John McCain

Mr. McCAIN

Mr. McCAIN. I ask for the yeas and nays.

Mr. McCAIN. Mr. President, for the information of the manager, I have the following speakers: Senator Coburn for 10 minutes, Senator DeMint for 10 minutes, Senator Thune for 10 minutes. I have not been able to nail down Senator Shelby as to how much time he will take. I would like to sum up for 5 minutes. There will be no more speakers on my side other than those.

Mr. McCAIN

Mr. McCAIN. In the words of Humphrey Bogart in Casablanca, I was misinformed because I was told by several different individuals that you would be moving to table the amendment if it was proposed. I am glad to hear that is not the case. I know of at least 20 Members on this side who want to speak on this issue. I will try to compile that and try to come to the Senator with a list and the time they want to discuss. With all due respect to all the other amendments--and I do not say this very often--when we are talking about trillions of dollars-- trillions of dollars--this is a very important amendment. So I will try to get to the distinguished chairman--I say with sympathy and respect-- a list of speakers and the amount of time they may consume as soon as possible.

Mr. McCAIN. Sure. Absolutely.

Mr. McCAIN. Absolutely.

Mr. McCAIN. I have no objection to moving other amendments while I am doing that. None whatsoever.

Mr. McCAIN. We have to ask our leader but, yes, that is fine. Our two leaders say it is fine. I thank you.

Mr. McCAIN. I have not laid down the amendment because I understand the Senator from Connecticut would move to table, and there are numerous Members who want to talk on this issue--this multitrillion- dollar issue. So, no, I have not. But I can also assure the Senator from Connecticut, if I propose the amendment, and it is tabled without proper debate, there will be another amendment just like it.

Mr. McCAIN. Madam President, I want to discuss amendment No. 3839. This amendment is 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. Events of the last 2 years have made it clear that never again can we allow the taxpayer to be responsible for poorly managed financial entities which gamble away billions of dollars. Fannie Mae and Freddie Mac are synonomous with mismanagement and waste and have become the face of too big to fail. The time has come to end Fannie Mae and Freddie Mac's taxpayer-backed free ride and require them to operate on a level playing field. I want to quote from an AP story yesterday entitled: ``Freddie Mac seeks $10.6B in aid after 1Q loss.'' Freddie Mac is asking for $10.6 billion in additional Federal aid after posting a big loss in the first 3 months of the year. It is another sign that the taxpayer bill for stabilizing the housing market will keep mounting. The McLean, VA-based mortgage finance company has been effectively owned by the government after nearly collapsing in September of 2008. The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion. Freddie Mac says it lost $8 billion, or $2.45 a share, in the January-March period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with the loss of $10.4 billion or $3.18 a share, in the year-ago period. So the beat goes on and the drainage goes on. Here on this chart we have the money yet to be repaid by institutions that received $10 billion or more in taxpayer bailouts. Obviously, these organizations have paid back. GMAC still has $16 billion they owe the taxpayer; Citigroup, $25 billion; GM--despite their PR stunt the other day, where they say they paid back, with TARP money, they paid the taxpayers with taxpayer money--$43.7 billion; AIG, $69.8 billion; and, of course, Fannie and Freddie, $125.9 billion plus. I wish to begin today by calling my colleagues' attention to an editorial in this morning's Wall Street Journal, which states: Fan and Fred owned or guaranteed $5 trillion in mortgages and mortgage-backed securities when they collapsed in September of 2008. Reforming the financial system without fixing Fannie and Freddie is like declaring a war on terror and ignoring al-Qaida. I want to repeat that sentence for the benefit of my colleagues. This is from the Wall Street Journal this morning. Reforming the financial system without fixing Fannie and Freddie is like declaring war on terror and ignoring al- Qaida. 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 numbers, I say to my colleagues, are staggering--staggering. 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-- Strangely enough on 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. Specifically, this amendment does several things: It provides for a finite end to the current conservatorship period for both government-sponsored enterprises--GSEs--at 2 years of date from the enactment. The Federal Housing Finance Agency has an option to extend conservatorship for 6 months if the FHFA Director determines and notifies Congress that adverse market conditions exist. If at the end of conservatorship a GSE is not financially viable, the FHFA must place that GSE in receivership. If the GSE is financially viable, then it would be allowed to reenter the market under new operating restrictions. It provides for the following changes to existing operating structure: It calls for the repeal of the affordable housing goals mandates for the GSEs. It calls for new limits for mortgage assets held on its books of no more than 95 percent of mortgage assets owned on December 31 of the prior year, reduced an additional 25 percent by the end of year 1, reduced an additional 25 percent by the end of year 2, and reduced to $250 billion by the end of year 3. It strengthens capital standards and allows them to be increased by the FHFA as necessary. It calls for the repeal of the temporary increases in conforming loan limit and high cost area increases, and a return to the $417,000 conforming loan limit for the first year, subject to annual adjustments by FHFA. It provides for a prohibition on the purchase of mortgages exceeding the median home price for that area. It calls for a minimum downpayment requirement of at least 5 percent for all new loans purchased by the GSE, increasing to 7.5 percent in the second year, and 10 percent in the third year. It repeals the GSE exemption from having to pay State and local taxes. I wonder how many of my colleagues and fellow citizens knew that Fannie and Freddie did not have to pay State and local taxes. It calls for a repeal of the exemption allowing GSE securities to avoid full SEC registration. In other words, given their enormous clout here in the Congress, Fannie and Freddie were able to have an exemption from their securities falling under SEC registration. It calls for an assessment of fees on GSEs to recoup full value of the benefit due to guarantee provided by the Federal Government. And GAO will conduct a study to determine current value of government guarantee. The amendment establishes a 3-year period after the end of conservatorship for GSEs to operate under new operating restrictions until their government charter expires. Upon charter expiration, it provides for a 10-year period with the creation of a separate holding corporation and a dissolution trust fund for any remaining mortgages or debt obligations held by the GSE. It establishes a Senate-confirmed special inspector general within the Government Accountability Office with responsibility for investigating and reporting to Congress on decisions made with respect to the conservatorships of Fannie Mae and Freddie Mac. The SIG would provide quarterly reports to Congress. While GSEs remain in conservatorship, it reestablishes the Federal funding limit of $200 billion per institution for the GSEs and requires the GSEs to reduce their portfolio holdings by 10 percent of the prior year's holdings. It also establishes an approval process for any further agreements that put the taxpayers at risk. It places Fannie Mae and Freddie Mac as part of the Federal budget as long as either institution is under a conservatorship or receivership. Again, my colleagues might be interested that Fannie Mae and Freddie Mac, and what we are doing with them now, is not part of the Federal budget--remarkable. It requires the FHFA to establish minimum prudent underwriting standards for mortgage loans eligible for government-sponsored entities purchase. Minimum requirements will include verification and documentation of income and assets relied upon to qualify the borrower for the mortgage loan and determination of borrower's ability to repay the mortgage loan. I might add that the Congressional Budget Office has indicated this amendment would save the taxpayers several billions of dollars annually. I repeat, the Congressional Budget Office states--and, by the way, it has not been given any phony assumptions such as a doc fix-- this amendment would save the taxpayers several billions of dollars annually. During the debate on this financial reform bill, we will continue to hear a lot about how the U.S. Government will never again allow a financial institution to become too big to fail. We will hear continuous calls for more regulation to ensure that taxpayers are never again placed at such tremendous risk. Sadly, and I say very sadly, the underlying bill completely ignores the elephant in the room because no other entity's failure would be as disastrous to our economy as Fannie Mae's and Freddie Mac's. Yet this bill does not address them at all. In a recent Opinion Piece in the Wall Street Journal, Robert Wilmers wrote: Congress may be making progress crafting new regulations for the financial-services industry, but it has yet to begin reforming two institutions that played a key role in the 2008 credit crisis--Fannie Mae and Freddie Mac. We cannot reform these government-sponsored enterprises unless we fully confront the extent to which their outrageous behavior and reckless business practices have affected the entire commercial banking sector and the U.S. economy as a whole. At the end of 2009, their total debt outstanding--either held directly on their balance sheets or as guarantees on mortgage securities they'd sold to investors--was $8.1 trillion. That compares to $7.8 trillion in total marketable debt outstanding for the entire U.S. government. The debt has the implicit guarantee of the federal government but is not reflected on the national balance sheet. The public has focused more on taxpayer bailouts of banks, auto makers and insurance companies. But the scale of the rescue required in September 2008 when Fannie and Freddie were forced into conservatorship--their version of bankruptcy--was staggering. To date, the federal government has been forced to pump $126 billion into Fannie and Freddie. That's far more than AIG, which absorbed $70 billion of government largess, and General Motors and Chrysler, which shared $77 billion. Banks received $205 billion, of which $136 billion has been repaid. Fannie and Freddie continue to operate deeply in the red, with no end in sight. The Congressional Budget Office estimated that if their operating costs and subsidies were included in our accounting of the overall federal deficit--as properly they should be--the 2009 deficit would be greater by $291 billion. The op-ed continues: All this happened in the name of the ``American Dream'' of home ownership. But there's no evidence Fannie and Freddie helped much, if at all, to make this dream come true. Despite all their initiatives since the early 1970s, shortly after they were incorporated as private corporations protected by government charters, the percentage of American households owning homes has increased by merely four percentage points to 67%. According to a 2004 Congressional Budget Office study, the two GSEs enjoyed $23 billion in subsidies in 2003--primarily in the form of lower borrowing costs and exemption from state and local taxation. But they passed on only $13 billion to home buyers. Nevertheless, one former Fannie Mae CEO, Franklin Raines, received $91 million in compensation from 1998 through 2003. Amazing. In 2006, the top five Fannie Mae executives shared $34 million in compensation, while their counterparts at Freddie Mac shared $35 million. In 2009, even after the financial crash and as these two GSEs fell deeper into the red, the top five executives at Fannie Mae received $19 million in compensation and the CEO earned $6 million. This is not private enterprise--it's crony capitalism, in which public subsidies are turned into private riches. From 2001 through 2006, Fannie and Freddie spent $123 million to lobby Congress--the second-highest lobbying total in the country. That lobbying was complemented by sizable direct political contributions to members of Congress. Changing this terrible situation will not be easy. The mortgage market has come to be structured around Fannie and Freddie and powerful interests are allied with the status quo. Nonetheless, Congress must get to work on the reform of Fannie Mae and Freddie Mac. A healthy housing market, a healthy financial system and even the bond rating of the federal government depend on it. There have been countless 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 stated that: 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. The Board's failures continued in the wake of revelations of accounting problems and improper earnings management at Freddie Mac and other high profile firms, the initiation of OFHEO's special examination, and credible allegations of improper earnings management made by an employee of the Enterprise's Office of the Controller. Senior management did not make investments in accounting systems, computer systems, other infrastructure, and staffing needed to support a sound internal control system, proper accounting, and GAAP-consistent financial reporting. Those failures came at a time when Fannie Mae faced many operational challenges related to its rapid growth and changing accounting and legal requirements. Fannie Mae senior management sought to interfere with OFHEO's special examination by diretstOg the Enterprise's lobbyists to use their ties to Congressional staff to No. 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 No. 2, insert into an appropriations bill language that would reduce the agency's appropriations until the Director of OFHEO was replaced. OFHEO has directed and will continue to direct Fannie Mae to take remedial actions to enhance the safe and sound operation of the Enterprise going forward. OFHEO staff recommends actions to enhance the goal of maintaining the safety and soundness of Fannie Mae. A remarkable report. So what steps were taken by the Congress to punish Fannie Mae for such deliberate manipulation and outright corruption? Basically: NONE. According to published reports--including Fannie Mae's own news release--Daniel Mudd, the president and CEO of Fannie Mae at the time, was awarded over $14.4 million in 2006--the year this report was issued, and over $12.2 million in 2007 in salary, bonuses and stock. And Fannie Mae continued their risky behavior-- successfully posting profits of $4.1 billion in 2006. The blatant corruption reported by the OFHEO led me to come to the Senate floor back in 2006 and call for the immediate consideration of GSE regulatory reform legislation. At the time I said: For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. Additionally, also in May, 2006, I joined 19 of my colleagues in writing to the majority leader urging him to bring the Federal Housing Enterprise Regulatory Reform Act to the floor for debate. I ask unanimous consent this letter be printed in the Record.

Mr. McCAIN. The letter stated in part: Substantial testimony calling for improved regulation of the GSEs has been provided to the Senate by the Treasury, Federal Reserve, HUD, GAO, CBO, and others. Congress has the opportunity to recommit itself to the housing mission of the GSEs while at the same time making sure the GSEs operate in a manner that does not expose our financial system, or taxpayers, to unnecessary risk. It is vitally important that Congress take the necessary steps to ensure that these institutions benefit from strong and independent regulatory supervision, operate in a safe and sound manner, and are primarily focused on their statutory mission. More importantly, Congress must ensure that the American taxpayer is protected in the event either GSE should fail. Sadly, the bill which had passed the Senate Banking Committee under the leadership of then-Chairman Shelby, with the support of all the committee's Republicans and none of the Democrats, was not brought up for consideration before this body. It is critical to note, it was in 2005 that the GSEs, which had been acquiring increasing numbers of subprime loans for many years in order to meet their HUD-imposed affordable housing requirements, accelerated the purchases that led to their 2008 insolvency. If legislation along the lines of the Senate Banking Committee's bill had been enacted that year, many if not all the losses Fannie Mae and Freddie Mac suffered, and will suffer in the future, may have been avoided. I wish to make it clear to my colleagues: Failure of Congress to act could have prevented--if they had acted--many of the failures we are now facing. Any criticism leveled at Congress for the failures in Fannie Mae and Freddie Mac is very well placed. On October 3, 2008, the Wall Street Journal reported on how Congress pushed Fannie Mae and Freddie Mac to increase the purchases of low- and moderate-income borrowers. They wrote: Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low- and moderate-income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target--42 percent of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50 percent in 2000 and 52 percent in 2005. For 1996, HUD required that 12 percent of all mortgages purchased by Fannie Mae and Freddie Mac be ``special, affordable'' loans, typically to borrowers with income less than 60 percent of their area's median income. That number was increased to 20 percent in 2000 and 22 percent in 2005. The 2008 goal was to be 28 percent. Between 2000 and 2005, Fannie Mae and Freddie Mac met these goals every year, funding hundreds of billions of dollars' worth of loans, many of them subprime and adjustable rate loans made to borrowers who bought houses with less than 10 percent down. Fannie Mae and Freddie Mac also purchased hundreds of billions of subprime securities for their own portfolios to make money and help satisfy HUD affordable housing goals. Fannie Mae and Freddie Mac were important contributors to the demand for subprime securities. Congress designed Fannie Mae and Freddie Mac to serve both their investors and the political class. Demanding that Fannie Mae and Freddie do more to increase home ownership among poor people allowed Congress and the White House to subsidize low-income housing outside the budget, at least in the short run. It was a political free lunch. The Community Reinvestment Act, CRA, did the same thing with traditional banks. It encouraged banks to serve two masters, their bottom line and the so-called common good. First passed in 1977, the CRA was ``strengthened'' in 1995, causing an increase of 80 percent in the number of bank loans going to low- and moderate-income families. By the way, there is nothing wrong with that as long as they meet the fundamental criteria, that they are borrowing money they can pay back. Fannie Mae and Freddie Mac were part of the CRA story too. In 1997, Bear Stearns did the first securitization of CRA loans, a $384 million offering guaranteed by Freddie Mac. Over the next 10 months, Bear Sterns issued $1.9 billion of CRA mortgages backed by Fannie Mae or Freddie Mac. Between 2000 and 2002, Fannie Mae securitized $394 billion in CRA loans, with $20 billion going to securitize the mortgages. Fannie Mae and Freddie Mac played a significant role in the explosion of subprime mortgages and subprime mortgage-backed securities. Without Fannie Mae and Freddie Mac's implicit guarantee of government support, which turned out to be all too real, would the mortgage-backed securities market and the subprime part of it have expanded the way they did? Perhaps. But before we conclude that markets failed, we need a careful analysis of public policy's role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time? Part of the answer is, a political class greedy to push home ownership rates to historic highs, from 64 percent in 1994 to 69 percent in 2004. This was mostly the result of loans to low-income, higher risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted this rise as it occurred. The consequence, on top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets. Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process and a proposed solution to this crisis. Congress had the responsibility to ensure that Fannie Mae and Freddie Mac were properly supervised and adequately regulated. Congress failed. The devastation caused by that failure continues to reverberate across the Nation as more and more families face foreclosures every day. In September 2008, the Washington Post published an in-depth article titled: ``How Washington Failed to Rein in Fannie, Freddie. As Profits Grew, Firms Used Their Power To Mask Peril.'' It is extremely informative and raised many troubling questions about the culture of corruption which is evident in the operations of both enterprises. The Post piece begins: Gary Gensler, an undersecretary of the Treasury, went to Capitol Hill in March 2000 to testify in favor of a bill everyone knew would fail. Fannie Mae and Freddie Mac were ascendent, giants of the mortgage finance business and key players in the Clinton administration's drive to expand home ownership. But Gensler and other Treasury officials feared the companies had grown so large that, if they stumbled, the damage to the U.S. economy could be staggering. Few officials had ever publicly criticized Fannie Mae and Freddie Mac, but Gensler concluded it was time to rein them in. ``We thought this was a hand-on-the-Bible moment,'' he recalled. The bill failed. The companies kept growing, the dangers posed by their scale and financial practices kept mounting, critics kept warning of the consequences. Yet across official Washington, those who might have acted repeatedly failed to do so until it was too late. Blessed with the advantages of a government agency and a private company ``at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them. The companies fought successfully against increased regulation by cultivating their friends and hounding their enemies. The agencies that regulated the companies were outmatched: They lacked the money, the staff, the sophistication and the political support to serve as an effective check. But most of all, the companies were protected by the belief widespread in Washington--and aggressively promoted by Fannie Mae and Freddie Mac--that their success was inseparable from the expansion of homeownership in America. That conviction was so strong that many lawmakers and regulators ignored the peril posed to that ideal by the failure of either company. In October 1992, a brief debate unfolded on the floor of the House of Representatives over a bill to create a new regulator for Fannie Mae and Freddie Mac. On one side stood Jim Leach, an Iowa Republican concerned that Congress was ``hamstringing'' this new regulator at the behest of the companies. He warned that the two companies were changing ``from being agencies of the public at large to money machines for the stockholding few.'' On the other side stood Barney Frank, a Massachusetts Democrat, who said the companies served a public purpose. They were in the business of lowering the price of mortgage loans. Congress chose to create a weak regulator, the Office of Federal Housing Enterprise Oversight. The agency was required to get its budget approved by Congress, while agencies that regulated the banks set their own budgets. That gave Congressional allies an easy way to exert pressure. ``Fannie Mae's lobbyists worked to ensure that [the] agency was poorly funded and its budget remained subject to approval in the annual appropriations process,'' OFHEO said more than a decade later in a report on Fannie Mae. ``The goal of senior management was straightforward: to force OFHEO to rely on the [Fannie] for information and expertise to the degree that Fannie Mae would essentially regulate itself.'' Congress also wanted to free up money for Fannie Mae and Freddie Mac to buy mortgage loans and specified that the pair would be required to keep a much smaller share of their funds on hand than other financial institutions. Where banks that held $100 could spend $90 buying mortgage loans, Fannie Mae and Freddie Mac could spend $97.50 buying loans. Finally, Congress ordered that the companies be required to keep more capital as a cushion against losses if they invested in riskier securities. But the rule was never set during the Clinton administration, which came to office that winter, and was only put in place nine years later. The Clinton administration wanted to expand the share of Americans who owned homes, which had stagnated below 65 percent throughout the 1980s. Encouraging the growth of the two companies was a key part of that plan. ``We began to stress homeownership as an explicit goal for this period of American history,'' said Henry Cisneros, then Secretary of Housing and Urban Development. ``Fannie Mae and Freddie Mac became part of that equation.'' The result was a period of unrestrained growth for the companies. They had pioneered the business of selling bundled mortgage loans to investors and now, as demand for investors soared, so did their profits. Near the end of the Clinton administration, some of its officials had concluded the companies were so large that their sheer size posed a risk to the financial system. In the fall of 1999, Treasury Secretary Lawrence Summers issued a warning, saying, ``Debates about systemic risk should also now include government-sponsored enterprises, which are large and growing rapidly.'' It was a signal moment. An administration official had said in public that Fannie Mae and Freddie Mac could be a hazard. The next spring, seeking to limit the companies' growth, Treasury official Gensler testified before Congress in favor of a bill that would have suspended the Treasury's right to buy $2.25 billion of each company's debt--basically, a $4.5 billion lifeline for the companies. A Fannie Mae spokesman announced that Gensler's remarks had just cost 206,000 Americans the chance to buy a home because the market now saw the companies as a riskier investment. The Treasury Department folded in the face of public pressure. There was an emerging consensus among politicians and even critics of the two companies that Fannie Mae might be right. The companies increasingly were seen as the engine of the housing boom. They were increasingly impervious to calls for even modest reforms. As early as 1996, the Congressional Budget Office had reported that the two companies were using government support to goose profits, rather than reducing mortgage rates as much as possible. But the report concluded that severing government ties with Fannie Mae and Freddie Mac would harm the housing market. In unusually colorful language, the budget office wrote, ``Once one agrees to share a canoe with a bear, it is hard to get him out without obtaining his agreement or getting wet.'' Fannie Mae and Freddie Mac enjoyed the nearest thing to a license to print money. The companies borrowed money at below-market interest rates based on the perception that the government guaranteed repayment, and then they used the money to buy mortgages that paid market interest rates. Federal Reserve Chairman Alan Greenspan called the difference between the interest rates a ``big, fat gap.'' The budget office study found that it was worth $3.9 billion in 1995. By 2004, the office would estimate it was worth $20 billion. As a result, the great risk to the profitability of Fannie Mae and Freddie Mac was not the movement of interest rates or defaults by borrowers, the concerns of normal financial institution. Fannie Mae's risk was political, the concern that the government would end its special status. So the companies increasingly used their windfall for a massive campaign to protect that status. ``We manage our political risk with the same intensity that we manage our credit and interest rate risks,'' Fannie Mae chief executive Franklin Raines said in a 1999 meeting with investors. Fannie Mae, and to a lesser extent Freddie Mac, became enmeshed in the fabric of political Washington. They were places former government officials went to get wealthy--and to wait for new federal appointments. At Fannie Mae, chief executives had clauses written into their contracts spelling out the severance benefits they would receive if they left for a government post. The companies also donated generously to the campaigns of favored politicians. But Fannie Mae wasn't just buying influence. It was selling government officials on an idea by making its brand synonymous with homeownership. The company spent tens of millions of dollars each year on advertising. In tying itself to politicians and wrapping itself in the American flag, Fannie Mae went out of its way to share credit with politicians for investments in their communities. ``They have always done everything in their power to massage Congress,'' Leach said. And when they couldn't massage, they intimidated. In 2003, Richard H. Baker (R-La.), chairman of the House Financial Services subcommittee with oversight over Fannie Mae and Freddie Mac, got information from OFHEO on the salaries paid to executives at both companies. Fannie Mae threatened to sue Baker if he released it, he recalled. Fearing the expense of a court battle, he kept the data secret for a year. Baker, who left office in February, 2008, said he had never received a comparable threat from another company in 21 years in Congress. ``The political arrogance exhibited in their heyday, there has never been before or since a private entity that exerted that kind of political power,'' he said. In June 2003, Freddie Mac dropped a bombshell: It had understated its profits over the previous three years by as much as $6.9 billion in an effort to smooth out earnings. OFHEO seemed blind. Months earlier, the regulator had pronounced Freddie's accounting controls ``accurate and reliable.'' Humiliated by the scandal, then-OFHEO director Armando Falcon Jr. persuaded the White House to pay for an outside accountant to review the books of Fannie Mae. The agency reported in September 2004 that Fannie Mae also had manipulated its accounting, in this case to inflate its profits. The companies soon faced new bills in both the House and the Senate seeking increased regulation. The Bush administration took the hardest line, insisting on a strong new regulator and seeking the power to put the companies into receivership if they foundered. That suggested the government might not stand behind the companies' debt. Fannie Mae and Freddie Mac succeeded in escaping once more, by pounding every available button. The companies orchestrated a letter-writing campaign by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up. The wife lamented: ``But that could mean we won't be able to afford the new house.'' Most of all, the company leaned on its Congressional supporters. Fannie Mae even persuaded the New York Stock Exchange to allow its shares to keep trading. The company had not issued a required report on its financial condition in a year. The rules of the exchange required delisting. So the exchange created an exception when ``delisting would be significantly contrary to the national interest.'' The amendment was approved by the Securities and Exchange Commission. Fannie Mae would remain on the New York Stock Exchange. As Fannie Mae and Freddie Mac were trying to recover from their accounting scandals, a new and ultimately mortal threat emerged. Yet again, the warnings went unheeded for too long. The companies had begun buying loans made to borrowers with credit problems. Fannie Mae and Freddie Mac had been losing market share to Wall Street banks, which were doing boomtown business packaging these riskier loans. The mortgage finance giants wanted a share of the profits. Soon, the firms' own reports were noting the growing risk of their portfolios. Dense monthly summaries of the companies' mortgage purchases were piling up at OFHEO. An employee at one of the companies said it was already a constant discussion around the office in 2004: When would the regulators notice? ``It didn't take a lot of sophistication to notice what was happening to the quality of the loans. Anybody could have seen it,'' the staffer said. ``But nobody on the outside was even questioning us about it.'' President Bush had pledged to create an ``ownership society,'' and the companies were helping the administration achieve its goal of putting more than 10 million Americans into their first homes. Fannie Mae and Freddie Mac's appetite for risky loans was growing ever more voracious. By the time OFHEO began raising red flags in January 2007, many borrowers were defaulting on loans and within months Fannie Mae and Freddie Mac would be running out of money to cover the losses. Finally, as the credit crisis escalated, Congress passed a bill in July of 2008 that established a tough, new regulator for Fannie Mae and Freddie Mac. It was too late. Americans are hurting. The economic situation remains depressed in my State. Unemployment is at record levels. The time has come to end the taxpayer-funded free ride of the gambling institutions. We cannot afford it anymore. Mr. President, for us to somehow say we are going to enact significant and meaningful financial regulatory reform without addressing this situation--these hundreds of billions of dollars of toxic assets that still have not been resolved; two government- supported enterprises that have been propped up by the taxpayers of America for too long, while they engaged in the riskiest of enterprises, paying obscene profits to their executives and CEOs, their boards of directors derelict in their duties, criminally so. We must enact reform of Freddie and Fannie if we are going to perform our duties, albeit too late--too late because of the terrible losses we have inflicted on the American taxpayers. But it is not too late to fix it. Mr. President, I yield the floor.

Mr. McCAIN

Mr. McCAIN. Mr. President, I would like to take a moment today to recognize the extraordinary contributions of VADM Mike Loose, Civil Engineer Corps, U.S. Navy to our Nation. Vice Admiral Loose has served with exceptional distinction as the Deputy Chief of Naval Operations, CNO, for Fleet Readiness and Logistics, a position of great responsibility, from January 2007 to April 2010. Vice Admiral Loose brought a unique and remarkable perspective to the CNO's leadership team, resulting in profound innovations to Navy policy, programs, and resourcing. His professional reach extended to the Joint Staff, the other Services, our international defense partners, and the industry to achieve alignment and collaboration resulting in great benefits to everyone involved. He was the visionary leader and driving force behind the Navy's transition from a level-of- effort based budget to a model-based approach that links Afloat Readiness to output metrics and resources. This transformational leap provided senior Navy leadership the intellectual basis and the tools to enhance core Warfighting capabilities in a restrained fiscal environment and to clearly define the relationship between baseline and overseas contingency operations funding. Vice Admiral Loose was also the vanguard who recognized the strategic imperative of energy to the employment of Navy combat forces and spearheaded the establishment of Task Force Energy and the Navy Energy Coordination Office 2 years ago. He fully established the mindset that energy is a tactical advantage and strategic enabler for military forces. In short order, his Energy organization was recognized as the premier model for the other Services and as the foundation for the DON's Energy program. In addition, he profoundly reshaped and expertly guided the Navy's Environmental Program at a time when the importance of the program was paramount. His foresight and energetic leadership ensured the Navy achieved regulatory milestones and uninterrupted, critical operational training in support of national command authority objectives. In recognition of the enormous challenges inherently facing the funding of future ownership costs of existing and new systems Vice Admiral Loose directed the development of a ``2030 and Beyond'' assessment that demonstrated that the growth in future ownership costs of existing and new systems would far exceed the expected growth in the Navy's topline budget over the next 20 years. His efforts led to an increased focus on total ownership costs across the Navy, specific direction in the 2010 Chief of Naval Operations Guidance and his assignment as the Navy's Executive Agent for Total Ownership Costs. Today, I honor Vice Admiral Loose for his service to our country, his inspirational and visionary leadership, his extraordinary strength of character and moral courage, and his irrepressible drive and leadership. He and his wife Carol and their son Chris have made many sacrifices during his career in the Navy. I call upon my colleagues to join his family, friends, and association to wish them ``fair winds and following seas.''

Mr. McCAIN

Mr. McCAIN. Mr. President, I wish to speak in order to honor the life and achievements of Christopher C. Bolkcom, Congressional Research Service Specialist, on the occasion of the first anniversary of his passing away, on May 1, 2009. Christopher Bolkcom served Congress with distinction for 9 years at the Library of Congress as a specialist in military aviation for the Congressional Research Service. He held a bachelor's degree in international relations from the University of Minnesota, a master's degree in international affairs from American University in Washington, DC, and a master's degree in national security strategy from the National War College in Washington, DC. Christopher was born on June 13, 1962, in Minneapolis, MN, raised there and then spent his adult life and career in the National Capitol Region until his untimely death on May 1, 2009. Christopher was recognized throughout Congress, the military Services, the defense community, and the aeronautical industry as an expert on the management, operational use and procurement of military aircraft. In that capacity, he assisted Congress in its legislative and oversight activities, including testifying before the Senate Armed Services Committee; the House Armed Services Committee; the Senate Commerce, Science and Transportation Committee; and the Senate Governmental Affairs Committee. Christopher published many influential CRS reports on such subjects as Air Force aerial refueling; the role of airpower in counterinsurgency operations; tactical aviation and bomber force modernization; military aviation safety; suppression of enemy air defenses; and protecting commercial aircraft from shoulder-fired missiles. He provided objective, expert analysis on a number of issues, including the Joint Strike Fighter and the KC-X Tanker, to Congress, the Senate Armed Services Committee, and to me and my staff personally--analysis for which I am very grateful. Christopher displayed generous enthusiasm for meeting the professional needs of colleagues and clients, enlivened by persistent humor and wit in his interpersonal relations. He worked hard at his public duties. He also played hard with friends, whether skiing or kick-boxing, and found time to serve others, at for example the Falls Church Presbyterian Church in Falls Church, VA. On this occasion--the first anniversary of Christopher's passing away--I want to honor the life and achievements of Congressional Research Service Specialist Christopher Bolkcom, who is survived by his loving family, including his children Jessica and Maxwell Bolkcom; their mother Mary Anne Alexander; his parents Gene and Ann Bolkcom; his sister Elizabeth Matteson; his brother Bill Bolkcom; and his nephew Tristin Matteson.

Mr. McCAIN

Mr. McCAIN. Mr. President, I am pleased to introduce legislation that would amend the Radiation Exposure Compensation Act, RECA, by adding Mohave County, AZ, to the list of counties eligible for downwinder compensation. A similar proposal was introduced in the House of Representatives by Congressman Trent Franks. I'm hopeful this bill will help close a painful chapter for those Arizonans who were arguably the most affected by nuclear weapons testing during the Cold War. In 1990, Congress enacted the Radiation Exposure Compensation Act to compensate victims or their survivors who suffered certain illnesses caused by fallout exposure ``down wind'' of atmospheric nuclear weapons testing in the 1940's and lasting into the 1960's. Among various requirements, compensation eligibility is limited to certain affected counties which are specifically listed in the law. Astonishingly, despite its close proximity to the Nevada Test Site, the original RECA law and its subsequent amendments never listed Mohave County proper as an affected area. I believe the people of Mohave County deserve to see righted this unjust policy which has obstructed their ability to qualify for compensation. I understand that several of my colleagues have proposed similar RECA amendments based on data suggesting that their home states were also ``down wind'' of nuclear weapons testing. In addition, my colleague, Senator Tom Udall, has introduced a far reaching legislative proposal to vastly expand the RECA program. I would hope that as these various RECA proposals advance through the legislative process, Congress gives thorough consideration to an April 2005 report by the National Academy of Sciences, NAS, that assessed, among other things, whether additional geographic areas should be added to the RECA program. The NAS study revealed a much wider area of radioactive fallout then originally identified when the RECA law was first written. The report also recommended replacing the geographic area criteria with a new science- based process for determining compensation eligibility, a method similar to what's used in the Radiation Exposed-Veterans Compensation Act and the Energy Employees Occupational Illness Compensation Program Act. I believe it is worthwhile for policy makers to consider the recommendations of the NAS report. In the meantime and until a comprehensive overhaul of RECA is developed, I will work within the parameters of the existing RECA law in my efforts to ensure that the people of Mohave County are treated fairly in this matter. I encourage my colleagues to support this bill.

Mr. McCAIN

Mr. McCAIN. Mr. President, I am pleased to introduce legislation that would amend the Radiation Exposure Compensation Act, RECA, by adding Mohave County, AZ, to the list of counties eligible for downwinder compensation. A similar proposal was introduced in the House of Representatives by Congressman Trent Franks. I'm hopeful this bill will help close a painful chapter for those Arizonans who were arguably the most affected by nuclear weapons testing during the Cold War. In 1990, Congress enacted the Radiation Exposure Compensation Act to compensate victims or their survivors who suffered certain illnesses caused by fallout exposure ``down wind'' of atmospheric nuclear weapons testing in the 1940's and lasting into the 1960's. Among various requirements, compensation eligibility is limited to certain affected counties which are specifically listed in the law. Astonishingly, despite its close proximity to the Nevada Test Site, the original RECA law and its subsequent amendments never listed Mohave County proper as an affected area. I believe the people of Mohave County deserve to see righted this unjust policy which has obstructed their ability to qualify for compensation. I understand that several of my colleagues have proposed similar RECA amendments based on data suggesting that their home states were also ``down wind'' of nuclear weapons testing. In addition, my colleague, Senator Tom Udall, has introduced a far reaching legislative proposal to vastly expand the RECA program. I would hope that as these various RECA proposals advance through the legislative process, Congress gives thorough consideration to an April 2005 report by the National Academy of Sciences, NAS, that assessed, among other things, whether additional geographic areas should be added to the RECA program. The NAS study revealed a much wider area of radioactive fallout then originally identified when the RECA law was first written. The report also recommended replacing the geographic area criteria with a new science- based process for determining compensation eligibility, a method similar to what's used in the Radiation Exposed-Veterans Compensation Act and the Energy Employees Occupational Illness Compensation Program Act. I believe it is worthwhile for policy makers to consider the recommendations of the NAS report. In the meantime and until a comprehensive overhaul of RECA is developed, I will work within the parameters of the existing RECA law in my efforts to ensure that the people of Mohave County are treated fairly in this matter. I encourage my colleagues to support this bill.

Mr. McCAIN

Mr. McCAIN. Mr. President, I am proud to introduce the Second Amendment Enforcement Act today with Senator Tester. I have always supported Americans' Second Amendment rights and was pleased when the Supreme Court found in June 2008 that the District of Columbia had reached too far in restricting the District's residents from owning firearms and defending themselves in their home. The legislation that we introduce today seeks to implement the Supreme Court's decision in District of Columbia v. Heller. Specifically, the Second Amendment Enforcement Act would codify many of the laws the District of Columbia City Council has put in place in response to the Supreme Court's decision. For example, this legislation would codify the District's repeal of the semiautomatic ban and retain the District's ban on fully-automatic machine guns. The legislation would also codify the District City Council's law that prohibits the carrying of firearms into the District's public buildings that have implemented security measures and codify the Council's law regulating the carrying of rifles or shotguns. The legislation would correctly restore the right of self-defense for any District resident in his or her home. Previously, the District had a requirement that any firearm kept in a home be stored in a manner that made it essentially useless for self-defense, e.g. kept ``unloaded and either disassembled or secured by a trigger lock, gun safe, locked box, or other secure device.'' The legislation would also clarify that landlords cannot prohibit firearms in rented homes or offices or dictate what firearms tenants may own. Most egregious was the District's restrictions on the purchase of firearms and outright ban on the purchase of ammunition. At the heart of the Supreme Court's decision was that District residents must be able to own operable firearms for lawful purposes, which must then allow residents meaningful opportunities to purchase firearms and ammunition. Since the District does not have traditional retail gun shops and current federal law prohibits a person from purchasing handguns outside the person's State of residence, the legislation would amend Federal law to allow District residents the ability to purchase guns from federally-licensed dealers in Maryland and Virginia and then transport them back to their homes in DC. Let me be very clear on this point, this legislation would not allow residents of the District to buy firearms from anyone who is not a federally-licensed dealer, even at a gun show. I believe this is a very reasonable restriction and one that again, like much of this legislation, takes into consideration the concerns of the District's City Council. Some may ask why a Senator from Arizona and a Senator from Montana would introduce legislation that impacts the lives of District residents. It is simple--we believe that residents across this country should have access to firearms to protect themselves, particularly in their own home or place of business. It is a constitutional right and one that was put in place by the Founding Fathers, recognized by the Supreme Court and cherished by many Americans. However, the District of Columbia City Council did not follow the Supreme Court's directive in fully updating their city's laws regarding firearms, and so now it is up to Congress to ensure that District residents' rights are respected by their government. I hope my colleagues will join me in supporting this important legislation that will not only restore District residents' rights, but also ensure that no resident in any State, territory or the District is prevented from exercising his or her Second Amendment right.

Mr. McCAIN

Mr. McCAIN. Mr. President, I am proud to introduce the Second Amendment Enforcement Act today with Senator Tester. I have always supported Americans' Second Amendment rights and was pleased when the Supreme Court found in June 2008 that the District of Columbia had reached too far in restricting the District's residents from owning firearms and defending themselves in their home. The legislation that we introduce today seeks to implement the Supreme Court's decision in District of Columbia v. Heller. Specifically, the Second Amendment Enforcement Act would codify many of the laws the District of Columbia City Council has put in place in response to the Supreme Court's decision. For example, this legislation would codify the District's repeal of the semiautomatic ban and retain the District's ban on fully-automatic machine guns. The legislation would also codify the District City Council's law that prohibits the carrying of firearms into the District's public buildings that have implemented security measures and codify the Council's law regulating the carrying of rifles or shotguns. The legislation would correctly restore the right of self-defense for any District resident in his or her home. Previously, the District had a requirement that any firearm kept in a home be stored in a manner that made it essentially useless for self-defense, e.g. kept ``unloaded and either disassembled or secured by a trigger lock, gun safe, locked box, or other secure device.'' The legislation would also clarify that landlords cannot prohibit firearms in rented homes or offices or dictate what firearms tenants may own. Most egregious was the District's restrictions on the purchase of firearms and outright ban on the purchase of ammunition. At the heart of the Supreme Court's decision was that District residents must be able to own operable firearms for lawful purposes, which must then allow residents meaningful opportunities to purchase firearms and ammunition. Since the District does not have traditional retail gun shops and current federal law prohibits a person from purchasing handguns outside the person's State of residence, the legislation would amend Federal law to allow District residents the ability to purchase guns from federally-licensed dealers in Maryland and Virginia and then transport them back to their homes in DC. Let me be very clear on this point, this legislation would not allow residents of the District to buy firearms from anyone who is not a federally-licensed dealer, even at a gun show. I believe this is a very reasonable restriction and one that again, like much of this legislation, takes into consideration the concerns of the District's City Council. Some may ask why a Senator from Arizona and a Senator from Montana would introduce legislation that impacts the lives of District residents. It is simple--we believe that residents across this country should have access to firearms to protect themselves, particularly in their own home or place of business. It is a constitutional right and one that was put in place by the Founding Fathers, recognized by the Supreme Court and cherished by many Americans. However, the District of Columbia City Council did not follow the Supreme Court's directive in fully updating their city's laws regarding firearms, and so now it is up to Congress to ensure that District residents' rights are respected by their government. I hope my colleagues will join me in supporting this important legislation that will not only restore District residents' rights, but also ensure that no resident in any State, territory or the District is prevented from exercising his or her Second Amendment right.

Mr. McCAIN

Mr. McCAIN. I ask unanimous consent to engage in a colloquy with my colleague from Arizona, Senator Kyl.

Mr. McCAIN

Mr. McCAIN. Mr. President, as is well known by my colleagues and most Americans, over the last several days, the Governor of Arizona signed legislation, which is controversial, which is designed to affect the issue of illegal immigrants into the country across the Arizona border. That legislation was enacted by the Arizona legislature and signed by the Governor because of the frustration the Governor and the legislation and, indeed, the majority of my constituents have over the Federal Government's failure to carry out its responsibility to secure our border. Many viewed this as a civil rights issue. There is no intention whatsoever to violate anyone's civil rights, but this is a national security issue. This is a national security issue where the United States has an unsecured border between Arizona and Mexico which has led to violence, the worst I have ever seen, and numbers that stagger those who are unfamiliar with the issue--such as 241,000 illegal immigrants were apprehended on the Tucson sector border of Arizona in the last year. Do the math. You have three to five times that number who actually cross, so we are talking about a million people crossing the border illegally. This is not just a human smuggling issue. This is a drug issue. Our borders are unsecured, and the flow of drugs across the border is staggering. Last year in the Tucson sector alone, there were over 1.3 million pounds of marijuana apprehended, 1.3 million pounds on the Arizona border. The numbers of methamphetamine, cocaine, and other drugs crossing the border by the drug cartels is staggering. The Los Angeles Times reported last week that over 22,000 Mexican citizens have been killed in drug wars against the cartels. Have no doubt, this is an existential government between the Government of Mexico, the drug cartels, and the human smugglers who work together, and the security of the United States. The violence has already spilled across our borders, and unless we get it under control, it will get worse. Three American citizens were murdered in Juarez, Mexico as they were trying to find their way home. A rancher in southern Arizona was murdered as he was out patrolling his own property. The people in southern Arizona have had their rights violated by the unending and constant flow of drug smugglers and human traffickers across their property. Their homes are being broken into. Their rights are being violated, their rights as American citizens to live in a safe and secure environment, as most of the pundits who are criticizing this legislation enjoy. The fact is, our borders are broken. They are not secure. It is a Federal responsibility to secure our borders. It is not being done. Senator Kyl and I have a 10-point plan that can be enacted immediately in order to secure the borders and secure them quickly. Before I ask my colleague to comment, there is a question about whether we can secure our borders. Of course, we can. We have seen in the Yuma sector of Arizona a dramatic decrease in illegal crossings and drug smuggling. Again, I want to mention to my friend from Arizona, have no doubt that this is not just a human smuggling problem and people trying to cross the border illegally to find work. This is a human smuggling cartel aligned with the drug cartels that are sending drugs across our border and killing our citizens. The cartels and the human smugglers are a direct threat to the security of this Nation. Two weeks ago a highly organized syndicate that takes people who are coming across our border illegally to Tucson, puts them in vans, taking them to Phoenix and distributing them all over the country. These individuals come from as far away as China. Have no doubt of the extent of the problem, the organization, the cruelty, the barbarity of the challenge we face, of the drug cartels and the human smugglers that are just south of our border, and the State of Arizona has been bearing the brunt of it. The administration has failed to act. We need 33,000 Border Patrol agents down on the border. We need the National Guard, 3,000 troops. We need to take a number of other steps Senator Kyl and I will describe. This situation is the worst I have ever seen. It is time for the Federal Government to act. If you don't like the bill the legislature passed and the Governor signed in Arizona, then carry out the Federal responsibility to secure the border. You probably wouldn't have had this problem.

Mr. McCAIN. I have. If it was 241,000 last year that were apprehended, there are estimates that as many as five to one are not apprehended. So that could have been over a million people who crossed the Arizona border illegally in 1 year. That is staggering in itself.

Mr. McCAIN. May I ask unanimous consent, with the indulgence of my friend from Hawaii, for 3 additional minutes.

Mr. McCAIN. Could I also emphasize that the violence is worse than it has ever been. Mr. President, 22,000 Mexicans have been murdered on the Mexican border. American citizens have been murdered on our border. This is no longer a situation where someone from Mexico or some other country decides they want to cross our borders. These are highly organized, highly sophisticated, well-equipped, well-trained, armed cartels. Drug and human smuggling cartels coordinate with each other through these corridors. They have better communication than our enforcement agencies due to our lack of interoperability. They have sophisticated equipment. They are even sending drugs over using ultralights. This is a struggle for the existence of the Government of Mexico. This is a struggle on our side of the border for the fundamental obligation any government has; that is, to provide its citizens with secure borders. Right now, our citizens are not safe, and therefore the Federal Government should be fulfilling its responsibilities to provide the necessary equipment and manpower to secure our borders. As my colleague from Arizona just pointed out, it can be achieved. It is now a massive failure on the part of the Federal Government. They should also fund it. I thank my friend from Arizona, and I thank my colleague from Hawaii for his indulgence.

Mr. McCAIN

Mr. McCAIN. Madam President, today is April 15, perhaps the most dread day of the year for the American taxpayer. At some point today, millions of people will engage in a painful, complicated, and uniquely American exercise: filing their Federal tax returns. According to the Tax Foundation, Americans worked well over 3 months this year--over 3 months; from January 1 to April 9--before they had earned enough money to pay this year's tax obligations at the Federal, State, and local levels. Congress has succeeded in establishing a pattern of taxing and spending to the point that the average American must work a full 99 days of the year just to pay their taxes. Sadly, while we continue to spend and spend and spend here in our Nation's capital, the tax burden carried by the average American gets heavier and heavier and heavier. On September 12, 2008, in Dover, NH, then-candidate Obama said this: I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes. Another interesting quote from then-candidate Obama. According to data released yesterday by the House Ways and Means Committee, since January of 2009, President Obama and the congressional Democrats have enacted into law gross tax increases totaling more than $670 billion or more than $2,100 for every man, woman, and child in the United States of America. A list of tax increases includes at least 14 violations of the President's pledge not to raise taxes on Americans earning less than $200,000 for singles and $250,000 for married couples. For example, there is a new tax on individuals who don't purchase government-approved health insurance. There is a new tax on employers who fail to fully comply with government health insurance mandates. There is a new 40-percent excise tax on certain high-cost health plans. There is a new ban on the purchase of over-the-counter drugs using funds from FSAs, HSAs, and HRAs. There is an increase from 7.5 percent to 10 percent of income, the threshold after which individuals can deduct out-of-pocket medical expenses. There is a new $2,500 annual cap on FSA contributions. There is a new annual tax on health insurance. There is a new annual tax on brand-name pharmaceuticals. There is a new 2.3-percent excise tax on certain medical devices. There is a new 10- percent tax on indoor UV--ultraviolet--tanning services. There is a new tax on insured and self-insured health plans, and it is double the penalty for nonqualified health savings accounts distributions. There is a tobacco tax increase. There are Federal unemployment surtaxes which have been extended through 2011, and there are more and more on the list. In addition to the financial burden associated with all of the tax increases heaped upon the American people in the past year, taxpayers face the added anxiety of a complicated, antiquated, and oversized Tax Code. Let's look at what Americans go through every year in order to meet the April 15 deadline as reported by National Review Online. As April 15 approaches like an incoming monsoon, millions of Americans brace for the pain of writing checks to the IRS. Even worse, this annual discomfort begins even earlier, as taxpayers generate a cyclone of documents just to calculate their tax liability. America's excruciatingly complex tax- compliance regime deepens the aggravation of sending hard- earned cash to Washington for virtual incineration by Congress. Completing tax reforms required 7.75 billion hours of human labor in the 2008 fiscal year, according to the latest reginfo.gov data. That roughly equals 3.7 million people--or everyone in Los Angeles--filling out IRS forms for 40 hours every week, all year, without vacations. That involves more workers than those at the Fortune 500's five biggest employers-- The National Taxpayers Union's David Keating concludes in a forthcoming report-- more than everybody at Wal-Mart, UPS, McDonald's, IBM and Citigroup combined. Keating also found that: Individual taxpayers would devote some 2.3 billion hours grappling with the income tax in 2010 at an equivalent labor cost of $71.4 billion. Add to this the $31.5 billion that individual taxpayers will cough up for tax software, accounting services, photocopying, and other compliance- related expenses. All told, individual taxpayers will spend $103 billion to determine how much more money they must pump into the Beltway. Meanwhile, the IRS Web site now offers 1,909 different documents, which is up from 1,770 last year. These include the riveting form 8833: Treaty-Based Return Position Disclosure Under Section 6114, or 7701(b). And don't miss Form 990-W: Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations. This year's basic 1040 tax return includes 76 lines and 174 pages of instructions, up from 68 lines and 52 pages in 1985. Last year, the National Taxpayers Union calculated that U.S. corporations spent $159.4 billion on tax compliance, equal to 54 percent of corporate income tax revenue. In 2008, General Electric's tax returns droned on for some 24,000 pages. It is abundantly clear we are on a path to fiscal disaster. David Walker, the former head of the Government Accountability Office and current president and CEO of the Peter G. Peterson Foundation and one of the most respected budget experts in the Nation, recently said: The financial condition of the United States has deteriorated dramatically in recent years. Importantly, our primary fiscal threat is not today's deficit and debt levels, but the structural deficits and escalating debt burdens that will occur after the economy has recovered, unemployment is down, the ``wars'' are over, and the recent crises have passed. These large and growing structural deficits and the tens of trillions in unfunded federal government promises that drive them serve to threaten the future of our country and our families. We must begin to take steps now to put our Federal financial house in order. In addition, we must achieve some meaningful reforms within the next three years in order to help avoid a ``crisis of confidence'' that could have much worse economic consequences for America, Americans, and the world than the recent housing and financial crisis. Today, all over America, there will be people demonstrating at tea parties, at gatherings, at organizations, at coffee shops, at restaurants, at places of business at the water cooler. People all over America will be talking today about this incredible, complex, difficult, burdensome system we have laid on the American people. It is fundamentally unfair and fundamentally incomprehensible to average citizens. Most citizens, after they file their tax returns, will now live in some concern, if not grave concern, that they may have made a mistake because of this incredibly complex document from the agency we call the IRS and the tax bills we have. These American citizens can't be positive--even if they have gone to an accountant--that they will not be audited and then subject to further penalties. We need to clean up the Tax Code. We need to stop the spending. We need to restore the confidence of the American people. There is a veritable uprising going on out there. It is a peaceful one. It is all over America. On a day like today, when they see their taxes have increased by some $670 billion just in the last year, this will fuel the fire that is spreading across America and will culminate this coming November. Madam President, I suggest the absence of a quorum.

Mr. McCAIN

Mr. McCAIN. Madam President, I ask unanimous consent to extend morning business for up to 10 minutes.

Mr. McCAIN. I thank the Chair.

Mr. McCAIN

Mr. McCAIN. Mr. President, I just wanted to congratulate my three colleagues for taking that trip. It is of the utmost importance that my colleagues are able to see the situation on the ground, meet with our leaders, meet with the leaders of Afghanistan and Pakistan, and meet with the men and women who are serving in the military. One thing I know is, the word spreads. The word spreads throughout the men and women of our military that Senators took time from their schedules, from our recess, to be with the men and women who are serving. There is no better way to express our appreciation, but also it is very much noticed by the men and women serving over there. I know my colleagues come back better informed. Also, as the situation in Afghanistan continues to evolve, we will be much more qualified and informed as we engage in what is appropriate for the Senate to engage in--discussion and debate over our strategy and our goals in Afghanistan. So I thank my colleagues for going. I thank them for their service. The Senator from Delaware has proven that even a former Navy person can understand the issues that confront the Army and the Marine Corps.