[Congressional Record (Bound Edition), Volume 154 (2008), Part 1]
[Senate]
[Pages 869-871]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            STIMULUS PACKAGE

  Mr. DORGAN. Madam President, I want to talk for a few moments about 
the so-called stimulus package we are assembling to help our economy. 
What

[[Page 870]]

I want to say, first of all, is we have an economy that is a remarkable 
engine. This little spot on the planet--the United States of America--
is quite an unbelievable economic engine. It has provided bounties and 
benefits to a group of people that exceed that provided to almost 
anybody else on this planet.
  But we have run into some real problems. We now find ourselves in the 
year 2008 where we have a stock market that is wildly gyrating up and 
down. We see these dramatic swings in the stock market. That is a 
reflection of a substantial amount of concern and nervousness about 
what is happening in the economy and where we are heading.
  In the last several decades we have morphed into a global economy. I 
have never questioned that. I have always questioned why the rules have 
not kept up. But the global economy is a different kind of economy for 
us. We are now told by those who wanted to create their own set of 
rules that the American people should compete with folks who work in 
Shenzhen, China, for 20 and 30 cents an hour making bicycles and little 
red wagons. There is downward pressure on income in this country. There 
is great concern by the American people about the loss of jobs and the 
loss of benefits. So there is a lot happening that is of great concern.
  In addition to these dramatic yo-yo swings in the stock market that 
reflect widespread concern about the economy--we have at the same time 
some real fundamental structural problems in the economy. Because it 
appears the economy is now weak, we have more people unemployed. We 
have fewer housing starts. We have a whole range of issues that 
demonstrate a serious economic problem: A slowdown certainly, a 
recession very likely. Because of that, we are told there needs to be 
some short-term stimulus to provide a spark to help crank up this 
economy again.
  Well, we always talk about that in an economic slowdown. We have put 
economic stabilizers in place over a long period of time--two to three 
to four decades--that have been very helpful in moderating the 
recessions we have had. Normally speaking, the recessions we have had 
have been shallower recessions because of economic stabilizers that 
have been put in place. But that does not mean you will not ever have 
recessions.
  We might be in a recession now. So the Federal Reserve Board decided, 
earlier this week, cuts interest rates by 75 basis points. That was a 
big, bold, dramatic move by the Fed. These people wear gray suits and 
do not do anything very boldly, but this week they decided: Man, we are 
going to do something bold--so three-quarters of a percent interest 
rate cut.
  It is expected, then, in monetary policy--having been moved by the 
Fed earlier this week--in fiscal policy our responsibility in Congress 
is to do something as well. So we in the Congress are putting together 
a fiscal policy approach. That approach is a stimulus package.
  Well, the stimulus package would typically be some sort of tax rebate 
to people, perhaps some investment tax incentives to stimulate capital 
acquisition by businesses.
  The House and the White House have moved now to agree on something 
that is going to come to us from the House of Representatives. I think 
that is good news. It has been a long time since we have seen much 
cooperation from the White House. I think it is good news this week. 
The Fed moved. The White House is interested in an agreement. So we are 
going to have a stimulus package. I think the sooner the better. We 
need to tell the American people we are moving. I also want to say this 
about a stimulus package. I think there are two steps to it. One is 
shorter term--rebates for individuals, incentives for business 
investments, and so on--but, second, and I think very important, is to 
understand one of the quick ways to put people back to work and also to 
invest in America's future, to help build America, is in 
infrastructure: roads and bridges and dams and all the things that have 
been deteriorating.
  We are so far behind in infrastructure. If we are going to be a world 
class economic power, we need to invest in infrastructure. We can do 
that and should do that as also part of a second step in a package to 
stimulate this economy.
  Having said that, let me make a couple other points. If all we do is 
genuflect about a stimulus package, and then we step back and say, 
``Well, we are out of breath now. We have done that''--if that is all 
we do, this country is in deep trouble.
  Let me describe what I think the significant causes of our trouble 
are. No. 1, we have a President who says, through his Vice President: 
Deficits don't matter. Well, of course he is wrong.
  Paul O'Neill, the first Secretary of the Treasury under the Bush 
administration, and one of the real straight shooters in this town--
he's a guy I liked; he said it the way he felt it and thought it, and 
you could believe him--Paul O'Neill, conservative Republican Secretary 
of the Treasury--well, he got fired. Do you know why he got fired? 
Because Dick Cheney came into his office and, according to the things I 
have read, said: Deficits don't matter. Don't you understand? Deficits 
don't matter.
  Well, Paul O'Neill did not believe that for a minute. Because he did 
not believe that, he was not part of the team, and he got fired.
  Deficits do matter. This administration inherited a budget surplus of 
well over $200 billion a year and has turned it around into a huge 
budget deficit. This administration has added over $3 trillion to the 
debt. It ran into a recession, a terrorist attack, a war in 
Afghanistan, a war in Iraq, and now a subprime loan scandal.
  Some of us stood on the floor of the Senate and said: Mr. President, 
don't push this issue of giving huge tax cuts on expected surpluses 
that are going to occur but have not yet occurred. What if something 
happens? The President said: Not on your life. We are going forward 
with my plan.
  He pushed it through this Congress. I did not support it. But the 
result was big budget surpluses were turned into record budget 
deficits, because now we had all these unexpected circumstances happen.
  Well, the President said: We are going to fight a war, but we are 
going to send soldiers to Iraq and Afghanistan and we are not going to 
pay for it. We are going to send soldiers abroad to fight, but we are 
not going to ask anybody to pay for it. We will add it to the debt. So 
a little over two-thirds of a trillion dollars has been added to the 
Federal debt.
  Last year, the President sent us a request saying: I want $196 
billion over and above that which I have asked for the Defense 
Department as an emergency. I want none of it paid for, and I want it 
now: $196 billion. That is $16 billion a month, $4 billion a week, and 
I don't want to pay for any of it, he said.
  This is a reckless fiscal policy that has been running this country 
into a ditch. Now you add to that fiscal policy from this 
administration--which is supposed to be a conservative administration--
you add to that the trade deficit. The trade deficit is $2 billion a 
day, every single day, 7 days a week. Every single day, we import $2 
billion more than we export--over $700 billion a year in trade deficit.
  We are not only shipping our money overseas, which then gives the 
Chinese and the Japanese the opportunity and responsibility to finance 
our debt, but they then begin to buy a fair amount of our country. We 
have just seen it in recent weeks. Citigroup went to Singapore for 
$12.5 billion. GE Plastics got $11.6 billion from the Saudis. Dow 
Chemical got $9.5 billion from Kuwait. Citigroup needed more money; 
they got $7.5 billion from United Arab Emirates. Where do you think 
they got this money? They got it from us, with these huge trade 
deficits. So we have a trade deficit that is well above $700 billion a 
year.
  I know the administration says: Well, the budget deficit is $200 
billion, $300 billion. That is not true at all. It is if you take away 
the Social Security surplus and misuse it, and continue with fiscal 
policies that are not paid for. We are going to add roughly $600 
billion to

[[Page 871]]

the federal debt in this fiscal year. So $600 billion in budget 
deficit, $700 billion in trade deficit, and you are talking $1.3 
trillion or roughly 10 percent of the economy this country will 
borrower in 1 year. That is unbelievable. There are people who are 
drunk who think they are invisible. Well, I am not suggesting we are 
drunk here in the Congress. However, I am saying that both the 
President and the Congress seem to think we are invisible in terms of 
our public policies. The rest of the world sees what is happening--that 
our trade deficit and budget policies are way out of control.
  Now add to those two things one other element: The subprime housing 
loan scandal that comes because federal regulators were asleep and too 
cozy because they didn't want to regulate those they were supposed to 
regulate. So we had a bunch of high flyers and hot shots who took off--
many of them have now been fired but went out the door with $100 
million or $200 million, and what they were doing was providing and 
selling, through high pressure sales techniques, mortgage loans to 
people who could never possibly repay them. The refrain--if you saw it 
on your television set or heard it on your car radio, as many people 
did--you wondered: How could this be? The refrain on the television 
advertising was hey, you know something? If you have bad credit, come 
to us. If you have filed bankruptcy, come to us. If you can't make your 
house payments, come to us. We have a loan for you. Do you want to cut 
your loan payment every month? Do you have bad credit? Come to us. We 
want to give you a loan. All over this country you heard that sort of 
refrain. Well, guess what: This was mortgage brokers. It was mortgage 
banks. It was a bunch of high-flying folks who not only were putting 
out bad mortgages, but then they were doing as they did in the old 
meat-packing plants when they put sawdust in sausage. You took bad 
mortgages and good ones, mixed them up, put them in a case and sliced 
them and securitized it all and put them all in hedge funds. Soon 
nobody knew what they had, but they were grinning from ear to ear 
because they had high returns, high yields, and high fees on the 
origination of these securities. It turns out a lot of them were bad 
securities and nobody even knows who has them. Nobody knows which ones 
are bad. But 3 years after the loan is put out and the interest rate is 
reset, we discover that loans were given to people who couldn't 
possibly pay them. Then we discover that those who purchased them and 
those who sold them can no longer claim they are good assets. They file 
for bankruptcy. So we have all of this going on.
  Now, there is another thing that is happening at exactly the same 
time and is also causing great danger to our economy. Even as this 
subprime loan mortgage scandal is happening, we have the growth of 
hedge funds and derivatives, and they too are outside of the purview of 
regulators. With respect to the subprime mortgage loans, we had 
regulators who were asleep or dead from the neck up. They wanted to 
serve here, but didn't like Government, and didn't want to do anything. 
That is what happened there. On hedge funds, Senator Feinstein and I 
and others have been on the floor for years saying: We have to regulate 
hedge funds. We have to understand what is happening with derivatives.
  Well, guess what. If you go into a casino in Las Vegas, you are going 
to lose what is in your back pocket in most cases. Well, sometimes you 
might be able to sign for a loan, but in most cases you only lose that 
which you have. Hedge funds are unregulated, No. 1, and, No. 2, have 
unbelievable amounts of leverage, unbelievable borrowing.
  A reasonably new derivative called credit default swaps have a 
notional amount of $43 trillion. I said $26 trillion earlier this week. 
That was the end of 2006. In 2007, the notional amount of credit 
default swaps, which most people would believe to be a foreign 
language, was $43 trillion. It is not a foreign language at all. These 
are sophisticated financial instruments that represent an unbelievable 
amount of speculation that in my judgment put this country's economy at 
great risk.
  So we have budget deficits that are way out of control, and a trade 
deficit that is an outrage. We also have regulators who have no 
interest in regulating, allowing the subprime mortgage loan scandal, 
and hedge funds that we have had an aggressive fight on the floor 
about. We have the administration and others who are not interested in 
having any regulation of hedge funds, are unconcerned about what kind 
of liability exists with derivatives, and ignore the problem of this 
unbelievable leverage. If we don't deal with those four areas, we can 
stimulate forever. We can come here in the morning and stimulate every 
day on the floor of the Senate, if you like. It is not going to solve 
what is wrong with this country. If you don't put the foundation in 
order, if you don't lay the bricks right in the foundation, there is no 
structure you can build above it that is going to withstand the kind of 
problems that exist internally in this economy.
  This country is too good a country for us to decide not to care about 
fixing these problems. President Bush came to the Congress and said: I 
am a conservative. Well, there is nothing conservative about an 
administration that runs up this sort of red ink. We are drowning in 
red ink. There is nothing conservative about an administration that has 
regulators who have decided they don't have any interest in regulating. 
It doesn't matter what the subject is: unsafe toys from China, you name 
it. We have regulators who are apparently collecting a Government 
paycheck and don't have the foggiest interest in regulating. That is 
how the scandal of subprime mortgage loans has happened and that has 
caused great injury to our country. It is also what is happening as a 
result of those who are preventing us from knowing what is going on 
with hedge funds and derivatives, which can cause a much greater level 
of damage than even the subprime mortgage loan scandal.
  As I said, most Americans wouldn't have heard or know very little 
about credit default swaps and would hardly know what it means. These 
numbers are in the trillions. Hedge funds are about $1.2 trillion of 
our economy. People say: Well, that is not so much. Gosh, there is $9 
trillion in mutual funds, there is roughly $40 trillion of stocks and 
bonds out there. Mr. President, $1.2 trillion in hedge funds. Hedge 
funds conduct one-half of the daily trades on the New York Stock 
Exchange. Think of that. One-half of the trades by hedge funds. In 
addition to the $1.2 trillion, you have unbelievable amounts of 
leverage.
  So I think we face a lot of big challenges. If I didn't have great 
hope for the future, I wouldn't want to get up and come to work in the 
morning. But I have a great reservoir of hope. I believe we can fix 
these things. But we need leadership from the White House. We need to 
work together here. We need to understand that it is not just about 
stimulating a short-term response; this is about fixing the foundation 
and setting things right. I think it was Thomas Wolf who talked about 
an indestructible belief, a quenchless hope, a boundless optimism. I 
have all of that. But we have to start now and understand what we need 
to do to put this country back on track toward a better and brighter 
future, one that grows and provides opportunities for all Americans.
  Madam President, I yield the floor, and I make a point of order that 
a quorum is not present.
  The PRESIDING OFFICER. Could the Senator withhold the quorum call?
  Mr. DORGAN. I will be glad to withhold the quorum call.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.

                          ____________________