[Congressional Record Volume 156, Number 34 (Wednesday, March 10, 2010)]
[Senate]
[Pages S1360-S1367]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BENNETT:
  S. 3096. A bill to prevent an economic disaster by providing budget 
reform; to the Committee on the Budget.
  Mr. BENNETT. Mr. President, as I move around the State of Utah to 
talk to my constituents, I find, with all of the other specifics they 
are concerned about, the one thing just about everybody is concerned 
about is our long-term fiscal situation. They are worried about debt. 
They are worried about the deficit in this year that is adding to the 
debt. They say to me: What can we do about it? They listen to the 
pundits who talk on the air about this particular project or that 
particular project that sounds outrageous. Many times the projects are, 
in fact, legitimate, but they make good copy.
  I say, if you add up all of these projects together--the good ones 
and the bad ones--and eliminated them all, you would reduce the Federal 
deficit by less than 1 percent. Let's talk about where the money lies. 
Let's talk about where the challenge is. So I present to my 
constituents a series of charts that I will present here that outline 
where the challenge is.
  One of the things that becomes clear, as we go into this debate, is 
it is not just our financial situation that is in trouble. The 
pressures created by our debt are crossing over into the area of 
national security. We cannot maintain our military or our diplomatic 
initiatives with the kinds of pressures continually increasing.
  So a little bit of history, which I share with my constituents and 
that I share here as the background for the bill I am introducing 
today.
  This is a very simple pie chart that shows the components of Federal 
spending back in 1966. I ask my constituents: Why do I pick 1966 as the 
year to start? Some of them know the answer; some of them do not. But 
in 1966, mandatory spending constituted 26 percent of the budget, and 
interest on the national debt another 7 percent. You have to pay the 
interest on the bonds, so that is mandatory spending as well. So the 
government is committed for a third of the budget before the Congress 
ever gets around to appropriating any money.
  In 1966, the biggest portion of mandatory spending was Social 
Security. The combination of Social Security and other mandatory 
programs, and the interest cost, was one-third of the budget. The other 
two-thirds was available to the Congress. Of that spending, defense 
spending was 44 percent of the total. Defense spending, obviously, 
dominated nondefense discretionary spending.
  Where are we today? What has happened in the years since 1966 and 
today? Here are the components of Federal spending in fiscal 2008. I 
picked that year, before the tsunami hit us--the financial tsunami that 
caused the meltdown and all of the problems--as

[[Page S1361]]

perhaps a demonstration of what is happening structurally within the 
budget, not affected by any particular emergency.
  Mandatory spending has now grown to 54 percent. Interest costs are 
from 7 to 8 percent. So the two of them constitute roughly two-thirds 
of the budget. From 1966 to 2008, mandatory spending now is twice as 
big in its proportion of the budget than it used to be. Defense 
spending has shrunk to a half of what it was back in the 1960s, and 
nondefense discretionary spending is about the same.
  All right. Now back to the question: Why did I pick 1966 as the year 
to start with? Because that is the year the Federal Government got into 
the medical business and enacted Medicare. Since then, we have added 
Medicaid. So today, when you talk about mandatory spending, Social 
Security is no longer the dominant factor. It is a combination of 
Social Security, Medicare, and Medicaid.
  I will leave aside the issue of the value of those programs. I am 
just talking about the money we are spending here. Today, as we argue 
over congressional spending, we only have a third of the budget to talk 
about, and half of that, roughly, is defense spending.
  Let's go to fiscal year 2009. Mandatory spending has grown to 59 
percent. The interest cost is 5 percent. Defense will have shrunk, 
nondefense will have shrunk. The reason the interest costs are 
shrinking is because we are borrowing money at a lower rate by virtue 
of the things that have happened with the financial tsunami.
  But now let's go out 10 years to 2020 and see where we will be. In 10 
years, mandatory spending will have grown to 58 percent. The interest 
costs will have grown to 13 percent, and defense and nondefense 
together will constitute only 30 percent. If defense is shrunk to 15 
percent of the budget, it begins to bite very seriously into America's 
role in national security around the world.
  One author I have looked at who has talked about America's role in 
the world in a very thoughtful way looks ahead to this, and he says the 
greatest threat to America's position in the world is not China, it is 
not India, it is not North Korea. It is Medicare. The greatest threat 
to America's ability to sustain itself and its national security is 
coming from the growth of mandatory spending.
  If we spend all of our time arguing over those tiny things that make 
good copy in newspapers and on television and do not address this 
inexorable growth, we will discover that the Congress has become 
irrelevant. Three-fourths of the budget of Congress will already be 
spent before the Congress even meets, and only one-fourth will be left 
for us to talk about, and that one-fourth will have to include our 
spending for national security, and you will see how everything else 
will get squeezed out.
  I had that hit me directly as we had the debate last year on the 
budget resolution for fiscal year 2010. Standing at this very place, I 
looked down at the bill that was presented and sitting here on a 
podium, and it projected Federal revenues for fiscal year 2010 at $2.2 
trillion--down because of the challenges we had with the economic 
meltdown. Then on the next page it said: mandatory spending, $2.2 
trillion. That meant everything we do in government in fiscal year 
2010, other than mandatory spending--the Defense Department, the war in 
Afghanistan, the FAA which controls the airplanes, the national parks, 
our embassies overseas, the FBI, all of our law enforcement, the border 
security--everything, every single dime we spend in government, other 
than mandatory spending, in fiscal year 2010 had to be borrowed. We did 
not have a single dime of tax revenue available to pay for anything in 
government because it was all taken up in mandatory spending.
  All right. What does this do to us long term as a nation?
  People keep talking about the national debt and how it is growing and 
growing and growing. Actually, the national debt has not been growing 
and growing and growing over the years. Here is a chart that shows the 
national debt measured in the way it should be measured, as a 
percentage of the gross domestic product, the size of the national debt 
with respect to the size of the economy.
  To illustrate why this is the way to do it--I have often used this 
example on the Senate floor--I ran a company before I came here. When I 
became the CEO of that company it was very small. It had a debt of 
$75,000. When I stepped down to retire prior to running for the Senate, 
the debt was $7.5 million. One might say: Well, Bob Bennett, you are 
not a very good manager if you ran the debt up from $75,000 to $7.5 
million. Then you look at the debt the way you should look at it.
  At the time I became the CEO of that company, they were doing under 
$300,000 a year in total revenue. They had no margin at all. Every dime 
they took in, in revenue, was eaten up with costs, and they could not 
make the payments on the $75,000 debt. The $75,000 debt threatened the 
survival of the company. When we had a $7.5 million debt, the company 
was doing over $80 million in business, and we had a 15-percent margin 
on sales. We were earning more per year than the whole debt we had, and 
the only reason we didn't pay it off is because we had some prepayment 
penalties built into the mortgages we had established. So I wasn't such 
a bad steward after all, if you make the measure totally on the basis 
of the size of the debt. I was a good steward if you make it on the 
measure of the debt in relationship to the size of the enterprise.
  That is what this chart shows: the national debt as a percentage of 
the size of the enterprise, to use business terms; in this case, the 
size of the economy.
  We see that just after the Second World War our national debt was 
well over 100 percent of GDP, and in the two decades after the Second 
World War, we come from 1945 to 1965, the debt had shrunk from over 100 
percent of GDP to close to 30 percent of GDP. Even though it was going 
up in nominal dollars, it was coming down as a percentage because the 
economy was growing so rapidly. Then, once again, we add to our 
entitlement spending, we add Medicare, and we see this is the trough. 
It begins to grow and it begins to grow.
  When we get to the end of the Cold War, it turns down again because 
of two things: No. 1, our defense spending goes down and the economy 
booms. We get tremendous growth as a result of the end of the Cold War. 
It was at 46.9 percent when Medicare and Medicaid got started, and not 
much different in 1989 by the end of the Cold War, 53.1 percent. This 
shows the historic level it has been.
  OK. Now, this is the history, and the blue line shows the projections 
that the Obama administration has given us as to what will happen under 
their spending plan. One thing we know about projections is that they 
are always wrong. We don't know whether they are wrong on the high side 
or the low side, but we know they are always wrong. What usually 
happens is that the projections are always optimistic and circumstances 
come in with a result that is less than we had hoped for.
  So if we take this as an optimistic projection, we are saying when we 
get to 2020, which is only a decade away--only 10 years away--the 
national debt will be back up very close to what it was at the end of 
the Second World War. That is unacceptable. Everyone in this Chamber 
knows that entitlement spending is the driving force behind all of 
this. Everyone in this Chamber knows shaving back a little on this 
program or cutting out a particular grant on another program will have 
no real impact on this if we don't have the courage to deal with 
entitlement spending.
  So today I am introducing a bill to deal with entitlement spending. I 
have no illusions that it is going to pass in this Congress, but I wish 
to lay it down so we at least have a marker from which to begin. I have 
already done that with Social Security.
  Several years ago, when I was chairman of the Joint Economic 
Committee, I held a series of hearings on Social Security and 
discovered that we can indeed solve the Social Security problem. We can 
move numbers around a little and say to everyone who is currently 
drawing Social Security: You will continue to draw Social Security 
throughout your lifetime, adjusted for inflation. Nothing will happen 
to it. Furthermore, your children can draw the same level of Social 
Security benefits that you draw adjusted for inflation through their 
lifetimes without any

[[Page S1362]]

danger to it, and their children can draw Social Security throughout 
their lifetimes at exactly the same level adjusted for inflation, 
without a tax increase.
  How is that possible? The way it is possible is to say we are only 
going to allow Social Security benefits to grow as rapidly as inflation 
grows. We already have built into the program that we are going to pay 
Social Security plus inflation, plus a nice little kicker along the 
way. That nice little kicker along the way over 10 years, and then 20 
years, then 30 years pretty soon gets us into the kind of trouble I 
have described. If we say, no, we will allow it to grow with respect to 
inflation, but we will not allow it to grow any more rapidly than that, 
then the kind of thing that happened here can happen again. As the 
economy grows more rapidly than the inflation rate, we will see the 
national debt begin to come down, we will see the pressure on national 
security begin to ease, and we will see the great concern that 
Americans have about the financial situation begin to be addressed in 
the way it was addressed in the years after the Second World War.
  I am not saying we abolish entitlement programs. There are some of my 
constituents who say that is the thing to do: just abolish Medicare; 
abolish Social Security. I say, yes, we want to abolish these things 
but keep the taxes because that is what we would have to do if we are 
going to get the financial circumstance we like. No, over time, we can 
do this without abolishing these programs, but we have to see to it 
they do not grow.
  So here is what my bill will do. It will control the growth of 
entitlement spending by reinstating spending limits and saying 
entitlement programs cannot grow at a rate faster than the inflation 
rate. That will mean to the future Congresses, if they adopt this bill: 
OK, we can still spend for Medicare, we can still spend for Medicaid, 
we can still do Social Security, but we can't add things to it in such 
a way that will cause it to grow more rapidly than inflation, No. 1. 
No. 2, do the same thing with all nondefense discretionary spending. We 
will allow it to grow each year in accordance with the inflation rate, 
but we will not allow increases in nondefense discretionary spending 
more rapidly than the inflation rate. Then, No. 3, enforce the spending 
caps with automatic spending reductions and budget points of order, the 
details of the kind of thing we get into around here all the time.
  The bill is very simple, very straightforward, but it gives the kind 
of direction that many of the solutions that have been proposed around 
here don't do. Many of the solutions we have around here sound great, 
and they are very complicated--this point of order lies here, and that 
situation there--but, overall, we are turning our backs on two-thirds 
of the Federal spending. We say we would not address them because these 
programs are popular, and we don't want to offend the voters by saying 
something has to be done with the most popular programs in America.
  I find the voters are saying we have to deal with this. We have to 
have the courage to deal with it, which means we have to have the 
courage to deal with entitlement spending and not just focus on 
nondefense discretionary spending.
  The final thing my bill will do is to prohibit the creation of any 
new mandatory spending programs, which is, again, part of the problem 
we have had.
  I close by repeating a question I ask my constituents as I am making 
this presentation to them. I say: How many of you know who Willie 
Sutton was? Most of my audience is young enough not to know the answer 
to that question, but there are a few who say Willie Sutton was a bank 
robber, and that is true. He wasn't a very good bank robber because he 
kept getting caught. Each time he would serve his sentence and then he 
would go out after he had been released from prison and he would rob 
another bank.
  Finally, somebody said to him--and this is why we remember Willie 
Sutton, not for being a bad bank robber but for the comment he made. 
Somebody said: Willie, why do you keep robbing banks?
  He said: Because that is where the money is.
  We look at the national debt, we look at the problems we face, and we 
ask the question: Where is the money? We have to rein in the 
entitlement spending because that is where the money is. It is two-
thirds of the budget now, three-fourths of the budget within 10 years. 
If we continue to ignore the growth of entitlement spending and focus 
entirely on the rest of it, that makes good press but not good policy. 
We will find our financial situation is up here, our national debt will 
be as high as it was with the percentage of GDP as it was after the 
Second World War, and our national security will be threatened to the 
point that our entire posture around the world will be changed, simply 
because we would not be able to afford it.
  It is for that reason that I send to the desk an act that may be 
cited as the Economic Disaster Prevention Act of 2010 that deals with 
spending limits on entitlement programs as well as spending limits on 
discretionary spending, and the prohibition of any new mandatory 
spending programs.
                                 ______
                                 
      By Mr. MERKLEY (for himself, Mr. Levin, Mr. Kaufman, Mr. Brown of 
        Ohio, and Mrs. Shaheen):
  S. 3098. A bill to prohibit proprietary trading and certain 
relationships with hedge funds and private equity funds, to address 
conflicts of interest with respect to certain securitizations, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. LEVIN. Mr. President, I would like to relay a story that says a 
great deal about how the worst financial crisis since the Great 
Depression came to be.
  In 2006, a bond trader at Lehman Brothers struck up a conversation 
with one of the firm's college interns. When the trader asked this 
intern, who had not yet begun his senior year, what he was doing on his 
winter vacation, the young man replied that he would be trading 
derivatives for Lehman. That was a surprise, but the shock came when 
the intern said the firm had given him $150 million of its own money 
for this college student to bet on risky derivatives.
  Now, one college junior and his $150 million trading account did not 
bring the entire financial system close to collapse. But it is just 
this brand of recklessness that led to the need for multibillion-dollar 
bailouts and to the worst recession in decades, one that has left 
millions of Americans without a job.
  The losses that Lehman and other large financial firms racked up, 
trading on their own account and not on the behalf of investors, helped 
build the bonfire that nearly engulfed our entire financial system.
  That is why I have joined Senators Merkley, Kaufman, Sherrod Brown, 
and Shaheen to introduce the Protect our Recovery Through Oversight of 
Proprietary Trading Act, or PROP Trading Act. With this legislation, we 
attempt to rein in some of the reckless practices that led to economic 
catastrophe, the proprietary trading and hedge-fund operations that 
lost billions of dollars, caused the collapse of some of our biggest 
financial institutions, and pushed other major financial firms to the 
brink of collapse.
  This legislation would accomplish several important goals to ensure 
that the abuses of recent years don't lead to another crisis. It would 
ban taxpayer insured banks, and their affiliates and subsidiaries, from 
engaging in proprietary trading that is, trading on their own behalf 
and not that of their customers. It would ban taxpayer insured banks 
from investing in or sponsoring hedge funds or private equity funds. 
Nonbank institutions that are critically important to the systemic 
health of the financial system, i.e., those that have been deemed ``too 
big to fail,'' would be subject to new capital requirements and limits 
on their ability to trade on their own behalf or invest in hedge funds 
or private equity funds. Federal regulators would set those 
requirements and limits. And our legislation would prohibit 
underwriters of asset-backed securities from engaging in transactions 
that create a conflict of interest with respect to the securities they 
package and sell.
  The reaction of Wall Street has been swift. Proprietary trading, they 
tell us, was not a large factor in creating the financial crisis. And 
restrictions on proprietary trading would have no effect in preventing 
the next crisis.
  On both points, they are wrong. Here is why.

[[Page S1363]]

  While Wall Street claims that proprietary trading was a tiny part of 
its operations before the crisis, their financial reports during the 
boom years tell a different story. Firms such as Goldman Sachs and 
Lehman Brothers earned as much as half their revenue on proprietary 
trades when markets were booming. Bank of America reported in a 2008 
regulatory filing that losses in ``large proprietary trading and 
investment positions'' had ``a direct and large negative impact on our 
earnings.'' JP Morgan Chase warned in its 10K filing for 2008 that it 
held large ``positions in securities in markets that lack pricing 
transparency or liquidity,'' presumably proprietary positions. 
Likewise, Goldman Sachs told regulators that the collapse of 
proprietary asset values ``have had a direct and large negative 
impact'' on its earnings.
  What these firms are saying in the dry, lawyerly language of SEC 
filings is that they had been betting big, and losing big, and those 
failed bets had done them serious harm.
  How much harm? By August of 2008, according to one estimate, the 
nation's largest financial firms had suffered $230 billion in losses 
from proprietary trading. Only a Wall Street trader could dismiss such 
losses as immaterial; in fact, that total is about one-third the size 
of the Wall Street rescue package we were forced to approve. Nearly 
every major financial institution suffered major losses in proprietary 
trades. Lehman Brothers, whose bankruptcy was a major contributor to 
the financial crisis, in 2006 derived more than half its revenue from 
proprietary trades. By 2007, its proprietary holdings totaled $313 
billion. But the firm lost $32 billion on such trades in 2007 and 2008, 
nearly double the value of the firm's common equity. Bear Stearns 
collapsed and was bought by JP Morgan Chase with federal aid in large 
part because of the collapse of its hedge funds. Morgan Stanley, JP 
Morgan Chase, Merrill Lynch, Goldman Sachs, each suffered major losses 
as a result of the risky bets they placed on securities that plummeted 
in value.
  There also is a need to prevent financial institutions that create 
asset-backed securities from engaging in transactions connected to 
those securities that present a conflict of interest. As has been 
widely reported, some institutions at the height of the boom in asset-
backed securities were creating these securities, selling them to 
investors, and then placing bets that their product would fail. Phil 
Angelides, the chairman of the Financial Crisis Inquiry Commission, has 
likened this practice to selling customers a car with faulty brakes, 
and then buying life insurance on the driver. It is an abusive 
practice, it should stop, and our legislation would stop it.
  It would be irresponsible of us to allow such risk and abuse to 
remain present in our financial system, lying dormant until the day we 
are once again on the brink of financial catastrophe, and once again 
the need to rescue financial firms who refuse to prudently manage their 
risks. This legislation is urgently important, and I urge my colleagues 
to carefully consider the consequences of failing to act.
                                 ______
                                 
      By Mr. MERKLEY (for himself, Mrs. Shaheen, Mr. Johnson, Mr. 
        Lugar, Mr. Bennet, and Mr. Graham):
  S. 3102. A bill to amend the miscellaneous rural development 
provisions of the Farm Security and Rural Investment Act of 2002 to 
authorize the Secretary of Agriculture to make loans to certain 
entities that will use the funds to make loans to consumers to 
implement energy efficiency measures involving structural improvements 
and investments in cost-effective, commercial off-the-shelf 
technologies to reduce home energy use; to the Committee on 
Agriculture, Nutrition, and Forestry.
  Mr. MERKLEY. Mr. President, I rise today to introduce legislation 
that will create jobs and lower energy bills for families and small 
businesses in rural communities by promoting energy-saving home 
renovations.
  I am honored to be joined in this effort by a bipartisan group of 
colleagues that includes Senator Shaheen, Senator Lugar, Senator 
Graham, Senator Johnson, and Senator Bennet of Colorado. Our colleagues 
in the other chamber are introducing companion legislation sponsored by 
Representatives Clyburn, Perriello, Whitfield, and Spratt.
  Our proposed Rural Energy Savings Program would assist rural electric 
co-operatives in offering ``on-bill'' financing to their customers. 
This concept offers two clear and important benefits for consumers, 
including homeowners and owners of commercial or industrial property.
  First, it addresses the challenge of the up-front cost of building 
renovations. Energy efficiency measures almost always make business 
sense in the long term, because they lower the energy bill for the 
family or business. But often, the family or business cannot afford the 
upfront cost of the renovation. By offering low-cost financing, we can 
let families and businesses pay for the cost of the renovation on the 
same time frame that they are getting savings on their energy bill.
  Second, we avoid complicating consumers' lives with another loan 
payment by offering a very simple repayment mechanism: under ``on-
bill'' financing, the consumer repays the loan through a charge on 
their electric bill.
  This bill offers these benefits to Americans across the country by 
using existing structures in place to provide federal assistance to 
rural electric co-operatives. Specifically, the Rural Utilities Service 
will offer loans at zero percent interest to rural co-operatives, who 
can then offer on-bill financing to their customers at no more than 
three percent interest. The difference can be used to pay the local 
nonprofit cooperatives' overhead expenses or to establish a loan loss 
reserve. There are more than 900 electric co-operatives serving 42 
million Americans, so we expect this program to create jobs and help 
lower energy bills in rural communities all over the country.
  For our rural communities to recover and thrive in the wake of the 
economic crisis, we need to put people back to work and lower families' 
expenses, and the Rural Energy Savings Program does both.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3102

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Rural Energy Savings Program 
     Act''.

     SEC. 2. RURAL ENERGY SAVINGS PROGRAM.

       Title VI of the Farm Security and Rural Investment Act of 
     2002 (7 U.S.C. 7901 note et seq.) is amended by adding the 
     following new section:

     ``SEC. 6407. RURAL ENERGY SAVINGS PROGRAM.

       ``(a) Purpose.--The purpose of this section is to create 
     and save jobs by providing loans to qualified consumers that 
     will use the loan proceeds to implement energy efficiency 
     measures to achieve significant reductions in energy costs, 
     energy consumption, or carbon emissions.
       ``(b) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means--
       ``(A) any public power district, public utility district, 
     or similar entity, or any electric cooperative described in 
     sections 501(c)(12) or 1381(a)(2)(C) of the Internal Revenue 
     Code of 1986, that borrowed and repaid, prepaid, or is paying 
     an electric loan made or guaranteed by the Rural Utilities 
     Service (or any predecessor agency); or
       ``(B) any entity primarily owned or controlled by an entity 
     or entities described in subparagraph (A).
       ``(2) Energy efficiency measures.--The term `energy 
     efficiency measures' means, for or at property served by an 
     eligible entity, structural improvements and investments in 
     cost-effective, commercial off-the-shelf technologies to 
     reduce home energy use.
       ``(3) Qualified consumer.--The term `qualified consumer' 
     means a consumer served by an eligible entity that has the 
     ability to repay a loan made under subsection (d), as 
     determined by an eligible entity.
       ``(4) Qualified entity.--The term `qualified entity' means 
     a non-governmental, not-for-profit organization that the 
     Secretary determines has significant experience, on a 
     national basis, in providing eligible entities with--
       ``(A) energy, environmental, energy efficiency, and 
     information research and technology;
       ``(B) training, education, and consulting;
       ``(C) guidance in energy and operational issues and rural 
     community and economic development;
       ``(D) advice in legal and regulatory matters affecting 
     electric service and the environment; and
       ``(E) other relevant assistance.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Agriculture, acting through the Rural Utilities Service.

[[Page S1364]]

       ``(c) Loans and Grants to Eligible Entities.--
       ``(1) Loans authorized.--Subject to paragraph (2), the 
     Secretary shall make loans to eligible entities that agree to 
     use the loan funds to make loans to qualified consumers as 
     described in subsection (d) for the purpose of implementing 
     energy efficiency measures.
       ``(2) List, plan, and measurement and verification 
     required.--
       ``(A) In general.--As a condition to receiving a loan or 
     grant under this subsection, an eligible entity shall--
       ``(i) establish a list of energy efficiency measures that 
     is expected to decrease energy use or costs of qualified 
     consumers;
       ``(ii) prepare an implementation plan for use of the loan 
     funds; and
       ``(iii) provide for appropriate measurement and 
     verification to ensure the effectiveness of the energy 
     efficiency loans made by the eligible entity and that there 
     is no conflict of interest in the carrying out of this 
     section.
       ``(B) Revision of list of energy efficiency measures.--An 
     eligible entity may update the list required under 
     subparagraph (A)(i) to account for newly available efficiency 
     technologies, subject to the approval of the Secretary.
       ``(C) Existing energy efficiency programs.--An eligible 
     entity that, on or before the date of the enactment of this 
     section or within 60 days after such date, has already 
     established an energy efficiency program for qualified 
     consumers may use an existing list of energy efficiency 
     measures, implementation plan, or measurement and 
     verification system of that program to satisfy the 
     requirements of subparagraph (A) if the Secretary determines 
     the list, plans, or systems are consistent with the purposes 
     of this section.
       ``(3) No interest.--A loan under this subsection shall bear 
     no interest.
       ``(4) Repayment.--A loan under this subsection shall be 
     repaid not more than 10 years from the date on which an 
     advance on the loan is first made to the eligible entity.
       ``(5) Loan fund advances.--The Secretary shall provide 
     eligible entities with a schedule of not more than ten years 
     for advances of loan funds, except that any advance of loan 
     funds to an eligible entity in any single year shall not 
     exceed 50 percent of the approved loan amount.
       ``(6) Jump-start grants.--The Secretary shall make grants 
     available to eligible entities selected to receive a loan 
     under this subsection in order to assist an eligible entity 
     to defray costs, including costs of contractors for equipment 
     and labor, except that no eligible entity may receive a grant 
     amount that is greater than four percent of the loan amount.
       ``(d) Loans to Qualified Consumers.--
       ``(1) Terms of loans.--Loans made by an eligible entity to 
     qualified consumers using loan funds provided by the 
     Secretary under subsection (c)--
       ``(A) may bear interest, not to exceed three percent, to be 
     used for purposes that include establishing a loan loss 
     reserve and to offset personnel and program costs of eligible 
     entities to provide the loans;
       ``(B) shall finance energy efficiency measures for the 
     purpose of decreasing energy usage or costs of the qualified 
     consumer by an amount such that a loan term of not more than 
     ten years will not pose an undue financial burden on the 
     qualified consumer, as determined by the eligible entity;
       ``(C) shall not be used to fund energy efficiency measures 
     made to personal property unless the personal property--
       ``(i) is or becomes attached to real property as a fixture; 
     or
       ``(ii) is a manufactured home;
       ``(D) shall be repaid through charges added to the electric 
     bill of the qualified consumer; and
       ``(E) shall require an energy audit by an eligible entity 
     to determine the impact of proposed energy efficiency 
     measures on the energy costs and consumption of the qualified 
     consumer.
       ``(2) Contractors.--In addition to any other qualified 
     general contractor, eligible entities may serve as general 
     contractors.
       ``(e) Contract for Measurement and Verification, Training, 
     and Technical Assistance.--
       ``(1) Contract required.--Not later than 60 days after the 
     date of enactment of this section, the Secretary shall enter 
     into one or more contracts with a qualified entity for the 
     purposes of--
       ``(A) providing measurement and verification activities, 
     including--
       ``(i) developing and completing a recommended protocol for 
     measurement and verification for the Rural Utilities Service;
       ``(ii) establishing a national measurement and verification 
     committee consisting of representatives of eligible entities 
     to assist the contractor in carrying out this section;
       ``(iii) providing measurement and verification consulting 
     services to eligible entities that receive loans under this 
     section; and
       ``(iv) providing training in measurement and verification; 
     and
       ``(B) developing a program to provide technical assistance 
     and training to the employees of eligible entities to carry 
     out this section.
       ``(2) Use of subcontractors authorized.--A qualified entity 
     that enters into a contract under paragraph (1) may use 
     subcontractors to assist the qualified entity in performing 
     the contract.
       ``(f) Fast Start Demonstration Projects.--
       ``(1) Demonstration projects required.--The Secretary shall 
     enter into agreements with eligible entities (or groups of 
     eligible entities) that have energy efficiency programs 
     described in subsection (c)(2)(C) to establish an energy 
     efficiency loan demonstration projects consistent with the 
     purposes of this section that--
       ``(A) implement approaches to energy audits and investments 
     in energy efficiency measures that yield measurable and 
     predictable savings;
       ``(B) use measurement and verification processes to 
     determine the effectiveness of energy efficiency loans made 
     by eligible entities;
       ``(C) include training for employees of eligible entities, 
     including any contractors of such entities, to implement or 
     oversee the activities described in subparagraphs (A) and 
     (B);
       ``(D) provide for the participation of a majority of 
     eligible entities in a State;
       ``(E) reduce the need for generating capacity;
       ``(F) provide efficiency loans to--
       ``(i) not fewer than 20,000 consumers, in the case of a 
     single eligible entity; or
       ``(ii) not fewer than 80,000 consumers, in the case of a 
     group of eligible entities; and
       ``(G) serve areas where a large percentage of consumers 
     reside--
       ``(i) in manufactured homes; or
       ``(ii) in housing units that are more than 50 years old.
       ``(2) Deadline for implementation.--The agreements required 
     by paragraph (1) shall be entered into not later than 90 days 
     after the date of enactment of this section.
       ``(3) Effect on availability of loans nationally.--Nothing 
     in this subsection shall delay the availability of loans to 
     eligible entities on a national basis beginning not later 
     than 180 days after the date of enactment of this section.
       ``(4) Additional demonstration project authority.--The 
     Secretary may conduct demonstration projects in addition to 
     the project required by paragraph (1). The additional 
     demonstration projects may be carried out without regard to 
     subparagraphs (D), (F), or (G) of paragraph (1).
       ``(g) Additional Authority.--The authority provided in this 
     section is in addition to any authority of the Secretary to 
     offer loans or grants under any other law.
       ``(h) Authorization of Appropriations.--
       ``(1) In general.--There is authorized to be appropriated 
     to the Secretary in fiscal year 2010 $993,000,000 to carry 
     out this section. Notwithstanding paragraph (2), amounts 
     appropriated pursuant to this authorization of appropriations 
     shall remain available until expended.
       ``(2) Amounts for loans, grants, staffing.--Of the amounts 
     appropriated pursuant to the authorization of appropriations 
     in paragraph (1), the Secretary shall make available--
       ``(A) $755,000,000 for the purpose of covering the cost of 
     direct loans to eligible entities under subsection (c) to 
     subsidize gross obligations in the principal amount of not to 
     exceed $4,900,000,000;
       ``(B) $25,000,000 for measurement and verification 
     activities under subsection (e)(1)(A);
       ``(C) $2,000,000 for the contract for training and 
     technical assistance authorized by subsection (e)(1)(B);
       ``(D) $200,000,000 for jump-start grants authorized by 
     subsection (c)(6); and
       ``(E) $1,100,000 for each of fiscal years 2010 through 2019 
     for ten additional employees of the Rural Utilities Service 
     to carry out this section.
       ``(i) Effective Period.--Subject to subsection (h)(1) and 
     except as otherwise provided in this section, the loans, 
     grants, and other expenditures required to be made under this 
     section are authorized to be made during each of fiscal years 
     2010 through 2014.
       ``(j) Regulations.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, not later than 180 days after the date of 
     enactment of this section, the Secretary shall promulgate 
     such regulations as are necessary to implement this section.
       ``(2) Procedure.--The promulgation of the regulations and 
     administration of this section shall be made without regard 
     to--
       ``(A) chapter 35 of title 44, United States Code (commonly 
     known as the `Paperwork Reduction Act'); and
       ``(B) the Statement of Policy of the Secretary of 
     Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), 
     relating to notices of proposed rulemaking and public 
     participation in rulemaking.
       ``(3) Congressional review of agency rulemaking.--In 
     carrying out this section, the Secretary shall use the 
     authority provided under section 808 of title 5, United 
     States Code.
       ``(4) Interim regulations.--Notwithstanding paragraphs (1) 
     and (2), to the extent regulations are necessary to carry out 
     any provision of this section, the Secretary shall implement 
     such regulations through the promulgation of an interim 
     rule.''.
                                 ______
                                 
      By Ms. SNOWE:
  S. 3103. A bill to help small businesses create new jobs and drive 
our Nation's economic recovery; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise this evening to speak to the urgent 
imperative of job creation in our country

[[Page S1365]]

and impress upon my colleagues that if we are serious about assisting 
our Nation's small businesses--the very catalysts that will lead us out 
of the longest and deepest recession since World War II--we cannot 
devolve once again into more delays. To that end, I filed an amendment 
to the tax extenders legislation before this Chamber which included a 
package of six bipartisan, achievable policy reforms designed to 
facilitate an entrepreneurial environment under which our Nation's 
almost 30 million small business firms can create new jobs. I had hoped 
to offer this amendment, which I am introducing today as a freestanding 
bill called the Small Business Job Creation Act, but after talking with 
the majority leader at length last week, I decided to forgo that 
opportunity, as the leader indicated to me personally--and to the 
entire Senate--that he, too, is anxious to address a small business 
jobs bill in the coming weeks.
  Now that we have cleared the tax extenders package today and are 
taking up the long overdue Federal Aviation Administration 
reauthorization legislation, I hope the Senate as well will consider 
the jobs package that will include small business initiatives that are 
so vital and imperative to the well-being of small businesses 
throughout the country and that we can address this issue before the 
Easter recess.
  As ranking member of the Senate Small Business Committee, I want to 
begin by taking a moment to tout the work our committee has 
accomplished in this Congress.
  As one of the most bipartisan panels in the Congress, I appreciate 
the chair, Senator Landrieu, who has built on the foundation of 22 
hearings and roundtables and reported out a series of bipartisan bills 
on topics ranging from access to capital, to exporting, and, just last 
week, small business contracting reform. I truly appreciate Chair 
Landrieu's approach in building a collaboration in the committee on 
these key issues. Most of the provisions I am championing here tonight 
originated from the work we have accomplished together in the committee 
as well.
  When it comes to this jobs agenda, I would have preferred a different 
approach to advancing it--one that was more comprehensive and robust, 
frankly. This kind of piecemeal strategy is not one I would embrace. It 
is not one the New York Times approves of, either, for that matter. In 
fact, an editorial of theirs this week contained the following 
observation:

       [T]he danger is that with stopgap measures boosting the 
     headline job numbers, Congress and the Administration will 
     avoid the heavy lifting that is required to clear away the 
     wreckage of the recession.

  So it is not enough to say jobs, jobs, jobs are the new mantra. They 
must be the new singular mission of this Congress that deserves 
rigorous action, not just in dribs and drabs but as the full-tilt 
agenda of this institution.
  Make no mistake, time is of the essence if we are to assist our 
Nation's small businesses. Nowhere is the test of meeting that 
challenge more immediate than with our Nation's small businesses, which 
at each turn and in every sector are having to struggle, not only at 
their own expense but at the expense of job creation and reversing our 
dire economic downturn.
  Based on what I have heard firsthand from numerous small business 
forums in Maine that I have held, not only this year but last year, 
throughout the entire year of 2009, business owners are desperate for 
relief, and they want answers to the pervasive uncertainty they are 
confronted with on so many levels.
  For example, as indicated on this chart, in an economic climate 
devoid of continuity on tax policy, skyrocketing health care costs, 
onerous regulations, or volatile energy prices, how can small 
businesses expect to hire a new employee, buy additional equipment, 
expand operations, or accurately forecast their operating costs? The 
regrettable fact is, they cannot as long as they remain not just unsure 
but understandably anxious about whether or when Washington will exact 
another tax, levy a new mandate, promulgate another regulation, or 
create more bureaucracy.
  A solid foundational starting point would be enacting the provisions 
in the amendment I filed, many of which I underscored in a letter I 
sent to both the majority leader and the Republican leader. Frankly, 
there is such wide agreement on so many of these ideas. In fact, the 
Small Business Committee has approved many of these provisions 
unanimously, and the President has called for them to be included in a 
jobs package. So I think most people would be shocked to learn that 
they are not already enacted into law.
  Getting back to the original proposition, it is the fact that there 
is uncertainty with respect to the policies that are emanating from 
Washington that creates a lot of anxiety and disenchantment about the 
direction we are taking but more importantly anxiety about their cost 
of doing business. What is it going to do to increase the cost of doing 
business, whether or not they are prepared to hire a new employee or 
make investments in capital and equipment, if they do not know the 
certainty of the propositions that come from Washington that could add 
to their costs of doing business? For example, if the centerpiece of 
any jobs agenda is assisting the best known job creators we have--our 
small businesses--then bringing some certitude to the expensing 
provisions in the Tax Code is unquestionably the place to begin.
  I know the Senate has already enacted this legislation, extending 
what had been part of the stimulus plan to increase expensing 
immediately for small businesses to write off up to $250,000. That 
expired at the end of last year, and we have extended that proposition 
for the remaining 10 months in this year. But then again, it will 
expire. So at that point, in 2011, then small businesses will only be 
able to write off up to $25,000. So that is a $225,000 decline. Exactly 
how does that contribute to greater confidence for small business 
owners? How are they supposed to look to the future in the face of a 
Draconian measure of that magnitude? So, really, it is important to 
extend the small business expensing level of $250,000 not just for 10 
months but at least for 5 years.
  As we see in this chart I am showing in the Chamber this evening, 
between Republicans and Democrats and the administration, they support 
extending small business expensing, they support enacting a zero-
percent capital gains rate for small businesses. So we have bipartisan 
solutions across the board with respect to these initiatives.
  It is also important to make sure there is continuity in these 
policies, which is really the troubling point because it is so 
important to make sure they can look down the road. They might not be 
making a decision within the next 5 or 6 months or 10 months, but it is 
important for them to be able to see down the road beyond the 10 months 
that there is certitude with respect to the policies we are enacting, 
especially regarding tax relief and tax policy--the types of 
initiatives that, frankly, are going to be instrumental in making a 
difference in job creation.
  So we have two initiatives here; that is, extending the small 
business expensing and enacting a zero-percent capital gains rate for 
small businesses, of which I joined with Senator Kerry in introducing 
that legislation. So it is true we can reach an agreement on some 
issues. That is important. And we are moving forward. But we have to 
give more longevity to these tax policies given the severity of the 
downturn, given the severity of the economic situation we face today, 
that it is a jobless recovery. We need to create jobs. If we are going 
to create jobs, then we have to create more permanent tax relief.
  We have seen that with the credit crisis. Why can we not join forces 
and address this stifling credit crunch that is placing a perilous 
choke hold on our economy across the country? Why can we not agree on 
doing something viable and bold to confront such a universally 
acknowledged problem? It remains an unmitigated outrage, frankly, that 
the Federal Reserve's January Senior Loan Officer Opinion Survey found 
the percentage of banks easing credit terms for small businesses was an 
astonishing zero percent--zero percent. The same was true in October, 
the last time they conducted the survey.

  So if you wanted not just to freeze credit but fossilize it, that 
would be the way to do it. This is not a recipe for recovery. After 
all, lending is critical. It is a lifeline to our economy, it is the 
lifeblood, and it is certainly a

[[Page S1366]]

lifeline for small businesses if they are going to be able to have 
jobs, to preserve jobs, or to make investments in the future.
  But here again is another area where we could take immediate action 
right here and now, where we can turn this deplorable trend around 
beginning with boosting the SBA's access to credit. My provisions 
include key lending provisions from the bill I introduced in the Small 
Business Committee with Chair Landrieu which was reported out of our 
committee with a vote of 17 to 1--overwhelmingly bipartisan--to 
increase the maximum limits for the SBA 7(a) program and the 504 loan 
program from $2 million to $5 million, raising the maximum microloan 
limit from $35,000 to $50,000, and allowing for the refinancing of 
conventional small business loans through the SBA 504 program. Now, if 
fully utilized, the loan limit increases would create and retain up to 
an estimated 211,000 jobs.
  I would note that enhancing SBA loans has already paid tremendous 
dividends, as in the stimulus bill, because we included these 
provisions which have been credited with increasing loan volumes by a 
remarkable 86 percent nationwide and in my own State of Maine, 227 
percent. That is all as a result of what we included in the stimulus 
package last year in increasing and expanding the loan volumes under 
these programs. So it obviously is indicative of what can be 
accomplished.
  So with numbers such as these, not to mention the endorsement of 80 
business organizations, it is essential that we give these critical 
programs the ability to grow more small businesses.
  Just as there is much we can do right away domestically, how about 
finally taking action to help our small businesses compete globally? 
Given that fewer than 1 percent of our small businesses export, it is 
all the more vital that we take advantage of this untapped market and 
help those enterprises sell their goods and services to 95 percent of 
the world's customers who live outside our borders.
  In the State of the Union Address, President Obama made clear that we 
must double our exports over the next 5 years, and small businesses are 
a critical component of the administration's strategy and our national 
competitiveness. For this reason, my provisions were included in the 
small business exporting legislation I introduced with Chair Landrieu.
  As this chart reveals, the provisions in the bill--larger SBA export 
loan limits, expanded export technical assistance, and enhanced 
assistance for trade promotion--had bipartisan support. They were 
reported unanimously by our panel and passed unanimously last 
December--unanimously. They have the administration's support. They 
have been endorsed by the U.S. Chamber of Commerce. So we have 
solidarity on this initiative, and for good reason, because it could 
create roughly 36,000 new American jobs in the year after enactment and 
170,000 jobs over the next 5 years. So there is no reason on Earth why 
we cannot move on this bill today.
  Whether we are debating trade or health care, a jobs bill or climate 
change, whatever the issue, it is also time we retool our thinking so 
that in every matter before us we are striving to create a climate in 
which our job creators cannot only survive but thrive. For example, for 
years we have had environmental impact statements. Well, in 2010, it is 
high time we require job impact statements. Consider that in 2009 
alone, there were close to 70,000 pages in the Federal Register, and 
the annual cost of Federal regulations now totals more than $1.1 
trillion, with small firms bearing the brunt.
  There are enough built-in impediments to starting a small business, 
not to mention sustaining one, without the Federal Government 
compounding the problem. That is why I have included language in my 
legislation I introduced last month with Senator Pryor requiring the 
Congressional Budget Office to provide such job impact statements for 
every single major initiative before Congress to evaluate its effect, 
positive and negative, on job creation, job losses, job preservation.
  We didn't stop there. Our bill would also require Federal agencies to 
fully analyze the cost of regulations on small businesses which too 
often undermine and usurp the entrepreneurial spirit that has defined 
every generation of Americans.
  Our bill is strongly supported by groups including the NFIB, the U.S. 
Chamber of Commerce, and the National Small Business Association.
  My provisions include $50 million in funding for the Small Business 
Development Centers which, again, provide critical technical assistance 
and counseling to small businesses at over 1,000 locations nationwide. 
The SBDC program has a proven track record of job creation, and 
according to an annual report by Dr. James Chrisman of Mississippi 
State University, between 2007 and 2008, employment levels of SBDC 
clients have increased 10 percent more than for businesses in general. 
As a result of the additional funding I am pressing for, Dr. Chrisman 
estimates that over 20,000 new jobs would be created, while tens of 
thousands more will be saved.
  Finally, while it is paramount that we move forward with the 
initiatives I have just described, we must simultaneously be mindful of 
their cost. I have also included an offset for this legislation. I do 
happen to think it is important that we provide offsets. I think we 
have to reexamine the stimulus package we enacted last year, much of 
which has been meritorious, much of which has worked, but there are 
other parts of it that have yet to be implemented or expended, and I 
think that is the point.
  The fact is, with a projected $1.6 trillion deficit this year alone, 
it is essential that we look at ways in which we can pay for 
legislation, especially targeted toward job creation, that can be 
accomplished immediately. That is why I am proposing to fully offset 
the cost of my provision with unspent, unobligated funds that we 
appropriated as part of the stimulus.
  I understand some of my colleagues oppose using unobligated stimulus 
funds as an offset, citing Congressional Budget Office data that the 
Recovery Act has added up to 2.1 million jobs and has preserved many 
jobs across this country. At the same time, I also believe it is our 
obligation to continually assess and reassess whether the Recovery Act 
is working because, after all, stimulus is supposed to be timely, 
targeted, and temporary. In two of the three instances it has not met 
those goals. In fact, as we have noted in this following chart, just 
$288 billion of the $787 billion that was enacted last February--only 
37 percent of the total--has actually been spent. When you consider 
just the $275 billion of the stimulus's appropriated funding for 
expenditures such as contracts, grants, and loans, just $81.6 billion, 
or 30 percent, has been paid out.
  That is where I think we need to reassess the three critical criteria 
of timely, targeted, and temporary. Obviously, for timeliness and being 
targeted, we have not met those goals. That is why I think we should 
redirect some of these stimulus funds to other purposes that are more 
effective, more immediate to do the job.
  That is where our small businesses enter the equation, with these 
initiatives I have identified that are absolutely paramount to helping 
small businesses to create jobs across this country. After all, we are 
depending on small businesses to lead us out of this economic downturn. 
They have been the job generators in the past. They have created two-
thirds of all the net new jobs in America.
  We need to create millions and millions of jobs. We have 100,000 new 
entrants in the market every month, so we have to move expeditiously. 
That is the point here tonight.
  I have an array of initiatives that are very critical and vital to 
small business and job generation. One, we have to do it immediately. 
Two, we have to be focused and we have to provide continuity of policy 
and certainty so that small businesses can look down the road and see 
what types of policies are emanating from Washington, DC.
  As I said to the Secretary of the Treasury recently, would you take a 
risk in making investments today? Would you take a risk knowing what 
you are hearing in Washington? Since we will see more costs as a result 
of potential health care legislation, adding more costs to small 
businesses--and there is no question that with the Medicare payroll tax 
that is embedded in that legislation, that really is another hidden 
tax, just as the alternative minimum tax. It will raise taxes

[[Page S1367]]

62 percent, and it is not indexed for inflation. So we know what the 
exponential growth in that tax will become for small businesses. That 
is an example. Ten months does not make a policy of certainty with 
respect to tax relief.
  We need to provide continuity of that policy with respect to tax 
relief, and small business expensing is certainly part of it. We can 
expand the loan limits under the SBA's programs, and 7(a) and 504 
already demonstrated they can work. They did work in the year in which 
we expanded those programs. It has been demonstrated nationwide and 
certainly conclusively in my State. So why not move expeditiously to 
address those issues?
  Finally, we can pay for it. We can redirect the stimulus. I think 
that is the most conservative, effective approach to paying for this 
legislation because, after all, if we have only spent 30 percent of the 
appropriated funds under stimulus and only 37 percent overall of the 
stimulus, we may not even spend $600 billion at the end of this year; 
we need to spend it now. That is the point, is spending it now. What 
are we waiting for?
  There is no question that there is a sense of despair across the 
landscape in looking at the unemployment numbers. We are not creating 
jobs; we are losing jobs every month. Albeit it has improved in terms 
of the number of jobs lost, the fact is, we need to create millions and 
millions of jobs in addition to offsetting the new entrants into the 
market every month. We have a 9.7-percent unemployment rate. That means 
we have to get to work, and the only way we can do that is helping 
small businesses, and the only way we can do that is to put these 
initiatives to work before the Easter recess. Let's not delay and 
defer. We have time to do it now. It has broad unanimous support in the 
Small Business Committee. There is no reason we cannot accomplish this 
goal now.
  I appreciate the majority leader's indication and commitment that he 
will bring a small business package to the floor. I urge the leader and 
I urge all Members of the Senate to support doing that before the 
Easter recess because we need to adopt it now, not months from now, 
because people depend on these jobs. There is uncertainty, and people 
are looking on their Main Streets in their communities, and what are 
they seeing is trouble. They are wondering whether the hardware store 
is going to stay open, or the barbershop. That creates either certainty 
or uncertainty; that is what creates either despair or hope.
  So I hope we would move and that we would move with a sense of 
urgency with respect to small businesses. If we are depending on them, 
then we have to get to work now. There is no reason, no rationale, no 
excuse for not taking action in this Chamber in this Congress that can 
be signed by the President and that we can move forward on. So we 
should strive with every fiber of our beings to help these longtime 
beacons of our economy, which is going to give hope to all Americans. 
What they deserve is to see action that will create the kind of 
certainty, give them the kinds of resources that they deserve, and do 
it in a fiscally responsible manner.

                          ____________________