John McCain

Mr. McCAIN

Mr. McCAIN. Mr. President, I will withhold until tomorrow morning, according to the unanimous consent agreement, and file the amendment and ask for its consideration at 9:30 a.m.

Mr. McCAIN. Whatever the floor staff wishes, as well as the manager. By the way, I say that with great respect to the staff on the floor who are making this machine, this unwieldy machine, run in the most efficient fashion.

Mr. McCAIN. Mr. President, I will withhold proposing the amendment. I ask unanimous consent that my amendment be allowed to be filed and considered at the beginning of legislative work tomorrow.

Mr. McCAIN. If I could ask unanimous consent that I would be the first amendment considered tomorrow.

Mr. McCAIN. I would be pleased to accommodate the manager, who has been very accommodating to this side of the aisle, and he just demonstrated that. So I would be glad, if it is agreeable to the manager to allow me to propose the amendment now. Then I would be glad to ask for a vote on it at the convenience of the managers of the bill so that it is most convenient for them.

Mr. McCAIN. Mr. President, I would like to keep the floor, if I can, for a couple of minutes. Basically, tomorrow morning we will be considering this amendment. I would like to say a few words because this is a proposal that I think should be considered, along with the legislation that is pending. It is a compilation of what we believe is the most effective way to address the stimulus and job creation. It has tax provisions, such as elimination of the 3.1-percent payroll tax for all employees for 1 year. It lowers the 10-percent tax bracket to 5 percent; lowers the 15- percent tax bracket to 10 percent; lowers the corporate tax bracket from 35 to 25 percent and has accelerated depreciation for capital investments for small business; the extension of unemployment insurance benefits; extension of food stamps, unemployment insurance benefits, tax-free training and employment services, as well as keeping families in their homes through a loan modification program. It has tax incentives for home purchases and GSE-FHA conforming loan limits; national infrastructure and defense, which is very badly needed; transportation infrastructure; and also contains the trigger that is also the subject of a separate amendment I have proposed, with a total of about $420 billion. Now, I know my friend from Wisconsin is waiting patiently, but I would like to point out where I think we are at this moment; that is, we basically have legislation which is too big, which is not stimulative, and which does not create jobs. The American people are beginning to figure it out. In fact, polling numbers in the last couple of days have shown a significant shift in American public opinion because they are beginning to examine this proposal. I argue that it is time we sit down, Republicans and Democrats, and begin good-faith negotiations to create a real job creation and stimulus package. I think it would be unfortunate if this body passed, on a party-line basis or largely party-line basis, this package in similar fashion as it did in the other body. I think we have a proposal here that deserves consideration, but I also think it is time that we had serious negotiations to try to reach some kind of consensus on a package and legislation that truly stimulates and truly creates jobs. My colleague from Arizona will be pointing out, as many others have, that there are many programs here, moneys in the hundreds of millions and billions, that simply do not meet any criteria for job creation: $75 million for smoking cessation; $150 million for honeybee insurance. The list goes on and on. We also have an obligation to future generations to understand that $1.2 trillion, followed by another TARP, followed by an omnibus appropriations bill, requires us to put this country, once the economy recovers, back on the path to a balanced budget and reduce spending across the board once our economy has recovered. I thank the Senator from Montana, the distinguished manager of the bill, for his consideration on my amendment. I thank my colleague from Wisconsin, as always. I yield the floor.

Mr. McCAIN. Madam President, I rise to offer an amendment that would strike the protectionist ``Buy American'' provision from the pending economic recovery package. While the supporters of this provision state that they intend it to save American jobs, it would have exactly the opposite effect, causing great harm to the American worker and global economy. In 1930, as the United States and the world was entering what would be known to history as the Great Depression, this body considered issues similar to those we are discussing on the Senate floor today. Two men-- Mr. Smoot and Mr. Hawley--led the effort to enact protectionist legislation in the face of economic crisis. Their bill, the Smoot- Hawley Tariff Act, raised duties on thousands of imported goods in a futile attempt to keep jobs at home. In the face of this legislation, 1,028 economists issued a statement to President Herbert Hoover. This statement, subsequently printed in the New York Times, is as relevant today as it was nearly 80 years ago. ``America is now facing the problem of unemployment,'' these economists wrote. ``The proponents of higher tariffs would claim that an increase in rates will give work to the idle. This is not true. We cannot increase employment by restricting trade.'' Mr. Smoot, Mr. Hawley, and their colleagues paid no heed to this wise admonishment, and the Congress went ahead with protectionist legislation. In doing so, they sparked an international trade war as countries around the world retaliated, raising their own duties and restricting trade, and they helped turn a severe recession into the greatest depression in modern history. We know the lessons of history, and we cannot fall prey to the failed policies of the past. We should not sit idly by while some seek to pursue a path of economic isolation, a course that could lead to disaster. It didn't work in the 1930s, and it certainly won't work today. That is why I so strongly oppose the protectionist ``Buy American'' provision in the pending bill and believe we must strike it. The Senate version of the stimulus bill goes beyond the stark protectionism of its House counterpart in a way that risks serious damage to America's economic well-being. The bill currently on the Senate floor prohibits the use of funds in this bill for projects unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. These antitrade measures may sound welcome to Americans who are hurting in the midst of our economic troubles and faced with the specter .of layoffs. Yet shortsighted protectionist measures like ``Buy American'' risk greatly exacerbating our current economic woes. Already, one economist at the Peterson Institute for International Economics has calculated that the ``Buy American'' provisions in this bill will actually cost the United States more jobs than it will generate. Some of our largest trading partners, including Canada and the European Union, have warned that such a move could invite protectionist retaliation, further harming our ability to generate jobs and economic growth. And it seems clear that this provision violates our obligations under more than one international agreement. The purpose of this stimulus legislation is to create jobs and generate economic growth. I am very concerned about the potential impact these ``Buy American'' policies will have on trade relations with our partners, an impact that will directly affect the number of jobs we are able to create at home. For example, in a few days, President Obama will embark on his first trip abroad to Canada. I applaud his decision to visit our neighbors to the north, as they are one of our closest allies and strongest trading partners. Our two nations share an increasingly integrated trade relationship, resulting in nearly $1 million of trade and commerce crossing our border every minute, a level of trade that sustains approximately 7 million jobs here in the United States. Should we adopt protectionist legislation, however, President Obama is likely to visit our ally with a dubious gift indeed: legislation that attempts to choke off Canada's access to the U.S. market. Prime Minister Stephen Harper said yesterday that the provisions ``are measures that are of concern to all trading partners of the United States.'' In a recent letter, Canada's ambassador to the U.S. Michael Wilson wrote, ``If Buy American becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies. A rush of protectionist actions could create a downward spiral like the world experienced in the 1930's.'' He writes further that this provision would ``decrease North American competitiveness, thereby killing jobs rather than creating them.'' It is beyond my comprehension why we would seek to hamper such an important relationship by passing legislation with provisions that have been proven counterproductive time and time again. The reaction of our Canadian friends is just the beginning of what we can expect to occur should this provision become law. American trade with the European Union currently stands at over $200 billion per year. John Bruton, the European Commission's ambassador to Washington, has raised serious objections to the ``Buy American'' provisions in a letter to Congress and the administration, saying that the provision ``risks entering into a spiral of protectionist measures around the globe that can only hurt our economies further.'' A European Commission spokesman noted, ``We are particularly concerned about the signal that these measures could send to the world at a time when all countries are facing difficulties. Where America leads, many others tend to follow.'' Should we enact such a provision, it will only be a matter of time before we face an array of similar protectionism from other countries-- from ``Buy European'' to ``Buy Japanese'' and more. In fact, in the 1980s we saw Japanese provisions that attempted to take the kinds of steps we are contemplating now, and barred American goods in Japanese government procurement. The U.S. Congress responded just as we can expect others to do now--by threatening retaliation and considering legislation that would restrict Japanese imports. We took these steps in order to persuade our Japanese friends to abandon these protectionist moves, and in the end we succeeded. The United States has spent decades pushing toward a globalized world of open trade and investment, governed by rules applicable to all. The ``Buy American'' provision contained in this legislation would undermine this longstanding tenet of American trade policy and would violate our international obligations and commitments. Just last November in Washington, the U.S. signed a joint declaration with members of the G-20 pledging that ``within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services.'' Yet here we are, barely 2 months later, contemplating whether or not to go back on a commitment to some of our closest allies and trading partners, potentially damaging our credibility to uphold future agreements. Canadian Prime Minister Harper pointed out the irony here when he noted that ``we all agreed that we had to have a global response to recession, which would include stimulus packages in all major countries and the avoidance of protectionism, and certainly not protectionism in a stimulus package.'' In addition, it appears that the ``Buy American'' provision would violate our obligations under the WTO Agreement on Government Procurement and, in fact, reports indicate that the European Union is already considering a legal WTO complaint--and the procurement chapter of the North American Free Trade Agreement. Such action is not only potentially disastrous for our economic interests, it is also a terrible way to conduct foreign policy. Pascal Lamy, head of the World Trade Organization, said recently, ``I hope the senators will be wise enough . . . to make sure the U.S. complies with its international obligations.'' Will we? In addition to the growing chorus of international opposition, there is also. opposition from the very American companies that would generate badly needed jobs at home. In a recent Washington Post article, Bill Lane, government affairs director for Caterpillar, is quoted as saying that ``by embracing Buy American, you are undermining our ability to export U.S.-produced products overseas.'' Karan Bhatia, GE's senior counsel for international law, said that adoption of the ``Buy American'' provision would ``be creating an ample basis for countries to close their markets to U.S. products.'' Why then should this body approve a bill that would potentially devastate the ability of American companies to tap into foreign markets and, in turn, continue to employ thousands of hardworking Americans? The short answer is that we should not. President Obama himself spoke out against the Buy American provision. ``I think that would be a mistake right now,'' he said yesterday. ``That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe.'' I hope all senators will support this amendment, which would strike the existing ``Buy American'' provision and replace it with a limitation on ``Buy American'' clauses in this bill. To adopt anticompetitive, protectionist policies is to risk economic disaster, and it is the last thing we should consider at a time of economic difficulty. I urge my colleagues to support this amendment. Madam President, I ask unanimous consent that the Record be held open for my second statement concerning the other amendment.

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

Mr. McCAIN. Madam President, I ask unanimous consent that consideration of the present amendment be set aside, and I send to the desk an amendment and ask for it to be considered at the appropriate sequence of amendments.

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

Mr. McCAIN. Madam President, I am pleased to join with my good friend Senator Feingold in offering this fiscally responsible amendment, along with Senators McCaskill, Burr, Lieberman, Graham, Coburn, and others. May I say that I find there are very few pleasant aspects of losing an election, but one of them that I most value is going back to work with my friend from Wisconsin, Senator Feingold, whom, for now many years, I have had the great honor and privilege of working with as we attempt to bring about the reforms which will help restore the confidence and trust of the American people in the way we do business in Washington but also in our stewardship of their tax dollars. I am pleased to join with my good friend Senator Feingold. Senator Feingold outlined the provisions of the amendment so I don't want to repeat them. But I also want to point out that some people are saying: Why should we have this on this legislation, when this stimulus package does not directly apply? We know there is an omnibus appropriations bill coming down the pike. The House of Representatives intends to take it up soon. There is apparently, unfortunately, another TARP that may be coming, not to mention the other appropriations bills that will be coming. So the sooner we address this issue, the better off we will be. I also think one of the reasons why support for the stimulus package is rapidly eroding is because you don't have to call it an earmark and it doesn't have to be technically an earmark, but when you see many of the provisions in this stimulus bill, they have nothing to do with stimulus and everything to do with spending. They are fundamentally earmarks as well, certainly in their effect. It is not only appropriate but necessary to adopt this amendment so that the American people will know in the future, when we make tough decisions, this kind of practice of adding absolutely unnecessary, unwarranted spending of their tax dollars on appropriations bills without a proper process of scrutiny and ability to reject them will not occur. It will not restore their confidence. The stimulus package before us is important, but right now the American people see it not as a stimulus but a spending package. That is why this provision will restore some confidence in the future way we address their tax dollars. Every time Senator Feingold and I have tried to kill off a specific unwanted and unnecessary and, many times, outrageous appropriation, if we had succeeded, it would have taken down the whole bill. So one of the important aspects of this legislation is to allow us to rifleshot and remove unnecessary and wasteful spending. I don't have to go through the list, but it is always kind of fun to do it. Even though we passed in January 2007, by a vote of 96 to 2, an ethics and lobbying reform package that had meaningful reforms, by August of 2007, we were presented with a bill containing very watered- down earmark provisions and doing far too little to rein in wasteful earmarks. Since we adopted the much heralded reforms of January 2007, we have spent $188,000 for the Lobster Institute, which includes a lobster cam at the bottom of the ocean, which so far we have been unable to make work; $98,000 to develop a walking tour of Boydton, VA, population 454; $212,000 for olive fruit fly research in Paris, France; $1.95 million for the Charles B. Rangel Center for Public Service; $150,000 for the Montana Sheep Institute--almost every one of these earmarks location specific required--$345,000 for tree planting in Chicago; $196,000 for the renovation of an historic post office in Las Vegas; $150,000 for the STEEED program, Soaring Towards Educational Enrichment via Equine Discovery, a youth program in Washington, DC; $100,000 for Cooters Pond Park in Prattville, AL; $50,000 for construction of a National Mule and Packers Museum in Bishop, CA; $244,000 for bee research in Weslaco, TX. The point is, some of these projects I am talking about may have virtue. It may be of the utmost national importance in this time of record deficits that we have a lobster cam at the bottom of the ocean and that we should spend $188,000 for it. But it should be subject to debate and discussion and amendment and acceptance or rejection. What Senator Feingold and I are seeking is a process where these earmarks can be judged on their value, their contribution to the overall economy, and whether they are necessary. Under the present system, they are still inserted without the Congress having the ability to carefully examine them. It also would require recipients of Federal dollars to disclose any amounts that the recipient has expended on registered lobbyists. There is a new game in town--not so new, it has been going on for some years, but it grows--and that is that special interests, universities, others will go to a specific lobbying group, and they will then seek the earmarks this interest desires and believes is required. There are certain, obviously, amounts of money given to those lobbyists for their work. We are not saying they should not do that. We are saying that the amounts of money given to the lobbyists as a result of the recipients of Federal dollars obtaining those funds should be revealed. Again, $446,500 for horseshoe crab research at Virginia Tech in Virginia; $500,000 for a maritime museum in Mobile, AL; $360,000 for Hawaii rain gauges; $401,850 for the Shedd Aquarium in Chicago, IL. This process has got to end. The American people do not trust the Congress to dispose of their tax dollars without these billions of earmarks, or at least a process where they are scrutinized and Members of Congress have the ability not to just vote on an appropriations bill that appears on the Member's desk shortly before the vote takes place. The appropriators will tell us these are all worthwhile projects. They are not, and they have resulted in corruption. There are former Members of Congress residing in Federal prison today because this process--this process--has corrupted people. It has to be fixed. So I could go in citing examples of unauthorized earmarks and policy riders in appropriations bills and conference reports. But I think you have the picture. By the way, an egregious example that is being investigated today is that for one of the appropriations bills, appropriations were inserted after the bill was passed and signed by the President of the United States--a remarkable occurrence--a remarkable occurrence. It shows how far we have gone in our obligations to the American people. I would like to say a word to my own side of the aisle. We just lost an election, and I will take the responsibility for that. But I can assure my colleagues on this side of the aisle that one of the reasons why Republicans lost the last election is because our base, who are concerned about our stewardship of their tax dollars, believes we got on a spending spree which has mortgaged our children's futures. If there is a future on this side of the aisle, then we have to clean up our act on spending. Time after time, when some of us said: You have to veto these spending bills, the answer was: Well, we have to please Members. What we did was we alienated those American citizens--frankly, of all parties--who feel strongly we have lost our sense of obligation to them as far as careful stewardship of their tax dollars is concerned. I wish to mention one other thing. I had a very good conversation with the President of the United States. We all want to work together to pass this stimulus, a stimulus package that will get our economy going again. I look forward, as do other Members on this side of the aisle, as well as the other side, to sit down, and let's have some serious negotiations so we can eliminate wasteful and unnecessary spending that is part of the stimulus package that is before the Senate today. We should make sure we adopt an amendment that as soon as the GDP improves for two quarters by 2 percent, we will then enact spending cuts to put us on the road to a balanced budget. We need to do that. We used to talk about millions of dollars and then we started talking about billions of dollars and now we are talking about trillions of dollars of deficits that will be run up that we will lay on future generations of Americans. With this stimulus package, there must be a commitment to stop this spending and to reduce spending once our economy recovers, so we can have some sense of ability to put this Nation on a path to a balanced budget to eliminate the debt and deficit we are laying on future generations of Americans. Americans are beginning to turn against the stimulus package as it is presently designed. They are doing that because they do not believe it is a stimulus package. They believe, correctly, it is a spending package. I urge my colleagues to help restore confidence in whatever the outcome is, that we adopt this amendment, so in the future the American people can be sure we will have done our very best to eliminate unnecessary, wasteful, and corrupting spending that has characterized the expenditures we have made in the past on appropriations bills that contained those unwanted, unnecessary spending practices. I thank the Senator from Wisconsin, again, and my friend, Senator Lieberman, and Members on both sides of the aisle who will support this amendment. Madam President, I yield the floor.

Mr. McCAIN. Madam President, I ask unanimous consent for the consideration of that amendment in keeping with the order of consideration as decided by the majority leader and the minority leader.

Mr. McCAIN. I will not take too long because I know there are other Senators waiting to speak. I send an amendment to the desk and ask for its immediate consideration.

Mr. McCAIN. Mr. President, nearly 80 years ago, two men--Mr. Smoot and Mr. Hawley--led an effort to enact protectionist legislation in hopes of curing the woes of the American worker. Despite the strong objection of over a thousand leading economists of the time, the Smoot- Hawley legislation was enacted. This bill helped spark an international trade war that turned a severe recession into the greatest economic depression in modern history. The Buy American provision in the current bill has echoes of the disastrous Smoot-Hawley tariff act. It prohibits the use of funds in this bill for projects unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. These anti-trade measures may sound welcome to Americans who are hurting in the midst of our economic troubles and faced with the specter of layoffs. Yet shortsighted protectionist measures like Buy American risk greatly exacerbating our current economic woes. Already, one economist at the Peterson Institute for International Economics has calculated that the Buy American provisions in this bill will actually cost the United States more jobs than it will generate. Some of our largest trading partners, including Canada and the European Union--who account for hundreds of billions of dollars in annual trade--have warned that such a move could invite protectionist retaliation, further harming our ability to generate jobs and economic growth. And it seems clear that this provision violates our obligations under more than one international agreement, including the WTO Agreement on Government Procurement and the procurement chapter of the North American Free Trade Agreement. Just last November in Washington, the U.S. signed a joint declaration with members of the G-20 pledging that ``within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services.'' Yet barely 2 months later, we are contemplating whether or not to go back on a commitment to some of our closest allies and trading partners, potentially damaging our credibility to uphold future agreements. Even President Obama himself spoke out against the Buy American provision. ``I think that would be a mistake right now,'' he said yesterday. ``That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe.'' We know the lessons of history, and we cannot fall prey to the failed policies of the past. We should not sit idly by while some seek to pursue a path of economic isolation, a course that could lead to disaster. It didn't work in the 1930s, and it certainly won't work today. I hope all senators will support this amendment, which would strike the existing Buy American provision and replace it with a limitation on Buy American clauses in this bill. As I said, the President of the United States said it would be a mistake right now. It sends a message to the world that the United States is going back to protectionism. I ask unanimous consent the comments of literally every leader in the world, including the Canadian leader, the European leader, and over 100 major industries in the United States of America in opposition to this amendment and an op-ed article by Douglas Irwin be printed in the Record at this time.

Mr. McCAIN. Madam President, there are other Senators who are waiting to speak and propose amendments, so I will come back at the appropriate time to speak at some length on both amendments. I suggest the absence of a quorum.

Mr. McCAIN. Madam President, I send another amendment to the desk and ask unanimous consent for its consideration.

Mr. McCAIN

Mr. McCAIN. Reserving the right to object, would the majority leader and the Senator from Maryland object to a sequence of speaking so some of us can plan the use of our time at least for the next two or three speakers?

Mr. McCAIN. Is there a previous unanimous consent agreement?

Mr. McCAIN. I was just asking if there was a previous unanimous consent agreement, I ask the Presiding Officer.

Mr. McCAIN. What is the nature of that request?

Mr. McCAIN. Now, one of the unfortunate things, and this is beginning to be appreciated by the American people, is that Members of Congress couldn't resist the temptation to load this bill with hundreds of millions of dollars in unnecessary spending, that will not do anything to stimulate the economy. We all know some of these, but they bear repeating, that have been included under the guise of stimulus: $400 million for STD prevention; $600 million for new cars for the Federal Government; $34 million to remodel the Commerce Department headquarters here in our Nation's Capital; $25 million to rehabilitate ATV trails; $150 million for honeybee insurance; $75 million for smoking cessation; and $50 million for the National Endowment for the Arts. There is no doubt all of those are worthy causes which probably deserve our attention, our care and, sometimes, our dollars. But to portray them and others as a stimulus to create jobs and to have our economy recover, I think flies in the face of reality. In the Senate bill, we have $100 billion to assist States with agricultural losses; $300 million for diesel emission reduction grants; $150 million for facility improvements at the Smithsonian Museum; $198 million for school food service equipment; and $2.9 billion for the weatherization assistance program. There is also $6 billion of wiring for broadband and wireless in rural areas. I have always been an advocate of that. But the fact is, anyone who is knowledgeable of the difficulties and challenges will tell you that it takes years to achieve that goal even if the funds are available. In order to comply with the Congressional Budget Resolution, the committee report contains a statement of how the emergency provisions contained in the bill meet the criteria for emergency spending. The report states, and I quote: The bill contains emergency funding for fiscal year 2009 for responses to the deteriorating economy, natural disasters and for other needs. The funding recommended herein is related to unanticipated needs and is for situations that are sudden, urgent, and unforeseen, specifically the devastating effects of the economic crisis, natural disasters and rising unemployment. Perhaps the authors of the bill can explain to me how $150 million for honeybee insurance falls within the distinction as outlined in the legislation. Someone needs to explain to me how giving tens of millions of dollars to the National Endowment of the Arts or the Smithsonian Museum will reverse ``the devastating effects of the economic crisis.'' The problem is we are accumulating debt that we are laying upon future generations of Americans. We are going to have to pay this debt sometime. My great worry is that if we do not account for this debt in some way, if we continue trillions of dollars of unnecessary and wasteful spending, then obviously we will find ourselves back in the situation we were in the 1970s, when we had hyperinflation and had to debase the currency. I want to say a word for a minute about ``Buy American.'' The next time I come to debate on the ``Buy American'' provisions, I intend to bring a picture of Mr. Smoot and Mr. Hawley, the two individuals who were responsible, in the view of historians, for taking a country that was in a serious recession into the depths of one of the great depressions in the history of the United States. Because as we enact protectionist measures, I was interested to hear my friend from North Dakota, Senator Dorgan, say it was not in violation of any treaty. It is in violation of several treaties. It is in violation of what has been an important aspect of America's policy which has been free and open trade. I guess the fundamental difference I have between the authors of the ``Buy American'' provisions and myself is that I believe the most productive, the most innovative, and the strongest and best workers in the world reside in the United States of America, that the innovations and technology that have led the world have come from the United States of America, and that our products can compete anywhere in the world under free and open trade conditions. Now, there have been violations on the part of other countries. That is why we are members of the WTO. That is why there are provisions in the North American Free Trade Agreement that should be vigorously pursued when there are violations and protectionist activities on the part of any nation of which we are participants in trade agreements. If there are specific violations, then those violations should be addressed. But I wanted to emphasize, if we pass these ``Buy American'' provisions, you will find other nations retaliating and you will find us on a sure but unfortunate path to the exacerbation of our economic difficulties. That is a matter of history. Consult any historian. I hope we will not keep these ``Buy American'' provisions in whatever legislation we arrive at. This bill contains protectionist ``Buy America'' provisions that will prove harmful to both the American worker and the world economy. The Senate version of the stimulus bill goes beyond the stark protectionism of its House counterpart in a way that risks serious damage to our economy. The Senate bill requires that major projects funded in the bill favor American-made steel, iron, and manufacturing over goods produced abroad. These anti-trade measures may sound welcome to Americans who are hurting in this economy and faced with the specter of layoffs. The United States, after all, produces the world's finest products. Yet shortsighted protectionist measures risk greatly exacerbating our current economic woes. Already, one economist at the Peterson Institute for International Economics has calculated that the ``Buy American'' provisions in this bill will cost more jobs than it will generate. Some of our largest trading partners, including Canada and the European Union, have warned that such a move could invite protectionist retaliation, further harming our ability to generate jobs and economic growth. We have seen this tendency before. In the 1930s, as depression swept the globe, countries around the world enacted protectionist legislation in a counterproductive effort to preserve jobs at home, at the expense of those abroad. It was a fool's errand, and the result was the largest and most prolonged economic downturn of the 20th century. We know better now, and we must have the foresight and the courage to do what is right. I am very concerned about the potential impact these ``Buy America'' policies will have on bilateral trade relations with our allies. From a philosophical point of view, I oppose this type of protectionist trade policy, not only because I believe free trade to be an important means of improving relations among all nations, but it is essential to U.S. economic growth. Moreover, from a practical standpoint, the added ``Buy America'' restrictions in this stimulus bill could seriously impair our ability to compete freely in the international markets and could also result in loss of existing business from long-standing trading partners. Let me be clear. I am not against U.S. procurement of American products. The United States, without a doubt produces the very best products in the world, this certainly is the case with American-made defense products. In fact, a Department of State study reported that U.S. defense companies sold more weapons and defense products and claimed a larger share of the world market than was previously realized. This study shows U.S. exports of defense products increased to nearly $49 billion in 2006, comprising nearly 70 percent of global exports. This number continues to rise steadily. Furthermore, I believe that competition and open markets among our allies on a reciprocal basis would provide the best equipment at the best prices for the taxpayers and U.S. and allied militaries alike. Congress can continue to protect U.S. industries from foreign competition for selfish, special interest reasons, or we can loosen these restrictions to provide necessary funds to ensure our economy can return to the strength it once had. ``Buy America'' policy in defense spending is particularly harmful and costly. Every dollar we spend on archaic procurement policies, like ``Buy America,'' is a dollar we cannot spend on training our troops, keeping personnel quality of life at an appropriate level, maintaining force structure, replacing old and worn-out weapon systems, and advancing our military technologies. It is my sincere hope that legislative provisions like ``Buy America'' in the stimulus bill are dropped and that Congress will end once and for all the anticompetitive, antifree trade practices that encumber our Government, the military, and U.S. industry. In addition to the ``Buy America'' language contained in both the House and Senate stimulus bills, other policy provisions have been included in this legislation. Many of these items are nothing more than typical policy riders that will do nothing to stimulate the economy and create jobs. Most are partisan provisions that were added to this bill because it is considered to be ``must-pass'' legislation. They should not be included in any type of stimulus legislation and should instead go through the regular legislative process and subjected to necessary debate. Some examples of these policy riders include requiring the Transportation Security Administration to buy 100,000 employee uniforms from U.S. textile plants, legislation to give Federal workers new whistleblower protections, and legislative language favoring open access, or net-neutrality, that telecoms have long opposed. Additionally, both bills contain wasteful Davis-Bacon provisions that mandate artificially high wage rates, based on faulty data, for its Federal construction spending. These rates are determined by the Secretary of Labor to be the prevailing wages in the geographic locality of the project for similar crafts and skills on comparable construction work. A report by the Department of Labor found that the wage surveys on which the prevailing wages are based are inaccurate. DOL's inspector general submitted a report to Congress that noted that a contractor hired by DOL found ``one or more errors in nearly 100 percent of the wage reports we reviewed.'' The error rates were high even after a more than $20 million effort to fix the surveys. In addition to outright errors, the inspector general noted that DOL used faulty methodology from unscientific surveys that led to bias, and even the data it did collect was untimely and, therefore, suspect. The Davis-Bacon Act is an outmoded, depression-era, inflationary policy that, according to recent estimates, will inflate the construction costs of this bill by $17 billion. If we are trying to create new jobs then we should repeal Davis-Bacon, not encourage its expansion in this bill. Davis-Bacon imposes heavy regulatory burdens and unnecessary costs on Government contractors--not to mention the taxpayers who have to foot the bill for the inflated costs. Furthermore, Davis-Bacon makes it more difficult for entry level job seekers, the unemployed, and the unskilled to obtain work. A recent study noted that ``contrary to its purpose, the Davis-Bacon Act distorts construction labor markets. Davis-Bacon wages bear little relation to market wages, because the Government's prevailing wage estimates are wildly inaccurate. In some cities, Davis-Bacon rates are much higher than market wages. In Long Island, New York, for example, market rates for plumbers are $29.68 an hour. Davis-Bacon rates, however, are $44.75 an hour, 51 percent more than what the markets demand. In other cities, Davis-Bacon wages are significantly below market rates. For instance, Davis-Bacon rates for carpenters and plumbers in Sarasota, FL, are $6.55 an hour, a figure below Florida's minimum wage of $7.21. Nationwide, Davis-Bacon rates average 22 percent above market wages and inflate the cost of Federal construction by 10 percent.'' Mr. President, decent, livable wages are important for every American--but imposing harmful, outdated Davis-Bacon requirements on Federal construction projects will do nothing more than bloat the cost of this bill, suppress new construction hires, and depress the economy. I want to say a few words about the proposal that I and a group of other Senators have presented today and will be proposing as we go through this debate. Basically in the category of taxes, it would eliminate the 3.1-percent payroll tax for all American employees, lower the tax bracket from 10 percent to 5 percent, lower the 15-percent tax bracket to 10 percent, lower corporate tax brackets from 35 to 25, lower tax brackets to 25 from 35 to small businesses, and help provide for accelerated depreciation for capital investment. The total cost of that provision would be $275 billion. It would also extend the unemployment insurance benefits, extend food stamps, unemployment insurance benefits would be made tax free, and training and employment services for dislocated workers would be provided at the cost of $50 billion. There would be housing provisions. Let me emphasize to my colleagues what we all know: It was the housing crisis that began this conflagration and it will be the stabilization of home values that ends it. My friend from Nevada here and others have been working hard to try to address the housing crisis. In our respective States, obviously, the housing crisis is of the utmost severity, as it is throughout the country. But in high-growth areas of the country such as ours, it is even more severe. We have seen even more dramatic reductions in home values. So our primary goal, my friends, is that we must stabilize home values if we are going to reverse this deep and precipitous slide we are seeing and the difficulties we are experiencing in our economy. Among other proposals, $11 billion would require the Federal Government to allocate funding to increase the fee that servicers receive from continuing a mortgage and avoiding foreclosure from a one- time fee of $1,000 up to $60 per month for the life of the loan. Safe harbor provisions remove the legal constraints inhibiting modifications; tax incentives for home purchases; the tax credit in the amount of $15,000 or 10 percent of the purchase price, whichever is less, with the option to utilize all in 1 year, or spread out over 2 years, and GSE and FHA conforming loan limits. This cost would be around $32 billion. We should invest in our national infrastructure and defense. We should spend $9 billion to improve, repair, and modernize Department of Defense facilitates, restore and modernize barracks, improve facilities and infrastructure directly supporting the readiness and training of the Armed Forces, and invest in the energy efficiency of Department of Defense facilities. This activity would generate construction and craftsmen jobs in the short term by addressing deteriorating conditions of existing facilities for projects that are ready to be carried out in the next 9 months. As to the resetting our combat forces, the Department of Defense will be requesting emergency supplemental appropriations in the spring of 2009 to support the operations in Iraq and Afghanistan. Inclusion of this in the stimulus accelerates those requirements and will be used to place new orders or to repair vehicles, equipment, material, ammunition required to fully equip our combat units, while generating jobs on assembly and manufacturing lines around the country. I urge my colleagues to think about, if we are going to provide funds, that our defense needs are great, of the equipment that has been worn out in Iraq and will again be required to be used in Afghanistan. Obviously all of us who have visited our military installations know there are facilities that need to be modernized, restored, and new construction. We propose $70 billion for road and bridge infrastructure, road and bridges on Federal land, public transit and airport infrastructure and improvements, and $1 billion for a small business loan program. The total estimated cost for investing in our infrastructure: $88 billion. Finally, we need to require these spending programs in the stimulus bill be sunset 3 years from enactment. If this spending is intended to restore our economy and jump-start it, once the economy is jump-started and restored, then we should not have to continue this spending and increase the size of our debt and lay it on future generations of Americans. This proposal states that after two consecutive quarters of economic growth greater than 2 percent of inflation-adjusted GDP, the following control mechanisms will trigger to reduce the deficit and promote long- term economic growth: All spending provisions in the economic stimulus legislation where funds have not been spent or obligated will be cancelled and permanently rescinded. The budget baselines shall be adjusted downward to ensure that all spending in the stimulus, whether spent or cancelled, is treated as a one-time expenditure and not assumed to be repeated. What a lot of Americans do not know is every time we add a spending provision, that becomes part of the baseline, which assumes that that money will be spent over time. We cannot continue that indefinitely. We propose a 2-percent across-the-board reduction in spending, with the goal of balancing the budget by 2015. We should establish two separate entitlement commissions, one to make recommendations on systems and the other Medicare-Medicaid. We all know the elephant in the room is Social Security and Medicare, and the unfunded liabilities associated with it. We should also require recipients to disclose costs for awarded projects, prohibit stimulus funds from being used for lobbying activities, political contributions, holiday parties, unnecessary renovations, and questionable travel. We should spend some more money on accountability, transparency, oversight, and results. We should create a recovery and accountability and transparency board with a Web site, create a Congressional oversight panel, establish a recovery and reinvestment oversight board composed of Federal agency heads, require review and audits by the Comptroller General on the bill's effectiveness in achieving economic and workforce recovery goals, and establish a special inspector general modeled after the oversight required for TARP. The total is $445 billion. I think this is a balanced proposal and one that I hope deserves the serious consideration of this body. I want to say a word about TARP. The American people have been dissatisfied with the results, and Members of this body have been as well. In the first round of $350 billion, it seemed that the priorities seemed to change literally on a daily or weekly basis. It became unclear as to exactly what that $350 billion was going to do, and, apparently, if you look at all of the statistics, it has not resulted in significant improvement. Now, what would have happened without it will be a matter of conjecture and analysis by economists and historians. Now we are in the second round. Now we are told there may need to be more, another TARP, after we pass this stimulus legislation and an omnibus appropriations bill. When we start totaling that, we are talking about several trillion dollars, and we can't continue that without the American people experiencing some tangible results. Most Members of this body are in agreement. We need to stimulate and jump-start the economy. Let's not do it in such a way that our children and grandchildren pay for it in the most painful and difficult manner. We owe that to them. I yield the floor.

Mr. McCAIN. I would, Mr. President. I ask unanimous consent that after the Senator from Maryland, the Senator from Georgia and whatever speaker on the other side wishes to speak, then I be----

Mr. McCAIN. Mr. President, I would like to begin by thanking the managers for their patience and their leadership in this marathon that we are engaged. I rise in support of the Coburn amendment, which strikes the $246 million Hollywood tax earmark. It is quite an interesting earmark in that the stimulus legislation provides a tax earmark for Hollywood in the amount of $246 million--a quarter of a billion dollars--over the next 11 years, and would allow large Hollywood studios the opportunity to choose between the existing tax break for movie studios or to write off 50 percent of the entire production cost for movies and TV shows made in 2009. In the years that follow the remainder of the production cost would be written off according to existing depreciation law. The 50-percent accelerated depreciation in the first year is a ``bonus depreciation.'' Obviously, this amendment would strike that special earmark. I would point out to my colleagues that Hollywood is doing okay. They raked in over a billion dollars in January--the biggest January ever for the movie industry. That is testimony to the attractiveness of the product. Box office receipts were up nearly 20 percent in January 2009, with ticket sales up 16 percent over January 2008, when January is typically considered a weak month for the industry. Movie director Rob Reiner was recently asked about Hollywood's relationship with Washington, DC, and claimed: We are a special interest group that doesn't ask for anything like earmark legislation or tax breaks. We are the one industry that doesn't ask for a quid pro quo. Well, rather than targeting tax breaks at big-time political donors, the stimulus should have targeted its tax break toward mainstream America. I regret that I can't support the so-called stimulus bill that has been presented. We have an opportunity to craft a bill that would provide real relief for the American people at a time of great economic uncertainty. Unfortunately, that opportunity has so far been rejected. Once again, parochial partisan and special interests have taken precedence over the interests of the American people. This bill has become nothing more than a massive spending bill, expected to cost taxpayers more than $1.2 trillion, according to the latest estimate by the Congressional Budget Office, and $1.2 trillion dwarfs any Government program in history, after adjusting for inflation. It is bigger than the New Deal and the Iraq war combined. The interest alone will be costlier than the Louisiana Purchase in current dollars or the amount the United States spent to land on the Moon. During a press conference in November 2008 to introduce the new Director of the Office of Management and Budget, then President-elect Obama said: The new way of doing business is, let's figure out what projects, what investments are going to give the American economy the most bang for their buck, how we protect taxpayer dollars so that this money is not wasted, restore a sense of confidence among taxpayers that, when we spend our money, it is on that which is actually going to improve their quality of life, create jobs that are so desperately needed, help to spur on economic growth and business creation in the private sector. That is all part of the new way of doing business. 1I was very pleased to hear the President speak those words. However, I do not believe the bill before us today is reflective of that sentiment. Let's acknowledge and continue to acknowledge that American families are hurting and they need our help. We have entered the second year of a recession. Record numbers of homeowners face foreclosure, our financial markets have nearly collapsed, the U.S. automobile manufacturers are in serious trouble, and the national unemployment rate stands at 7.2 percent--the highest in 16 years--with over 1.9 million people having lost their jobs in the last 4 months of 2008. Additionally, the number of Americans filing first-time unemployment claims this month matches the highest level in 26 years. Housing starts decreased 15.5 percent in December compared to the prior month. For 2008, housing starts were at a new low, shattering the previous record of 1.014 million set in 1991. The list goes on and on, and I don't have to tell any American of the economic challenges we face and the real suffering that is going on throughout America. In the last year alone, due to the mortgage crisis, the Government has seized control of Fannie Mae and Freddie Mac, and we already passed a massive $700 billion rescue of the financial markets. We have debated giving the big three auto manufacturers tens of billions in taxpayer money as a ``short-term infusion of cash,'' knowing they would be back for more. Last week, the House approved its $819 billion stimulus package on a party-line vote. The total cost of that legislation is almost as much as the annual discretionary budget for the entire Federal Government. We need to stimulate the economy, but we need to do it in a smart, fiscally responsible manner that will not bankrupt future generations of Americans. It is more important now than ever before that Congress restore fiscal discipline to Washington and get our financial house in order. In a November 25, 2008, opinion piece in the Wall Street Journal, John Taylor, a senior fellow at the Hoover Institution and a professor of economics at Stanford University, wrote: The major part of the first stimulus package last year was the $115 billion temporary rebate payment program targeted to individuals and families that phased out as incomes rose. Most of the rebate checks were mailed or directly deposited during May, June, and July of 2008. The argument in favor of these temporary rebate payments was that they would increase consumption, stimulate aggregate demand, and thereby get the economy growing again. What were the results? This chart reveals the answer. The upper line shows disposable personal income through September. Disposable personal income is what households have left after paying taxes and receiving transfers from the government. The big blip is due to the rebate payments in May through July. The lower line shows personal consumption expenditures by households. Observe that consumption shows no noticeable increase at the time of the rebate. Hence, by this simple measure, the rebate did little or nothing to stimulate consumption, overall aggregate demand or the economy. These results may seem surprising, but they are not. They correspond closely to what basic economic theory tells us. Temporary increases in income will not lead to significant increases in consumption. However, if increases are longer term, as in the case of a permanent tax cut, then consumption is increased and by a significant amount. Mr. President, I ask unanimous consent to have printed in the Record the full text of Mr. Taylor's op-ed.

Mr. McCAIN

Mr. McCAIN. Mr. President, I wish to address the issue of the legislation before us, the SCHIP reauthorization. We all know that the Children's Health Insurance Program is a vital safety net program the Congress created to offer coverage to one of our Nation's most vulnerable populations, and that is low-income children. It is an objective that all of us stand behind. Unfortunately, the measure before us is an attempt to take a good program, expand it far beyond its original scope, and to fund it by imposing higher tobacco taxes. Remarkable. That is not the right approach. When it was created, it was done to address the needs of millions of children who went without health coverage. I was pleased to join my colleagues in supporting the establishment of the CHIP program. And thanks to this program, many low-income children have been able to obtain health care coverage they otherwise wouldn't have had. Today, obviously, this bill would drastically expand coverage, and as has been discussed several times on the floor, it contains loopholes, for example, that would allow one State--the State of New York--to go ahead with their planned expansion and cover children of families earning up to $88,000 a year. That will have a crowdout effect, where 2.4 million of the 6.5 million newly enrolled individuals would have had private coverage without this legislation. Some of us who look at this may view it as another effort to eliminate, over time, private insurance in America, and I am concerned about that. I am also concerned about the drastic expansion. We should take the word ``children'' out of it, since it is now being expanded to many other citizens than children. But what I find unacceptable here is that we are basically going to count on Americans to use tobacco products--smoking--in order to fund it. Is there anyone in this body who doesn't know that smoking and the use of tobacco products is harmful and a danger to the health of these same children we are insuring? Is there anyone who isn't concerned about what seems to be a rise in the use of tobacco amongst young Americans? One of the reasons for that is because the deal that was negotiated between the lawyers and the attorneys general of this country was that these supposed funds from tobacco taxes were supposed to go to advertising for antitobacco usage and for treatment of illnesses associated with the use of tobacco, but it has now become another source of revenue for every State in America. Yesterday, during a Health and Education Committee roundtable discussion, the topic of preventive measures was discussed at length, and what did we talk about? We talked about the ill effects of the use of tobacco, particularly smoking and secondhand tobacco, and yet here we are funding an attempt to improve the health of young Americans with billions and billions of dollars of taxes on tobacco products. Couldn't we have found somewhere in our budget programs that could have been reduced or even eliminated to fund the SCHIP program? Apparently not. Apparently not. So we now are at a point where the States no longer use the money in the form of taxes on tobacco products that was supposed to go to discourage the use of tobacco. We are now going to depend on a tax on tobacco products for funding of insurance for children and others, thereby, at least in some ways, encouraging the use of tobacco. So I am very much opposed to this legislation. I am proud of what we did initially. But it seems to me that using the ill- gotten taxes from the use of tobacco--smoking in particular--in order to fund any program is not an appropriate legislative remedy. So I believe the bill differs drastically from the original intention of SCHIP, and I disagree strongly with its funding mechanism of increased tobacco taxes. I support the ideas contained in the alternative bill, which would keep the Children's Health Insurance Program focused on low-income children, and would have done so without dramatic increases in Federal spending or higher taxes. Mr. President, I appreciate the courtesy of my colleagues, and I yield the floor.

Mr. McCAIN

Mr. McCAIN. Madam President, I regret that I must oppose the nomination of Timothy Geithner to be the next Secretary of the Treasury. I assure my colleagues, I did not reach this decision lightly but, rather after much thoughtful consideration. Next to the confirmation of Supreme Court Justices, the Senate has no more important duty than the confirmation of members of the President's Cabinet. Throughout my time in this body I have held the view that elections have consequences and that--barring any extraordinary circumstance--the President should be free to pick his team and surround himself with those he feels can best assist him in attaining his goals. Mr. Geithner's involvement in the failed policies behind the misuse of hundreds of billions of taxpayer dollars in the Troubled Asset Relief Fund, TARP, has led me to conclude that an extraordinary circumstance exists in this situation. Mr. Geithner played a critical role in the creation of the TARP and should be held accountable for the fact that it has been terribly mismanaged and has not achieved its intended results. Unfortunately, I have come to believe that Mr. Geithner lacks the critical judgment necessary to be an effective Treasury Secretary and careful steward of taxpayer dollars. To properly weigh a potential Cabinet member's qualifications, it is important to pay close attention to the committee hearings held to consider the nomination and the views expressed by both the nominee and members of the committee. After Mr. Geithner's testimony before the Senate Finance Committee, a very well-respected member of the committee stated that ``I don't believe that the requisite candor exists for me to indicate my support for him with an affirmative vote.'' Another member of the committee stated that, ``Mr. Geithner has been involved in just about every flawed bailout action of the previous administration. He was the front-line regulator in New York when all the innovations that recently have brought our markets to their knees became widespread. . . . All those actions, or failures to act, raise questions about the nominee's judgment.'' I fully agree with my colleagues' sentiments. I am deeply troubled by Mr. Geithner's role in the mismanagement of the TARP. He has enthusiastically supported failed policies that have cost the taxpayer hundreds of billions of dollars. Earlier this month, I voted with 41 of my colleagues in opposition to releasing the remaining $350 billion TARP funds because I had seen no evidence that the additional and substantial taxpayers' money would be used for its intended purpose. TARP was created to allow the Treasury Department to purchase up to $700 billion in ``toxic assets'' from financial institutions in order to help homeowners facing foreclosure and to stimulate the economy. The misuse of the first $350 billion of TARP funds combined with the lack of transparency promised by the Treasury Department were reasons enough to oppose releasing additional funds. It is my strong opinion that no further TARP funds should be released until we are able to impose strict standards of accountability and ensure that the money is spent only as intended by Congress--to purchase mortgage-backed securities and other troubled assets. Unfortunately, I have seen no evidence that Mr. Geithner shares that view. He has stated that more oversight and transparency are necessary but to date he has offered no specifics about how the remaining $350 billion in TARP money would be spent and has laid out no criteria for serious oversight and accountability of such substantial sums of taxpayer dollars. With no regard for congressional intent, and with the support of Mr. Geithner, the Treasury Department has used TARP funds to prop up the banking industry and to guarantee securities backed by student loans and credit card debt. But most troubling to me has been the use of TARP funds to help bail out the domestic auto industry--in direct defiance of Congress. Last month, after extensive discussion and debate, the Senate rejected a plan to pump billions of Federal dollars into the domestic auto industry because we saw no evidence of serious concessions from the industry and no assurance of the domestic auto manufacturers' long-term viability. When asked about the use of TARP funds to further assist the domestic auto industry, Mr. Geithner indicated he would support further funding as long as it was accompanied by ``a comprehensive restructuring'' of the auto industry. Again--he offered no specifics. Madam President, the American people can no longer afford ambiguous assurances of transparency, accountability, and reform. They need and want specifics and particulars--and the person leading the U.S. Treasury should be able to provide the American taxpayer with the details they seek.