 percent of the homes in Arizona are underwater, where people are throwing keys in the middle of the living room floor because they cannot afford to make the payments. The enablers were Fannie Mae and Freddie Mac--the enablers of all this. Time after time, this Congress--this Congress--put pressure on them to increase their home loan mortgages to people who could never afford to pay their mortgages. We know that is the cause of it, and how the Senator from Connecticut can somehow allege that Fannie and Freddie were not--as Mr. Wallison says, the ``action confirms that the decade- long congressional failure to more closely regulate these two government-sponsored enterprises will rank for U.S. taxpayers as one of the worst policy disasters in our history.'' This morning, Mr. Wallison is quoted as saying: Right now we have a consensus that something needs to be done. The sensible thing to do is to put Congress in a position where they have to act within a certain period of time. That is what this amendment does. They have to act in a certain period of time. The Senator wants to know who should be making home loans? Community banks. Community banks should be making home loans to people. They should be able to extend lines of credit to small businesses. But the main thing is, it should not be given to a government-sponsored enterprise to keep it in business, where the hundreds of billions of taxpayer dollars being spent is unlimited. I yield the floor. Senator Thune, I believe, has 10 minutes.

Mr. McCAIN. Mr. President, I have been around this body for a long time. I have seen the side-by-sides. This is one of the classics that we have seen time after time. If you don't like a tough amendment, then have one that requires a study. Let's study the problem. And the purpose of this amendment as stated, and I quote from the amendment: To require the Secretary of the Treasury to conduct a study on ending the conservatorship of Fannie Mae and Freddie Mac and reforming the housing finance system. Reforming the housing finance system--I thought reforming the housing finance system was part of the deal here. I had no idea we were not going to reform the housing finance system when we advertised this legislation to the American people as to assure them that there would never be another financial meltdown which was caused by the housing finance system. What does the side-by-side amendment do? It will require the Secretary of Treasury to conduct a study. Do you mean to tell me the Secretary of Treasury, after the greatest financial meltdown in history since the Great Depression, has to conduct a study? He has to conduct a study to figure out why we have just spent $145 billion, lifted the $400 billion cap at 7 p.m. on Christmas Eve? The system cries out for reform now. As is stated by literally every expert in America, it was the housing meltdown, abetted by the enablers Fannie and Freddie, that caused the financial meltdown. So we are doing nothing about it except asking the Secretary of Treasury to conduct a study. Remarkable. Remarkable. Again I want to quote from the Wall Street Journal that says it well enough. It says: This action confirms the decade-long congressional failure to more closely regulate these two government-sponsored enterprises will rank for U.S. taxpayers as one of the worst policy disasters in our history. One of the worst policy disasters in our history, and we are doing nothing about it except conduct a study. That ought to do it. I am not calling for the abolition of Fannie and Freddie. I am calling for them to stop being in the government trough. I am saying that Fannie and Freddie ought to be doing their job in competition with everybody else who finances home loan mortgages in America. The history of these organizations is replete with enabling by the Congress of the United States--including, by the way, incredible compensation for the so-called people who were supervising these organizations as they went into the tank--one of them $93 million for a year or two of supervising going farther and farther into toxic assets. All I can say is if we pass this legislation without this amendment, do not look the American people in the eye and say we have reformed the financial system in America. Do not look the American people in the eye and say we will never again have a financial collapse in this country. Do not say we are going to turn off the spigot of Federal tax dollars-- already $145 billion. Why did the Treasury lift the cap of $400 billion that we were going to spend to help with these toxic assets of Fannie and Freddie if they didn't think it was going to be more than $400 billion? So what are we doing in response? Sitting by and watching hundreds of billions of dollars of the taxpayers' money being used to bail out these two government-sponsored enterprises to the great cost of the American taxpayer. Again I say to my colleagues: Don't wonder why the American people are fed up. Don't wonder why the American people are in virtual peaceful revolt, when we continue to pour good money after bad, to the tune of hundreds of billions of dollars, without reforming the institutions that caused it. We are not fulfilling our responsibilities to the American taxpayers. I am asking my colleagues, don't vote for another study. If you are going to vote against my amendment, fine, but let's not continue this charade and vote for another study. I yield to the Senator from Alabama what time remains.