Jim Webb

Mr. WEBB

Mr. WEBB. I thank the Senator for inquiring. I wish to speak for up to 10 minutes about the Ensign amendment.

Mr. WEBB. Mr. President, it was my understanding that the Ensign amendment was going to be called up at 4:30.

Mr. WEBB. Would that not be the proper topic of discussion on the floor? I have been waiting since 4:15 when I was slated to speak.

Mr. WEBB. May I ask for a courtesy from the Senator from Texas and the Senator from Louisiana? I have a commitment I cannot break back in my office that was supposed to begin at this moment. Would you feel it appropriate if I were to ask that my statement be printed in the Record at this point with respect to the Ensign amendment, once you called it up?

Mr. WEBB. I appreciate that courtesy. If there is opportunity for me to come back later, I will try.

Mr. WEBB. I also wish to thank the Senator from Louisiana for yielding for this exchange. Amendment No. 3476, As Modified

Mr. WEBB. Mr. President, I want to thank Senate leadership for bringing this bill to the floor. Our Nation's air traffic control systems are in serious need of modernization, and this bill is the right step forward in addressing those challenges. Improved safety, a reduction in flight delays and more efficient routes resulting in less fuel burned are all possible with a modern, 21st century air traffic control system. I commend Chairman Rockefeller, Ranking Member Hutchison and the Senate Commerce Committee for their commitment in addressing these issues. I want to take a few moments today to talk about an issue that is important to me, the communities near Washington Reagan National Airport and those communities throughout America who currently have reliable service to the Nation's Capital. I am deeply concerned with any attempts to modify the current agreement on the perimeter and slot rules that currently apply to Reagan National Airport. In 1987, Congress created the Metropolitan Washington Airports Authority to run Reagan National and Washington Dulles International Airports. The creation of the Airports Authority established a professional organization to operate the airports efficiently and represented a commitment to the surrounding communities regarding aircraft noise and traffic. I think that bears repeating. Congress made a commitment to the residents of Alexandria, Arlington and Fairfax County on the operation of Reagan National Airport when it transferred authority to the Airports Authority. Those commitments were codified by Congress in the so-called perimeter and slot rules. Changes to these rules threaten to seriously degrade service to Reagan National, Dulles International, and Baltimore-Washington International airports. And they break the commitment made to our surrounding communities. The amendment that the Senator from Nevada has offered seeks essentially to do away with the existing 1,250 mile perimeter rule that governs flights into and out of Reagan National Airport. The Senator from Arizona, Mr. Kyl, has argued that this will have a limited impact on existing flights at DCA. On the contrary, if this amendment passes, up to 75 existing flights that currently fly from DCA to other large cities within the perimeter could be lost. Shifting these flights would not only have a direct impact on the cities that stand to lose the routes they currently have, but it would also have follow-on effects to flights in smaller markets, as well as flights that now service Dulles and BWI. Furthermore, the flights that would be added at Reagan National would be long-haul flights, which means bigger planes and more passengers. That in turn means more congestion around and inside the airport: worse traffic, longer lines at security, more difficulty parking large planes at already crowded gates. There are basic physical constraints at Reagan National Airport that cannot be ignored, and the original slots and perimeter rules were carefully crafted to take that into consideration. If you have ever tried to fly out of Reagan National Airport during peak hours, you know that parking can be impossible, ticket counters can be incredibly congested and the number of gates for jets to park is limited. More than 10 years ago, the Airports Authority rebuilt much of Reagan National Airport, transforming it into one of the most efficient airports in the Nation as the facilities constructed were matched to the number of flights established by law. It did so with the slot and perimeter restrictions in mind. Any significant change in those rules will overburden critical airport facilities and infrastructure, causing serious disruptions. New flights will create more demand for parking where none is available. At the same time, gate access at Reagan National Airport is limited, as airlines are currently sharing gates in some areas. Flights coming and going would be delayed, an important issue we happen to be addressing in this bill. We have laid out policies to reduce the inconvenience of delays and sitting in grounded aircraft because of air traffic congestion in this very bill. These are significant issues that the Senate must consider before making any changes to the perimeter rule. When members consider this issue in the context of additional flights for them to get back to their constituents, keep in mind there is a significant risk of greater delays and, for many Senators here, a possible reduction in services to their communities. With a change in the current structure at Reagan National Airport, there will be potential impact for communities inside the perimeter who could see their access reduced or eliminated. Flights to cities like Miami, FL; Chicago, IL; New York City; and Boston, MA could lose many of the flights they now have. Communities like Charleston, WV; Des Moines, IA; Jackson, MI; Lexington, KY; Madison, WI; Manchester, NH; or Omaha, NE; could eventually lose their access as well, as airlines backfill their flights to more profitable routes. It strikes me that the desire to change the slot and perimeter rules at Reagan National Airport is not being driven by market demand, but rather by a few airlines seeking a competitive advantage over others. Allowing airlines to swap flights from hub airports inside the perimeter to hub airports outside of the perimeter could be seen as a special interest earmark for a select group of carriers, as the pool of beneficiaries is identifiable and limited. By allowing existing rules to be altered for a select class, Congress will be allocating this scarce resource for the convenience of a few rather than the larger community need. This is fundamentally anticompetitive behavior and we need to end this periodic and detrimental practice. Congress added 24 new slots in 2000 and another 22 slots in 2003. If we get rid of the perimeter rule, or modify it in such a way that causes loss of service or diminished service to communities inside the perimeter, the affected communities will be back before Congress seeking more slots to make up for lost service. The communities of Northern Virginia should not have to continually suffer for the convenience of a relative few. We have seen examples of service in other congested airspaces where reasonable slots restrictions have controlled or reduced growing delays in flight times. The convenience of Reagan National comes at a heavy price for many airport neighbors in the form of aircraft noise and airport related traffic in Arlington, Alexandria and southern Fairfax County. Changing current law only further breaks the bond that was created with the neighbors of the airports and unfairly burdens them for the sake of the convenience of others. With some foresight in this body, we can avoid any greater congestion whether in the air, on the tarmac or on our roads. The position that the Senators from Maryland, Mr. Warner, and I hold is consistent with local communities groups of Northern Virginia and that of many previous Governors of the Commonwealth. With regard to the perimeter rule, its value is evident in the development taking place at Dulles Airport today. Because Dulles is better situated to handle the demands of long-haul flying, Congress wisely established the perimeter rule to move long-haul traffic to Dulles where the space exists to handle the necessary parking and infrastructure expansion. The multibillion-dollar Dulles Development program, and the investments in rail service to Dulles, are all predicated upon Congress keeping its word on the perimeter rule. Eliminating or changing the perimeter rule will not only overburden capacity at Reagan National Airport by overwhelming the facilities but would significantly change the infrastructure improvements needed at Dulles International Airport, many of which are already under construction. Sizable business interests have located their operations in Fairfax and Loudoun Counties based on their proximity to Dulles and on assumptions about the stability of the slot and perimeter rules. Service will suffer, infrastructure will be strained and the communities surrounding the airport will face more noise and more traffic. That is the last thing we need for Northern Virginia, or the Nation's Capital. I have laid out only the most significant arguments against changes to the slot and perimeter rules. But here is one more: it is not appropriate for Congress to meddle and manipulate the airports in my home State. Congress no longer maintains this kind of silent hand in the operations at any airports in my colleagues' home states. Let us let the Airports Authority run Washington's airports as Congress agreed to. I urge my colleagues to vote against the Ensign amendment and reject changes to the perimeter rules at Reagan National Airport. I ask unanimous consent to have printed in the Record a March 17, 2010, letter to me from the Metropolitan Washington Airports Authority.

Mr. WEBB

Mr. WEBB. Mr. President, today I introduced a bill that speaks directly to the welfare of our military service members and their families. TRICARE, TRICARE for Life, and the nonappropriated fund health plans are the programs that provide health care for our men and women in uniform, their families, retirees, and other eligible individuals. These programs, as well as today's military veterans health care system, exceed the minimum essential coverage for individual health insurance required by the health care reform bill passed yesterday by the House of Representatives. I am pleased to offer a companion bill to one introduced last week by my good friend, House Armed Services Committee Chairman Ike Skelton, that explicitly protects TRICARE and NAF health plans. Representative Skelton's bill, which passed Saturday by a vote of 403 to 0, makes it perfectly clear that no TRICARE or NAF health plan beneficiary will be required to purchase additional coverage beyond what they already have. My companion legislation to Chairman Skelton's provides a similar reassurance to our servicemembers and their families. It will amend the Internal Revenue Code of 1986 in a way that stipulates that Department of Defense TRICARE health-care coverage will be treated as minimal essential coverage under the health care reform bill when it is signed into law by the President. There has been a great deal of confusion over the past year surrounding the future of TRICARE and other military health care programs. False allegations have been raised, for example, that the administration planned changes to TRICARE for Life that would jeopardize its future or substantially raise its cost for beneficiaries. It is important to set the record straight. In my capacity as the chairman of the Personnel Subcommittee of the Senate Committee on Armed Services, I am committed to protecting the health care coverage programs in place for the military today. Supporting this bill will reassure our service members that the coverage provided by TRICARE and nonppropriated health plans is properly protected in law as meeting the requirements for individual health insurance mandated by the new health care reform bill. I urge my colleagues to join me in supporting this legislation.

Mr. WEBB

Mr. WEBB. Mr. President, today I introduced a bill that speaks directly to the welfare of our military service members and their families. TRICARE, TRICARE for Life, and the nonappropriated fund health plans are the programs that provide health care for our men and women in uniform, their families, retirees, and other eligible individuals. These programs, as well as today's military veterans health care system, exceed the minimum essential coverage for individual health insurance required by the health care reform bill passed yesterday by the House of Representatives. I am pleased to offer a companion bill to one introduced last week by my good friend, House Armed Services Committee Chairman Ike Skelton, that explicitly protects TRICARE and NAF health plans. Representative Skelton's bill, which passed Saturday by a vote of 403 to 0, makes it perfectly clear that no TRICARE or NAF health plan beneficiary will be required to purchase additional coverage beyond what they already have. My companion legislation to Chairman Skelton's provides a similar reassurance to our servicemembers and their families. It will amend the Internal Revenue Code of 1986 in a way that stipulates that Department of Defense TRICARE health-care coverage will be treated as minimal essential coverage under the health care reform bill when it is signed into law by the President. There has been a great deal of confusion over the past year surrounding the future of TRICARE and other military health care programs. False allegations have been raised, for example, that the administration planned changes to TRICARE for Life that would jeopardize its future or substantially raise its cost for beneficiaries. It is important to set the record straight. In my capacity as the chairman of the Personnel Subcommittee of the Senate Committee on Armed Services, I am committed to protecting the health care coverage programs in place for the military today. Supporting this bill will reassure our service members that the coverage provided by TRICARE and nonppropriated health plans is properly protected in law as meeting the requirements for individual health insurance mandated by the new health care reform bill. I urge my colleagues to join me in supporting this legislation.

Mr. WEBB

Mr. WEBB. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. WEBB. Mr. President, I rise to speak about amendment No. 3342 which I have offered with respect to the legislation in question. There has been some confusion among my colleagues about what exactly is contained in this amendment which I introduced with Senator Boxer as an individual stand-alone bill previously and introduced in similar format here on this legislation. I emphasize to my colleagues that this is a carefully drafted, one- shot amendment designed to give the American taxpayers a place on the upside of the recovery of the financial system that they, quite frankly, enabled. This amendment would provide a one-time 50-percent tax on bonuses that are above $400,000 of any initial bonus paid to executives of financial institutions that received a minimum of $5 billion in the TARP program. It is only for income that was generated through work in 2009 and compensated in 2010. This is a one-shot matter of fairness to balance out the rewards these financial institutions received which were enabled by the contributions of the American taxpayer in the TARP program. We have had estimates that this amendment will recover for our economic system somewhere between $3.5 and $10 billion. I again emphasize that the American taxpayers did not create this economic crisis. They were required to bail out those people who did create it. They deserve to share in the upside, in the rewards they themselves enabled. Paul Krugman, who is a Nobel Prize-winning economist, wrote in July of 2008 about his concern at the very inception of this economic crisis that we were moving toward a tendency in this country to socialize risk and individualize reward. In other words, whenever we create a situation where there is an economic challenge, the American taxpayers at large are expected to absorb the risk. But then when the reward comes in, only the executives, the people who were managing the financial system, are able to actually get the rewards. This particular reward in this one-shot tax proposal has come about largely as the result of government intervention, as the result of working people having to put their money forward in order to bail out a financial system that had gone wrong. As a result, I believe, as a matter of equity, the reward should be shared with taxpayers who made it possible. For those who had to vote on the TARP program on October 1, 2008, it was a very difficult vote and a defining moment in the Senate. We need to remind ourselves of what was going on at that point. We were called on a mass conference call in the Senate by the Secretary of the Treasury and Chairman Bernanke telling us that if we did not move $700 billion forward without a hearing, on an emergency basis, the world's economic systems were going to go into cataclysmic free fall. I, like a lot of Members, struggled with that vote. I talked with as many people as I could across the philosophical spectrum of how the economy should work. I finally decided in favor of moving that money forward. At the same time, I laid down a set of principles. One is that we should look at executive compensation. Another is that we should look at reregulating the financial sector, on which Chairman Baucus has taken the lead. Another is that it would be vital, in terms of fairness, that we include the American taxpayer on the upside of any recovery. In other words, if the taxpayers were going to have to put money in when these troubled assets or toxic assets--whichever term people would like to use--couldn't find a value and were clogging up our economic system, clogging up our liquidity, once that situation was cleared and a value was placed on these amounts and the economy started to recover, a portion of that benefit should go to the taxpayers who had to put the money out. There has been some talk about how with these companies--and we are only talking about 13 companies that got $5 billion or more--TARP money has been paid back. In some cases, a good bit of this money has been paid back. But I wish to make two points. The first is, any moneys that were paid back were received at the earliest in midyear last year, 2009, meaning that taxpayer assistance to these companies was very much in effect. Quite frankly, among the 13 companies included in our amendment, most of the money has not been paid back. I have had some questions here on the floor about whether this amendment discriminates against New York. Quite frankly, two of the largest companies with respect to bailout commitments are based in DC and in my own State of Virginia. This has nothing to do with regional disagreements or class envy of any sort. It is just a matter of how we ought to deal fairly with the way our taxpayers, our working people, had to step forward. A second point in terms of the TARP money being paid back is that the extent of our government's obligation to these bailout companies is astronomical. It is beyond the $700 billion. This goes to Paul Krugman's point which he has made consistently since 2008 about continually socializing risk that is enabling these rewards and not giving a benefit to the people who largely took the risk. The billions of dollars in bonuses being paid out are a direct result not only of the TARP bailout but also of generous Federal Reserve policies over the last year. We have seen near-zero interest rates, a discount window, and we have had the toxic assets bought by taxpayers. At the same time, these firms were able to borrow cheaply, to lend at a higher rate, to charge fees, and to leverage their bets into purely financial transactions. If you examined a quarterly report to the Congress that came out in July of last year, they indicated that the true potential amount of support the Federal Reserve was providing these programs was in the neighborhood of $6.8 trillion. So these risk takers, these people who were managing at the top level in these companies did so at a time that they had enormous backup from the American taxpayer. Andrew Cuomo, attorney general of New York, wrote a letter in January of this year to TARP recipients. In this letter, he made a couple of very important points that go to the intent of our legislation. I ask unanimous consent to have the letter printed in the Record at the end of my remarks.

Mr. WEBB. He writes: . . . the Office of the New York Attorney General has been conducting an inquiry into various aspects of executive compensation at many of our nation's largest financial institutions . . . [including] a review of compensation practices at the 2008 TARP-recipient banks. He makes a very valid point at the end of his letter. And here, he is writing to a company that had paid back the initial TARP money. He writes: . . . when you received TARP funding, your firm took on a new responsibility to taxpayers. While your firm has now paid the TARP money back---- Again, not all have; most of the money has not been paid back---- it is not clear that your firm would have been in the same position now had you not received that TARP money. We have all struggled with this issue. There have been many different approaches. In fact, Chairman Baucus has been out front on this issue in a number of different ways. I have in front of me the Compensation Fairness Act of 2009, which Chairman Baucus introduced last March, which was one attempt to address this issue of windfall profits bonuses. This legislation was sponsored by Senators Grassley, Schumer, Menendez, and others. Our bill is much narrower than this bill. This bill would tax bonuses of more than $50,000. Our bill taxes bonuses of more than $400,000. This bill would have taxed institutions that received more than $1 million. Ours requires $5 billion. This bill was retroactive and recurring in terms of the taxes. Ours is a one-shot, just on this 2009 amount of money that came in as a result or the benefits that came in as a result of our taxpayers stepping forward and putting $700 billion into the TARP program. Senator Brown of Ohio has introduced legislation that would put a windfall profits tax on any bonus higher than $25,000. Our amendment was inspired and designed based on a couple of previous writings and pieces of legislation, the first being the Baucus legislation, which was the starting point for it. The other was, I think, a very powerful article written in the Financial Times--one of the most conservative economic newspapers in the world--last November, by Martin Wolf. I am going to read some excerpts from this article. First, he said: Windfall taxes are a ghastly idea. . . . So why do I now find the idea of a windfall tax on banks so appealing? Well, this time, it does look different. First, all the institutions making exceptional profits do so because they are beneficiaries of unlimited state insurance for themselves and their counterparts. . . . Second, the profits being made today are in large part the fruit of the free money provided by the central bank, an arm of the state. . . . Third, the case for generous subventions is to restore the financial system--and so the economy--to health. It is not to enrich bankers. . . . Fourth, ordinary people can accept that risk takers receive huge rewards. But such rewards for those who have been rescued by the state and bear substantial responsibility for the crisis are surely intolerable. . . . Fifth. . . .``Windfall'' support should be matched by windfall taxes. His proposal, which inspired the specifics of our amendment, was that there could be a ``one-off windfall tax on bonuses,'' a one-time windfall tax on bonuses to equal the playing field in terms of this unique situation our country found itself in. I wish to say to my fellow Members and to other people who are doing the hard work of keeping our economy strong, I respect what it takes to take on risk and get a reward. I respect the entrepreneurship that has strengthened our country throughout its history. But we also need to remember the working people in this country strongly and rightly believe they have borne the brunt of this economic crisis, and they just as strongly and rightly believe they are becoming the last to be rewarded, as we begin to recover from it. Our taxpayers, our working people, rescued a financial system that was on the verge of collapse because of massive acts of bad judgment by the very companies that are now reaping huge bonuses from the government's intervention. It is not too much to ask those who have been fully compensated, and who have received in excess of a $400,000 bonus on top of their compensation, that they pay a one-time tax and share that excess on top of their $400,000 bonus in order to help make their rescuers a little more secure. Mr. President, I yield the floor. Exhibit 1 State of New York, Office of the Attorney General, New York, NY, Jan. 11, 2010. Re executive compensation investigation. Bank of America Corp., New York, NY. Dear Mr. Liman: As you know, the Office of the New York Attorney General has been conducting an inquiry into various aspects of executive compensation at many of our nation's largest financial institutions. Our inquiry has included a review of compensation practices at the original 2008 TARP- recipient banks. Last year, this Office conducted a review of bonuses to allow the public, and the industry, an opportunity to review all relevant information concerning compensation practices. This year, both the amount of bonus packages and the construction of such packages is relevant information to our inquiry. Pursuant to our ongoing inquiry, please provide this Office with a detailed accounting regarding executive compensation at your firm for 2009. In particular. it is vital that you immediately provide us with any and all information concerning your firm's bonus pool and distribution information for the 2009 year. In particular, please provide this Office with the following information: 1. A description of all bonus pools for 2009, including a description of the process by which the pools were or will be established. 2. A description of your bonus program to include cash, stock and other incentive breakdowns, vesting periods, clawback provisions, and any other provisions to tie compensation to performance and/or the long-term health of your firm, as well as a description of how the 2009 bonus structures differ from 2008. 3. A description of the process by which the bonus pools were or will be allocated and distributed, including any documents reflecting discussion of the allocation and distribution process and the justification thereof. 4. A description of how, if at all, the calculation and plans for allocation of the bonus pools have changed as a result of your firm's receipt of TARP funds and/or your firm's repayment of TARP funds. 5. For the years 2007, 2008, and 2009, a description of the bonuses awarded to employees receiving more than $250,000 in compensation. For this request, please include the allocation between cash and non-cash compensation and please provide a listing by amount of the 200 top bonuses awarded by your firm. 6. For 2009, the total value of bonuses awarded; 7. A description of how your bonus pool would have been impacted had you not received TARP funding in 2008 and/or 2009. 8. A chart and description of your institution's rate and/ or magnitude of lending over the last 3 years--2007, 2008, and 2009. Please also include the relevant sizes of the businesses to which there has been lending. 9. For 2009, the number of employees who received any bonus with a value equal to or greater than (i) $1 million, (ii) $2 million and (iii) $3 million. ``Bonus'' includes cash, deferred cash, equity, options, restricted stock, performance or time vesting stock and performance priced options, restricted stock units, restricted stock award, stock appreciation right or any similar type of grant or award. Please include for each bonus the cash and non-cash allocation. 10. Identify all compensation consultants retained as part of the 2009 compensation process. 11. The number of employees employed at your firm on December 31, 2009. We have copied the Board of Directors on this letter because we believe they should be involved in the response to our requests as the firm's top management likely has a significant interest in the compensation issues raised by our requests. As we informed your firm last year, when you received TARP funding, your firm took on a new responsibility to taxpayers. While your firm has now paid the TARP money back, it is not clear that your firm would have been in the same position now had you not received that TARP money. Accordingly, we also ask that the Board inform us of the policies, procedures, and protections the Board has instituted that will ensure Board review of all such company expenditures going forward. As recent government actions have created new issues of public accountability and as private sector financial institutions are grappling with the consequences of these actions, we believe the need for full disclosure and transparency are essential and this reporting will assist in that effort. We ask that you provide the requested information by February 8, 2010. Very truly yours, Andrew M. Cuomo, Attorney General of the State of New York.

Mr. WEBB. I suggest the absence of a quorum.

Mr. WEBB

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on March 3, 2010, at 4:30 p.m.

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate on March 3, at 10 a.m. in room SD-366 of the Dirksen Senate Office Building.

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet during the session of the Senate on March 3, 2010, at 10 a.m. in room 406 of the Dirksen Senate Office Building.

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on March 3, 2010, at 10 a.m. in room 215 of the Dirksen Senate Office Building, to conduct a hearing entitled ``The 2010 Trade Agenda.''

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs be authorized to meet during the session of the Senate on March 3, 2010, at 9:30 a.m. to conduct a hearing entitled ``Chemical Security: Assessing Progress and Charting a Path Forward.''

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate on March 3, 2010, at 2:15 p.m. in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Encouraging Innovative and Cost-Effective Crime Reduction Strategies.''

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet during the session of the Senate on March 3, 2010. The Committee will meet in room 418 of the Russell Senate Office Building beginning at 9:30 a.m.

Mr. WEBB. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs' Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security be authorized to meet during the session of the Senate on March 3, 2010, at 2:30 p.m. in order to conduct a hearing entitled ``Oversight Challenges In The Medicare Prescription Drug Program.''

Mr. WEBB. Mr. President, I ask unanimous consent that the Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard of the Committee on Commerce, Science, and Transportation be authorized to meet during the session of the Senate on March 3, 2010, at 10 a.m., in room 253 of the Russell Senate Office Building.

Mr. WEBB. Mr. President, I ask unanimous consent that the Subcommittee on Strategic Forces of the Committee on Armed Services be authorized to meet during the session of the Senate on Wednesday, March 3, 2010, at 2:30 p.m.

Mr. WEBB

Mr. WEBB. Mr. President, I will offer an amendment to the pending legislation, amendment No. 3342. It is my intention to call up that amendment after the votes on the pending amendments this afternoon, but I would like to take a few minutes to explain to my colleagues the nature of this amendment and why I believe it is important. This amendment basically says if you are an executive at one of the companies that received more than $5 billion in the TARP bailout, the financial bailout that occurred when we began our economic crisis, and if you receive in addition to your compensation a bonus in excess of $400,000, then that amount above $400,000--which is the approximate compensation of our President--will be taxed at 50 percent, and the amount it is taxed will be returned to the American taxpayers for deficit reduction. It is a very simple amendment. It is a one-time amendment based on a unique situation in this country when the American taxpayers had to bail out our major companies in order to stabilize our economy. This is not class warfare. It is not a continuing windfall profits tax. But I believe it is very proper for us to institute this on a one- time basis. Estimates we have had, when I offered this amendment as independent legislation a short while ago, along with Senator Boxer, were that you could recoup in the neighborhood of $10 billion back into our economy by this very fair tax assessment. I want to go back to two opinion pieces that have been written over the last couple of years from people with great standing in the financial community and great philosophical differences. Then I want to remind my colleagues the process we had to enter into when the TARP legislation was first voted on. On July 14, 2008, Paul Krugman, a Nobel Prize-winning economist, wrote a piece in the New York Times. I came to the floor at that time and quoted from his piece. He was talking about the beginning of what became our crisis, and he made the point: It's the belief of investors-- He was talking at this point about the situation with Fannie and Freddie, to quote from his article. It's the belief of investors if they fail, the federal government will come to their rescue. Then he wrote: The implicit guarantee means that profits are privatized while losses are socialized. What he meant by that and what we actually have seen play out as our economy, thankfully, has begun to recover is, with the situation we entered into with TARP, risk was socialized. That means the average worker in this country--the person out there driving a truck, the nurse working in a hospital, the people doing the day-to-day work--had to put their tax dollars in to stabilize these banking systems, but the reward from the stabilization has become personalized to the executives who were running these companies, who then have benefited through these large bonus systems once our economy began to stabilize. It is my strong belief, as someone who is a supporter of people who are willing to take risks and create the right kind of environment for growth in our economy, that they should be happy once they have reached a point where they have been compensated and they have had a $400,000 bonus. They should be happy to take the money beyond that $400,000 bonus and divide it up with the average worker out here who may not even own stock who had to put their tax dollars in to stabilize the economy. The second article I would like to quote from is from the Financial Times which, as all of my colleagues will recognize, is one of the most conservative newspapers in the world when it comes to capitalist enterprise, risk taking, rewarding the people who get out and lead in our business sector. Martin Wolf wrote an editorial on November 19, 2009, not that long ago. I ask unanimous consent to have printed in the Record the entire article after my remarks.

Mr. WEBB. Mr. President, Martin Wolf said this: Windfall taxes are a ghastly idea. . . . No sensible person should support them. So why do I now find the idea of a windfall tax on banks so appealing? Well, this time, it really does look different. Mr. Wolf goes on to point out: Ordinary people can accept that risk takers receive huge rewards. But such rewards for those who have been rescued by the state and bear substantial responsibility for the crisis are surely intolerable. . . . The public finances will be devastated for decades: taxes will be higher and public spending lower. Meanwhile, bankers are about to reap huge rewards. This damages the legitimacy of the market economy. Mr. Wolf went on to support the very concept I am putting on the table today; that is, a one-time windfall profits tax on moneys that were earned in 2009 when this American taxpayer rescue of our financial system occurred, when earnings that occurred through work in 2009, which are paid in 2010--this is not a retroactive tax; one shot, balance the playing field and reward the people who stepped forward to help save our economy. Sometimes it is hard for us to remember the circumstances that took place when we were asked to vote for TARP back in September of 2008 because so much has happened to our economy and to the debate in this country since then. But we should remember that in September of 2008, Secretary Paulson and Chairman Bernanke put us all on a conference call. They told us if we did not put $700 billion of taxpayer money into a program to assist our major Federal financial institutions that the world as we knew it economically was going to fall into cataclysm. We voted in support of this $700 billion--I voted for it--in order to help these financial institutions solve the problems, undo their systems of bad assets--which had taken place, quite frankly, through a lot of bad judgment in their leadership--free up our economic system and get credit going again. And we did it with the explicit understanding that it was the American taxpayers who were putting the money in and who, when the system righted itself, would get their money back. So this one-shot deal is designed to help do that. It is fair to all parties. It allows the executives in these 13 companies that received more than $5 billion each of taxpayer money to still reward their executives and at the same time share these profits, or these benefits that go beyond a $400,000 bonus, with the people who basically pulled their fat out of the fire. I hope we can get a vote on this amendment. I trust my colleagues will understand the care with which it was designed and the equity we are trying to deal with. I yield the floor. Exhibit 1 [From the Financial Times, Nov. 19, 2009] Tax the Windfall Banking Bonuses (By Martin Wolf) Windfall taxes are a ghastly idea. They are a sop to prejudice, a burden on risk-taking and a form of arbitrary confiscation. No sensible person should support them. So why do I now find the idea of a windfall tax on banks so appealing? Well, this time, it really does look different. First, all the institutions making exceptional profits do so because they are beneficiaries of unlimited state insurance for themselves and their counterparties. As Andrew Haldane of the Bank of England argues, the state has ``become the last resort financier of the banks''. In the UK, total support amounted to a staggering 74 per cent of gross domestic product. These must be the largest business subsidies ever. Second, the profits being made today are in large part the fruit of the free money provided by the central bank, an arm of the state. The state is giving the surviving banks a licence to print money. Third, the case for generous subventions is to restore the financial system--and so the economy--to health. It is not to enrich bankers, particularly not those engaged in the sorts of trading activities that destroyed the financial system in the first place. Fourth, ordinary people can accept that risk takers receive huge rewards. But such rewards for those who have been rescued by the state and bear substantial responsibility for the crisis are surely intolerable. What makes them yet more so is that the crisis has devastated the prospects of tens, if not hundreds, of millions of innocents all over the globe. The public finances will be devastated for decades: taxes will be higher and public spending lower. Meanwhile, bankers are about to reap huge rewards. This damages the legitimacy of the market economy. Fifth, it is hard to argue in favour of exceptional interventions to bail out the financial sector at times of crisis, and also against exceptional interventions to recoup costs when the crisis is past. ``Windfall'' support should be matched by windfall taxes. Finally, these are genuine windfalls. They are, as George Soros has said, ``hidden gifts'' from the state. What the state gives, the state is entitled to take back, if it is not used for the state's purposes. So the question, in my mind, is not whether a windfall tax can be justified but whether it can be designed successfully. All taxes have unintended consequences. One must be particularly careful with this one. Since the aim of policy is to recapitalise the banks, the tax should not reduce their ability to do so. It would be far better then to impose a tax on contributions made to the bonus pool. There is no public interest in such payments. Since it would be a one-off event, it should not affect incentives (unless banks plan to create systemic crises every few years). If the tax applied to all banks operating within a given jurisdiction, it would not affect competitiveness among them. The case seems strong--even more so if the tax could be implemented across major jurisdictions, simultaneously. Yet windfall taxes cannot contain financial excess, precisely because their goal is not to affect incentives. So what is to be done? As Mr. Haldane notes, we have seen ``a progressive rise in banking risk and an accompanying widening and deepening of the state safety net''. As the liabilities of the banks have become ever more socialised and so equity cushions have become increasingly redundant, the incentive for both limited liability shareholders and employees to game the taxpayer has risen greatly. It is rational for banks to choose risky strategies because they take the upside and taxpayers much of the downside. Over the past half century, UK bank capital has remained at between 3 per cent and 5 per cent of assets, these assets have risen tenfold, relative to GDP, and returns on equity have averaged 20 per cent. Such high returns, in an established industry, must mean either high barriers to entry or excessive risk-taking. The former are undesirable and the latter terrifying, particularly in view of the huge rise in the state's exposure to the risks. We will never have a better opportunity than now to redress the deteriorating terms of trade between the banks and the state. A big part of the solution must be to shift incentives. The more credible are the pre-announced limits on support from government, the more effective will be the changes in incentives inside banks, and vice versa. The less we are able to shift these incentives, the more important it will be to impose heavy regulation. The combination of today's incentives with today's safety nets and yesterday's ``light touch'' regulation was devastating. Yet, regardless of the success of reforms of incentives in--and regulation of--the financial sector, it is reasonable to recoup not only the direct fiscal costs of saving banks but even some of the wider fiscal costs of the crisis. The time has come for some carefully judged populism. A one-off windfall tax on bonuses would make the pain ahead for society so very much more bearable. Try it: millions will love it.