[Congressional Record Volume 155, Number 30 (Friday, February 13, 2009)]
[Senate]
[Pages S2258-S2262]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            STIMULUS PACKAGE

  Mr. McCAIN. Mr. President, I object to the 10-minute time restraint. 
This is a very difficult issue. We are talking about hundreds of 
billions of dollars of stimulus. I hope my colleagues on the other side 
of the aisle would understand that more than 10 minutes may be required 
for some statements.
  Mr. DURBIN. If the Senator will yield, this is a very important 
matter, and complex, and we are not going to limit the Senator from 
Arizona. We would like to have rough parity in terms of the time given 
to both sides of the aisle to explain this matter, but we are not going 
to limit or even try to limit, under the standing rules, any speech by 
the other side.
  Mr. McCAIN. I thank my friend. I ask we keep track of the timing on 
both sides as both sides talk so we can try to make sure there is 
parity on timing throughout the day. Obviously, it will be dictated by 
the number of speakers who want to speak on either side, but we should 
try to preserve parity throughout the day.
  I thank the Senator from Illinois.
  Mr. DURBIN. I say to Senator McCain, I am sorry to interrupt him 
again. Could we enter a consent to that effect, that we will divide the 
time?
  Mr. McCAIN. I would agree with the Senator from Illinois, but I think 
it is pretty clear there are going to be more speakers on this side 
than that side. I would like to have our leader, the Republican leader, 
agree to that before I could.
  Mr. DURBIN. I am informed by the Senate staff that it is already part 
of the agreement.
  Mr. McCAIN. I thank the Senator from Illinois.
  Mr. President, today the Senate will pass a $789 billion bill, $1.1 
trillion with interest added in--and we do, when we calculate the costs 
of these appropriations bills, count in the interest. It is the so-
called stimulus bill, and it is under the guise of a bipartisan 
compromise.
  Let me reiterate what I have so often stated during the past 2 weeks: 
The Nation needs a stimulus bill. The Nation expects the Congress and 
the President to act in a truly bipartisan manner to address this 
crisis. But, unfortunately, this measure is not bipartisan. It contains 
much that is not stimulative and is nothing short--nothing short--of 
generational theft.
  At times of great challenge, history tells us our Nation will work 
collectively to remedy the problems we face. Working on this measure 
together was that opportunity. Republicans offered a good-faith 
alternative to the measure that is before us. Our alternative provided 
the American taxpayers with a stimulus bill devoid of porkbarrel 
projects and excessive spending programs that fail to create jobs.
  Our bill was not simply to advocate policies we could not otherwise 
pass; our bill, in fact, was a real stimulus proposal. Instead, 
partisan legislation was pushed through.
  Sadly, when we could be uniting to assist hurting Americans, we have 
exacerbated our differences and burdened our children and grandchildren 
with a debt the proportions of which have never been seen before.
  Mr. President, before I go too much further, the bill is 1,071 pages. 
We got it last night, I believe, at 10:20 p.m. That was the first 
moment a copy was made available. It was not numbered correctly. At 11 
p.m. we received notification it had just become available on the House 
Web site.
  Compare the process that we have been through with the Web site that 
is from the Obama campaign. The Web site of the Obama campaign stated, 
and I will quote in a second--this is a quote from the Obama Web site:

       End the practice of writing legislation behind closed 
     doors. As President, Barack Obama will restore the American 
     people's trust in their Government by making Government more 
     open and transparent. Obama will work to reform congressional 
     rules to require all legislative sessions, including 
     committee markups and conference committees, to be conducted 
     in public.

  What happened in the last few days--law and sausages--it is certainly 
a long way from the Obama Web site that said:

       Reform congressional rules to require all legislative 
     sessions, including committee markups and conference 
     committees, to be conducted in public.

  All day yesterday the media made different reports about the process 
that was going on, in which, by the way, there was no Republican 
leadership anywhere in the vicinity.
  I recognize this will be greeted as a victory for the administration 
and the Democrats today. I recognize that, and it is a victory. But I 
am not sure it is the right kind of victory. I think words which will 
haunt us for a long period of time were uttered by the Speaker of the 
House: ``We won, we write the bill.'' ``We won, we write the bill.''
  I think on both sides of the last campaign there was a commitment not 
to use those words: ``We won, we write the bill.'' That commitment was 
to sit town together in a bipartisan fashion and work together to come 
up with solutions to the enormous domestic and foreign policy and 
national security challenges we face. I understand who won. I think I 
understand it about as well as anybody in this body. I have often said 
elections have consequences. This is one of the consequences of my side 
of the aisle losing. But it was not the promise that was made to the 
American people.
  I understand the other side of the aisle--and many in the media--will 
say: Well, Republicans are recalcitrant. Republicans are trying to 
block it. Republicans don't want anything.
  We had a provision, we had a proposal of over $420 billion. We had a 
proposal that got 44 votes for a trigger that, once our economy begins 
to recover and is in recovery, the spending stops. One thing that 
Milton Friedman said, among many others I have always appreciated, was: 
Nothing is so permanent as a temporary Government program. There is 
nothing more permanent than a temporary Government spending program. So 
I think we had an opportunity and, hopefully, there will be 
opportunities in the future, to sit down, Republican and Democrat 
together--and at the beginning, not the end. If you are not in on the 
takeoff, then you are certainly not going to be in on the landing.
  This bill took off with the Speaker of the House saying: We won, we 
write the bill. That was repeated on several occasions by the President 
of the United States.
  Now, I want to say again, my side of the aisle, for 8 years, did not 
include the other side of the aisle. We were guilty. We were guilty of 
not observing the rights and privileges of the minority party. I do not 
excuse it, nor do I rationalize it. But I do believe that some Members 
did work in a bipartisan fashion and that times are different. The 
times are different. The American people spoke.
  So yesterday, not the Republican leadership, not the majority of my 
colleagues sat by while the bill was finally written, and that is why 
the final legislation here will have three Republican votes, probably, 
out of all of the Republicans in the House of Representatives and the 
Senate. It may pick up a couple in the House. But to call this 
bipartisan is clearly an inaccurate and false description of the 
legislation that will pass sometime this evening.
  So we passed up an opportunity. I hope we will, in the future, since 
there will be TARP III somewhere--some estimates, $500 billion; some 
estimates, $1 trillion; no one knows. The Secretary of the Treasury 
testified the day before yesterday before the Senate. He had no idea. 
He could give us no clue as to how much the next TARP was going to be. 
But I hope that will then present us with another opportunity to work 
together from the beginning, not at the end.
  Again, this side of the aisle is not blameless on partisanship. But 
this was an opportunity for all of us to join together.
  USA Today stated in an editorial: Republican opposition seems more 
like partisan positioning than a sincere effort to reach compromise 
with the White House at a time of severe economic distress.
  I cannot speak for all of my colleagues, but I can, I know, speak for 
the majority of them. That is a false

[[Page S2259]]

statement. That is a false statement. Nothing could be further from the 
truth. Every Senator here wants a reasonable, workable stimulus bill 
that will help turn our economy around and put people to work. That is 
why 40 Republican Senators voted for an alternative that sought to fix 
our housing crisis--remember, it was housing first, and it is housing 
that is going to restore our economy. The stimulus package has not a 
lot of it to start with and comes out of the ``conference'' with less--
invest in our Nation's infrastructure through effective and restrained 
spending; put money immediately back in the hands of all Americans 
through a payroll tax holiday; allow businesses to keep more of their 
profits to hire new employees, invest in capital, or expand their 
businesses; finally begin to focus our attention on entitlement 
reforms; and then, most importantly, put a halt to the spending once 
our economy turns around. And the total cost of our alternative 
proposal was about half the cost of this conference report.
  There are a couple of cautionary tales. One was a study by John 
Taylor of Stanford and the Hoover Institution that showed that the last 
time we gave Americans a paycheck--and that is one of the big parts of 
this stimulus package, checks of $400 to $800--it had no effect on the 
economy. It is also a cautionary tale as to what the Japanese did over 
the last decade, and I am afraid some of this stimulus package repeats 
that.
  We missed an enormous opportunity to rein in excessive spending 
despite the support of 44 Senators eager to get our fiscal house in 
order when our amendment that would have required unobligated funding 
to be returned to the taxpayer upon two consecutive quarters of 
economic growth greater than 2 percent of inflation-adjusted GDP was 
defeated.
  We have seen time after time stimulus packages at other times when we 
were in fiscal difficulty, financial difficulty--not to the degree of 
this one--but much of the spending has taken place after the economy 
recovered and contributed enormously to the deficit and consequently 
putting burdens on future generations of Americans. Why would we not 
agree that once the economy has recovered, we should proceed on a path 
to a balanced budget and stop some of these spending programs that are 
going to be adopted tonight in the way of stimulus? Why wouldn't we 
bring them to a stop? Could it be that some want these spending 
programs to be permanent?
  I repeat, Milton Friedman said, ``There is nothing so permanent as a 
temporary Government program,'' and I am sure we will see many of these 
programs in the stimulus live a long, long life.
  In a recent Washington Post op-ed entitled ``$800 billion Mistake,'' 
Martin Feldstein, an economic professor at Harvard University and 
president emeritus of the National Bureau of Economic Research, wrote: 
The fiscal package now before Congress needs to be thoroughly revised. 
In its current form, it does too little to raise national spending and 
employment. It would be better for the Senate to delay legislation for 
a month or even two if that is what it takes to produce a much better 
bill. We cannot make an $800 billion mistake.
  Of course, it is a $1.1 trillion mistake. We cannot make that 
mistake. By passing this conference report, we are essentially engaging 
in an act of generational theft. How can anyone ignore the cold hard 
facts? The current national debt is $10.7 trillion. The 2009 projected 
deficit is $1.2 trillion. The cost of this stimulus is $1.124 trillion; 
that is, $789 billion plus interest. The expected omnibus spending bill 
to fund the Federal Government through September 30, 2009, is $400 
billion. The expected supplemental request for the wars in Iraq and 
Afghanistan the Armed Forces Committee staff estimates at $80 billion. 
The appropriations bills for 2010 that we will consider this year are 
untold billions. Tarp I and II are $700 billion, and TARP III is 
possibly upwards of $1.5 trillion. These numbers are staggering. These 
numbers are staggering. We have never dealt with numbers such as this, 
not in the Great Depression, not in any other era in time of our 
country. Every dollar of spending in this conference report will be 
added to our national debt, which now stands, as I said, at $10.2 
trillion or 70 percent of GDP.
  According to the Center for Data Analysis, if Congress borrows the 
funds for its economic stimulus package--which, of course, it will do--
total debt could grow to $13 trillion in fiscal year 2009 or 92 percent 
of our gross domestic product. By 2010, the total debt could grow to 
$14 trillion or 95 percent of our GDP. The center further finds that 
the stimulus package will add about $30,000 in new Federal debt per 
American household.
  Remarkably, while we are on the brink of saddling our children and 
grandchildren and great grandchildren with this enormous debt load, the 
conference report before us does little to actually address the core 
issue that brought us to the point of needing a stimulus bill in the 
first place, and that is the housing crisis.
  I would remind my colleagues that history shows us that if you run up 
enough debt, the answer to it is to print more money, which is the 
basis of the currency, which inevitably leads to inflation, which is 
the greatest enemy of the middle class in America.
  I see my colleague from New York who is going to talk on many things, 
including the terrible tragedy that has taken place in the crash of the 
airliner in New York. But I also want to, while he is on the floor, 
strongly disagree with his comment that the American people do not care 
about little porky projects. Americans care. I can only speak for my 
constituents in Arizona, who have flooded my office with calls. They 
care about little porky projects that are to the tune of millions of 
their tax dollars.
  Just yesterday, the National Association of Realtors reported the 
largest drop in home prices--12.4 percent--since the Association 
started gathering such data in 1979. Prices declined in almost 9 out of 
every 10 cities. Despite the fact that this extremely sobering 
statistic was released yesterday, this bill cuts almost half of the 
only significant housing provision in the conference report.
  This provision, written by Senator Isakson, a former real estate 
agent, and approved by all Republicans and Democrats would have allowed 
any homeowner to take a nonrepayable tax credit of $15,000 or 10 
percent of the purchase price of a house used as a principal residence. 
Senator Isakson argued that such a generous tax credit would help the 
market recover swiftly. As a real estate agent during the economic 
crisis of the 1970s, he saw tax credits spur the purchase of many 
homes, which served to reduce the glut of vacant homes in the market, 
thereby allowing home values to stabilize, the housing inventory to 
drop, and the market to recover. We could have achieved a similar 
result here, I believe. But, instead, it was cut--the only housing 
provision in the report that was roundly supported by both Republicans 
and Democrats and millions of potential home buyers. Instead, they 
decided to cut the tax break to $8 thousand and limit it to only first-
time buyers. My belief is that this will not produce any real change to 
our sagging housing market.

  The Congressional Budget Office has estimated that the stimulus bill 
would create anywhere from 1.3 million to 3.9 million jobs. At $789 
billion, 1.3 million jobs would work out to cost $506,923 per job, and 
for 3.9 million jobs, the cost would be $202,308 per job. If you add 
the cost of interest to the price tag, it comes to $1 trillion. Every 
economic estimate I have seen lately falls within the category of 1.3 
to 3.9 million jobs. The administration says it could be 4 million or 
more.
  In a new letter from CBO dated February 11 providing a year-by-year 
analysis of the economic effects of spending of the pending stimulus 
legislation, CBO finds:

       Beyond 2004 the legislation is estimated to reduce GDP by 
     between 0 and 0.2 percent. The reduction in GDP is therefore 
     estimated to be reflected in lower wages rather than lower 
     employment. The increased debt would tend to reduce the stock 
     of productive private capital. In economic parlance, the debt 
     would ``crowd out'' private investment. Workers will be less 
     productive because the capital stock is smaller. The 
     legislation's long-run impact on output also would depend on 
     whether permanently changed incentives to work are saved. The 
     legislation would not have any significant permanent effects 
     on those incentives.

  I know my colleagues are going to say we are going to do other 
things.

[[Page S2260]]

And we need to do other things--reform entitlements. We should have, in 
this legislation, put ourselves on a path to entitlement reform by 
setting up commissions for both Social Security and Medicare reform, 
but we did not, just as we should have had a trigger to stop spending 
and put us on a path to a balanced budget once our economy recovers.
  It is unfortunate that even in these difficult economic times, 
Members of Congress couldn't resist the temptation to lard up this bill 
with billions of dollars in unnecessary spending that will do nothing 
to stimulate the economy. What makes this most disturbing, in order to 
include these questionable provisions in the final measure, the 
conferees cut some of the few truly important spending provisions that 
had been included in the House and Senate bills.
  For example, I don't understand how, on the one hand, the conferees 
can cut close to $3 billion from the Senate bill for Department of 
Defense and veterans hospital and medical facilities and, on the other 
hand, add funding above either House- or Senate-passed bills for State 
Department information technology upgrades, totaling $290 million. 
Information technology may be worthwhile, but I am dumbfounded as to 
the conferees' rationale for adding funding for information technology 
programs that exceeds either Chamber's recommendations and cuts defense 
and veterans. We all talk about our commitment to veterans. Certainly 
VA hospital and medical facilities are badly needed, as we found in the 
scandal of Walter Reed.
  Just as egregious, the conference report provides $1 billion for 
prevention and wellness programs that were previously struck by the 
Senate and reported to be for smoking cessation programs and STD 
prevention. Why is this added back in, even though it may be worthy, at 
the expense of military members, families, and veterans whose funding 
was cut?
  The conference report provides more funding for grants to provide 
high-speed Internet to Americans, $7.2 billion, than it does for 
military and veterans affairs construction--again, at the expense of 
our Nation's bravest and most worthy. The conference report falls short 
in addressing the needs of our military and veterans who have given so 
much in support of this country and our democratic values.
  Again, these are not tiny, porky amendments. The American people do 
care what we are talking about. If the American people don't care, then 
on behalf of the American people, we should take out these little tiny, 
porky items that will provide questionable stimulative effects.
  I have a long list, and I ask unanimous consent that it be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     Examples of Questionable Provisions in the Conference Report--
                              Stimulative?

       $200 million to consolidate the DHS headquarters in 
     Washington, DC.
       $15 million for historic preservation grants for 
     historically black colleges and universities.
       $25 million for the Smithsonian.
       $50 million for the National Endowment for the Arts.
       $5.55 billion for the Federal Buildings Fund, including 
     $750 million for Federal buildings and U.S. Courthouses; $450 
     million for the Department of Homeland Security headquarters; 
     $4.5 billion to convert GSA facilities to ``High-Performance 
     green facilities''.
       $300 million for new energy efficient vehicles for the 
     Federal government including hybrid vehicles, and electric 
     vehicles, and ``commercially-available, plug-in hybrid 
     vehicles'' which many believe would include golf carts.
       $100 million for grants to small shipyards.
       $7.2 billion to accelerate broadband deployment in unserved 
     and underserved areas and to strategic institutions, split 
     between the Department of Commerce, to administer $4.7 
     billion in grants, and the Department of Agriculture, to 
     administer $2.5 billion in grants and loan activity.
       $50 million to upgrade the computer systems at the Farm 
     Service Agency.
       $50 million for aquaculture producers.
       $300 million in grants for a diesel emission reduction 
     program.
       $50 million to build biomass plants.
       $165 million for U.S. Fish and Wildlife Service fish 
     hatcheries and wildlife refuges.
       $25 million for habitat restoration, trails repairs, and 
     the cleanup of abandoned mines on BLM lands.
       $140 million for USGS stream gauges, and volcano monitoring 
     systems.
       $200 million to repair leaking underground storage tanks 
     under the Leaking Underground Storage Tank Trust Fund.
       $85 million to upgrade the computer systems at the Indian 
     Health Service.
       $1 billion for the Bureau of the Census, including $250 
     million for partnership and outreach efforts to minority 
     communities and hard-to-reach populations.
       $650 million for digital television converter box coupon 
     program, with $90 million for education and outreach to 
     vulnerable populations.
       $230 for operations, research and facilities at the 
     National Oceanic and Atmospheric Administration (NOAA).
       $600 million for the procurement, acquisition and 
     construction at the NOAA.
       $400 million for science at the National Aeronautics and 
     Space Administration (NASA).
       $150 million for aeronautics at NASA.
       $2.5 billion for the National Science Foundation (National 
     Science Foundation), of which $300 million is for the Major 
     Research Instrumentation program, and $200 million for 
     academic research facilities modernization.
       $400 million for major research equipment and facilities 
     construction at the NSF.
       $375 million for Mississippi River and Tributaries.
       $2.5 billion for applied research concerning energy 
     efficiency and renewable energy including $800 million for 
     biomass and $400 million for geothermal activities and 
     projects.
       $5 billion for the Weatherization Assistance Program.
       $2 billion for Advanced Battery Manufacturing grants.
       $300 million for the Energy Efficiency Appliance Rebate 
     program and the Energy Star Program.
       $3.4 billion for Fossil Energy Research and Development 
     including: $1 billion for fossil energy research and 
     development programs; $800 million for Clean Coal Power 
     Initiative Round III Funding Opportunity Announcement; $1.52 
     billion Clean Coal Demonstration plants; $50 million for 
     competitive solicitation for site characterization activities 
     in geological formations; $10 million for geologic 
     sequestration training and research grants; $10 million for 
     program direction funding.
       $1.6 billion for DOE Science program.
       $1.2 billion for summer youth jobs (for individuals up to 
     age 24).
       $1.5 billion to provide short term rentals assistance for 
     families who may become homeless.
       $2.25 billion to install new windows and furnaces of HUD 
     homes.
       $100 million to remove lead-based paint.
       $8 billion for high speed rail.
       $90 million for additional passport facilities.
       $53.6 billion for a State Fiscal Stabilization Fund for 
     education--$14 million for administration, oversight, and 
     evaluation; $5 billion for State Incentive Grants and an 
     Innovation Fund.
       $86.6 billion to State Medicaid programs through a 
     temporary increase in the Federal Medical Assistance 
     Percentage.
       $1.1 billion for comparative effectiveness research: $300 
     million for the Agency for Healthcare Research and Quality; 
     $400 million for the NIH; $400 million to be used at the 
     discretion of the Secretary of HHS.
       $2 billion for the Office of the National Coordinator for 
     Health Information Technology.
       $13 billion for Education for the Disadvantaged: $10 
     billion for title I formula grants; $3 billion for School 
     Improvement grants.
       $720 million for School Improvement Programs: $650 million 
     for Enhancing Education through Technology program; $70 
     million for Education for the Homeless Children and Youth 
     program.
       $10 billion for the National Institutes of Health: $1.3 
     billion for the National Center for Research Resources; $8.2 
     billion for the Office of the Director; $500 million for 
     buildings and facilities for Bethesda, MD.

  Mr. McCAIN. Among these are $200 million to consolidate the DHS 
headquarters in Washington, DC; $15 million for historic preservation 
of Historically Black Colleges and Universities; $25 million for the 
Smithsonian; $50 million for the National Endowment for the Arts; $5.55 
billion for the Federal Buildings Fund, including $750 million for 
Federal buildings and U.S. courthouses.
  The list goes on: $300 million for new energy-efficient vehicles for 
the Federal Government; $100 million for grants to small shipyards; 
$7.2 billion to accelerate broadband deployment in unserved and 
underserved areas and to strategic institutions. By the way, certainly 
the Presiding Officer knows we cannot spend within the next year $7.2 
billion or anything like it to accelerate broadband deployment because 
of the nature of the challenge. There is $50 million to upgrade the 
computer systems at the Farm Service Agency; $50 million for 
aquaculture producers; $300 million in grants for a diesel emission 
reduction program; $50 million to build biomass plants; $150 million 
for USGS stream gauges and volcano monitoring systems; $200 million to 
repair leaking

[[Page S2261]]

underground storage tanks under the Leaking Underground Storage Tank 
Trust Fund; $1 billion for the Bureau of the Census. We will be talking 
more about this issue. We can't have the census taken from the 
Department of Commerce and put in the White House. We can't politicize 
the process of the system. We will be talking more about that later on.
  There is $230 million for operation, research, and facilities at the 
National Oceanic and Atmospheric Administration. You can make arguments 
for all these programs as worthwhile. You cannot make arguments that 
they stimulate the economy in a short period. There is $150 million for 
aeronautics at NASA; $2.5 billion for the National Science Foundation, 
of which $300 million is for the Major Research Instrumentation Program 
and $200 million for academic research facilities modernization; $275 
million for the Mississippi River and tributaries; $10 million for 
program direction funding in fossil energy research and development; 
$1.6 billion for DOE science program; $2.25 billion to install new 
windows and furnaces in HUD homes; $8 billion for high-speed rail.
  The high-speed rail program is very interesting. It started out at $2 
billion and now has been raised to $8 billion, a remarkable increase in 
funding, when we think about it. There are media reports that state 
this could probably be used for the Las Vegas-Los Angeles high-speed 
rail. The list goes on.
  The fact is, there are also policy provisions. The conference report 
still includes the protectionist ``Buy American'' provisions that will 
damage the ability of U.S. corporations to export and create jobs at 
home. If passage of this bill triggers retaliatory trade action by 
foreign countries against the United States, Congress will have 
succeeded in deepening one of the worst recessions of our time.
  There is an article in this week's Economist magazine entitled ``The 
return of economic nationalism, A specter is rising. To bury it again, 
Barack Obama needs to take the lead.'' It talks about the ``Buy 
American'' provisions. At the end it states:

       Once again, the task of saving the world economy falls to 
     America. Mr. Obama must show that he is ready for it. If he 
     is, he should kill any ``Buy American'' provisions. If he 
     isn't, America and the rest of the world are in deep trouble.

  I ask unanimous consent that the article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   [From the Economist, Feb. 5, 2009]

                   The Return of Economic Nationalism

       Managing a crisis as complex as this one has so far called 
     for nuance and pragmatism rather than stridency and 
     principle. Should governments prop up credit markets by 
     offering guarantees or creating bad banks? Probably both. 
     What package of fiscal stimulus would be most effective? It 
     varies from one country to the next. Should banks be 
     nationalised? Yes, in some circumstances. Only the foolish 
     and the partisan have rejected (or embraced) any solutions 
     categorically.
       But the re-emergence of a spectre from the darkest period 
     of modern history argues for a different, indeed strident, 
     response. Economic nationalism--the urge to keep jobs and 
     capital at home--is both turning the economic crisis into a 
     political one and threatening the world with depression. If 
     it is not buried again forthwith, the consequences will be 
     dire.


                        Devil take the hindmost

       Trade encourages specialisation, which brings prosperity; 
     global capital markets, for all their problems, allocate 
     money more efficiently than local ones; economic co-operation 
     encourages confidence and enhance security. Yet despite its 
     obvious benefits, the globalised economy is under threat.
       Congress is arguing about a clause in the $800 billion-plus 
     stimulus package that in its most extreme form would press 
     for the use of American materials in public works. Earlier, 
     Tim Geithner, the new treasury secretary, accused China of 
     ``manipulating'' its currency, prompting snarls from Beijing. 
     Around the world, carmakers have lobbied for support (see 
     article), and some have got it. A host of industries, in 
     countries fro India to Ecuador, want help from their 
     governments.
       The grip of nationalism is tightest in banking (see 
     article). In France and Britain, politicians pouring 
     taxpayers' money into ailing banks are demanding that the 
     cash be lent at home. Since banks are reducing overall 
     lending, that means repatriating cash. Regulators are 
     thinking nationally too. Switzerland now favours domestic 
     loans by ignoring them in one measure of the capital its 
     banks need to hold; foreign loans count in full.
       Governments protect goods and capital largely in order to 
     protect jobs. Around the world, workers are demanding help 
     from the state with increasing panic. British strikers, 
     quoting Gordon Brown's ill-chosen words back at him, are 
     demanding that he provide ``British jobs for British 
     workers'' (see article). In France more than 1m people stayed 
     away from work on January 29th, marching for jobs and wages. 
     In Greece police used tear gas to control farmers calling for 
     even more subsidies.
       Three arguments are raised in defence of economic 
     nationalism: that it is justified commercially; that it is 
     justified politically; and that it won't get very far. On the 
     first point, some damaged banks may feel safer retreating to 
     their home markets, where they understand the risks and 
     benefit from scale; but that is a trend which governments 
     should seek to counteract, not to encourage. On the second 
     point, it is reasonable for politicians to want to spend 
     taxpayers' money at home--so long as the costs of doing so 
     are not unacceptably high.
       In this case, however, the costs could be enormous. For the 
     third argument--that protectionism will not get very far--is 
     dangerously complacent. True, everybody sensible scoffs at 
     Reed Smoot and Willis Hawley, the lawmakers who in 1930 
     exacerbated the Depression by raising American tariffs. But 
     reasonable people opposed them at the time, and failed to 
     stop them: 1,028 economists petitioned against their bill. 
     Certainly, global supply-chains are more complex and harder 
     to pick apart than in those days. But when nationalism is on 
     the march, even commercial logic gets trampled underfoot.
       The links that bind countries' economies together are under 
     strain. World trade may well shrink this year for the first 
     time since 1982. Net private-sector capital flows to the 
     emerging markets are likely to fall to $165 billion, from a 
     peak of $929 billion in 2007. Even if there were no policies 
     to undermine it, globalisation is suffering its biggest 
     reversal in the modern era.
       Politicians know that, with support for open markets low 
     and falling, they must be seen to do something; and policies 
     designed to put something right at home can inadvertently eat 
     away at the global system. An attempt to prop up Ireland's 
     banks last year sucked deposits out of Britain's. American 
     plans to monitor domestic bank lending month by month will 
     encourage lending at home rather than abroad. As countries 
     try to save themselves they endanger each other.
       The big question is what America will do. At some moments 
     in this crisis it has shown the way--by agreeing to supply 
     dollars to countries that needed them, and by guaranteeing 
     the contracts of European banks when it rescued a big 
     insurer. But the ``Buy American'' provisions in the stimulus 
     bill are alarmingly nationalistic. They would not even boost 
     American employment in the short run, because--just as with 
     Smoot-Hawley--the inevitable retaliation would destroy more 
     jobs at exporting firms. And the political consequences would 
     be far worse than the economic ones. They would send a 
     disastrous signal to the rest of the world: the champion of 
     open markets is going it alone.


                             A time to act

       Barack Obama says that he doesn't like ``Buy American'' 
     (and the provisions have been softened in the Senate's 
     version of the stimulus plan). That's good--but not enough. 
     Mr Obama should veto the entire package unless they are 
     removed. And he must go further, by championing three 
     principles.
       The first principle is co-ordination--especially in rescue 
     packages, like the one that helped the rich world's banks 
     last year. Countries' stimulus plans should be built around 
     common principles, even if they differ in the details. Co-
     ordination is good economics, as well as good politics: 
     combined plans are also more economically potent than 
     national ones.
       The second principle is forbearance. Each nation's stimulus 
     plan should embrace open markets, even if some foreigners 
     will benefit. Similarly, financial regulators should leave 
     the re-regulation of cross-border banking until later, at an 
     international level, rather than beggaring their neighbours 
     by grabbing scarce capital, setting targets for domestic 
     lending and drawing up rules with long-term consequences now.
       The third principle is multilateralism. The IMF and the 
     development banks should help to meet emerging markets' 
     shortfall in capital. They need the structure and the 
     resources to do so. The World Trade Organisation can help to 
     shore up the trading system if its members pledge to complete 
     the Doha round of trade talks and make good on their promise 
     at last year's G20 meeting to put aside the arsenal of trade 
     sanctions.
       When economic conflict seems more likely than ever, what 
     can persuade countries to give up their trade weapons? 
     American leadership is the only chance. The international 
     economic system depends upon a guarantor, prepared to back it 
     during crises. In the 19th century Britain played that part. 
     Nobody did between the wars, and the consequences were 
     disastrous. Partly because of that mistake, America bravely 
     sponsored a new economic order after the second world war.
       Once again, the task of saving the world economy falls to 
     America. Mr Obama must show that he is ready for it. If he 
     is, he should kill any ``Buy American'' provisions. If he 
     isn't, America and the rest of the world are in deep trouble.

[[Page S2262]]

  Mr. McCAIN. Of course, we know about Davis-Bacon that will inflate 
the construction costs of the bill by $17 billion. Section 604 requires 
that only domestic apparel and textile products may be procured by the 
Department of Homeland Security, unless the Secretary of DHS determines 
the quality and quantity cannot be procured in the United States at 
market prices, whatever ``market prices'' means. There is a provision 
which states that within 45 days of enactment, the Governor of each 
State shall certify that they will request and use taxpayer funds 
provided in the bill. It goes on to say that if any of the money 
provided by this bill is not accepted by the Governor, then that 
State's legislature can simply pass a resolution to bypass the Governor 
and receive those funds. I have never seen a provision such as that in 
the Congress.
  I repeat, if the Governor of a State says his State doesn't need the 
money, then the State's legislature can simply pass a resolution to 
bypass the elected Governor of the State and receive the funds. What 
does that say about States rights and States electing their Governors 
to lead. It is remarkable. Every Governor in America should be on 
notice that we may have established a precedent that if you don't want 
to take taxpayer money, then you can be bypassed by your legislature. 
It is unconstitutional and should be challenged in court.
  It adds a new far-reaching policy with respect to unemployment 
compensation entitled ``Unemployment Compensation Modernization''--an 
interesting description. The new policy would allow a person to collect 
unemployment insurance for leaving his job to care for an immediate 
family member's illness, any illness or disability as defined by the 
Secretary of Labor. This provision stems from legislation introduced in 
the Senate during the 110th Congress that was not approved. Each State 
would need to amend their unemployment insurance in order to receive a 
portion of the $7 billion added to the bill for this additional 
unemployment compensation program. It provides a total waiver of cost 
savings related to inland waterways projects; 50 percent of the cost is 
supposed to be carried by private companies that utilize the waterways.
  The report establishes the Federal Coordinating Council for 
comparative effectiveness research. The bill text does not use the term 
``clinical'' when referring to comparative effectiveness research, 
leading to the possibility that the bill does not protect against the 
research being used to make coverage decisions based on cost-
effectiveness rather than clinical effectiveness.
  It includes the Health Information Technology for Economic and 
Clinical Health Act, a massive overhaul of our health IT infrastructure 
that deserves more consideration.
  It is 1,071 pages and a 41-page statement of the managers, a total of 
1,492 pages. It was negotiated in a partisan fashion, behind closed 
doors, in direct contradiction to President Obama's commitments during 
the campaign. I understand his spokesman yesterday said it was ``an 
emergency.'' It may have been an emergency, but that was not mentioned 
during the commitments made by then-candidate Obama.
  Among other things, the conference report contains $450 million for 
Amtrak security grants through the Department of Transportation. It 
wasn't in the House bill, wasn't in the Senate bill. It duplicates a 
program that already exists.
  I urge my colleagues, when they have a few spare moments, to look at 
the history of Amtrak, a railroad that was taken over by the Federal 
Government with the intent to turn it over to the private sector in a 
short period. We have propped it up with billions and billions of 
taxpayer dollars, funding that will never become profitable.
  A provision recreates the slush fund that was unanimously rejected by 
both the House and Senate. The slush fund allows agency heads to move 
money around between programs as they see fit without any real 
oversight by Congress.
  I mentioned high-speed rail. That is $8 billion. The Senate included 
$2 billion for these programs, and the House didn't include anything. 
The conference now has added $6 billion. I mentioned earlier the 
veterans and military construction spending has been cut by over $3 
billion below both the House and Senate bills. Of course, the 
conference report, among many other items, contains $50 million for 
NEA, a worthwhile endeavor, but I don't see how you can make the 
argument it creates jobs.
  A commitment was made that the spending would be done quickly. The 
conference agreement drops provisions that require all funds in the 
bill to be awarded within 30 to 120 days of enactment. Instead, the 
report allows numerous programs to have 3 years or more to actually 
begin spending the funding.
  I know many of my colleagues, including my friend from Illinois, are 
here. I don't want to take too much time, as many of my colleagues wish 
to discuss the legislation. I wish to mention there is $2 billion for a 
neighborhood stabilization program which could go for money for groups 
such as ACORN. You could make arguments about whether ACORN should be 
funded. I do not see how that possibly creates jobs.

  I understand this bill will be passed this evening. I hope the next 
time--maybe with TARP--because there are going to be other issues of 
enormous consequence that the Congress and the President of the United 
States will face in the coming weeks and months. I do not believe 
things are going to get better in the world real soon. We see 
activities around the world, from the behavior of the Russians to the 
Iranian testing of a missile, to renewed aggressive rhetoric by North 
Korea, to others, including developing a strategy for Afghanistan. But 
there are also enormous economic challenges here at home.
  The American people would like us to, and the message they have sent 
us is, that they want us to sit down and work together. As I said, this 
bill began with a statement by the Speaker of the House: We won. We 
write the bill. We need to sit down together before the bill is 
written, outline the principles, turn those principles we share into 
concrete legislation, and work together. I hope we never again have a 
repetition of a bill that has such enormous consequence that would pass 
through both bodies with literally no Republican support--three 
Senators out of 178 Members in the House and 40 in the Senate. That is 
not bipartisanship.
  I think we passed up an opportunity this time. I hope the American 
people will respond again by sending us the message. They want us to 
address the economic woes we face, but they want us to address them 
together. This legislation, in my view, is very bad for the economic 
future of America.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from New York.

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