[Congressional Record Volume 152, Number 86 (Wednesday, June 28, 2006)]
[Senate]
[Pages S6615-S6624]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           EXECUTIVE SESSION

                                 ______
                                 

  NOMINATION OF HENRY M. PAULSON, JR., TO BE SECRETARY OF THE TREASURY

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to executive session to consider the following nomination, 
which the clerk will report.
  The assistant legislative clerk read the nomination of Henry M. 
Paulson, Jr., of New York, to be Secretary of the Treasury.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I hope before the day is out that we are 
able to help a very good American citizen by the name of Henry Paulson 
to be the next Secretary of the Treasury. Mr. Paulson had his hearing 
yesterday. That was before the Finance Committee that I chair. He was 
reported out on a unanimous voice vote this very morning in the Finance 
Committee.
  Since the Treasury Secretary is the top economic policy official in 
the administration, and the Treasury Department implements so many of 
our Nation's laws--be it tax, trade, or commerce--we have a tradition 
in the Senate of moving with all deliberate speed on nominations to 
fill that post.
  That tradition has held no matter which party controlled the White 
House or the Congress. I have moved aggressively on this nomination, 
but the timeline is consistent with past Treasury Secretary 
nominations.
  Just as an example, everybody remembers Secretary Rubin in the 
Clinton administration. That timeline is something like: The Senate 
receives his nomination January 4, 1995. That was the first day of the 
session that year. The official ethics-related paperwork was received 
on January 5 of 1995. The Finance Committee staff expedited review of 
the complicated financial details of Secretary Rubin, also a senior 
official at Goldman Sachs--Henry Paulson being the CEO of that same 
firm. The Finance Committee held a hearing 5 days later, on January 10, 
1995. On that same day, the committee reported Secretary Rubin's 
nomination. On that same day, the full Senate confirmed Mr. Rubin, and 
he was sworn in as Treasury Secretary.
  So we are moving with a similarly aggressive schedule. I appreciate 
the cooperation of Members on what I will acknowledge is relatively 
short notice.

[[Page S6616]]

I thank the committee tax staff on both sides, especially the joint 
committee staffer Gray Fontenot, and the hard work that not only he 
did, but a lot of others, and it took a lot of long hours to process 
these papers over just a period of a few days prior to today.
  My staff examined Mr. Paulson's complicated financial records, his 
tax return, and the activities of his firm, Goldman Sachs. We do this 
most often in the area of tax planning. We have received very good 
cooperation. Then, of course, after the review, we have high confidence 
in his qualifications for this position.
  Mr. Paulson brings to the table an enviable set of assets, meaning 
qualifications to do a good job as Secretary of the Treasury, although 
I presume he brings a lot of other assets to the table as well. Mr. 
Paulson spent a good amount of his youth--would you believe it--in the 
cornfields of Illinois. As a bright young man with excellent academic 
credentials, he served in the Pentagon and in the White House.
  After Government service, Mr. Paulson joined Goldman Sachs and rose 
through the ranks to the highest position of chief executive officer.
  When you look at Mr. Paulson's story, you come away with a view that 
this is a guy who gets the best results at whatever he tackles, and 
that is just the sort of a person we need as Secretary of the Treasury 
because we have a very good economy, measured by long-term standard 
measures of the economy--creating 5.3 million jobs in the last less 
than 3 years, having 4.6 percent unemployment, having growth on average 
that we had during the 1990s; lots of measurements of the economy that 
are very good.

  I am not picking out things that are never used to measure the 
economy. I am talking about things that have been used to measure the 
economy over the last 60 or 70 years. Those measurements say it is 
good. But if we don't have the right people setting the right policy 
for carrying out those policies that Congress might set, it could be in 
jeopardy.
  That is why we need a person of Paulson's background--a person who 
comes out on the right end of almost everything he tackles--to be the 
chief economic voice for our country and to be the voice for this 
administration. But his work is the administration's work, his work is 
the country's work, and I think he is up to doing the country's work.
  The impression I have and gave you about Mr. Paulson is reinforced 
when you have a personal meeting with him. I think it is fair to say 
that after yesterday's hearing, Members on both sides of the aisle came 
away very impressed with Mr. Paulson as a thoughtful and intelligent 
nominee who appreciates the concerns raised by Senators and will work 
with Senators on trying to solve those concerns.
  I will touch briefly on one matter that came up at the hearing, and 
which I know is of concern to some Members. It is well known that Mr. 
Paulson is active in environmental issues. He is an avid bird watcher 
and is chairman of the board of the Nature Conservancy. I share the 
worry that Mr. Paulson knows his job is to be Secretary of the Treasury 
and not head of EPA. Mr. Paulson's response on this concern to about 
three of us on the committee who brought this up was this. He said:

       The President of the United States has nominated me to be 
     Secretary of the Treasury, he hasn't nominated me to be 
     Secretary of Interior, he hasn't nominated me to be head of 
     the Environmental Protection Agency, that really big focus I 
     have is going to be dealing with so many of the issues that 
     we've been talking about today, the economic issues that are 
     the core of our agenda . . .

  Considering his sincerity--and I don't think he is a person capable 
of misleading--I think he is very transparent. I came away with the 
confidence that Mr. Paulson knows where his focus needs to be and where 
his responsibilities lie.
  I did kid him the other day. There is a superintendent of that 
building you call the Treasury Department down there that is trying to 
get his favor. So they are probably right now building a bird-watching 
station for him outside of the Treasury building someplace because he 
is known very much for that.
  But I think he is going to tend to business and not get over into 
other areas of the Government.
  I also note that Mr. Paulson is here at just the right time. He is 
here to deal with tax reform, China currency, and with other major 
economic issues facing America.
  I am pleased that Mr. Paulson has answered the call to return to 
public service.
  I encourage Members to vote in favor of a highly qualified nominee to 
be Secretary of the Treasury.
  For the public at large that does not quite follow everything every 
day in Washington, DC, I hope you understand that there are some people 
in America who are willing to give up the multimillion dollar salaries 
as CEOs of Wall Street firms to serve the public good, to serve as 
Secretary of the Treasury and a lot of other positions in Government 
and make less than $200,000 a year compared to the tens of millions of 
dollars that they make. Most people who like to make big money like to 
keep on making big money. But there are some people, such as Mr. 
Paulson, who are willing to serve the American public, to do what is 
right for our country and do it willingly and selfishly.
  I urge my colleagues to vote for a very good citizen, a person who I 
believe will be a very good Secretary of the Treasury.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I thank my good friend, Chairman Chuck 
Grassley, for the way in which he has moved this nomination. It is the 
right thing to do. I commend him for it.
  Mr. President, I also support Hank Paulson, this administration's 
nominee for Secretary of the Treasury.
  Throughout its history, the Department of the Treasury has required 
enormous innovation, vision, and perseverance. Our Nation's first 
Treasury Secretary, Alexander Hamilton, laid the foundation principles 
of America's public economy, its credit, its industrial development, 
and commercial activity.
  In 1790, Hamilton presented to Congress his plan for public credit, 
assuming the States' war debts, implementing import duties and excise 
taxes to repay these debts, and establishing a national bank. The next 
year, he laid out a plan for an American manufacturing economy, so far 
ahead of its time that it resonated well into the 20th century.
  Henry Morgenthau Jr. steered the Treasury for over a decade in peace 
and in wartime. He defended the dollar against speculation through the 
1930s, financed the war effort with war bonds, and ushered in a new 
system of international financial stability after the Second World War.
  Secretary James Baker embraced new challenges, including the Latin 
American banking crisis and the Plaza Accords.
  The Asian financial turmoil of the 1990s met the able and wise 
leadership of Secretaries Robert Rubin and Lawrence Summers. They 
steered the world economy through crises. And they managed our 
economy's remarkable growth and return to fiscal discipline.
  Today, leadership and vision are as imperative as during our Nation's 
founding and in the two centuries since. The challenges are different. 
The world economy is more complex. China and India are economic powers 
on the rise. Speculative investments have grown. Twelve European 
nations are bound by a common currency. Financial markets are deeper, 
more liquid, and more integrated than ever before. But global economic 
growth and international trade are fundamentally out of balance.
  Faced with these challenges, I welcome this administration's 
nomination of Henry Paulson to become Secretary of the Treasury. I have 
known Hank for many years. I believe that he is an outstanding choice 
for this demanding position. Hank has demonstrated his knowledge of 
financial markets and helped guide them through three decades of 
transformation. He rose to the helm of Goldman Sachs with our former 
colleague Governor Jon Corzine, and as sole CEO, presided over some of 
the most successful years of that company.
  Hank is broadly respected by his colleagues. He has earned a 
reputation as a man of boundless energy and a relentless work ethic. 
Hank proved himself an innovative and prescient thinker, able to 
consider economic and financial challenges before they are upon

[[Page S6617]]

us. Today he has nobly answered the call to public service. And he will 
bring much-needed credibility to our economic message to hard-working 
Americans, and to the world.
  Hank Paulson understands that our economy's strength is rooted in the 
entrepreneurial spirit and the competitive zeal of the American people. 
He understands just as well that our strength is not a given. That we 
cannot take our economic preeminence for granted. In the Rose Garden 
last week, he rightly declared that ``We must take steps to maintain 
our competitive edge in the world.''
  I welcome Hank's determination to take steps to boost our economic 
competitiveness. I am convinced that economic competitiveness is one of 
the greatest challenges facing this administration, this Congress, and 
our Nation.
  The competitiveness challenge comes from a rising China. China has 
tripled its share of global trade in 4 years. China has become the 
world's top information technology exporter. And China has drawn much 
of the world's investment.
  The challenge comes from India. India's IT sector has grown 50 
percent a year since 1993. India's universities are top-notch. And 
India's research capabilities attract billions of dollars in 
investment.
  The challenge comes from countless smaller economic dynamos in Asia 
and Europe. These emerging markets have transformed their economies to 
embrace globalization.
  Yet our competitiveness challenge also comes from within. America too 
often looks back at what we have achieved. Rather, we should prepare 
for tomorrow's challenge.
  Our broadband infrastructure ranks 16th in the world. Our research 
and development spending ranks behind Sweden, Finland, Israel, Japan, 
and South Korea. Three out of 10 Americans do not graduate high school. 
One-quarter of Americans read below basic levels. And our national 
savings are negative.
  These challenges are at our doorstep. We must act. That is why I urge 
Treasury Secretary Paulson, once confirmed, to lead this 
administration's engagement with Congress on economic competitiveness. 
As I have said in several dozen statements on competitiveness over the 
past months, we can wait no longer to implement a real competitiveness 
agenda. We in Congress are ready.
  I have spent much of the past year developing a comprehensive 
economic competitiveness agenda. This agenda focuses on education as 
the foundation of a successful economy.
  In the coming weeks I will introduce legislation that would provide 
scholarships and create tax incentives for early education, science, 
math, and engineering teachers. It would provide matching funds to 
offer universal early education, lower barriers to higher education, 
and double the number of advanced placement courses in our high 
schools. My education competitiveness legislation would support 
afterschool and mentoring programs. It would restore our commitment to 
Native American education. It would direct grants to outstanding young 
scientists. And it would encourage companies to get involved in making 
our schools the world's finest.
  Upon this foundation of education must stand strong pillars of a 
competitive economy. One such pillar is energy, which fuels a 
successful economy. My energy competitiveness legislation would look to 
the future. It would create the new Advanced Research Projects Agency--
Energy to conduct transformative research and create alternative energy 
solutions. While this research would look for tomorrow's energy 
alternative, my legislation would also encourage today's alternative 
energies, like coal gasification technology, wind, and other 
alternative fuels.
  A second pillar of my agenda is the Research Competitiveness Act, 
which boosts what America does best--innovate. My legislation would 
simplify and make permanent the research and experimentation tax credit 
for innovators looking for tomorrow's next big thing. My legislation 
would provide access to start-up capital for small, research-intensive 
businesses. And my legislation would encourage support of basic 
university research.
  The trade competitiveness initiative is the third pillar of my 
agenda. Trade is vital to American ranchers, farmers, and businessmen. 
But they must have a level global playing field.
  Legislation I have introduced would create a Senate-confirmed trade 
enforcement official who would be dedicated to guaranteeing that our 
trading partners play by the rules. It would also give the Treasury 
Department the tools to keep countries from unfairly manipulating their 
currencies to keep their exports cheap.
  A fourth pillar of my agenda is the Savings Competitiveness Act. It 
would underscore savings as critical to households and vital to a 
healthy economy. It would make the Saver's Credit into a refundable 
matching credit. It would make enrollment in 401(k) plans automatic. It 
would offer savings plans for small business employees. And it would 
create Young Saver's Accounts for parents' contributions to their 
children's savings.
  Friends warned Alexander Hamilton against accepting a position as 
Treasury Secretary. They said the position was too difficult, too 
controversial. He replied simply: It is the situation in which I can do 
the most good.
  I believe Hank Paulson can also do much good. I hope my colleagues 
will join me in welcoming this nomination. I hope we can work together 
to implement a comprehensive agenda to improve America's economic 
competitiveness.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Martinez). The Senator from Oregon.
  Mr. WYDEN. Mr. President, I commend Chairman Grassley and Senator 
Baucus for moving quickly to have the Senate consider the nomination of 
Henry Paulson. I am convinced he is the right man at the right time. It 
is my intent to strongly support his nomination and vote for him later 
in the course of this afternoon.
  My hope, in particular, as Henry Paulson moves to this vital 
position, is that he will move quickly to set in place a strategy for 
reforming our Tax Code. Suffice it to say, a lot has happened to our 
tax system since 1986, the last time the Tax Code was overhauled.
  For example, since 1986, there have been more than 14,000 changes to 
the Tax Code. It comes to three changes for every working day for the 
last 20 years.
  There are substantial questions with respect to fairness in the Tax 
Code. I am one who feels it is critically important that every American 
have the chance to build and accumulate wealth. That is pretty hard to 
do, given some of this country's tax policies.
  For example, this spring, Warren Buffett, who is the second 
wealthiest person in the United States, told me he was going to be 
paying a lower tax rate than his receptionist. That is not right. I am 
not interested in soaking anybody. I am not interested in any kind of 
class warfare. But I want middle-class people to be able to get ahead 
as well.
  For the first time in decades, we have seen corporate profits go up. 
We are glad to see that. We have seen productivity go up. We are glad 
to see that. But middle-class people are not seeing much growth in 
their wages. They are living paycheck to paycheck.
  As Hank Paulson goes to the Treasury Department, I know he is 
interested in coming up with a fresh approach to the Tax Code, an 
approach that can allow us to simplify it, get a fair shake for middle-
class folks and all Americans. I particularly commend our ranking 
minority member, Senator Baucus, because I think Senator Baucus, in 
talking about global competitiveness and what it is going to take to 
create high-skill, high-wage jobs for Americans in the global economy, 
has done some of the heavy lifting on this key issue by spending a lot 
of time over the last few years looking at these issues, talking to 
people on both sides of the aisle, with business leaders and the like. 
I commend Senator Baucus because he has laid some of the key groundwork 
to discuss tax reform as a result of his focus on global 
competitiveness.
  I also thank Chairman Grassley for his discussions with me and with 
the committee. We have begun to look at corporate issues in this area. 
Senator Grassley, as he begins the effort to look at tax reform, 
particularly because of the bipartisan way in which he has led our 
committee, is a person ideally suited to work with Senators

[[Page S6618]]

on both sides of the aisle and the administration, for us to build a 
strategy with a new Secretary of the Treasury, Mr. Paulson, to get this 
job done.
  Suffice it to say there will be some very tough issues. Look, for 
example, at the issue of State and local jurisdictions and the 
differing tax treatment we have for these jurisdictions. A State that 
may have high taxes, such as New York, looks at this differently than a 
part of the country that does not have the same dependence on revenues 
from that source.
  With the leadership of Chairman Grassley and Senator Baucus and a new 
Secretary of the Treasury who is going to look to bring people 
together, look at how we can modernize the Tax Code so we can make the 
kind of decisions that are necessary to give our citizens a better 
quality of life in a global economy. We are up to it.
  We do not have a lot of time. The next 6 months, particularly the 
time between now and January, is key. That is why I have been so 
pleased Chairman Grassley and Senator Baucus have been interested in 
looking at these issues. As a result of their examination of these 
topics, we can lay the groundwork so the administration next January 
could work with Senators on both sides of the aisle, work with the 
other body and work with the Senate, and we can enact comprehensive tax 
reform.
  There will be a host of other issues we will have to look at. 
Obviously, health care, the fastest rising expense in the American 
economy, is dramatically affected by the Tax Code. I happen to think 
there are some good ideas on both sides of the aisle with respect to 
tax treatment of health care expenditures in our economy. We are 
spending over $150 billion through the Tax Code on American health 
care. I don't think we are getting our money's worth. In too many 
instances, we are subsidizing inefficiency. This is certainly going to 
be a controversial area.
  Democrats and Republicans, under the leadership of Chairman Grassley 
and Senator Baucus, and the new Secretary of the Treasury can dig into 
that issue.
  The last point I mention, in the Commission that was set up that was 
chaired by Senator Mack and Senator Breaux, there are some good ideas 
the Congress can pick up on, working with the administration. 
Certainly, I don't agree with all the Commission has proposed, but let 
me give a couple of examples.

  In legislation I have authored, the Fair Flat Tax Act, I have made it 
clear I want a Tax Code that is simpler, fairer and flatter. If you 
look at what the President's Commission has come in with, there is some 
opportunity for common ground. For example, in my Fair Flat Tax Act, 
there is a 1-page 1040 form, something a typical person can fill out in 
about half an hour. The administration's version, the one that came out 
with the advisory committee, is probably six, seven lines longer. I 
have a 30-line, 1040 form; theirs is six or seven lines longer. Big 
deal. For purposes of Government work, we can find common ground in a 
hurry in order to have a simpler Tax Code. That alone would be a real 
contribution for the American people.
  On the question of making the Tax Code flatter, there are six 
brackets today in our Tax Code as it relates to the individual side of 
the code. My proposal involves three brackets. It is a progressive 
structure. Essentially, it is the same one that Ronald Reagan started 
with when he looked at tax reform. The President's advisory commission 
comes in with four brackets. Once again, big deal. We can find common 
ground as it relates to making the Tax Code flatter.
  There are differences of opinion, certainly, in other areas. I have 
mentioned trying to get a fair shake for middle-class folks. We all 
understand what Henry Ford said about capitalism. Henry Ford was an 
industrialist. He said he wanted to do well, but for him to do well, 
his people had to have enough money to be able to buy cars.
  Middle-class folks are getting hammered in a way today that makes it 
hard for them to make a lot of these purchases that are essential to 
them, which is why they wrack up so much debt. I think both political 
parties can find common ground on this tax issue.
  For example, Henry Paulson yesterday talked about the value of low 
rates. I certainly agree with his interest there. Marginal rates are 
particularly important. It was something Ronald Reagan recognized in 
1986. Senators on our side of the aisle, including Bill Bradley, said 
exactly the same thing. We can get the rates down. We can ensure 
fairness for middle-class folks.
  What we are going to need is leadership. We are going to need it in a 
hurry. Chairman Grassley and Senator Baucus are going to do everything 
they can to find common ground on this issue. I am very pleased that 
Henry Paulson, who could certainly find other things to do in his life 
besides public service, is willing to step up and take on this effort. 
He will have to move very quickly to drive this tax reform debate. As I 
pledged to him in my private meeting and said again yesterday, I am 
interested in working with him and the administration in a bipartisan 
way. There is a lot of good faith and a lot of interest in this issue. 
It is a key consideration in how we are going to create high-skill, 
high-wage jobs for Americans in the future and enhance the quality of 
life for middle-class folks.
  Henry Paulson is the right person at the right time. He is going to 
have a lot to do, and he is going to have to do it in a hurry. I intend 
to work with Chairman Grassley and Senator Baucus to ensure we have an 
opportunity, on a bipartisan basis, to tackle these big economic issues 
in the right way. Right at the top is tax reform.
  I urge colleagues today to indicate their strong support for Henry 
Paulson, head of the Treasury Department.
  I yield the floor.
  Mr. BAUCUS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BOND. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Mr. President, I rise in support of the nomination of Henry 
M. Paulson to be Secretary of the Treasury. If confirmed by the Senate, 
he would be the Nation's 74th Secretary of the Treasury.
  From what I know about him from reputation, from his work on Wall 
Street, and from what I have learned in my discussions with him, I 
believe Hank Paulson will bring a kind of strong leadership, unique 
expertise, and knowledge of global financial markets and will be fully 
capable of keeping our country competitive in a global economy.
  Mr. Paulson is a strong choice for Treasury Secretary for many 
reasons. Most people know of his talents, the intimate knowledge he has 
of the financial markets, and his ability to handle crises. He is 
considered a hard worker who is dedicated to his job and who 
understands the importance of strong and capable management to run a 
large organization.
  Today I spoke about the SWIFT program, the very important Treasury 
terrorism finance tracking measure that was regrettably blown by the 
newspapers last week. When I talked to him, he obviously did not know 
about it. I did not know it was going to become an item of news. But as 
he seeks to repair our relations with banks across the world, his 
experience in dealing with international financial matters will be a 
great benefit.
  He has a string of very important challenges facing him. We have the 
deficit, which is running out of control by reason of unsustainable 
entitlement spending. The value of the dollar is falling. How much of a 
problem is that? How do we deal with it? There is a tax gap in the IRS 
of roughly 15 percent of the money that is owed or some $345 billion 
that is not collected. He needs to work through the IRS to cure that. 
We have a Tax Code that is so complicated, even professional tax 
preparers disagree on what the implications of many normal transactions 
are. He will have to fight terrorism financing. He is going to have to 
confront the issues of dealing with rogue nations such as Iran, and 
others, through economic sanctions and getting others in the world 
community to join with him.
  As of yesterday, as the chairman of the appropriations subcommittee 
that handles the Treasury, IRS, and other agencies, I have found that 
they have

[[Page S6619]]

water in their basement and they have extremely mundane problems like 
that, to the global issues that face any Treasury Secretary. I think 
even the media understands that this is a man who has experience and 
whose is held in high respect by major world financial leaders, as well 
as American financial leaders, and he will serve us well.
  As chairman of the Transportation, Treasury, the Judiciary, HUD, and 
Related Agencies Appropriations Subcommittee, and as a member of the 
Senate Intelligence Committee, I look forward to working with Mr. 
Paulson in meeting these challenges.
  Even though he is a sophisticated Wall Street financier, I was 
pleased to find out that he is basically a Midwest farm boy at heart. 
We had a very useful and productive discussion about growing native 
grasses such as big and little blue stem and Indian grass and how to 
burn them in the spring to make sure the crops come back without weeds 
or other non-natives. So he has a strong foot in reality, a Midwest 
farming background, but he also has a very strong background and 
expertise in financial matters, and he has respect on Wall Street.
  I urge my colleagues to support the nomination of Hank Paulson. This 
is a time when we have many serious issues, and having him confirmed by 
this body will be a great asset to us in dealing with everything from 
international negotiations, terrorism financing, and the other 
significant economic challenges the world presents today.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, as we consider the nomination of Henry 
Paulson to be Secretary of the Treasury, I think it is important to 
bring a reality check to some of the claims about the current state of 
the economy--those claims made by the administration.
  My colleague, Senator Bennett, pointed out that yesterday we had a 
hearing in the Joint Economic Committee, and appearing as a witness was 
Edward Lazear, chairman of the Council of Economic Advisers. We had 
also two outside experts who were economists testifying on the state of 
the economy. Many of the Bush supporters are claiming that the economy 
is strong and everyone is benefiting, but I doubt that many working 
Americans would see it as strong as they do and see it as benefiting 
them as much as it is claimed by the administration.
  It is true that the economy is experiencing a business cycle recovery 
after the 2001 recession and after going through the most prolonged job 
slump since the 1930s. The President pointed out that the economy has 
done better since 2003 than it did in 2001 and 2002, but they don't 
talk about how this recovery has not been particularly strong by the 
standards of previous recoveries.
  This first chart shows the percentage change in payroll employment. 
The curve here is the average of seven previous recession recovery 
cycles. If you look back, historically, it is a much more robust 
increase over time than this lower line, which is the March 2001 to May 
2006 statistics, the recovery in the last several years. In fact, this 
recovery is much less than the recovery was after the 1990 
recession. That recovery was called the ``jobless recovery'' because 
job generation was so slow.

  So what you are seeing is that job losses continued for much longer 
in this period of time, 2001 to 2006, than had been typical. This 
recovery has been much weaker than those in the past. At this point in 
the recovery, from the 1990 to 1991 recession, the economy had created 
5 million jobs.
  That is this delta right here--5 million more jobs than have been 
created in this recovery. So the difference between job generation at 
the same point in March 2001 to 2006, and comparing it to the 1990s, is 
plus 5 million jobs.
  This situation is similar with respect to business investment. It 
took much longer for the recovery to start with respect to business 
investment, and the level of investment lagged behind what has been 
typical in past recoveries. Each year of depressed investment means 
less capacity to produce goods and services in the future.
  Defenders of the President's economic record cannot deny that 
workers' wages have not been keeping up with inflation. Part of that is 
a result of many factors but, one, looking back at the investment, it 
has been a relatively small recovery in terms of business investment. 
Here is the average of seven previous recoveries and here is the 1991 
recovery business investment and here is the current recovery. It is 
not as robust as it has been in previous recoveries.
  As I suggested a moment ago, there is another very palpable impact of 
this bad economic news, and that is that wages have not been keeping up 
with inflation. This will be, no doubt, no surprise to working families 
as they work to get their paychecks each week. Some have suggested that 
this is a result of the fact that wages are held down but benefits are 
growing, and that compensation is growing at historic rates. This is 
not the case.
  This is a chart that shows productivity, the output per hour, and 
real compensation per hour. What you generally see is that productivity 
increases will be closely tracking compensation increases except over 
the last several years where productivity is going up at a significant 
pace, but real compensation, wages plus benefits, is lagging far 
behind. This is what the average American is confronting today when 
they are looking at increased gasoline prices, soaring health care 
prices, and they are not seeing either in their paycheck or, in many 
cases, even benefit packages the same kinds of increases that are so 
necessary to keep up with an increase in inflation. Growth in 
compensation has lagged behind. Wages have grown more slowly than total 
compensation, but that is not because workers are negotiating better 
deals from their employers, it is because employers are facing higher 
costs for health insurance and are squeezing workers' wages as a 
result.
  Increased health care prices, particularly in the area of small 
business, is causing many businesses to forego increases they would 
like to give to workers, in terms of wages, just to keep up with 
increased health care costs. This doesn't mean a better health care 
package for workers, and in some cases workers are being dropped, 
unfortunately, from health care protection because of the expense.
  What we are seeing is that compensation is not keeping up with 
productivity and, typically, compensation does keep up with 
productivity. There is another issue, too, with respect to the 
situation for many American workers, and that is the fact that pension 
arrears have to be made up. Many companies now are putting money into 
pensions just to make them actuarially sound, where in the past they 
might have devoted that to wages. By and large, the situation, when it 
looks at the working men and women, is that we are not seeing the 
robust increases in wages or compensation that is important.
  These points were made by one of the witnesses yesterday at the JEC 
hearing, chief economist of the Bank of America, Dr. Mickey Levy, who 
testified that:

       Wage and compensation increases have been somewhat 
     disappointing. Real wages have been suppressed by higher 
     energy costs and have not kept pace with labor productivity 
     gains. . . .Wages may be constrained by higher employer costs 
     for workers' health care, along with the heightened 
     international competition related to low cost production 
     overseas. . . .

  Wage and compensation increases have indeed been disappointing, 
especially for the majority of workers who are not getting them. Gains 
in average earnings or income do not tell the real story when they hide 
growing inequality. When you look at one level, you see increases, but 
when you look at how the increases are distributed across the working 
population, it is another story altogether.
  The red bars on this chart show that workers in the middle and bottom 
have experienced a decline in real earnings, while those at the top 
have experienced gains. This is in sharp contrast to the experience of 
the time from 1995 to 2000. Here in blue, in the data for gains in 
terms of earnings, broken down by the lowest 10th percentile, 25th, 
median, 75th, and 90th, at the upper level in the 1990s you saw 
increases, but they were almost comparable at the very lowest level of 
income. You saw the proverbial picket fence, where there were positive 
gains at every percentile. What we are seeing today is quite the 
reverse of that--losses in real terms of earnings at the lowest levels 
through

[[Page S6620]]

the middle levels, and only at the upper income levels are you seeing 
real gains in earnings.

  So the distribution of the economic progress that is being made over 
the last several years is not being shared fairly. Those at the upper 
income levels are seeing gains but, frankly, not the same robust gains 
of the nineties. At the bottom-income and middle-income level, there is 
a loss in real earnings.
  That is not an example of an economy that is working for all 
Americans. That is an economy that is working for the very affluent 
Americans. The answer of the Bush administration to these economic 
trends is basically to ignore them, try to gloss over them or redefine 
them or explain them away. They proposed tax cuts, which will do very 
little to help this distribution of earnings. In fact, what it does, 
essentially, is protect more of the earnings at the upper income 
levels. If we continue along the present course, we will be undermining 
the economy's longrun capacity for growth and undermining future living 
standards.
  Another aspect here, too, that is not dwelt upon by the 
administration is the fact that we are virtually zero in national 
savings. Without national savings, there is not the pool of investment 
capital necessary to provide for the new technology, new capital of the 
future. We are borrowing huge amounts of money overseas to fund our 
deficit. This is investments made in our country. But in terms of 
national savings of this country, it is close to zero. In some cases, 
it is negative.
  These are the real problems that confront this country. These are the 
real questions that Mr. Paulson has to address. How do we create an 
economy that performs as well as it did in the 1990s, where earnings 
gains are shared virtually equally across the spectrum of income, where 
low-income Americans don't see a loss of earnings but actually a gain? 
How do we ensure that wages and compensation keep up with productivity 
gains? How do we ensure essentially and fundamentally that the working 
families in this country cannot only get by but get ahead? That is the 
question that Mr. Paulson has to answer as Secretary of the Treasury.
  I think it begins with looking hard at the deficit and the policies 
of the administration with respect to taxes. I don't subscribe to the 
theory that our deficit is caused by runaway entitlement programs. We 
have an issue with entitlement programs, but we also have an issue with 
tax programs that take away revenue and are targeted to the wealthiest 
Americans. We have problems with expenditures that we cannot avoid with 
respect to supporting our forces in the field. We cannot stop providing 
equipment and materiel for our forces fighting the wars today, and we 
have to take care of them in the future. But there are significant 
issues with which we have to deal. I hope Mr. Paulson will be a strong 
voice in this administration to look at the facts and propose realistic 
solutions that benefit not just the few who are wealthy but the vast 
majority of Americans.

  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank my colleague from Rhode Island. 
Senator Jack Reed is our voice on the Joint Economic Committee. It is a 
committee that takes a look at the overall economy and reports to our 
caucus regularly. Senator Reed has brought us economic indicators from 
time to time that give us at least some insight as to how we are doing 
in most general terms in America.
  Everybody measures the economy by their own lives, their own family, 
maybe their own town, but when it comes to the appointment of a 
Secretary of the Treasury, we take a step back and look at the overall 
economy in America.
  A good Secretary of the Treasury can make a big difference. When Bob 
Rubin became Secretary of the Treasury under President Bill Clinton, he 
faced enormous challenges with huge deficits as far as the eye could 
see and an economy moving ever so slowly. He put in place those 
policies on an economic, fiscal, and monetary basis that made a big 
difference.
  Our Nation went from a deficit in our budget to a surplus. We 
actually put the indebtedness behind us for the first time in decades. 
The good news is we did it while the wealth of America was expanding 
dramatically. That period during the Clinton years saw people with 
their own savings accounts growing, more pension plans expanding, folks 
buying homes and starting businesses. It was a time of great economic 
expansion.
  No one person deserves the credit or the blame for our economy, but 
Secretary of the Treasury Bob Rubin was the right person at the right 
time to speak sense to the President about what needed to be done to 
make America strong for years to come. I have the same confidence that 
Henry Paulson is going to do that as well, and we need him now more 
than ever.
  I come to this with some prejudice because Mr. Paulson is a son of 
Illinois. He still calls Illinois his home. He spent his adult years--
at least recently--commuting back and forth between Illinois and New 
York and places around the world in his capacity as an investment 
banker.
  We had a terrific meeting in my office a week or two ago and talked 
about his life in Illinois, the experiences he had, about his family, 
and his commitment to our State. I readily concede I come to this 
nomination with some bias. But I think Mr. Henry Paulson is the right 
man for the job of Secretary of the Treasury at this moment in history.
  He came up through the ranks of Goldman Sachs, starting in their 
Chicago office many years ago and eventually becoming the CEO of that 
important investment bank. I don't think a person can rise to that high 
level without understanding how business works and how the economy 
works. Since even a corner grocer knows that an organization cannot run 
up endless debt forever without paying a stiff price, I think Mr. 
Paulson understands that as well. I think his business experience may 
help to start balancing the books in the Washington, DC, situation, 
which has been far from balanced for a long time. It is not a moment 
too soon for someone with Mr. Paulson's business background to tackle 
this challenge.
  Consider these realities Mr. Paulson will face when he becomes 
Secretary of the Treasury:
  This Bush-Cheney administration has accumulated more foreign-held 
debt in the past 6 years they have been in office than all of the 42 
Presidents before President George W. Bush. In other words, our 
indebtedness to foreign governments, such as Japan, China, Korea, and 
the OPEC nations, that, in fact, bankroll the debt of America, hold 
America's mortgage, has grown in dramatic terms over the last 6 years.
  That is not the policy President Bush inherited from the Clinton 
administration, which was generating a surplus. It is an approach he 
has taken which, sadly, has left us deeply in debt. The Bush 
administration came to office with a national debt of less than $6 
trillion--$6 trillion--and in just a 6-year period of time, it is 
almost $9 trillion, almost a 50-percent increase in America's mortgage, 
America's national debt in the short 6-year period of time.
  During this period, all but for a few months, the President has had a 
Congress of his own political party. The Republicans have controlled 
the House and the Senate, and the President has yet to veto the first 
spending bill in the time he has served as President. Not once has he 
said ``no'' to a spending bill that has come from Congress, 
particularly from his Republican Congress, and in the meantime his tax 
policies and spending policies have driven us into the highest level of 
national debt in the history of the United States. Our indebtedness is 
held by mortgagers such as China and Japan who expect in return to have 
a piece of the American economy.
  Secretary of Treasury Paulson will, I am sure, understand this, that 
as we become more indebted to these foreign nations, it is no wonder 
they take a claim on our economy. Why did we have to debate a Dubai 
Ports deal? Because Dubai happened to hold enough American dollars to 
have clout in our economy, and that is the reality.

  As these foreign entities become more powerful in our economy, 
sucking good-paying jobs out of the United States, it is a serious 
challenge for any new Secretary of the Treasury.
  The President has called for more tax cuts, which means deeper 
deficits,

[[Page S6621]]

more debt. It is estimated now that the indebtedness of the United 
States is a burden on every single man, woman, and child in America to 
the tune of $30,000 and growing. So in addition to a home mortgage and 
a student loan, we are unfortunately the victims of policies in 
Washington that increase the indebtedness of future generations.
  This has to stop. This is a disaster in the making. We have to 
balance the books and do it quickly. I hope Mr. Paulson has the vision 
and the strength to convey that message effectively within this 
administration.
  I hope he will take a very close look at our trade policies as well. 
My colleague, Senator Schumer, will speak after I finish. He has been 
one of the leaders in the Senate talking about the inequities in our 
trade policy with China.
  I believe globalization is as inevitable as gravity. We know we are 
in a shrinking planet. We do more business with one another than ever 
before. But when we enter into trade agreements with countries such as 
China, we say we are establishing rules of conduct, fair trade. 
Unfortunately, particularly in the case of China, many countries ignore 
those rules. They violate those rules.
  The Secretary of the Treasury has to be a strong voice to stand up 
for the American economy, American businesses, and American workers to 
demand that the countries with which we trade play by the rules. I 
think free trade is good for the future of our world, certainly good 
for the future of America. We are a land of opportunity. We have risen 
to every challenge, but we need to be involved in a fair fight where 
both sides play by the rules.
  The Bush administration has not fought hard enough for these trade 
agreements and understandings. When we create a trade agreement, we 
need to ensure that there are proper labor protections in place. We are 
about to consider a trade agreement with Oman, a very small country in 
the Middle East. There are good reasons for us to enter into that trade 
agreement. But when Members of the Senate suggested to the Bush 
administration that we put a prohibition in the trade agreement with 
Oman that they could not use slave labor--slave labor--to produce goods 
and services sold to the United States, the administration said: No, we 
are going to remove that, we don't think we should go that far.
  Slave labor? We should have basic understandings of what the labor 
standards will be. We know many countries will underbid us when it 
comes to the cost of labor, but there ought to be fundamental 
standards.
  The same is true when it comes to environmental protections. U.S. 
businesses operate under laws which restrict them in terms of their 
conduct, whether it is a burden or some sort of a problem with our 
environment, whether it is water pollution or air pollution or similar 
things. What we should insist on for the good of this planet we call 
home is that the countries engaged in trade with the United States also 
have respect for the environment of the world. Whether it is global 
warming or toxic release, we are literally all in this together.
  After we create these good trade agreements, the Secretary of the 
Treasury has to make sure there is proper enforcement so we don't just 
give our speeches on the Senate floor and then ignore the trade 
agreement afterward.
  I hope Mr. Paulson will fight harder than his predecessors to promote 
trade that is aggressive and fair. I also hope he will push for a 
tougher and more proactive stance when it comes to China. I am sure my 
colleague will speak to that further.
  He has traveled to China more than 70 times. He understands the 
importance of this critical relationship with this growing giant in the 
world economy. When we spoke in my office, I asked him specifically to 
deal with currency manipulation, intellectual property rights 
infringement, and trade violations.
  He also has to be very strong when it comes to China's labor records 
and their record on the environment and human rights. While he did not 
have any specific suggestions--I didn't expect them--I believe he was 
responsive, he understands the challenge, and I think he can rise to 
that challenge. That is why I am supporting his nomination.
  Finally, I hope Mr. Paulson's sensibility about the environment will 
become a source of real leadership in this administration. I know Mr. 
Paulson reiterated at his confirmation hearing that he is not running 
to be head of the EPA or Interior but Secretary of the Treasury. Still, 
Henry Paulson is a former chairman of the board of the Nature 
Conservancy. That is a group with which I have worked in Illinois that 
has great respect for our natural resources and has done a lot to 
reclaim them for future generations.
  I hope he can push the Bush administration to take a forward look at 
the issue of global warming. This is an issue which is real, and this 
administration must start immediately working with Congress to move on 
international agreements that deal with global warming. Mr. Paulson's 
voice at the Cabinet table could make a difference, and I am hoping 
that his deeply held personal beliefs will lead him to be that voice.
  I support the nomination of Hank Paulson to become Secretary of the 
Treasury. I think he will work as hard for farmers in the heartland as 
he does for bankers in New York. I look forward to working with him to 
strengthen America's economy and put the Federal Government's finances 
back in order.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. COBURN. Mr. President, I am going to take a few minutes. I am 
very happy with the support of the Senator from Illinois for the 
nomination of Mr. Paulson, but I challenge what was just said.
  There is no question we have deficits. There is also no question that 
on 9/11, we experienced a great economic shock and we had a recession 
that was big. The tax cuts have led to the highest revenues this 
Federal Government has ever had.
  On the spending side, I find it somewhat curious, the Senator from 
Illinois ranks No. 6 in the most spending voted for in the Senate last 
year. He ranks No. 8 in the cosponsorship of the most new spending 
outside the appropriations bills. You can't have it both ways. You 
can't complain that we are in deficits and we are in debt and never 
vote to lower the spending, never vote for amendments that trim 
wasteful spending, and then complain that somebody else made you do it.
  If we look at the voting record on appropriations bills, there are 
not very many noes coming from that vote. The way we control spending--
and we have proven it on our committee, the Federal management 
oversight committee--we identified over $200 billion worth of waste. If 
we want to balance the budget, let's have everybody on both sides of 
the aisle voting to trim the waste, fraud, and abuse out of the Federal 
Government, rather than when we go to a conference or a meeting with 
the President when there is excess money and demanding more spending, 
not less.
  The numbers are fairly revealing. Last year, Senator Durbin sponsored 
$93 billion in new spending--new spending, outside of what we did on 
appropriations. He put his name to spend $93 billion, and he put his 
name to trim $100 million. That is the problem we have. It is not 
taxes, it is wasteful spending and the idea that the only way we can 
accomplish something is to spend more money.
  I am for the same priorities. We need to help the people who need 
help in this country. But we will never be able to afford it in the 
future without stealing from our kids if we don't do the hard work to 
get rid of the waste now, and that means voting against appropriations 
bills, not voting for them. The President signed what the Senator from 
Illinois voted for.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I rise to speak in enthusiastic support 
of the nomination of Henry Hank Paulson to be the 74th Treasury 
Secretary.
  I have known Hank Paulson for 15 years. I recommend him to my 
colleagues wholeheartedly and without reservation. He is one of those 
great New Yorkers who come from somewhere else--in this case, the 
heartland of America--come to our city and become part of its life and 
a vital part of

[[Page S6622]]

this country and actually this world's economy.
  Mr. President, Hank is an extraordinary leader, a great financial 
thinker, a businessman, a father, and, as I said, an adopted son of New 
York. Hank has excelled in every area of life--from the classroom to 
the football field to the boardroom and everywhere in between.
  One of the things I like best about Hank is he is a straight shooter. 
He gives you direct answers to direct questions. We sure need somebody 
like that now.

  He graduated from Dartmouth in 1968 and received his MBA from 
Harvard. He worked at the Defense Department, the Nixon White House, 
and then found his true calling at Goldman Sachs where he worked for 32 
years. He became chairman and chief executive officer of Goldman in 
1999, and should he be confirmed, he will continue a long history, a 
great tradition of leaders from Goldman serving in the Government, 
including Bob Rubin, one of the great Treasury Secretaries, and Jon 
Corzine, our former colleague, now Governor of New Jersey, and John 
Whitehead, who served honorably and well as Deputy Secretary of State 
under Ronald Reagan.
  But the issue Hank really goes off the charts about, I say to my 
colleagues--particularly my colleagues on this side of the aisle will 
be happy to know--is the environment. Sometimes he would call me up and 
I would be sure he was talking to me about swaps or banking or some 
esoteric financial issue, and he would be talking to me about an 
environmental policy. I don't think he ever gets more enthusiastic than 
when he is talking about some rare bird that he saw on one of his bird-
watching jaunts. He is an avid environmentalist and lover of all things 
in nature. I hope a few of my colleagues on the other side of the aisle 
will not hold that against him.
  He is also one of those unique, good people who could fill any number 
of Cabinet posts. For instance, given his environmental proclivities, 
he would be a great Secretary of the Interior. But financial issues and 
the health of the global economy are his passions, that is mostly where 
he is needed, and I am glad the President has nominated him for this 
post.
  In the world of finance and international markets, there is simply no 
equal to Hank. At this critical point in our economy's history, we need 
Hank's expertise and experience to lead the way.
  The bottom line, Mr. President--you know it because we traveled to 
China together--we are at an amazing time economically. The world 
economy is becoming integrated, closer and closer every year. There is 
almost a one world labor market. Capital flows freely to every corner 
of the world. These circumstances present tremendous challenges for our 
Nation, in our desire to remain the world's economic leader, and for 
the world as we try to integrate this system. One of the great 
challenges we face is we are converging into one economic system, but 
we don't have one political system, and the bumps and grinds which that 
causes are large.
  So we need someone who understands markets. We need someone who has 
great experience traveling the world and knowing how the rest of the 
world's economic system works. Hank Paulson has all of those qualities. 
I am particularly glad that he knows a whole lot about China--I think 
he has been there over 70 times--because I believe the most important 
bilateral economic relationship in the next decade or two will be the 
American-Chinese relationship. Hank has the ability to understand the 
economies of both countries and figure out how we can work together.
  I have been very concerned about China playing by the rules. I have 
been very concerned that China doesn't simply seek the advantages of 
free trade but not the responsibilities. I have related these concerns 
to Hank Paulson.
  On currency, Senator Graham and I have worked closely with his 
predecessor, and you, Mr. President, have been involved in those issues 
as well as we traveled to China together. And we have worked to push 
and prod China to allow its currency to float based on international 
market forces. We have made some progress, but the progress since July 
has been too little, particularly in light of the fact that the Chinese 
assured us they know they have to get to a place where their currency 
floats.
  Hank's extensive experience in China, his personal relationships with 
both the Government and business side--where, incidentally, there is 
quite a dichotomy. Most of the businesspeople and people even on the 
economic side of Government understand the need for free markets. That 
is in China's interests--not just America's--that China open up its 
markets. But a lot of people on the Government side are afraid of that. 
They don't like change. They don't like giving up control.
  I think Hank Paulson is the right man at the right place at the right 
time to tackle the issue of persuading China to open up its markets 
more quickly. I believe that he is going to be able to show the Chinese 
that it is not only in our interest but in their interest as well to 
allow the yuan to float freely and to open up China's vast economic 
markets to American financial firms.
  On financial services liberalization, I know Hank will work closely 
with Ambassador Schwab, who was just confirmed, to make sure that China 
lives up to its WTO commitments. This is going to be very important in 
the next few months because on December 11 of this year, many of the 
current restrictions faced by American financial firms that want to do 
business in China, such as purchase Chinese companies or open up 
branches in China, will be lifted. Hank is the perfect person to 
monitor China's progress and, more importantly, to prod the Chinese to 
go further than they have already promised.
  In short, Mr. President, Henry Paulson is a thoughtful, dedicated, 
and renowned financial leader. I think this country will greatly 
benefit from his leadership. I am not at all shy about criticizing the 
President's nominees when I don't think they measure up to the job. I 
have done that in the judicial area repeatedly. But when the President 
nominates a sterling person, that person deserves praise and credit 
and, in my judgment, unanimous support in this body, and I believe that 
Hank Paulson is such a person.
  I will be proud to vote aye when his name is offered on this floor in 
a few hours.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMAS. Mr. President, I wish to address the nomination of Henry 
Paulson to be Secretary of the Treasury. I believe there is no question 
that Mr. Paulson is more than qualified to be Secretary of the 
Treasury, and it is to his credit that he is willing to give up the 
helm of Goldman-Sachs to serve his country in such a significant way. I 
am pleased that we have a nominee of this caliber.
  However, I have raised concerns stemming from Mr. Paulson's well-
known personal views on conservation and affiliations with groups such 
as the Nature Conservancy. Representing a State where about half of the 
land is already federally owned, and much more is otherwise federally 
restricted as to use, private property rights a very big concern. 
Similarly, our vast energy resources in the State of Wyoming are 
essential to our country's national energy policy, and we struggle to 
maintain a balance between development of those resources and the 
quality of life we enjoy in Wyoming.
  I submitted several written questions to Mr. Paulson after our 
Committee on Finance hearing, and we have had good follow-up discussion 
on these issues. He has assured me that he is a strong advocate for 
personal property rights and has committed to working with me and the 
Senate to pursue a sensible policy.
  I am pleased to be able to lend my support to Mr. Paulson, and I look 
forward to working with him.
  Mr. DOMENICI. Mr. President, I rise today to express my support for 
the nomination of Henry M. Paulson, Jr., to be Secretary of the 
Department of the Treasury. Mr. President, American

[[Page S6623]]

economy has changed dramatically in the past decade. International 
economic policy now has a direct effect on our domestic economy. The 
information age has transformed America's economic future. This new 
economy requires a new kind of Treasury Secretary. It requires someone 
who is experienced and knowledgeable in both the domestic and the 
international marketplace. It requires someone who has demonstrated 
exemplary leadership in both government and private enterprise. Henry 
Paulson will bring these vital skills to the Department of Treasury.
  Mr. Paulson's outstanding career in both the public and private 
sectors has clearly demonstrated his ability to serve as our Nation's 
next Treasury Secretary. Prior to joining The Goldman Sachs Group Inc., 
Mr. Paulson served the public as White House domestic Council staff 
assistant to the President from 1972 to 1973 and as staff assistant to 
the Assistant Secretary of Defense at the Pentagon from 1970 to 1972. 
In 1974, Henry Paulson decided to enter the private sector. He joined 
The Goldman Sachs Group, Inc., in Chicago. Mr. Paulson worked his way 
up through the ranks of Goldman Sachs and is currently serving as 
chairman and chief executive officer. Clearly, Henry Paulson has had a 
very distinguished 32 year career in the private business sector.
  Our Nation will be fortunate to have a Treasury Secretary with such 
broad and varied expertise, and these experiences will prove vital in 
leading a progressively diverse economy. I believe Henry Paulson will 
be an exemplary Treasury Secretary. He has already spoken of his keen 
appreciation for the role capital markets play in driving growth and 
efficiency, the globalization of finance and interdependence of major 
world economies, and ensuring that America's industries can compete in 
the new global economy. I am confident Henry Paulson will seek to 
strengthen and advance the competitive edge of our economy. I am 
certain his experience and leadership will be great assets in achieving 
these important goals.
  Mr. President, it is my great honor to support Henry Paulson to head 
the Department of the Treasury.
  Mr. HATCH. Mr. President, I wish to express my support for the 
nomination of Henry Paulson for Treasury Secretary. I believe we are 
quite fortunate to have someone of Mr. Paulson's caliber nominated to 
this vitally important position. Mr. Paulson has quite ably served in 
Government before in several positions before embarking on his 
impressive career on Wall Street, which culminated in his becoming CEO 
and chairman of Goldman Sachs. I am hard-pressed to think of many 
others in this country who might be more qualified for this position 
than Mr. Paulson.
  Henry Paulson is joining the Bush administration at a very important 
time. Our Federal Government is in a precarious position as it stares 
down the abyss of ever-increasing entitlement obligations that threaten 
to swallow more and more Government revenue and, along with it, other 
vitally needed programs. As our Nation's baby boomers enter their 
retirement years, we will have fewer people working per retiree to 
support them while the cost of providing them benefits inexorably 
increases. It is a trend that cannot continue without bankrupting the 
country. Despite the highly partisan environment in which we find 
ourselves, it is at precisely this moment in history when our economy 
is strong and Government revenues are increasing sharply that we need 
strong leadership both from Congress and the administration. I believe 
that strong leadership and some bipartisan cooperation we will be able 
to successfully address these growing problems and come up with a 
lasting solution.
  Now is also a propitious time to consider how to address the 
difficult problems facing our tax system. We need an Internal Revenue 
Code that is simpler, that promotes savings and economic growth, and 
that allows American businesses to compete fairly in the global 
marketplace. The Tax Code should serve the interests of the many, not 
the few, and one that is worthy of this great Nation.
  Mr. Paulson is uniquely qualified to address the issues facing our 
country today. I view the expediency by which we have acted on his 
nomination as a confirmation both of Mr. Paulson's fitness for the job 
as well as of the importance of the position of Treasury Secretary. I 
urge my colleagues to vote to confirm him as our next Treasury 
Secretary.
  Mr. REID. Mr. President, I rise in support of the nomination of Henry 
Paulson to be the next Secretary of the Treasury. I had the pleasure of 
meeting with Mr. Paulson, and we talked about a range of issues.
  I was most impressed with his commitment to protecting our 
environment and his record as a conservationist. I believe this 
administration needs someone committed to protecting our natural 
resources--even if he is at Treasury.
  I found Mr. Paulson to be an engaging and thoughtful person. These 
are qualities we need in our next Secretary of the Treasury, because he 
will have his work cut out for him. He faces an impending crisis not of 
his making, and for which courage and persistence will be needed to 
even begin the process of righting the ship.
  From the kitchen table to the national debt trade imbalance, our 
economy continues to move in the wrong direction. The middle-class is 
being squeezed like never before. Under the policies of this 
administration, families are forced to work harder and harder to make 
ends meet.
  In Nevada, families, farmers, and businesses are on track to pay 
approximately $3 billion for gasoline this year. That is over $1.5 
billion more than was spent in our State in 2001. The cost of college 
tuition in Nevada has increased 2 percent, while Federal student aid 
has failed to keep pace.
  But this is not just a Nevada story. It is an American story. 
Nationwide, since President Bush took office, energy prices have 
increased nearly 100 percent, health premiums have increased by 71 
percent, college tuition has increased nearly 60 percent, and the price 
of housing has risen dramatically, all while wages have been stagnant 
despite growing productivity.
  Instead of focusing on the needs of middle-class families, the Bush 
administration has ignored their problems. The President argues that 
the economy is doing great--he thinks middle-class families are in fine 
shape. Meanwhile, he is pursuing policies that would only make matters 
worse.
  The twin trade and budget deficits accumulated under President Bush 
have put the United States in a precarious situation. To fund our 
record trade deficits--which have more than doubled under President 
Bush--we have had to sell U.S. assets to foreigners. In 2005 alone, the 
United States sold to foreign governments and investors a portion of 
the U.S. economy that was larger than the combined economies of Nevada, 
Arizona, Ohio, Montana, Rhode Island, Wyoming, and North Dakota. Take a 
moment to absorb that fact.
  And, the problem is just getting worse. If current trends continue, 
in 20 years, we will have sold the entire wealth of America to foreign 
countries and foreign investors. It turns out that when President Bush 
talks about an ``ownership society'' he means that under his policies, 
all of our assets will eventually be owned by foreigners.
  Our trade deficit has been driven in part by unfair practices 
overseas, like currency manipulation in China. A number of people have 
raised concerns about Mr. Paulson's extensive ties to China while 
working for Goldman Sachs. I hope that those ties will give him the 
credibility and the negotiating toughness to make much needed progress 
with the Chinese Government. The Bush administration has talked a good 
game on getting China to end its unfair currency manipulation, but it 
has not delivered. To date, the Bush administration's policy has been 
rhetoric, not action, and on occasion, its excuses for its failures 
have sounded like the administration was an apologist for China's 
practice of currency manipulation. Mr. Paulson has to finally get this 
problem under control.
  Mr. Paulson will also need to address the enormous Federal budget 
deficits and the growing Federal debt. The Bush administration turned a 
record surplus generated during the Clinton administration into a 
string of record deficits. President Bush inherited a unified budget 
surplus of $236 billion from President Clinton, the largest

[[Page S6624]]

surplus in American history. Budget surpluses were expected to continue 
for another 10 years when President Bush took office in January 2001.
  By 2002, however, President Bush's policies had helped return the 
unified Federal budget to a deficit of $158 billion. The budget deficit 
has since reached historic highs. This year, the budget deficit is 
expected to exceed $300 billion. Of course, after this President's 
fiscal nightmare, that is not even a record. President Bush owns them 
all--$412 billion in 2004, $378 billion in 2003 and $319 billion in 
2005.
  Our fiscal problems will only grow worse in coming years as the baby 
boom generation retires.
  In the last 5 years, the gross Federal debt has grown by almost $3 
trillion. And it will exceed $11.8 trillion by 2011 if we don't do 
something to change course. And more and more of that debt is owed to 
people outside the United States. The United States has had to borrow 
more money from overseas during President Bush's 5 years in office than 
we borrowed during all previous Presidents combined. By contrast, 
during the last 3 years of the Clinton administration, the United 
States paid off more than $200 billion in debt to foreigners.
  History is clear that these rising Federal budget deficits will 
ultimately cause long-term interest rates to increase. These costs are 
a hidden tax and will appear in the form of higher interest rates on 
home mortgages, auto loans, credit cards, and other types of consumer 
debt. As Mr. Paulson stated in his confirmation hearing, the longer we 
wait to deal with these fiscal challenges, the more expensive it will 
be to solve them. At the end of the day, it is hard-working families 
and our grandchildren who will pay the price for the Republicans' 
fiscal recklessness.
  Unfortunately, the majority's fiscal policy, like its policy in Iraq, 
is more of the same--more of the same tax breaks targeted at 
multimillionaires, more of the same huge deficits, more of the same 
rising debt.
  We can't just go on this way, placing greater and greater burdens on 
our children and grandchildren. I hope that the new Secretary of the 
Treasury will be aggressive in forcing the administration to confront 
these pressing economic challenges head on, because more of the same 
just won't cut it.
  We need a new direction.
  Mr. FRIST. Mr. President, it is my great pleasure to come to the 
Chamber to express my strong support for the nomination of my good 
friend, Hank Paulson, someone I admire tremendously, to lead the 
Department of Treasury. He is an outstanding choice to be the Nation's 
top economic policy official.
  With 32 years of experience in finance, the last 8 of which he has 
served as president and CEO of Goldman Sachs, which, as we all know, is 
one of the Nation's largest financial institutions in the world, Hank 
Paulson is eminently qualified to craft and carry out the President's 
economic policies. Former Treasury Secretary Bob Rubin, who was also 
Hank's boss at Goldman Sachs, agrees that he is ``smart, he's bright, 
he's thoughtful, and he's intense. He's a very good choice.''
  Hank will lead with drive, with passion, and a deep understanding of 
how Government policies affect the capital markets throughout the world 
as well as America's economic growth. With his detailed and intimate 
knowledge of global finance and his ability to thrive under pressure, 
America's economic leadership will be in very capable hands.
  Hank Paulson is extraordinarily talented, smart, and hard working. He 
also happens to be a man of sterling character. Known for his candor 
and his down-to-earth demeanor, Senator Schumer calls Hank a ``straight 
shooter.'' He has led a life of impeccable integrity.
  He grew up on a farm in Illinois. His high marks led him to 
Dartmouth, where he became a member of Phi Beta Kappa and a football 
star. He was named All Ivy, All East, and earned an honorable-mention 
All American. After earning an MBA from Harvard Business School, Hank 
went into public service as a staff assistant to the Secretary of 
Defense. In 1974, he joined the Chicago office of Goldman Sachs, where 
over the next three decades he rose to president and CEO.
  Hank understands the macropicture, the global picture, as well as the 
micropicture, the more intimate, more defined microlevel. He 
understands the concerns of America's hard-working families and how big 
decisions here in Washington affect individual lives in a very personal 
way and in intimate ways and affect those individual opportunities.
  He inherits a thriving economy--as cited again and again, a 5.3-
percent gross domestic product growth in the first quarter, 
unemployment at historic lows, 5.3 million new jobs after 33 
consecutive months of job gains, and home ownership at historic highs.
  He understands that Americans are feeling those challenges in their 
everyday lives, those challenges of high gas prices, of escalating 
costs that seem to be skyrocketing out of the average person's reach.
  He shares the Republican Party's conviction that we need to continue 
those progrowth, low-tax policies in order to continue to create jobs 
and to foster more innovation.
  I am confident that under his leadership, America will continue to 
grow, to thrive, and expand. I look forward to voting to confirm Hank 
Paulson in a few moments as Secretary of the Treasury and to working 
with him to keep America moving forward.
  At this time, I know of no others who desire to speak on the Paulson 
nomination, and I urge the Senate to vote.
  The PRESIDING OFFICER. If there is no further debate, the question 
is, Will the Senate advise and consent to the nomination of Henry M. 
Paulson, Jr., of New York, to be Secretary of the Treasury?
  The nomination was confirmed.
  Mr. FRIST. Mr. President, as our colleagues know, there will be no 
further votes today and no rollcall votes today. We will be in session 
a bit longer as we finish the business over the course of the next 
little bit. When I close, I will have more to say about the schedule 
for tomorrow and Friday as well.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FRIST. Mr. President, I ask unanimous consent that the President 
be immediately notified of the Senate's action.

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