[Congressional Record Volume 157, Number 110 (Thursday, July 21, 2011)]
[Senate]
[Pages S4743-S4751]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          CUT, CAP, AND BALANCE ACT OF 2011--MOTION TO PROCEED

  Mr. REID. Mr. President, I now move to proceed to Calendar No. 106, 
H.R. 2560.
  The ACTING PRESIDENT pro tempore. The clerk will report the bill by 
title.
  The bill clerk read as follows:

       A motion to proceed to the consideration of Calendar No. 
     106, H.R. 2560, an act to cut, cap, and balance the Federal 
     budget.

  The ACTING PRESIDENT pro tempore. Under the previous order, the time 
until 2 p.m. will be equally divided and controlled by the two leaders 
or their designees, with Senators permitted to speak therein for a 
period of up to 10 minutes each, with the Republicans controlling the 
first 30 minutes and the majority controlling the next 30 minutes.
  The Senator from South Dakota is recognized.
  Mr. THUNE. Mr. President, I rise today to speak to the issue the 
Senate is going to be considering for the next couple of days and 
ultimately voting on, it sounds like, possibly sometime on Saturday; 
that is, the cut, cap, and balance proposal that has been put forward 
by the House of Representatives.
  The House passed this particular proposal the night before last. It 
is now pending under consideration in the Senate. What I would suggest 
to my colleagues in the Senate is this: It is the only proposal out 
there. It is the only plan we have to vote on.
  It has now been about 813 days--I think is the correct number of 
days--since a budget was passed in the Senate. The Democratic majority 
has not submitted one for consideration here. We have not had votes on 
a budget. We have been operating without a budget. There is no plan.
  The House of Representatives passed a budget earlier this year. It 
was criticized by many people here--Democrats--as being something they 
didn't want to support. There wasn't an alternative put forward by the 
Senate Democrats or by the President. The President did put a budget 
forward in his annual budget release earlier this year, but the Senate 
voted it down 97 to 0. There wasn't a single Member, Republican or 
Democrat, who voted in favor of the President's budget proposal. Why? 
Because it would have raised spending, raised the debt--almost doubled 
the debt over the next 10 years, and it would have increased taxes by 
over $1 trillion.
  Overall, I don't think those are the elements you want to be in a 
budget. You want to reduce spending and put a plan into place that 
starts getting a trajectory in place that starts reducing the amount of 
debt we have. You certainly don't want to raise taxes in an economic 
downturn, when you are dealing with 9.2 percent unemployment. That is 
the only budget submission we have seen from the President.
  As I said, there has not been anything in the context of the debt 
limit debate put forward by the Democrats in the Senate or by the 
President. The only proposal we have in front of us is the Cut, Cap, 
and Balance proposal passed by the House of Representatives. You can 
say the House arguably has done its work. They have put forward a plan 
that we need to act on.
  To suggest for a minute that there isn't an alternative, that the 
Republicans are being unreasonable in all this, I think completely 
misses the point, because that is the only plan out there. If you don't 
like that one, where is your budget? We have had 813 days without a 
budget. We don't have a plan to deal with the debt limit. What we have 
to vote on and consider and debate today is the Cut, Cap, and Balance 
proposal.
  That is significant for a number of reasons. One, I believe the way 
to deal with the crisis we have in this country today--a debt crisis 
that gets worse by the day--is to get spending under control. I believe 
fundamentally that the problem we have in this country is not a 
question of not enough revenue, it is a question of too much spending. 
The government has gotten too big, has grown too fast. It is spinning 
out of control, in the minds of most Americans. They want to see us 
rein it in and get government spending and debt under control.
  Yesterday, I read this on the floor, but I want to read it again. 
Ironically, it is a letter I got from a Boy Scout in South Dakota who 
is earning his merit badge. He wrote me a letter and said this:

       I feel that the Federal Government needs a balanced budget. 
     If we don't, the debt gets larger each year. I feel that 
     there are two solutions for this. In our house, we are 
     careful to only spend what my mom and dad earn. That needs 
     come first and what is left is for wants. Many times we were 
     told no when we ask for something. With my allowance and lawn 
     mowing money, I divide it between donations, saving, and 
     spending. I can't spend more than I make.

  I think there are a couple of very powerful observations in this 
statement. The first is, obviously, it is not lost even on this young 
American how important it is to live within your means, and that you 
cannot spend money you don't have. That is clearly a lesson he has 
already learned. We need to learn that in Washington, DC.
  Second is how profoundly this issue impacts the next generation. If, 
in fact, we fail to act to get spending and debt under control and to 
put us on a sustainable fiscal course, the next generation is going to 
pay a powerful price for our irresponsibility.
  I submit again to my colleagues this is fundamentally a spending 
issue. A lot of folks talk about the need for more revenue. The 
President talks about wanting more revenue. The majority leader just 
said the House is out of town and how that is terrible because revenue 
measures have to originate in the House. Many of us believe this can be 
solved without more revenue, that we don't have to raise taxes on the 
American people or American small businesses to solve what is 
inherently and fundamentally a spending problem.
  If we want to balance the budget, we have to get spending under 
control. Five times since 1969 the budget was balanced in this country. 
In each case, the average amount we spent was just under 18.7 percent 
of our GDP, so that is kind of the benchmark for the five times in our 
history since 1969 when the budget has been balanced. The 40-year 
average of spending to GDP in this country is 20.6 percent. That is the 
40-year average. The five times we balanced the budget, it was 18.7 
percent of GDP. This year, we are spending 24.3 percent of GDP. If you 
look at the President's budget--and even what are, in my view, 
optimistic assumptions about economic growth--you are still looking at 
that sort of a course for the foreseeable future. With what I think are 
going to be the exploding costs of the health care bill that was passed 
last year, it could be much higher than that.
  My point is this: If you can balance your budget at 18.7 percent 
Federal spending as a percentage of GDP, and we are spending at 24.3 
percent this year, we are 30 percent higher in terms of what we spend 
than those times in which we were able to balance the budget. If you 
are talking about balancing the budget, it means getting spending under 
control, reining in out-of-control Washington spending.
  For a long time, I have believed that we need not only what is 
proposed in the Cut, Cap, and Balance bill, in terms of an immediate 
reduction in spending, caps on spending in the future years, but also a 
balanced budget amendment to the Constitution. That is something I have 
campaigned on my entire political career. I believe it is necessary.
  Washington has not demonstrated in the past the political courage 
that is necessary to get spending under control. The consequence of 
that is we now have a Federal debt that is over $14 trillion, and we 
are actually talking about raising the borrowing authority of this 
country simply because we get further and further into debt every year. 
We are running $1 trillion deficits, and at that rate you are obviously 
going to continue to accumulate enormous amounts of debt. It means 
getting your budget balanced. We don't do that around here. Most 
States--49 of them--have some form of a balanced budget amendment that 
requires them to make sure their spending doesn't exceed the amount of 
revenue they have coming in. I think that is needed.
  When I first got to the Congress as a freshman Congressman in 1997, 
there was a vote in the Senate on a balanced budget amendment. It 
failed by one

[[Page S4744]]

vote. It needs two-thirds votes in the House and Senate, and then has 
to be sent to the States for ratification. If 38 States ratify, it 
would be added to the Constitution. We would have a requirement that 
the Federal Government balance its budget as so many States have to do 
every single year. Well, that vote in the Senate in 1997 failed by 1 
vote. It got 66 votes in the Senate, which is 1 short of the 67 
necessary to send it on to the House. At that time, I was a Member of 
the House of Representatives, and had the Senate passed it and sent it 
to the House, I believe we would have gotten a two-thirds majority in 
the House and been able to send it to the States.
  What has happened in the last 15 years? At that time, the accumulated 
debt was $5 trillion. Today, it is $14 trillion. We have seen a $9 
trillion increase in the amount of debt. I can't help but think that 
had we had a balanced budget amendment in place, we would be much 
better off today.
  The cut, cap, and balance approach strikes at the very heart of the 
issue, which is that this is fundamentally a spending issue that needs 
to be addressed in the near term by cutting spending, capping spending 
in future years, and putting in place the mechanism that requires 
Congress to have the discipline to balance the budget for future 
generations. I hope we will get an affirmative vote when the time 
comes, and that my colleagues will support the measure I think will get 
this country back on a sustainable fiscal track and create prosperity 
for this generation and future generations, as well.
  I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CONRAD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. CONRAD. Mr. President, I rise today to discuss the legislation 
that has come over from the House of Representatives which, I must say, 
I consider to be some of the most ill-considered legislation I have 
ever seen come over from the other body. This legislation has been 
hastily thrown together, has never had a hearing, and yet proposes to 
amend the Constitution of the United States in dramatic and draconian 
ways. This is truly dangerous business.
  I have been a part of the fiscal commission, and I was part of the 
majority that supported its conclusions to reduce our debt from what it 
would otherwise be by $4 trillion. Eleven of us supported that plan--
five Democrats, five Republicans, and one Independent. I have been a 
part of the Group of 6--three Democrats and three Republicans--and we 
have released our plan to reduce the debt from what it would otherwise 
be by $3.7 trillion. I have been part of putting out the Democratic 
Senate Budget Committee plan, and I am proud to say it would reduce the 
debt from what it would otherwise be by $4 trillion.
  In my entire career, 25 years in the Senate, I have consistently 
spoken of the dangers of deficits and debt and the risk of the debt 
threat to our country. I believe passionately that we have to find a 
way to come together to reduce the danger of these runaway debts. But 
this legislation that has come over from the House cannot be the 
answer. It is not bipartisan. In fact, it is superpartisan. It is 
totally done on one side of the ledger. It will not pass, it will not 
become law, and it should not.
  Now, let's understand the context within which we are operating. 
First of all, as a country, we are borrowing 41 cents of every dollar 
we spend. Our gross debt is now 100 percent of our gross domestic 
product. The best economists in the country have warned us that once we 
get to a debt that is more than 90 percent of our gross domestic 
product, our future economic prospects are in danger. Future economic 
growth is reduced. That is why I have been deeply involved in every 
serious bipartisan attempt to reduce deficits and debt.
  This proposal that has come over from the House--not having had a 
single hearing in this body, not one--is truly radical. Again, I say to 
my colleagues, we have an urgent need to act, but we shouldn't panic. 
Unfortunately, I think that is what the House did when they sent us 
this half-baked concoction of ideas that don't hold together, that 
don't add up, and that would actually further threaten the economic 
recovery.
  There is no denying we face a debt threat. This is what the Chairman 
of the Joint Chiefs of Staff said in June of last year:

       Our national debt is our biggest national security threat.

  Now we have had the rating agencies warn us that if we don't act, if 
we don't get our debt and deficits under control, they are going to 
downgrade the rating of U.S. debt--the rating of how the markets 
respond to our debt offerings. That would have a very serious impact on 
what we pay to borrow money. Remember, for every 1 percent increase in 
the interest rates we pay, it adds $1.3 trillion to the debt.
  Here is what one rating agency has said:

       We may lower the long-term rating on the U.S. by one or 
     more notches into the AA category in the next 3 months, if we 
     conclude that Congress and the administration have not 
     achieved a credible solution to the rising U.S. Government 
     debt burden and are not likely to achieve one in the 
     foreseeable future.

  That is why I joined the Gang of 6 some 6 months ago, to produce a 
bipartisan plan to deal with the debt threat. And we have released that 
plan now--three Democrats, three Republicans. Many more of our 
colleagues on both sides have joined and said they are with us. So we 
have a way forward, but it is certainly not the legislation that has 
come over from the House of Representatives that we are considering 
today.
  The House legislation would restrict the ability to respond to 
economic downturns and actually compound declines. It uses Social 
Security funds to calculate balance and subjects that program to the 
same cuts as other Federal spending, even though we all understand that 
is totally separate from the rest of the budget. It shifts ultimate 
decisions on budgeting to unelected and unaccountable judges. What a 
mistake that would be. It requires a State ratification process that 
could take years to complete.
  We don't have years to deal with this problem. I am afraid the House 
legislation is mostly political theater that has been sent to us rather 
than a serious response to the problem. But perhaps most alarming, the 
proposal before us could turn a recession into a depression. We need to 
think very carefully how we respond to this debt threat, and then we 
need to react in a serious and credible way, and we have to stand 
together with our colleagues.
  That is why I was proud to be a part of the fiscal commission, 
because we produced a plan that would get our debt under control and 
start reducing it. There were 11 of us--five Democrats, five 
Republicans, and one Independent--and a majority of that commission 
agreed to that plan. It is why I have been proud to be part of the Gang 
of 6 in the Senate--three Democrats, three Republicans. We have 
produced a plan to control our debt and to begin to work it down. None 
of those plans, and none of the other bipartisan plans, would risk 
turning a recession into a depression. But that is exactly what the 
legislation from the House would do.
  Now, why do I say that? Well, here is one of the most respected 
scholars in this town. He is from the American Enterprise Institute. He 
called the balanced budget amendment that has come from the House a 
really dumb idea. This is what he said:

       Few ideas are more seductive on the surface and more 
     destructive in reality than a balanced budget amendment. Here 
     is why: Nearly all our states have balanced budget 
     requirements. That means when the economy slows, states are 
     forced to raise taxes or slash spending at just the wrong 
     time, providing a fiscal drag when what is needed is 
     countercyclical policy to stimulate the economy. In fact, the 
     fiscal drag from the states in 2009-2010 was barely countered 
     by the Federal stimulus plan. That meant the Federal stimulus 
     provided was nowhere near what was needed but far better than 
     doing nothing.

  Now imagine that scenario with a Federal drag instead. Mr. Ornstein 
doesn't just imagine that, the Washington Post, in an editorial from 
last Friday, said:


[[Page S4745]]


       Rewriting the Constitution is the wrong way to deal with 
     the debt.

  Let me just reference, from their second column, these words:

       Worse yet, the latest version would impose an absolute cap 
     on spending as a share of the economy. It would prevent 
     Federal expenditures from exceeding 18 percent of the gross 
     domestic product in any year. Most unfortunately, the 
     amendment lacks a clause letting the government exceed that 
     limit to strengthen a struggling economy. No matter how shaky 
     the state of the union, policymakers would be prevented from 
     adopting emergency spending, such as the extension of 
     unemployment insurance and other countercyclical expenses 
     that have helped cushion the blow of the current economic 
     downturn.

  Two of the most distinguished economists in our country, Alan 
Blinder, the former Deputy Chairman of the Federal Reserve, and Mark 
Zandi, who was an adviser to John McCain's Presidential campaign, 
studied the government response to the latest financial crisis. Here is 
what they concluded:

       We find that its effects on real GDP, jobs, and inflation 
     are huge, and probably averted what could have been called 
     Great Depression 2.0.

  This amendment before us would have stopped the governmental 
response, which two of the Nation's most distinguished economists tell 
us averted Great Depression 2.0. Quoting further from the article:

       When all is said and done, the financial and fiscal 
     policies will have cost taxpayers a substantial sum, but not 
     nearly as much as most had feared and not nearly as much as 
     if policymakers had not acted at all. If the comprehensive 
     policy responses saved the economy from another depression, 
     as we estimate, they were well worth their cost.

  This amendment that is before us now would have prevented this 
response and would have prevented averting a Great Depression.
  Here is the work of Zandi and Blinder with respect to what would have 
happened to jobs absent the Federal response. Jobs with the Federal 
response, the green line; jobs without the Federal response, the red 
line: 8 million fewer jobs without the Federal response to prevent a 
depression. Unemployment, what would have happened without the Federal 
response, according to this detailed study by Zandi and Blinder: 
Without the Federal response, unemployment today would be about 16 
percent instead of the 9 percent we are experiencing. We would be in a 
depression. That is the hard reality. The amendment before us would 
have prevented that kind of governmental response.
  They call this plan cut, cap, and balance. They should have called it 
cut, cap, and kill Medicare, because that is what this plan would do; 
it would cut, cap, and kill Medicare.
  Why do I say that? Well, if we look at the House budget proposal that 
underlies this plan, we see what happens under traditional Medicare. 
Under traditional Medicare, the beneficiaries would pay 25 percent of 
their expenses. Under the Republican budget plan that underlies the 
amendment that has come before us, Medicare beneficiaries would pay 68 
percent of the expenses of their health care. In other words, somebody 
who is Medicare eligible, qualifies for the program, pays their 
required costs, pays their required copays, pays their required 
premiums, pays 25 percent of the cost under the plan. With the 
Republican plan from the House, that would increase to 68 percent. That 
stands Medicare on its head. Instead of Medicare, as normal insurance 
does, paying the lion's share, individuals would pay the lion's share 
of their health care expenses.
  The underlying House Republican plan that underlies this amendment 
would increase the out-of-pocket costs to a Medicare beneficiary from 
$6,000 to $12,500. That would be health spending for a typical 65-year-
old Medicare beneficiary in 2022. Instead of paying $6,000 under 
current law, they would pay $12,500.
  Somebody who has been following the details will look at these 
numbers and say, Well, Senator Conrad, what you have outlined there is 
the House Republican plan. And what has been sent you in an amendment 
actually is even more draconian than the House Republican plan. It goes 
even further. It cuts Medicare even more. And, yes, that is true. I 
have understated very substantially the devastation that would be done 
to Medicare under the amendments before us. But how can that be? Well, 
here is how it can be.
  The red line shows the spending under the House GOP budget. But in 
this amendment, in this legislation that has come to us, not only did 
they adopt the House Republican budget, they then trump it. They then 
override it with a constitutional amendment that goes even further.
  Here is the spending under the House Republican plan. It goes from 24 
percent of GDP down to 19.9. Then it is leapfrogged by the provisions 
of the constitutional amendment that would take spending down to 18 
percent of GDP. From 24.1 to 18, that is a 25-percent cut if you took 
the cut across the board.
  But their plan doesn't take the cut across the board. It shields 
certain things. So the cuts to those things that aren't shielded have 
to be more draconian and even deeper.
  Visually I thought I should produce a chart that shows what would 
happen if you had to reach the limit that is in the constitutional 
amendment that is before this body today.
  With an 18-percent cap on all gross domestic product spending, here 
is Social Security. That is 5 percent of gross domestic product. 
Defense and other nonhealth spending, as you can see, takes you well 
over 15 percent. Then you have interest, and you are at their cap. 
There is no money for Medicare. There is no money for Medicaid. There 
is no money for any of the other health care accounts. If they hold 
harmless Social Security, defense and other nonhealth spending, and of 
course we have got to pay interest on the debt, there is nothing left 
over. That is why I call this cut, cap, and kill Medicare. I should 
have added cut, cap, and kill Medicaid. Cut, cap, and kill every other 
health care account.
  This plan caps spending going forward at draconian and unrealistic 
levels. It fails to account for the retirement of the baby boom 
generation and rising health care costs. Perhaps more remarkable, it 
provides no war funding for 2013 to 2021. Nothing.
  Let me repeat that. This plan that has come over from the House is so 
ill-considered, so hastily thrown together, so lacking in credibility 
that they provide for no war funding after 2013. Does that mean they 
are advocating bringing all the troops home from every location 
everywhere around the world? Well, I am certain not, because that is 
not the position they have taken. But they don't provide any money for 
it.
  I don't know who slapped this thing together, but they weren't very 
careful in what they did. None of it adds up. It is totally make-
believe.
  This is not make-believe. This is what is going to happen to the 
number of people who are eligible for Medicare and Social Security 
running up to 2050: The number of people eligible is almost going to 
double. That is a demographic tidal wave that is a reality. It is not a 
projection. These people have been born. They are alive today. They are 
going to retire. They are going to be eligible. This amendment before 
us makes no provision for them.
  So what is going to happen? They are going to shred Medicare, they 
are going to shred Medicaid, and they are going to put at risk Social 
Security. That is as clear as it can be.
  Here is the reality we confront today as a nation. Spending as a 
share of GDP is the highest it has been in 60 years, but revenue as a 
share of GDP is the lowest it has been in 60 years. Both of these are 
facts, both of these are true. Our friends on the other side are saying 
you cannot touch the revenue side of the equation, even if it is 
closing tax havens, going after abusive tax shelters, going after tax 
scams that proliferate the Tax Code today. They say, Oh, no, you can't 
touch that; you can't make any changes on the revenue side of the 
equation, even though the revenue is the lowest it has been in 60 years 
as a share of our national income. They say it would take a two-thirds 
vote, and they would put it in the Constitution of the United States 
that they would require a two-thirds vote to close any tax haven, any 
tax shelter, any abusive tax scam would take a two-thirds vote.
  That is not what I learned when I was growing up about the 
Constitution of the United States. It didn't say anything about 
protecting those who engage in tax scams and tax havens and abusive tax 
shelters. But that is what this plan would do.
  The Washington Post back in May did an analysis: How did we get into

[[Page S4746]]

this ditch we are in of runaway debt and runaway deficits? How did we 
get into this position? Their conclusion after this study was that:

       The biggest culprit by far has been an erosion of tax 
     revenue triggered largely by two recessions and multiple 
     rounds of tax cuts. Together, the economy and tax bills 
     enacted under former President George W. Bush, and to a 
     lesser extent by President Obama, wiped out $6.3 trillion in 
     anticipated revenue. That is nearly half of the $12.7 
     trillion swing from projected surpluses to real debt. Federal 
     tax collections now stand at their lowest level as a 
     percentage of the economy in 60 years.

  This amendment before us would require a two-thirds vote to do 
anything about it? Let's get serious.
  As I say, I have been part of every serious bipartisan effort here 
over the last 2 years to come up with a plan, to get our debt under 
control. So, yes, cut spending; yes, reform entitlements; yes, get the 
revenue base recovered so we can reduce our debt. But this plan before 
us is a disaster.
  Let's look at reality. The last five times the budget has been in 
surplus in the last 40 years, revenue has been close to 20 percent of 
GDP. This plan would require a two-thirds vote to increase any revenue. 
Revenue is at 14.8 percent of GDP. Wow. You talk about consigning this 
country to an endless round of economic uncertainty and an undermining 
of the economic position of the United States, vote for this thing.
  Martin Feldstein, who is one of the most conservative economists in 
the country, has said we have got to take on these tax expenditures. 
Tax expenditures now amount to $1.1 trillion a year. We are spending 
more through the Tax Code than we are in all appropriated spending 
every year, and yet this amendment would require a two-thirds vote to 
change any of those tax expenditures, to close any of the tax 
loopholes, to go after any of the tax havens and abusive tax shelters.
  Here is Martin Feldstein, Professor of Economics at Harvard, Chairman 
of the Council of Economic Advisers under President Reagan. This is 
what he said:

       Cutting tax expenditures is really the best way to reduce 
     government spending. Eliminating tax expenditures does not 
     increase marginal tax rates or reduce the reward for saving, 
     investment or risk-taking. It would also increase overall 
     economic efficiency by removing incentives that distort 
     private spending decisions. And eliminating or consolidating 
     the large number of overlapping tax-based subsidies would 
     also greatly simplify tax filing. In short, cutting tax 
     expenditures is not at all like other ways of raising 
     revenue.

  Interestingly enough, every bipartisan commission has come back and 
said, as one part of dealing with our deficits and debt, we ought to 
reduce tax expenditures. It is spending by another name. But do you 
know what. The legislation before us would require a two-thirds vote to 
change any of these tax expenditures because it raises revenue. It 
raises revenue, so they are against that.
  Here is where the tax expenditures go. The top 1 percent get 26 
percent of the value of tax expenditures. These loopholes that have 
proliferated have gone to the very top. We are going to have to reform 
this Tax Code, take out the junk, and at the same time we are going to 
have to go after these offshore tax havens and tax shelters that some 
of the very best off among us, the most fortunate, are using to dodge 
what they legitimately owe in this country.
  They call this legislation cut, cap, and balance. They should have 
called it preserve, protect, and defend tax havens and tax shelters 
because that is, in effect, what it would do. They say if we go after 
these tax havens and these tax shelters that is a tax increase. That 
increases revenue; therefore, it should take a two-thirds vote to do 
anything about it.
  Let me say to my colleagues, this is a little five-story building 
down in the Cayman Islands. It claims to be home to 18,857 companies. 
They all say they are doing business out of this little building. This 
is the most efficient building in the world. It is unbelievable: 18,857 
companies say they are doing business out of this little building. That 
is a remarkable accomplishment, to be running 18,000 businesses out of 
this little building. How can that possibly be?
  Of course it is not. The only thing they are running down there is a 
giant tax scam on all the rest of us who pay what we owe. By the way, 
it has no taxes that apply to these businesses. We are not down in the 
Cayman Islands. We are right here. We are filing our taxes, and we are 
paying them. These companies are dodging theirs. If anybody doubts that 
this has become a huge hemorrhage for the U.S. Treasury, here is what 
our own Permanent Subcommittee on Investigations has found:

       Experts have estimated that the total loss to the Treasury 
     from offshore tax evasion alone approaches $100 billion per 
     year, including $40 billion to $70 billion from individuals 
     and another $30 billion from corporations engaging in 
     offshore tax evasion. Abusive tax shelters add tens of 
     billions of dollars more.

  Before we raise taxes one thin dime on any of the rest of us who are 
paying our taxes, let's go after these folks who are dodging their 
responsibilities and their obligations. This amendment before us would 
require a two-thirds vote to do it.
  That is not the end of it. Here is what happened to the tax rates of 
the most wealthy 400 families in the United States, their effective tax 
rates since 1995. In 1995 their effective tax rate was 29.9 percent. By 
2007 it was down to 16.6 percent. The wealthiest among us have had 
their tax rates about cut in half. I don't know about you, but I didn't 
have my taxes cut in half. The vast majority of Americans did not have 
their taxes cut in half. But with the help of well-placed lobbyists 
here, those who are the most fortunate have had their effective tax 
rates cut in half.
  This amendment before us would say it would take a two-thirds vote to 
change that. That is why I say this amendment should be called 
preserve, protect, and defend tax havens and abusive tax shelters.
  The last time the top rate was 39.6 percent we experienced the 
longest period of uninterrupted economic growth in U.S. history. Those 
who say if we raise any revenue we kill jobs--really? That is not what 
history shows. The last time we had a comprehensive plan to cut 
spending and raise revenue to reduce the debt--during the Clinton 
administration--we kicked off the longest period of uninterrupted 
economic growth in U.S. history: 39 straight quarters of economic 
growth, 32 of those quarters during the Clinton administration, and 24 
million jobs were created.
  Dealing with the deficit and the debt in a balanced and comprehensive 
way does not kill jobs. It creates the climate for the creation of jobs 
because it improves the competitive position of the United States.
  I have been part of three plans to reduce this debt from what it 
would otherwise be by $4 trillion. The fiscal commission plan--I 
served, 11 of us, 5 Democrats, 5 Republicans and 1 Independent endorsed 
that outcome. I was part of the Group of 6, 3 Democrats and 3 
Republicans.
  We produced a plan to reduce the deficit and debt from what it would 
otherwise be by $3.7 trillion. I was part of the Democrats on the 
Senate Budget Committee that unveiled a plan to reduce deficits and 
debt from what they otherwise would be by $4 trillion. So I have been 
happy to be part of bipartisan efforts, efforts just on our side of the 
aisle, and interestingly enough every single commission has come up 
with a package of about $4 trillion in deficit savings.
  I think the Group of 6 did yeoman's work, bringing the deficit down 
from 9.3 percent of GDP, down to 1.9. Yes, we have revenue; yes, we 
have spending cuts; yes, we reform entitlement programs--because all of 
that is necessary. This legislation before us says: Whoa, wait a 
minute. We don't want to do it all. We want to focus on just part of 
it. This problem is too big to try to solve it with just part of the 
Federal fiscal picture. It is going to take all parts to solve this 
problem.
  The Group of 6, I am proud to say, came up with a plan that 
stabilizes this debt and begins to bring it down, avoiding this 
skyrocketing debt we are otherwise going to experience. This 
legislation before us would stop it in its tracks. I think that would 
be a profound mistake.
  I hope my colleagues reject this ill-considered plan.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Texas is 
recognized.
  Mrs. HUTCHISON. Mr. President, I rise to speak in favor of the plan 
that

[[Page S4747]]

is before us, the Cut, Cap, and Balance Act. I also think there are 
some very important achievements in the Group of 6 proposal. It is a 
proposal. It is not legislative language. It has many things in it that 
are very good. It has tax cuts, it has entitlement reform, it has 
spending cuts. It is a complicated outline and one that needs to be 
fleshed out to know exactly what is in it, and it has some areas with 
which I disagree. I certainly want to assure that we keep the 15-
percent capital gains and dividends rate. But we also have another 
proposal that I think has great merit.
  I think the bill that has come over from the House, the Cut, Cap, and 
Balance Act, puts even more together on the issues that we are all 
trying to address. What we need are spending cuts that are real, not 
proposed down the road or promised. That is what the Cut, Cap, and 
Balance Act will do.
  We all know we have a $14.3 trillion debt ceiling that is getting 
ready to be hit sometime in the month of August. What we need to do--in 
this Senate, in the Congress, and, certainly, hopefully, the 
President--is give confidence to the markets. That means we do two 
things: We raise the debt ceiling. We don't default or even scare 
people that we are going to default, with reforms that will assure that 
we will not ever have to do it again. That is what we must do to send a 
message to the markets that we are going to get our fiscal house in 
order, and we are going to assure that our debts are paid, that the 
people who work on Federal contracts and our military and Social 
Security recipients will get their paychecks. We have to assure the 
market. To raise the debt ceiling we have to show we are going to cut 
back on spending. That is the key.
  We have to tackle the core problem. We have to stop spending too 
much, borrowing too much, and taxing too much. We do not have a taxing 
problem in this country, we have a spending problem. We are not being 
taxed too little, we are spending too much.
  With $2.2 trillion in tax revenue collected, the Federal Government 
has the ability to live within its means. We must prioritize and we 
must make sure we get a private sector economy that will hire people.
  I can tell you, small businesses are not hiring because they are 
terrified of the health care bill that was passed last year. They are 
terrified of the costs involved. Second, they are looking at people in 
Washington talking about more taxes, and they are saying: I am freezing 
right now. I am not going to take a chance that I am going to hire a 
new employee who is going to cost more than the productivity we can add 
to our business and keep going.
  The cut, cap, and balance bill would make significant spending cuts 
now. It also requires the passage of a balanced budget amendment to the 
Constitution. It takes a two-thirds vote of both Houses to do that, but 
we need to do it. We need to put the Federal Government on the same 
kind of fiscal constraint that almost every State in our Nation has; 
that is, a constitutional requirement that we have a balanced budget, 
that we do not borrow for operational expenses.
  We can borrow for long-term projects, bonds--absolutely. But we are 
not going to borrow for our immediate needs. That is what kills the 
governments that overspend, of which the U.S. Federal Government is 
one. We need to have the balanced budget amendment that is in this bill 
passed, knowing that it is not going to be an immediate fix because the 
States would have to ratify it.
  More than half the States will have to ratify a constitutional 
amendment. In that constitutional amendment we have an 18 percent of 
gross domestic product cap on Federal spending because that will put 
our fiscal house in order. We know that is long term. Certainly, we 
want to get started on that long-term constitutional amendment fix 
because once we do it and once the States ratify it--and I believe they 
will--then we will have the ability to assure future generations that 
we will never be in the fix we are in now.
  Today the Federal Government is spending 24 percent of GDP. The 40-
year average is 20.6 percent. We have about a 3-percent increase in the 
Federal spending level that is juxtaposed against a gross domestic 
product. If we put a spending cap of 18 percent in a constitutional 
amendment, we will have time to start drawing that down so it will not 
be an immediate hit. In fact, the bill that is before us has a gradual 
decrease in the caps on spending. We have the constitutional amendment 
part, that is the balance part.
  We also have a cap in the bill that is before us. It is not an 
immediate cut, 18 percent, but it does ratchet down: 21.7 percent in 
the year 2013, 20.8 percent in 2014, and so forth until we get to 2021 
which would have a 19.9-percent spending cap as a percentage of gross 
domestic product. It is a gradual cut between 2013 and 2021, in the cap 
on Federal spending. I think that is a responsible approach, and that 
is why I am fully supporting this bill. That is the cap part. We have 
the cut part that is real cuts. We have the cap part that puts the lid 
on spending going forward, and then we have the balanced budget part, 
which goes to the States and goes through our constitutional process to 
put us in the same situation most States are in; that is, with 
constitutional provisions that they have balanced budgets.

  One of the most valuable economic lessons we have in this country--
because we have learned from history--is we cannot spend our way out of 
debt. That is the worst remedy. If you are a family in debt, you do not 
keep spending and you do not put a freeze on spending either, which is 
what was suggested in President Obama's budget. He said: We will just 
freeze at 2011 levels. But 2011 levels are inflated. Because of the 
huge stimulus bill that was passed we have an inflated level and we say 
let's freeze there. No; we need to freeze at a lower level. We need to 
start ratcheting down the spending in this country in order to assure 
that we start going toward a balanced budget. The Cut, Cap, and Balance 
Act is a reasonable way to cut spending now so we will not have that 
debt ceiling lifted again because we will bring down the deficit and 
not hit that debt limit again. So we bring down the deficits with 
immediate spending cuts, then we go forward with a cap that starts at 
21.7 percent in 2013. Knowing we are at 24 percent now, we have to have 
those immediate cuts to start getting down to the reasonable level.
  There is one more thing we need to do that is not in this bill but is 
something that if we are going to have the long-term debt reduction, we 
have to look at the entitlements and expenditures because our 
discretionary expenditures are roughly 30 percent of the total 
expenditures of our country. So we know we are out of kilter right now 
in Social Security because the actuarial tables have not been kept up-
to-date. When Social Security was passed, the average man lived to be 
about 60 years old. Today, the average man lives to be about 77. We are 
going up--and thank goodness--with the life expectancy and quality-of-
life. So if we are going to get our fiscal house in order, we do need 
to address that. We need to have a very gradual increase in the 
retirement age.
  I have proposed a Social Security reform bill that does adjust the 
COLA, and it also has a gradual increase in the age of retirement. It 
stops at 69. The other thing the Gang of 6, or the Group of 6, did that 
I thought was very positive is, it put everything that depends on a 
cost-of-living adjustment in the Federal budget on a different 
calculation that is determined by economists to be a more realistic 
spending gauge, and it is the CPI, the Consumer Price Index. The CPI is 
adjusted in the Group of 6 proposal that will bring down the costs and 
will be a more realistic COLA, cost-of-living adjustment. So it is very 
important we look at that as one of the good parts of the Gang of 6, or 
Group of 6, proposal because it puts it more in line with reality, and 
it also will save money on the other end on the long-term strategy that 
we must have to adjust our fiscal requirements to meet the needs and 
the revenues that are coming in. The tax cuts that are also in the 
Group of 6 proposal will help spur the economy, and along with the 
spending cuts, will bring our debt interest requirements down. The 
cost-of-living adjustments are very minor but will have an impact over 
the long term. These are some of the good things that are out there.
  Let me say in conclusion, we have had several of our leaders make 
proposals. We had Senator Reid and Senator McConnell put out a 
proposal. Of course, there were critics on all sides of

[[Page S4748]]

that proposal. Then we had the Group of 6 that came out with a proposal 
and there were people who criticized that immediately. I think we need 
to take the nuggets of these proposals--which there are some very good 
parts of the Reid-McConnell bill and there are some very good parts of 
the Group of 6 proposal--and let's not criticize people for putting 
forth ideas because that is how we start coming to a conclusion about 
what is the best proposal. To criticize the people who have come 
forward with very bold plans is a huge mistake, and I think it is 
unfair to those who have put something out to say: Oh, that is a 
terrible plan and we would never vote for it. Are you kidding? I mean, 
we need to come together with all the plans.
  I am supporting this one, the Cut, Cap, and Balance Act, which I 
think came mostly from the House and some of our Senators. It is very 
solid. I certainly think Senator Reid and Senator McConnell didn't want 
us to come to August 1 and have no endgame. So they were preparing 
something that has some merit. They have a 302(a) allocation in theirs 
that is basically a cap on spending. We need to have that, and that 
part of their proposal is very sound. Then the Group of 6 has tax cuts 
as well as spending cuts and some adjustments in the mandatory spending 
side, the entitlements. We have to have those ideas all on the table.
  Instead of being negative about everything, let's take some of the 
good parts we like and see if we can come to a consensus on those. That 
is what we have to do if we are going to have an end result that will 
assure our obligations are paid sometime in August when the true debt 
ceiling is hit. I think it is later in August. That is what is in 
conflict right now. I think it is later in August, and if we are going 
to meet those requirements that we have as elected Members of Congress, 
we are going to have to find some way to get there with the reforms 
that are necessary to give confidence to not only the people who hold 
our debt but to the markets that would assure that our economy is not 
going to collapse under the heavy burden of this debt. The reforms are 
a necessary element to lift the debt ceiling or we will not be sending 
the right message to our debtors nor to the people who might start 
hiring and getting this 9.2 percent unemployment down.
  I hope we can have a very strong, positive vote on the Cut, Cap, and 
Balance Act. We need to address these issues. Let's put it all together 
and let's start talking about what we have to do when that debt ceiling 
is reached, and this is a good start.
  I yield the floor.
  Mr. ALEXANDER. I ask consent to speak for up to 15 minutes.
  The PRESIDING OFFICER (Mr. Brown of Ohio). Without objection, it is 
so ordered.
  Mr. ALEXANDER. Mr. President, I congratulate the Senator from Texas 
for her remarks, for her leadership, for her willingness to be involved 
in and support a variety of ways for us to meet the two goals we have 
before us, one of which is to make a significant step to reduce our 
Federal debt, to stop Washington from spending money it doesn't have; 
second, to do so in a way that honors the financial obligations of the 
United States of America, the most creditworthy country in the world.
  The Cut, Cap, and Balance Act, which has passed the House and has 37 
cosponsors in the Senate--I am proud to be one of them--I think is a 
superior piece of legislation. I hope when we vote on it, it gets a 
majority of votes in the Senate and becomes law. Before I speak about 
the Cut, Cap, and Balance Act, I would like to speak for a moment about 
those two goals that are before us as we consider our debt, consider 
our financial obligations, and consider all of them up against what is 
said to be a point on August 2 where the debt ceiling needs to be 
increased.
  As I think about those two goals, reducing our debt, honoring our 
obligations, I think about a friend of mine in Tennessee who pays his 
bills out of a cigar box. This is how it works: A bill comes in to my 
friend and he puts the bill in a cigar box. Then another bill comes in 
and he puts that bill in a cigar box. Then the next week maybe some 
money will come in. So my friend will reach down to his cigar box and 
he will pull a bill out and he will pay that bill. Then, when a little 
more money comes in the next week, he will reach down and pull out 
another bill and pay that bill. My friend pays his bills out of a cigar 
box. Now what happens to my friend if he wants to go down to the local 
bank and says: I would like to borrow some money in order to pay all 
the bills I have in my cigar box.
  I think what the banker is going to say is: I am sorry, my friend, 
but we are reluctant to loan money to you or, if we do, we are going to 
charge you more for it because we don't know whom you are going to pay. 
You might reach into your cigar box and pay the whiskey store instead 
of the bank. You might pay the grocery store instead of the principal 
on your loan. You might pay the service station before you pay us. So 
because you selectively pay your bills out of your cigar box, you are 
not a good risk. We are going to charge you more to borrow money or we 
are not going to loan you money at all. That is the risk we take if we 
play around with this idea of the United States of America--the most 
creditworthy country in the world--selectively paying its bills, going 
from being the most creditworthy country to being a country that pays 
its bills out of a cigar box.
  There are three obvious reasons why we should not do that. Reason No. 
1 is, it is going to cost us more. Today, the United States of America 
can borrow money for 10 years at about 3 percent. We are so 
creditworthy--people trust us so much to pay our obligations--that they 
will give us money for a short period of time at no interest. It is a 
tremendous advantage to us. The United States has the most risk-free 
credit in the world, and I might add the most risk-free credit in an 
increasingly turbulent world.
  What if we decided after August 2, when we are told sometime in that 
month we will begin to not have enough money to pay all our bills, what 
if we decided not to raise our debt ceiling and that we would pay our 
bills out of a cigar box? We might say: OK. We don't have enough money, 
so we will pay China before we pay grandma her Social Security. Oh, 
better not do that. In fact, I saw a fellow in Portland, TN, on Monday 
and he said: What is this about my Social Security not being paid? I 
said: I think it will be paid. It might be two or three days, but the 
telephone calls would come in and Congress will fix it and it will get 
paid. He said: It better not be 5 minutes.
  So we might want to pay all of our Social Security benefits, but the 
President might say or the Secretary of Treasury might say: Well, we 
will pay grandma her Social Security, but we won't pay the wife of the 
soldier at Fort Campbell who is in Afghanistan on his third tour. That 
is not such a good idea. So maybe we won't pay the veteran's benefit. 
We will pay the wife. That doesn't sound so good, either.

  What about those 12 million, 15 million students who are headed off 
to college in the next few weeks with a student grant or a student loan 
from the government? Should we pay just those going to public colleges 
and let the private colleges take care of their own--just the for-
profits, not the nonprofits?
  We see what could happen if we have a country that--especially a 
country such as the United States--instead of paying all of its 
obligations on time, whether it is to China or Japan or to grandma or 
to the veteran, begins to selectively pay those bills when we have the 
money. I think I know what would happen. Instead of being able to 
borrow money for 10 years at 3 percent, we might have to pay a little 
more for it. Let's say it just went from 3 percent to 4 percent. What 
would that mean to us? It would mean, according to the Congressional 
Budget Office, the taxpayers would have to pay $1.3 trillion more in 
interest over 10 years. So if it goes up 2 percentage points to 5 
percent, it is twice that. That is what happens when we pay our bills 
out of the cigar box.
  It is not just the taxpayers. My son said to me the other day: Dad, 
my mortgage loan resets in October. If you all don't work this out, it 
means my interest rate might go up.
  Let's say he has a $100,000 house loan, and it goes up 1 percent. 
That gets to be some money for him. So if it is a credit card loan, if 
it is a home loan--whatever loan it is, it would begin to go up. Paying 
our bills out of a cigar box would raise our costs.
  There is a second obvious reason not to do this. In 2008, we were 
smacked in

[[Page S4749]]

the face with a world economic crisis. We didn't expect it. Most of us 
didn't cause it, but we had to deal with it. Here in the Congress, we 
had to do some very unpopular things: We had to bail out banks, even 
some industries. The American people hated that, even though most of 
the money has been paid back. We don't know what we averted--probably a 
much worse problem--but we are still suffering from what happened in 
2008. But we didn't do that deliberately.
  In this case, if we were to deliberately go from being the most 
creditworthy country in the world to a country that paid its bills out 
of a cigar box, we would be deliberately injecting uncertainty into a 
turbulent world.
  Look at Europe, with the eurozone trembling over the debt in Portugal 
and the debt in Greece, with sovereign nations perhaps having to bail 
out European banks.
  Look at Japan, the third largest economy, in a 10-year recession, 
with a third of its powerplants closed after the tsunami, sweating 
through the summer, with an inability to sell their goods.
  Look at China. China is a big success story, but it may be growing 
too fast. Its inflation is up, and it has a lot of unreported debt at 
the provincial level.
  Look at our markets. We make trades in milliseconds, and twice in the 
last year we had sudden drops in the market which we couldn't explain 
for months. Do we really want to inject this level of uncertainty into 
the turbulence we have today and into the financial markets when we 
know we could avoid it? I think not.
  Then there is a third reason, and this is a purely partisan reason. 
Maybe it is not even appropriate to talk about it on the Senate floor, 
but let's talk about it for a moment anyway.
  The President has done a pretty good job of blaming his predecessors 
for problems, but lately people have said: Mr. President, we don't 
blame you for the problems you inherited, but we do hold you 
responsible for the decisions you have made to make it worse. You have 
made it worse with the health care mandates and higher individual 
health care policies. You have made it worse with the financial 
regulations bill. You have made it worse by not sending over the trade 
bills. You have made it worse with the high cost of energy. You have 
made it worse with your National Labor Relations Board appointments and 
undermining right-to-work laws. You have made it worse by doubling and 
tripling the debt.
  People are listening to that. They agree with that. But what would 
happen if the Republican Party or the Democratic Party or any group of 
people have the primary responsibility for turning this country from a 
country that is the most creditworthy country in the world into one 
that pays its bills out of a cigar box? The President will say--instead 
of us saying, Mr. President, you made it worse, he will say, you made 
it worse.
  There is every reason in the world to regard the debt ceiling 
decision we have to make as an opportunity to take a significant step 
to reduce the debt. We can do that while still honoring our financial 
obligations, and we should. And today we are talking about one of those 
ways to do it.
  Republicans have offered--with Democratic cosponsorship in a number 
of cases--at least five major ideas for taking a significant step 
toward stopping Washington from spending money it doesn't have. There 
are five ways to do that:
  There has been the Corker proposal, which is bipartisan and over 10 
years would bring our spending, which is the real problem, from its 
present level--about 25 percent of our total output in the country--to 
about 20 percent, which is the historical level.
  There is the balanced budget amendment, which is the most obvious 
solution for a nation that is spending more than it takes in. Families 
do it, States do it--balance their budgets, live within their means--
and the Federal Government can do it. Over time, we can get back to the 
point where we were not many years ago, where we spend about the same 
amount of money we take in. As Governor, I know that for 8 years we did 
that. As a result, we have almost no debt in the State of Tennessee, 
and as a result of that, we can use our gas tax money, for example, to 
pay for roads instead of interest on the debt.
  Then there is a third idea that has bipartisan support; that is, the 
Gang of 6, which came out this week. The President said it was a gang 
of seven. He thought I was in it. I would have to say with respect, Mr. 
President, I am a law-abiding citizen. I am not a member of any gangs. 
But I support what they do because I think it is a serious, bipartisan 
effort to help stop Washington from spending money it doesn't have.
  Then there is another proposal which has bipartisan support that 
Republicans as well as Democrats have initiated. Senator Isakson from 
Georgia has taken the lead on it. It is the 2-year budget proposal 
which would allow us time every other year to focus our efforts on 
eliminating rules and eliminating regulations instead of adding so 
many.
  So there are four ideas we have suggested--in some cases with 
bipartisan support--where we can take a significant step to reduce our 
debt while still honoring our financial obligations.
  Today, we are talking especially about cut, cap, and balance. The 
legislation that passed the House of Representatives with 234 votes 
this week has come to the Senate floor. We are going to be voting on it 
in the next day or two. It has 37 cosponsors, and I am one of them. I 
especially commend Senator Lee for his work on putting this bill 
together and doing it in a way that would attract the largest amount of 
support.
  This is a very reasonable proposal. The cut part is to say that for 
the first year, we would spend a little less than we did last year. 
Now, that is a reasonable proposal. The State of Tennessee, where I was 
once Governor--the current Governor is presiding over a State that is 
spending $1\1/2\ billion less than it spent last year. Now, they don't 
like to do that. There are some unfortunate consequences from it. But 
they still balanced their budget, they are still getting along, and 
they are hoping for the day when the economy recovers and they will 
have more revenues coming in without raising taxes.
  So step one is to cut what we are spending today in next year's 
budget. Then we cap, according to the economic output of the country 
over the next 10 years, the amount we spend over those 10 years. Then 
the third step is to balance the budget--the most obvious solution of 
all--over time, to say we are not going to spend more money than we 
have coming in. This is our proposal to begin to control spending in a 
government that borrows 40 cents out of every dollar it spends, a 
government the economists tell us is costing our Nation 1 million jobs 
because of the high level of debt. This is an urgent problem. It 
urgently needs a solution.
  In conclusion, almost all of us here in the Senate are good at making 
speeches. That is one way we get here. But we have not become as good 
at the rest of our job, which is to get a result. The American people 
expect us to do that. They have to do that in their everyday lives. So 
they respect our principles, they respect our speeches, but they know 
our principles sometimes conflict, and in the end, we have to have a 
result. We have to have a result here. We have to find a way, first, to 
significantly reduce the debt and, second, to do it in a way that 
honors the financial obligations of the United States.
  I have suggested five ways we can do that, including cut, cap, and 
balance. In order to do that, it means each of us is probably going to 
have to accept as a part of the solution an idea that is not our first 
choice. But why should we be exempt from that requirement? That is what 
we have to do in a marriage. That is what we have to do in a family. 
That is what we have to do in a business. That is what we had to do in 
creating the Constitution years ago. This Senate wouldn't exist if it 
weren't because of a grand compromise. Otherwise, how could we justify 
two Senators from Wyoming and the same number of Senators from 
California, which is so much larger?
  To get a result, after we make our speeches, we need to be willing to 
accept some ideas that are not our first choice. That is why I am a 
cosponsor of several different kinds of ideas--cut, cap, and balance, 
the Corker proposal, the Gang of 6 proposal. That is why I support the 
Isakson-Shaheen effort on the 2-year budget. That is the kind of 
attitude we need in the next couple of weeks.
  Cut, cap, and balance is a good way to meet our two urgent goals: 
take a

[[Page S4750]]

significant step to reduce our debt and do it in a way that honors our 
financial obligations.
  We are perfectly capable as a country of fiscally disciplining 
ourselves. We are capable of reducing our debt and of stopping spending 
money we don't have and, at the same time, avoiding turning the most 
creditworthy Nation in the world into a country that pays its bills out 
of a cigar box.
  Thank you, Mr. President. I yield the floor.
  Mr. SCHUMER. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SCHUMER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. Mr. President, as we spend the day debating the 
Republican plan to cut, cap, and kill Medicare, a plan that is dead on 
arrival in the Senate, it has become obvious what the true question of 
the day is. That question is, Will we as a nation allow ourselves to be 
driven into default and financial calamity by a small group of extreme 
rightwing ideologues in the House GOP?
  It has become increasingly clear that this group of ideologues has 
grabbed the reins and is refusing to let go, no matter who tries to pry 
their fingers off. It is clear that this uncompromising group of narrow 
ideological Congressmen is the one thing standing in the way of raising 
the debt ceiling so our Nation does not default. It is the group that 
alone wants to drive the car off the cliff. We are now 11 days from 
defaulting on our debt, and for the last few months this small group, 
far outside the mainstream, has contributed nothing to efforts to reach 
a compromise.
  The House GOP has rejected every form of compromise, from the 
Simpson-Bowles plan, to the President's $4 trillion grand bargain, to 
the McConnell fallback plan, to, as of yesterday, the Gang of 6 
framework. Instead, they have offered dangerous schemes such as the 
cut, cap, and kill Medicare plan that passed the House yesterday. Their 
``plan'' would wreak havoc on our country's seniors and the middle 
class. It is not a serious proposal, it will never pass this body, and 
it is a waste of time.
  While reasonable people are trying to come to a compromise, the House 
GOP is becoming increasingly isolated. Yesterday, for example, my 
colleague John McCain warned the House GOP that Americans do not want 
the government to shut down and urged them to learn the lessons of 
1995. Then, close to a third of Senate Republicans signed on to a plan 
that would combine major spending cuts with new revenues--a balanced 
approach the House GOP has sworn off. And every day more voters are 
abandoning them. As the L.A. Times reported this morning:

       Republican resistance to compromise has turned a 
     significant bloc of voters against them . . . frustrated 
     members of their own leadership as well as establishment GOP 
     figures.

  So the House GOP is being criticized from every corner.
  Then today we have what must be the most significant departure to 
date from the House GOP's fantasy-land. In a major development, antitax 
crusader Grover Norquist told the Washington Post that letting the Bush 
tax cuts lapse would not constitute a tax hike. This is a development 
the significance of which should not be underestimated. It is a 
recognition from Norquist that the House Republicans are increasingly 
isolated and have painted themselves into a corner. Norquist is trying 
to signal to the House GOP that their no-compromise position is 
untenable, deteriorating, and bad for their party and the country. The 
House GOP is on an iceberg that is melting into the ocean, and even 
Grover Norquist is offering them a lifeboat. The question is, for their 
own good and for the country's good, will they take it? I urge my 
colleagues in the House to accept this lifeline. It is time to leave 
default-denier island and come back to reality.
  The House Republican extremists--those who are way over to the far 
right--painted themselves into a corner, even to the right of Grover 
Norquist. Grover Norquist, the hall monitor when it comes to enforcing 
the Republican Party's antitax pledge, has given House Republicans a 
hall pass. They should use it. This is a coded message from one of the 
truest believers in the Republican Party that it is time for 
conservatives to step back from the brink.
  Norquist has given us a potential path forward. If we decouple the 
Bush tax cuts now by only extending them for the middle class and not 
for millionaires and billionaires, we could have the foundation of a 
deal that includes revenues but does not violate the Norquist antitax 
pledge.
  This decoupling strategy is what the President and Speaker Boehner 
were entertaining earlier in the context of a grand bargain, but Leader 
Cantor and other rightwing hardliners forced the Speaker to walk away 
because they feared violating the antitax pledge. But now a deal on 
decoupling seems to have Norquist's permission, if not his blessing. We 
should revisit it.
  It is time to recognize that the quickest, most effective and 
economically sound way to reduce our deficit and debt is a balanced 
approach that both cuts spending and raises revenues--a plan that 
mirrors every other successful deficit reduction deal in our Nation's 
history, a plan along the lines of the ones negotiated by Presidents 
Reagan, Bush, and Clinton.
  I hope my colleagues in the House GOP see the danger of the path they 
are going down and change course before they take the entire country 
down with them.
  Mr. REID. Will my friend yield for a question?
  Mr. SCHUMER. I would be happy to yield to the distinguished majority 
leader.
  Mr. REID. Mr. President, I ask permission to ask my friend a question 
through the Chair.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. REID. It is true, is it not, that the Senator served many years 
in the House of Representatives?
  Mr. SCHUMER. Eight years.
  Mr. REID. And the Senator understands the difference between the 
procedures in the House and in the Senate, does he not?
  Mr. SCHUMER. I do, some.
  Mr. REID. And in the Senator's years serving in the House of 
Representatives, he has seen how quickly things can move over there; is 
that right?
  Mr. SCHUMER. That is absolutely right.
  Mr. REID. And coming to the Senate, the Senator has seen how slowly 
things have to move here in the Senate; is that right?
  Mr. SCHUMER. Indeed. I have learned that hard lesson.
  Mr. REID. I say to my friend through the Chair that I see what is 
developing now as very, very bad for our country. It is hard to 
comprehend--I ask my friend this question--it is hard to comprehend how 
the House of Representatives, at the height of this fiscal crisis we 
have, has decided to take the weekend off. Is the Senator aware they 
have decided to take the weekend off?
  Mr. SCHUMER. I have read that. Yes, I have.
  Mr. REID. And it appears to me one reason to do this is to do 
indirectly what they cannot do directly; that is, we have--and I read 
them here this morning--statements from my friend the Speaker, John 
Boehner, saying we cannot default on our debt; from the whip over 
there, Eric Cantor--or majority leader, whatever he is, second in 
command--saying we cannot default on our debt. I am saying to my friend 
from New York that it appears to me they are going to do indirectly 
what they cannot do directly by not sending us whatever they decide to 
do in time to get it done.
  I think the country is staring in the face a default on our debt 
because of the House of Representatives being out this weekend. Would 
my friend comment on that?
  Mr. SCHUMER. Yes. I think the leader has an excellent point. To not 
be here this weekend when the Nation stares at the first default in our 
200-some-odd year history is amazing to me, that they would be gone. 
And when you think about it, either they do not care about defaulting 
on the debt--and we know Speaker Boehner does care about that default. 
I think he is aware of what terrible problems it would create for this 
country for decades to

[[Page S4751]]

come. So the answer must be what the leader is saying; that is, they 
hope to jam us at the last minute with something and say: Take it or 
leave it, which is playing with fire.
  I can assure my colleagues in the House that is not how we are going 
to play ball here. There has to be a fair compromise, not something 
they come up with at the last minute and sort of toss it over here. 
That could create default, and if they do it, it would be on their 
shoulders.
  Mr. REID. I say to my friend through the Chair that they may send us 
something well-intentioned, but I am not sure they understand the rules 
of the Senate. There are a number of people who are Republicans over 
here who have stated publicly that they think the debt should be 
defaulted upon. As my friend knows, most everything we do here is by 
unanimous consent and, if not by unanimous consent, by the rules of the 
Senate, which are very strict and very difficult sometimes to 
comprehend, but they are there.

  So I am afraid that what is happening with the House leadership is 
they think they can send something over here and, as the majority 
leader, I can figure out a way to get it done. I cannot get it done if 
we have to follow the rules, which we have to follow, and I cannot get 
consent, and I cannot get consent on most anything I do around here. So 
I would like my friend to comment on that.
  I appreciate my friend saying that Speaker Boehner is a good person. 
I agree with that. But I am not too sure that this is not an easy way 
out for everybody over there, that they could say: Well, we did what we 
wanted to do. I am sorry the Senate could not do it, so I guess our 
debt is defaulted upon, and we will close down all of the functions of 
this government and wait for a better day.
  Mr. SCHUMER. Well, again, in answering the leader, first, the rules 
of the Senate would allow any single Senator--and we have a whole 
handful--to delay things day after day after day after day. Second, 
there are things out of any Senator's control. For instance, any 
proposal on an issue such as this would have to be scored by the CBO. 
We learned on the health care legislation that CBO cannot just sort of 
push legislation into a machine and an hour later say: Here is your 
score. It takes days and sometimes weeks. And the fact that just about 
every procedural motion can be filibustered and delayed means we are 
getting so close to the deadline that we would be in serious trouble.
  Again, I repeat, I find it terribly disconcerting. It is hard to see 
anything but callousness toward the danger our Nation faces if we were 
to default by the House not being here this weekend because even a 
rudimentary knowledge of the House procedures--which I know the 
leadership of the House has--would indicate to them that if they do not 
get us something very, very soon and, in fact, they do not sit and 
negotiate and compromise--which they have refused to do, driven by a 
hundred, perhaps, Congressmen, many of them new here, who sort of say: 
We do not care if we default--the consequences of default would be 
enormous and staggering and would not just go away in a month or two 
but would be with us for a decade. And here they are back home this 
weekend when America faces one of the greatest potential economic 
crises that we have faced.
  So I very much thank the leader for bringing this up and asking these 
questions.
  The PRESIDING OFFICER. The senior Senator from Massachusetts is 
recognized.

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