finish -- that you all play golf together and you have a lot of fun and then you, you know, when the billions come around, you're able to kind of distribute them? i mean, i'm just saying do you know that's how people feel? >> i sure do. >> can you keep your voice up? >> i said, even though i'm not a golfer, i sure know that's how people feel. >> yeah. and when they see these deals going on, then the next thing they do is they begin to look at where people worked. and then they see the relationships, and then they say, well, you know, we don't have a chance because seems like they're kind of looking out for themselves but not looking out for us. and so, you know, you just gave a statement about transparency, and, you know, and i think one of the things that bothers people is when they don't see

transparency, then they begin not to trust. and when they begin not to trust, it becomes very difficult for them to go along with any program. and then when you put on top of that that they can't see themselves benefiting -- and i know that you mentioned if we didn't do what we did, unemployment may have gone up to 25%, but it's hard for people to even see that. you understand? .. i -- congressman, you've got to. people are very, very angry. i understand why they're angry and they're rightfully so, because they don't see the connection. they don't recognize what was done wasn't done for the banks. they were going to be the victims if we didn't step in. >> and so among the conditions in the t.a.r.p., aig as said by the investment senior's summary

of senior preferred terms as posted on treasury website. quote, the annual bonus pools payable to senior partners in respect of each of 2008 and 2009 shall not exceed the average of the annual bonus pools paid to >> do you believe it was appropriate for treasury to allow a i g. to create any bonus pool for senior partners considering it had just found it necessary to extend $40 billion to the firm through the t.a.r.p.? >> i'm not going to get into second-guessing decisions that were made at the treasury about bonuses. i realize this was a very difficult decision, because the taxpayer had a lot of money in this company. and this company needed to

perform well and needed to hold the team together in order to repay tax. >> and the taxpayers were saying to themselves, look, these are our tax dollars, we worked hard for these tax dollars and now these guys who screwed up everything are getting bonuses. >> you're right. no one, me included, likes to see private business profit from taxpayer assistance. that makes people angry. and to me, i just hope that part of that anger is not a diversion from what we need to do, but is an incentive to fix the system so that we will have resolution powers, and never again will we have a company that is so big, too big to fail so the taxpayer has to come up and put money in it, that a company can be liquidated and wound down in a way in which the taxpayer is not on the again.

but so, i understand that there's that anger out there and that frustration. i think it's very understandable, and i think there's a number of ways to do something about it. but the best way to do something about it is reform the system so that we don't ever again have to bail out a big institution, rescue a big institution, and be liquidated if it fails. >> no, with regard to the original treasury t.a.r.p. investment in aig, was the structured as a loan or was it an equity investment? >> congress and, it was an equity investment. >> was this in the aag. homecoming or any individual subsidiaries? >> this was in the. , this was a 40 billion-dollar equity investment because the company needed equity. >> wasn't made subordinate to any other creditors of aig? >> a preferred is, by

definition, senior to the common, and subordinated to the other creditors. >> how does this compare to the various federal reserve investment at aig? >> this would be -- this is the port it to the other federal reserve investments at aig, because a determination was made that the rating agencies and basically said you need to put capital in this institution, or there will be a downgrade and then it would have -- they would have precipitated the desert. >> why was it this structured in this way? >> it was structured in that way because that's the way a preferred needs to be structured. it wouldn't have been capital if it had been subordinated to the other, to the other liabilities spirit i see my time is a. >> the chair recognizes mr. stearns from florida. you may proceed for five minutes. >> thank you, mr. chairman. mr. paulson, mr. geithner

testified that he reaches himself during his counterpart negotiation. did you know that why you were secretary of treasury? >> i knew -- >> yes or no? >> yes. >> did you know -- >> i didn't view him as a decision-maker. >> did he call you up and advise you that i reaches myself? did he call you up? how do you notify you? >> he told me on the phone that he did not think it would be appropriate for him to be -- >> did you know he never got a letter? all he did, he testified that he recused himself. he decided, put up a flag and said i reaches myself, i'm not going to be involved in the counterpart negotiation. like you went to the white house counsel and you want to secretary-treasurer. you got a letter. he never got a letter. he never got a written confirmation of his recusal. did you know that? did you know he was just doing it on his own by his own volition? >> i did not know the details.

>> did you think a person who would recuse himself in this crisis we had, that he could go about and operate in his present job and not have a conflict of acres? did it ever occur to yourself to say, gee, the chairman of the federal reserve is in this crisis, we're having counterpart negotiation, and by golly he's going to step aside and says he knows nothing about it. that's what he's saying today. doesn't that seem sort of they key to you? >> i - no, it didn't because i thought it was an extraordinary position that we had to have a person of the -- >> the next question, he said in open test with that as chief of staff while he was chairman of federal reserve, the former employee of goldman sachs, did you know that? >> yes. >> you ever call the chief of staff, his chief of staff, former employee of goldman sachs during the process of the counterpart negotiation, if i go to the logs will i see your name calling and? >> he is chief of staff who was

a former employee of goldman sachs -- >> antiworker you when you were ceo. >> 's? >> did you ever call him at all. if i go back to the logs will i find that you called guyton as chief of staff, former employee of goldman sachs, during the counterpart negotiation's? >> no, i didn't. >> you never called? >> as i said, the former, his chief of staff, i think the person you're referring to -- >> we do know about it until today. >> when he became treasury secretary, after i had left office. >> he said while he was at the federal reserve, he was his chief of staff. that's what he said today. >> i don't believe that was the case. but in any event, -- >> let me go on. here's the problem i think a lot of us are having. mr. geithner said he was not involved with the counterpart in negotiations. you're saying you were not involved. oh, yes, you heard a little about it but on november 6 when

they gave $62 billion to all these parties that came in and looted aig, all of you guys say i knew nothing about it. and yet, it appears that this happened. now, recently michael mcgrady was struck of instruct other national association of insurance commissioners, told the senate banking committee, he said if aig had gone in bankruptcy, we would have to take care of it. we would have been an orderly disposition. this is what he said. aig's insurance operations and there are other companies we would have simply bought of aig's insurance assets allowing a seamless delivery of aig's insurance obligation. so the question is, considering the state insurance commissioners would likely have seized aig's insurance subsidiaries, protected policyholders in an aig bankruptcy, why was it necessary to bail out aig with taxpayers money? based upon the testament of the drug other national association of insurance commissioners. >> i respectfully disagree with them and i agree the biggest so

you disagree with all his years of experience? >> i would say many people with years of experience have some regular response was with regard to energy, but this company was at a huge problem. and it is case number one on what is wrong with the regular tour system, there was no single regulator that had a line of sight on the total company. so the regulators that look that different pieces of it, and if the company had gone down, it would have been a huge mess? >> against the next he scares the public. we are all scared. he said, if aig was not built out, this country would have collapsed. he intimated our constitution would not have been able to be enforced. there would be a revolution in this country. do you think it is that extreme if we let aig go bankrupt we would've had that kind of collapse and revolutionary spirit in this country? is that your decision to a?

>> i have serving never said that. >> he implied that. >> what i said is, i believe we would have had absolute economic disaster. >> the gentleman's time has expired. the gentleman's time has expired. we will rattle now recognize the gentlemen from ohio, mr. kucinich. >> thank you, mr. chairman. secretary paulson, thank you for being here today. in your testimony you state that in your capacity as united states treasury secretary, you were not involved in any decisions with respect to payments to aig's counterparties. and that you were not involved in any of the decisions concerning aig's disclosure of those payments. i'd like to accept that at face value, mr. paulson, except the critical decisions concerning payments to counterparties were made after the passage of the emergency economic recovery act by congress at your request.

and the emergency economic recovery act made the treasury secretary responsible for the use of funds authorized by congress. negotiations on the counterpart of payments by the federal reserve bank of new york, did not begin until november 6, 2008. the funding of the payment of the counter claims is backed by funds made available under the emergency economic recovery act. so, mr. paulson, doesn't it make it your responsibility to know how those funds were used? >> i think you'll find, congressman congressmen, and i think the secretary reported this, that t.a.r.p. investment, the $40 billion t.a.r.p. investment, was equity. and that those funds did not go into this maiden lane vehicle, where the fed -- the fed loan -- >> so you didn't have any knowledge of the counterparty

payment transactions? >> i did not. >> are you telling us that? >> i did not. >> and are you telling us you are not aware of any of the discussions, leading to the counterparty payments with any of the principal's? >> that's what i'm telling you. >> you're telling us as treasury secretary you had no role whatsoever in the decision on counterparty payments that you didn't even -- you can ask anyone questions that you never expressed an opinion on the matter that you're completely unaware of the nature, of proposed transactions until it was contemplated and no answer any questions about how these emergency economics act or the recovery act funds would be used to stabilize aig, the one financial institution, the heart of the crisis, you just did no? >> congressman, we asked a lot of questions about the $40 billion t.a.r.p. equity investment. that was something that was our job and it was our authority.

and as i said, the loan, that was a fed authority, and they had the authority and expertise to handle that. that was their job, and we were consumed with other matters. and had great confidence in them to carry out their responsibilities very professional. >> mr. paulson, no one disputes that you worked very hard throughout the crisis. well known you were personally talking with senior executives at all major financial institutions and you're now legendary cell phone which i might add, is in the museum of american history. but how is the that you played no role in the handling of this aig relief that you didn't have an interest in a? how was it that despite goldman sachs extensive role as a counterparty to an agent for aig and the transaction, your extensive personal network of

associations within golden, which extended to several golden alumni on staff a treasure that you can say you didn't have any knowledge, no influence over the transaction? i don't understand that. >> well, it can't be any clearer. i had -- i had assumed that goldman sachs knew, that goldman sachs and i assumed most other major financial institutions were counterparties, but i had no knowledge of what individual claims were. and that was my concern here, was not about counterparty claims when we rescued aig. my concern was about what was going to happen to the american economy and the american people. and again, you need to understand, when we worked together, the fed and treasury, we had different authorities, different responsibilities.

but there was so much going on, that we -- we had a lot to do, and they had the authority and responsibility for dealing with the lone. >> the thing that i have trouble with the is the government gave goldman sachs your former firm, a better deal than it had a right to expect. you heard the previous testimony here. i -- is mystifying how you asked secretary treasury, this could happen and you not really know anything about it, and unless you recuse yourself from any discussions about aig. >> are about goldman sachs. >> i didn't have to recuse myself because the fact was, no one discussed it with me, consulted with me. i was involved in other matters. this was a federal reserve authority. and they had the technical expertise and that was their job. >> thank you. thank you, mr. paulson. thank you. >> at this time i would like to

give anyone who has not had an opportunity. [inaudible] >> mr. chairman? >> can't hear you. >> i'm saying we have votes on the floor, and of course, we have four votes. and that we, due to previous agreement with mr. paulson, we now are going to allow him to go. >> mr. chairman, could we ask if mr. paulson could stay for five more mes to complete on our side? two people will split time. >> to? let me put it this way, who all has not had an opportunity? one, two, three. mr. paulson, could you give us another seven minutes? and let me spend three and a half, and three and a half. >> yes, okay.

>> mr. chairman? i would be willing to put mine in writing to secretary paulson, if he would be willing to respond within a certain given time, rather than yes. mr. secretary, there's a request in terms of, if we get the questions to you in writing you will respond. >> we will get back to. >> thank you very much. let's see how we will break this down first. would the gentleman yield? you're going to give us additional seven, eight minutes? >> okay. >> good. we will break it down -- >> it will be eight minutes, write? >> you are one of the top officers for goldman sachs, write? >> yes, the top officer. >> at some of the people went to work for mr. guyton are?

>> i believe i know some. >> and when you left golden sachs and went to the treasure, you were there for three years and you've got $200 billion in tax benefits because you didn't have to pay capital gains on $500 million worth of stock, write? >> i would strongly disagree with that. because -- >> is okay. you can respond. i will send a question to in writing. the concern i have is the same concern that mr. stearns had. u.k. before our conference their nervous saying oh, my gosh, the sky is falling, we got to come up with this money very, very quickly. and you were visibly nervous when u.k. before our caucus. and then we have this bailout of aig. and you don't know anything about. mr. geithner had nothing to do with it. it just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it. they didn't know. it make you want to think that some clerk someplace was making these decisions. i don't think anybody is going

to buy that. you in mr. geithner and others were directly involved in making this decision, will you not? >> of course were director involved, and i said in my testimony. i heard mr. guyton's testimony. i heard him say the same thing. i was very supportive of that decision. to prevent the failure of aig. >> who is next? mr. lynch? >> thank you, mr. chairman. >> two minutes. >> mr. secretary, you are essentially involved in negotiations regarding bear stearns when you insisted on a very, very low price on the part of the bear stearns shareholders in order to protect the taxpayer who has been reported that you

are very supportive of a 2-dollar a share price in order to protect the shared excuse me protect the taxpayers interest. and yet, in this situation with aig, and you were the ceo of goldman sachs back in 2006, it was a long-standing relationship there between aig and goldman sachs, that you are well aware of. goldman sachs was a major counterparty on a lot of these credit default swaps with aig when you are the ceo at goldman. and that relationship continued after you left. you would have known that these people were -- that goldman was exposed here with these credit default swaps when the money went from the taxpayer to aig, and through to your former company. and i guess the question that everybody has here is, why when you insisted on bear stearns

taking a big haircut, why did you allow goldman to be reimbursed, your former company, at $0.100 on a dollar in that situation? why did you not weigh in on behalf the taxpayer? >> as i have said on a number of occasions, i did not know, i had no knowledge of the size of the claim of any bank. and i had no involvement in the decision to make payments to the counterparties. none whatsoever. i was very supportive of the rescue of aig, because a failure of that company would have been disastrous. >> especially to goldman sachs. >> the gentleman's time has expired and i yield two minutes to the gentleman from ohio.

>> mr. paulson, i want to clarify the chain of events around the original request of the t.a.r.p. dollars. you came to the congress, everyone would admit you can do is in september and said we need the money to buy troubled assets, toxic assets. as everyone knows at some point you changed your mind. when did you change your mind and decide you were going to purchase the double assets -- troubled assets, when did that happen? >> i came to congress on september 18. >> when did you change your mind? >> it was our strategy when i came to congress to buy a liquid assets, perches illiquid assets. >> when did you change a mind of? >> it was by the time -- >> before the vote on october 3 or after did you change your mind? >> i had begun considering putting a capital into the banks as one option as we got near the final vote. but i have not changed my mind yet on the strategy.

and i will say one other thing to you. write up, even after we put capital in the banks, which we were forced to -- >> did you change a my before the vote or after the vote? because we had the interchanged -- >> i change my mind after the vote because i did not change -- and i just say this? i did not change my mind on purchasing a liquid assets until, until mid to late october, after we put the capital -- after we put -- >> just went so you didn't change her mind until after the. i want to point to the book that came out in the "in fed we trust," page 226, 227. and you just been given a copy once is. the next morning mr. paulson ran into michelle davis, the spokeswoman of the treasury building, all, i think were banks. despite what paulson had told congress buying toxic assets was going to take too long. davis gave him a blix care, we haven't even gotten the bill

through congress. she remember think that how are we going to blame this. we can't say that now. so again, i am asking you was a before or after because you've set two different things that you set i started thinking about it but you said i didn't make the decision and till after. but useful to congress on the simple fact are going to buy the troubled assets. that's why you did the money. your spokeswoman directly contradicts that. >> give me a minute to answer the question. during that period, when congress was acting, the situation worsened considerably. as we got near the final vote, i was beginning to be clear to me that we are going to need to think through other options. but no -- even after we put capital in the banks -- >> did you express that concern to the congress? >> the gentleman's time has expired. >> even as we put capital into bexhill so my intent to proceed with an illiquid asset purchase program until we got into late

october. >> the gentleman's time has expired. i'm sorry, the gentleman's time has expired. the gentleman's time has expired. and i yield two minutes to the gentleman from maryland. >> thank you, mr. chairman. naked, mr. paulson that i accept your testimony that failure to act enact a financial rescue plan would have led to as you said, economic disaster. when you and the president, president bush came before the congress in the emergency, you submit a plan that did not include at the time mechanism to make sure that the taxpayer would recoup any dollars that had been extended to the financial sector. the congress at that time inserted a provision requiring the president, whoever that president may be, to submit a plan to recover those funds on behalf of the taxpayer. president obama has now done it in proposing a fee. my question to you is, do you agree that given everything the

taxpayer did to save the financial industry, that in addition to taking measures to prevent this from happening in the future, we should also make sure that we put in place a mechanism to recover the monies that went to wall street and other financial banks as part of the rescue of? >> i do agree with that. but the provision that was put into the t.a.r.p. legislation envisioned contemplated looking at a five year window, and at the end of that five year time period, if the taxpayer had recovered the money, then it was going to be a tax. now, today, as i look at the circumstance, the money is going to come back from the banks in my judgment with a profit to the taxpayer. and it's too early to tell about whether, to what extent the money is going to come back from the rest of the program. i, frank, think that taxpayers will end up being pleasantly surprised and much more will come back. so my only question about the

fee, the tax that is being suggested, is is it too soon to make that judgment, number one. but most important, i don't want that to take our focus off of dealing with what is the real problem. we benefits of this system so it doesn't happen again. >> should there be a mechanism in place to ensure that the end of the day, the taxpayer is recoups 100 percent of the t.a.r.p. funds? >> that was the right thing to do. i agree. >> thank you. thank you, mr. paulson. >> thank you, mr. paulson, for -- >> i agreed to stay for another eight minutes. it's been 10 minutes. >> for that reason, i dismissed the gentleman who had the time to tell him his time has passed. and for the committee, and especially for chairman towns, may i thank you for not only eight minutes, butank you.

>> this weekend on c-span2 book tv. >> in the nation's capital and across the country, listen to c-span radio in washington >> u.s. senate convenes next. they will start with an hour of

general speeches and a plan to finish a measure that increases the u.s. federal debt limit. in the late morning, we expect vote on for amendments and final passage. later, debate and vote on a second term for ben bernanke as fed chairman who scored a appointment expires on sunday. the house is not in session today. republicans are meeting today and tomorrow. president obama will speak to republicans to our. the president today and can't of florida for a town hall meeting. live coverage just after 1 p.m. eastern on c-span. now to the senate here on c-span2. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. for the beauty of the earth, robed in the garb of providential love, we raise our morning hymn of praise. today, give our senators vivid

vision to know your will and to follow your leading. lord, inspire them to engage in selfless service with courage and compassion, fulfilling their call to be instruments of your glory. in these challenging times, drive them to their knees for the inner strength that will keep their faith from faltering when pressured. provide them with the strengthening joys of your spirit and the newness of life that only you can give. we pray in your great name.

amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., january 28, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable michael bennet , a senator from the state of colorado, to perform the duties of the chair. signed: robert c. byrd, presidet pro tempore.

mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: following leader remarks there will be a period of morning business for an hour. the time will be controlled by the two leaders or their designees. senator sanders is going to control 15 minutes of the majority time. we have a half-hour, so he will have 15 minutes of that. following morning business, the senate will resume h.j. res. 45, the debt limit legislation and will proceed to votes: brownback amendment, sessions-mccaskill amendment, reid amendment, baucus amendment -- actually baucus for reid -- and passage of h.j. res. 45. following votes there will be an hour of debate regarding the cloture vote on the nomination of ben bernanke. mr. president, we're going to try to see if we can work with both democrats and republicans to have more time debate prior to a vote on ben bernanke. then f we can work -- if we can

work that out, we can have an extended period of time, whatever the senators wanted, prior to mr. bernanke. and then we would have cloture and perhaps final passage. right away we don't have that worked out. the order before the senate is following the series of five votes there will be an hour of debate prior to a cloture vote on ben bernanke. mr. president, i see the distinguished judiciary chair here. we have a half-hour time, and i'd be happy to give to my friend whatever time he desires. how much time does my friend need? ten minutes to the chairman of the judiciary committee, pat leahy. i've already indicated that senator sanders will have 15 minutes of our time. the presiding ce leadership time is reserved. under the previous order, there will be a period of morning business for one hour with the time equally divided between the

two leaders or their designees, with the senator from vermont, mr. sanders, controlling 15 minutes of the majority time. mr. leahy: mr. president? the presiding officer: the senator from vermont. mr. leahy: mr. president, i thank my good friend from nevada, the majority leader, for -- mr. president, before i speak, i see the distinguished republican leader, and i will reserve my time while i give him time to speak, of course. mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: i want to thank my friend from vermont. i hope i will not inconvenience him. i have a very short opening statement. i thank him for giving me the opportunity to make that. mr. president? the presiding officer: the republican leader. mr. mcconnell: as always, we appreciate the the president coming to the capitol last night. i take him at his word when he says he wants to work with us on

issues that benefit the nation, and in particular to grow jobs. i'd like to speak this morning about two areas in particular that meet the criteria of bipartisan achievements and job growth. agreements to increase our exports and finding more american energy. those are two areas upon which we ought to be able to find bipartisan agreement. the president called for increased exports and for the congress to pass trade agreements that have languished under the current majority in the senate. republicans agree with the need to increase trade and with the need to ratify trade agreements. with colombia and other important trading partners that so far have met resistance on the other side of the aisle. we also support passing a sensible bill to help pakistan establish reinstruction opportunity zones that actually increase trade and do not impose

self--defeating restrictions. we agree with the president's call to pass these agreements. we agree that these agreements will lead to more american jobs. the congress should act on these agreements. the president also called for producing more american energy. this is an area with a huge opportunity for american jobs that can't -- that can't -- be sent overseas. we agree with his call for more clean energy produced here in america. we agree with his call for building more nuclear plants. we agree with his call for increased offshore exploration for oil and for gas. we agree with his call for development of clean coal technologies. we should build a new generation of clean nuclear plants in this country. the senate republicans support building 100 new plants as quickly as possible. we hope democrats will join news that effort, particularly now

with the president's call to action. and the president could start by moving forward on the nuclear loan guarantee program that was included in the bipartisan 2005 energy bill. he could also put forward a plan for dealing with the waste that comes from these plants in a safe and secure manner. the president and i agree on the need to meet in the middle to find bipartisan agreement to grow jobs. i've outlined two specific areas where the president and republicans in congress agree. we know that increased american energy without a new national energy tax will grow good jobs. we know that increasing markets for our farmers, entrepreneurs and manufacturers overseas through trade agreements will grow good jobs. we can get these done, and i hope the president will join us in calling on the majority to bring these issues to the floor here in the senate. now, one thing we had hoped to hear more about from the

president last night was the administration's handling of the attempted christmas day bombing. after 9/11, all americans recognized the need to create and coordinate myriad tools of defense, security and intelligence to protect us from future attacks. that's why americans are so troubled by the fact that the administration seems to have lost sight of this essential requirement for national security out of a preoccupation -- a preoccupation -- with reading the christmas day bomber his miranda rights. apparently there is little coordination among the administration's national security apparatus on how to treat this terrorist who nearly killed 300 innocent people over detroit on christmas day. shockingly, the administration then made the hasty decision to treat him as a civilian defendant, including advising him of a right to remain silent rather than as an intelligence resource to be thoroughly

interrogated in order to obtain potentially lifesaving information. republicans have issued a letter to attorney general holder demanding answers to some of the vital questions that arise out of the administration's handling of this attempted attack. it is critical that americans have a full and timely understanding of the policy and legal rationale upon which the ill-advised decision surrounding this narrowly averted calamity were made. until niece concerns are -- until these concerns are addressed, republicans will continue to raise them on behalf of the american people. mr. president, i yield the floor. mr. leahy: mr. president? the presiding officer: the senator from vermont. mr. leahy: mr. president, i understand i have ten minutes? the presiding officer: the senator is correct. mr. leahy: mr. president, i hope the american people watched and heard president obama's speech last night and were reassured. i know i was. there are so many things that he

covered, i won't try to repeat all those, but i would like to expand on one of the very important matters he raised. on this, i will wear my hat as chairman of the senate judiciary committee. i saw the supreme court's 5-4 decision last week in citizens united vs. federal election commission. that decision threatens to allow corporations to drown out the individual voices of hard-working americans in our elections by overturning years of work in congress, years of work by both republicans and democrats alike in campaign finance laws, by reversing a century of its own supreme court precedent, the conservative activist bloc on the supreme court reached an unnecessary and

improper decision that's going to distort future elections. the citizens united decision turns the idea of government of and by and for the people on its head. it creates new rights for wall street at the expense of main street. congress, on behalf of the american people, struggled for years to enact campaign finance reform. virtually every american wanted campaign finance reform, and we finally did that in a deposit way in the 2002 mccain-feingold act. this milestone campaign finance reform strengthened the laws protecting the interests of all americans by ensuring a fair electoral process. in the 2003 case, mcconnell vs. the federal election commission, the united states supreme court upheld the key provision of the act against a

first amendment challenge. that was consistent with 100 years of judicial precedent and law, including a longg standingg criminal law prohibiting corporations from contributing to federal electn campaigns. now, only six years after upholding 100 years of precedent, a thin majority of the supreme court, made possible by president bush's appointment of justice alito, has thrown out important parts of the law, and they have run roughshod over a long line of long-standing court precedent. mr. president, ts is a threat to the rule of law. it overrules congressional efforts to keep powerful moneyed interests from swamping individual voices and interests. in his confirmation hearing, justice alito -- i might say

under oath -- testified that the role of the supreme court is a limited role. it has to do what it's supposed to do vigilantly, but it also has to be equally vigilant about not stepping over the bound, invading the authority of congress. that was then when he was seeking confirmation. this is now. and as justice stevens' dissent makes clear, the narrow majority of the justices, including justice alito substituted their own preferences for those of the duly elected congress despite 100 years of their own supreme court precedence. this is are the most partisan decision since bush vs. gore. that decision by the activist conservative bloc in the supreme court intervened in a presidential election. this decision is broader and more damaging in that they have

now decided to intervene in all elections. last week's decisions are the latest example, but probably the most extreme, of a willingness of a narrow majority of the supreme court to render decisions from the bench to suit their own ideological agenda. i believe that the activist conservatives now in the supreme court got this decision dramatically wrong as a matter of constitutional interpretation and also of common sense. corporations are not the same as individual american men and women. they do not have the same rights, the same morals, the same ideals. they do not vote. they do not have the same role in our election as individual citizens. at the core of the first amendment is the right of individual americans -- individual men and women -- to

participate in the political process to speak and crucially, to be heard. that is what the campaign finance laws were designed to ensure, that american men and women can be heard and fairly participate in elections. last week's decision puts this inalienable right at risk by ignoring not only the extensive findings of congress and passing the law, but also logic and reality. the loud megaphone that can be bought by corporate money and drown out the unamplified voices of individual americans. campaign finance laws passed by congress reflect the clear reasoning for treating individuals and their free speech rights differently from corporations and their money. if corporations can use their wealth to make independent expenditures for electioneering

because they're now suddenly being given by five people on the supreme court constitutional rights at elections, what can prohibit them from contributing directly to campaigns? what principle allows us to bar foreign corporations -- foreign corporations -- from likewise engaging in campaign communications? the largest companies garner annual profits of hundreds of billions of dollars. they're doing this even during one of the greatest financial disasters in our nation's history. if even a fraction of that money were directed toward political activity, those companies would have the financial power to dominate and determine this country's elections and the laws of this country. the risk of this new ruling extends even further. the conservative activist majority and citizens united fails to make clear whether new rights are limited to american

corporations or if they apply to foreign corporations. can the chinese come in and decide in effect american elections? it's hard to envision that this is what the founding fars meant to enshrine in -- fathers meant to enshrine in the discussion when they wrote the first amendment. it's also hard to understand how these conservative activists who sound incessant alarm bells about the imagined dangers of applying foreign law and recognizing rights for noncitizens in our courts now cannot understand the threat of this encroachment on the very core of our democracy. now, i'm also disappointed in the justices, who as nominees before the senate, when terp testifying under -- when they were testifying under oath, proclaimed their belief in judicial modesty and judicial restraint, could so then turn around and brazenly ignore the proper judicial role in so

cavalier a manner, overturn supreme court precedent and override the rule of law. mr. president, i cannot remember a time in my 36 years here in the senate when i've come on this floor to criticize even decisions i disagree with. but this one i am, because it goes to the very core of our democracy. it will allow major corporations who should have laws written to control their effect on america instead control america. that's not the america i grew up in. it is not the america that vermonters believe in, where individuals have a right to speak but not megacorporations. some come to the opposite

conclusions about the right of orptions to spend unlimited money in elections for that enshrined in our laws and prior supreme court decisions. did we amend the constitution to somehow equate corporations to people? no, we did not. nowhere does the constitution even mention corporations. did we modify the first amendment? no, the first amendment reads as it did six years ago. indeed, as it did 219 years ago when the bill of rights was ratified and the 14th state in the union, vermont, ratified the constitution. as justice stevens noted in his dissent, the only relevant thing that has changed since austin mcconnell is the composition of the court. last week's decision and this troubling inconsistency with the court's other interpretations of the constitution leads us with

serious questions about how to ensure that our elections are not corrupted by unchecked corporate spending. it also reinforces the profound concern i have had about the real world -- the real-world consequences of the supreme court's recent decisions for hard-working americans, real americans on issues like equal pay for equal work. and basically this activist conservative supreme court ruled that men could get paid more than women or the power of congress under the 14th and 15th amendment to passively rights laws, like the voting rights act, or issues thought to be long-settled, like the meaning of brown v. board of education. the newly constituted supreme court seems determined to accrue to itself the powers given by the constitution, to congress

and to rewrite long-established presence dense, certainly act in contrary to what these same justices said in their sworn testimony when they were being confirmed. i think, mr. president, it's something that every one of us as americans have to work to ensure that the system of checks and balances envisioned by the founders is not cast aside by the whimsical preferences of five justices overriding the rights of 300 million americans. mr. president, i ask consent that my whole statement be made part of the record. the presiding officer: without objection. mr. leahy: mr. president, i also would introduce today the refugee opportunity act, legislation that corrects an

unfortunate limitation under current law. and i thank senator lugar for joining me in support of this legislation. the immigration statute requires refugees resettled in the united states would remain on u.s. soil for a full year before adjusting to lawful permanent residence. for many, this requirement presents no obstacle as we settled refugees immediately begin to work, learn english and drobt their local communities. but the one-year physical presence requirement poses a significant barrier to resettled refugees who are eager and willing to serve the united states government overseas. if they do, they lose that settlement. we can correct that. i'd ask -- i'd ask my full statement be included in the record. and again, mr. president, i can only emphasize on the supreme court, i do not recall a time in

my 36 years coming here to speak about supreme court decisions i disagree with, even though there have been many, but this is so egregious, as chairman of the senate judiciary committee, i would feel that i was neglecting my duties if i did not come and speak against it. mr. president, i yield the floor. . sessions: mr. president? the presiding officer: the senator from alabama. mr. sessions: i'd like to share a few thoughts on the sessions-mccaskill discretionary caps amendment that would limit spending to the budget item, budget levels that we passed. but i would just like to say, i -- i was disappointed that last night the president and my good friend and very effective leader of the judiciary committee, mr. -- senator leahy, have really politicized a very important decision of the supreme court of the united

states. the judges didn't take an oath not to reverse bad precedent. they swore an oath of fidelity to the united states constitution. and the first amendment guarantees the right of free speech, and for over a decade, i warned against this, others warned that this legislation that we were passing violated the first amendment of the united states constitution and, in fact, one of the supporters of the amendment, senator feingold, at one point offered a constitutional amendment to amend the first amendment because he recognized that this campaign restriction on spending during an election cycle ran afoul of the constitution. then at some point they decided to go forward with it. and i would just say two things about it. how it happened was this, during oral arguments on the showing on whether or not a -- a company,

the corporation that had produced a film about one of the presidential candidates could show that film before a an election and it was being blocked by the court that said you can't show a film about an election candidate. and they objected. they said this is free speech. and the supreme court asked this question during oral argument to the government's lawyer, who was defending the statute that we unwisely passed. and the question was well, counsel, what if a company produced a book and wanted to publish a book, could they not -- could -- would this statute prohibit that? and what was the answer? yes. and the supreme court said, wait a minute, this is a serious thing. so you passed a law, congress,

that prohibits a group of american citizens from publishing a book that might have something to do with an election? this is big deal. we've got laws that protect pornography and all kinds of things, but the first a.m. was written for free polit -- but the first amendment was written for free political speech. anyway, you won't go into detail -- i've talked about it before -- but i just wanted to push back a little bit. i'm have a disappointed that the president and my colleagues are attempting to politicize a very serious first amendment issue that we passed. they can write editorials on the day of an election, newspapers can, but if the ford motor company gets tired of g.m. getting billions and billions of dollars from the federal government, can they not run an ad and say, don't do this?

anyway... mr. president, we will be voting soon on a very important piece of legislation, and i'm so pleased to be working with senator clai claire mccaskill, y democratic colleague from missouri, to say that we need to do better about spending. and we do. and what happens in this body is that we too often find ways to get around the budgets that we pass. last year we passed a budget that i thought spent too much but it passed and it's our budget. and it calls for spending for the next five years to round -- around 1% to 2%, but historically we've been violating that, mr. president. historically we find this gimmicks, this way -- this gimmick, this way, this matter and to go above that. and it's going above that -- and i can demonstrate how baseline

increases in spending compound themselves over years and get us in serious financial trouble. what we need to do is stay with our budget. now, we need to have an option to go outside the budget or above the budget in case of an emergency, there's no doubt about that. but we've too often been able to get around the budget through manipulation and through emergency spending designations. so what our bill would do -- and it has a number of democratic senator that are supporting it, i think and most republicans will support it. and i think west virginia an opportunity to pass it and i think -- and i think we have an opportunity to pass it and i think it would provide some integrity to our process. the american people aren't trusting us and i think they're right not to trust us. and i'm prepared to debate that. committee show they have a right not to trust our budget numbers we've put out. we don't stick with it.

so what this would say, that for five years we'll take the very numbers that were in last year's budget, the budget we're operating under today, and we would place them in a statute by number, how many million dollars for this we would allow to be spent this year. and defense numbers and non-defense numbers. and when we would do that if it comes about that an attempt is made to violate the budget and to spend more than a senator could raise a point of order, and it would take two-thirds vote of the senate to override that point of order. i think that is a good, sound legislation. make no mistake, it will put some teeth in it. for those of us who know that we've given in too often to the desire to spend more, we get

multiple demands from our citizens, and we sometimes prove unable to say, well, i do need to help you, but i'm going to have to cut over here. what we do say is, well, i can't reduce anything. that would make those people uneasy and unhappy with me. but i want to help this person, so i'll just increase my spending and go over the debt some way here -- over the budget limit. i am of the belief that this legislation, though modest and very consistent with the numbers president obama talked about last night -- in fact, i think they're almost in perfect harmony with the freeze that he suggested would happen last night. this would actually allow a 1% to 2% increase, as i said, per year in defense and non-defense spending. this would be the kind of thing that would be in harmony with

the president's proposal. but the american people are cynical. we say these things. the president says these things. our members of the senate say these things. but our spending, when we look back at them don't look so well. for example, last year our domestic discretionary spending, the money that we actually control in the senate, increased 12%, which is a number above what we can realistically justify. and remember, we also had on top of that the stimulus package. a lot of that money still hasn't been spent -- maybe a third of it -- and that's pouring into the economy. so now is the time for us to get ahold of baseline spending. i really believe we can do it. these are some of the objections we've had about it. would it prevent the federal government from responding to emergencies? no. i would just point out that the emergency spending bills that came up before congress are

consistently passed with huge majorities. for example, the defense bill on the war against terrorism and tsunami relief, 100-0. the veterans care emergency we had, 99-1. the katrina spending was passed by unanimous vote. the second emergency for katrina, 97-0. one another katrina vote 93-0. supplemental appropriations for disaster loans, no budget point of order even raised. another hurricane katrina supplemental, 80-14. emergency stabilization act, 75 -- 74-25. the votes have been high. but everyone doesn't -- every one of these things does not need to be passed perhaps at the

level initially proposed. sometimes you may support katrina or some other supplemental and you think the numbers are too high, and you can object and the appropriators can come back with a smaller number and it would pass. that's the way the process should work. but we are violating the act too much. i would urge my colleagues to consider this legislation and vote for it. would it prevent congress from adequately funding missions in iraq and afghanistan? the answer is no to that. the 67-vote threshold would not apply in iraq and afghanistan and our war against al qaeda because the amendment explicitly states that this rule does not apply -- quote -- "in the case of the defense budgetary authority if congress declares war or authorizes the use of force," which we have done in this situation. in a wartime it does not

constrict our ability. we still have to vote for it and make sure we have the votes for it, but we do not have to have a supermajority of votes. i think that's an important point of it. some would say you're attempting to balance the entire budget by reducing non-defense discretionary spending, which is relatively small part of the budget. i would just say we know this won't fully balance the budget, but i can demonstrate that the growth in spending that's occurring on the discretionary account in the last several years has far acceded the -- exceeded the growth of medicare and social security and it's crowding out our ability to fund medicare and social security t.'s a threat to those programs as well as the long-term fiscal

status of our country. finally, i would just point out, madam president, that i just left a budget committee hearing, and mr. elmendorf, the c.b.o. director, testified this number today and indicated to us that if several more things that probably are likely to occur, occur -- which he did not use in his calculations the number here would be much worse, much higher. he says we are facing a critical economically threatening force of debt that we have got to do better about. and so did chairman conrad and so did ranking member gregg in their opening statements. i would point out that he reaffirmed their score that under the present path we are on, we now pay in 2009, $170

billion per year in interest. that's what we pay on people who loaned us money. the public debt. by 2019, ten years, that debt will triple from $5.7 trillion to over $17 trillion. and the interest we pay in one year on that debt is $799 billion. and when you think about it, that the highway program, the federal highway program is about $40 billion to $50 billion, aid to education is not much more than that, this is going to crowd out all kinds of spending that so many of my colleagues would like to see happen. we're either going to have massive increases in taxes or major reductions in spending just so we can budget and pay for the interest on this debt. he says it's unsustainable.

this is a nonpartisan person. the concord coalition, that has been a great -- has a great focus on excessive spending in this country, the concord coalition supports the amendment that senator mccaskill and i are offering. so does the committee for responsible federal budget, a great bipartisan group that's been watching budget issues for many years and are composed of some of the previous budget directors and experts on these matters, a very responsible group. the heritage foundation, a solid group of conservative scholars that have written persuasively about the dangers of debt as well as the national taxpayers union, which represents individual americans who realize the threat to our country from soaring debt and bigger and bigger spending. they all support this.

i think it's the kind of bipartisan legislation that would send a message not just to our congress here that we're going to contain spending, but also to the whole world that we're putting in place some things that indicate we are going to be serious about avoiding this path that we're on. and this is not made up. this is based on present commitments of the united states government in law, based on the projections of income that we'll receive and the spending levels that are surging. i hope my colleagues will seize upon this. i think it will help the stock market. i think it will help our own focus. and it would be a statement by we senators that we're serious about this. we're going to work together to get it done. and i urge my colleagues to support chair and yield the floor. a senator: madam president?

the presiding officer: the senator from nebraska. mr. johanns: thank you, madam president. i rise today to speak about the same topic that the last senator spoke about. but let me, if i might, start my comments today by complimenting senator sessions. i looked at that graph that was just up there; the one thing that it points out to me in very, very vivid detail is that spiraling courts, that -- spiraling costs, that straight up cost is only to pay the interest. it doesn't even start to pay down the principal. i stand here today before offering some comments about this further, thinking how much we would unleash the potential of this country if we just sent a signal that we were getting serious about our spending, our debt load, and we were intent on addressing that.

that's what brings me to the floor today, madam president. i rise today to speak against raising the debt ceiling. now, this is a decision that should not be taken lightly. no one in this body would take this decision lightly. it's a serious matter, enormously serious. our country has debt, and it's important that we start to deal with these commitments and the spending that is just out of control. ralph waldo emerson once said -- and i'm quoting -- "pay every debt as if god wrote the bill." unquote. yet i could not support increasing the amount that treasury can borrow by $1.9 trillion, the largest increase ever contemplated, in the current environment of spending the people's money as if it meant nothing.

you see, what's missing for me here to get to a point where you could raise the debt ceiling is a commitment, a plan, a serious plan, a road map on how we get our spending under control. the orchestra, sadly, madam president, continues to play oblivious to our government barreling down this entitlement and spending iceberg which is coming our way. there's just no doubt about it. if this increase passes, the debt limit will have increased about 35% in the last year. think about that. 35% in the last year. and we're not talking about a few million dollars or billion dollars. we're talking about trillions of dollars. let me repeat that. since this administration took

the reins, our debt ceiling will have increased by over one-third. now, we as parents teach our children that we say money doesn't grow on trees. how many times did i tell my kids that? but it seems like the u.s. government has missed this sage lesson. the latest proposed increase is undoubtedly the largest increase in history, more than double the previous record of $984 billion. since arriving here, i've consistently argued for setting priorities and against wasteful spending. i would just like to say again -- and i've said this on the floor -- you know, as my time as governor of nebraska went on, i realized that there were no easy choices in balancing a budget. but we had a constitutional mandate to balance the budget back home in nebraska. and what's more, our state constitution prohibited us from

borrowing money. what did that mean? i couldn't balance the budget by issuing debt. this whole idea of the federal government issuing more and more debt was a foreign concept back home. and so, when i came out here to join the president's cabinet, i didn't have to turn to the last governor and say, sorry about all that debt i took on for the state. there is no debt in nebraska. we pay our bills. since arriving here, though, i begin to realize that this government tries to be all things to all people, every day, all day. the u.s. government simply cannot continue on that path. you see, we really believe back home that less government is better government. now, many of my colleagues would probably come to the floor and

stand up and disagree with that. they may believe that literally you've got to spend your way out of these problems. you've got to spend your way to wealth. but there's nothing in our heritage that would lead me to the conclusion that that's the right approach. even if you disagree, we can have a respectful debate. i'm hard pressed to find anyone, though, who can argue with the reality of the numbers. i used to tell my cabinet when i was governor when we were dealing with tough budget issues, look, folks, this isn't magic. it's math. and the numbers don't lie. the numbers tell us that the nation's fiscal course is not sustain afpblt -- sustainable. by the end of this year our debt held by the public will be more than 60% of the gross domestic product. now, think about this: among

internationally recognized economic thresholds, 60% is generally known as the tipping point towards an unsustainable nation. the european union act actually treats it that way. you can't even be a member of the european union if your debt exceeds 60% of your gross domestic product. think about this. this great nation wouldn't be eligible to join the european union. looking down the road, within ten years, our publicly held debt will approach the 90% mark, and you see, once that snowball gets going down that mountain, good luck of ever stopping the avalanche. we won't be able to catch up with this runaway debt if we don't start dealing with it now. we are, in my judgment, on the verge of a vicious cycle that

requires more taxes, more debt to be taken on by american families and sent overseas to foreign creditors. if we allow our country to slip into this cycle -- and we're dangerously close to it now -- then that shining city on the hill that former president reagan would often speak about, it's more dim, if not dark. instead of voting to increase the debt limit and simply kicking the fiscal can down the road, we need first to devise some concrete interventions. unfortunately, the president's 2010 budget proposes a trillion-dollar deficit on average for each of the next ten years. with that vision, debt limit increases are going to be very commonplace around here. the cost of bearing such debt will swallow up our nation's

resources. it will dpinnish productivity. -- it will diminish productivity. now, i know the temptation is great. i saw it last night in the president's speech and i say this very respectfully. the temptation is great to say, you know, folks, these are the last guys' -- the last guy's problem, this is the proib created -- this is the problem i created. and you know, madam president, all i can say is this. what that reminds me of would be like me becoming the mayor of lincoln -- and i served two terms as mayor there -- and this time of the year you have terrible pothole problems. it would be like me saying, you know, those potholes there were caused by the last guy. i'll fix the ones that arose during my tenure. you know, i think what the american people are asking us to do is to start working together

to solve the problem. but, unfortunately, these aren't just potholes in the road of our nation's history. these are massive problems that are going to seriously impact our children and grandchildren and bring down their quality of life. madam president, i yield the floor. mr. brownback: madam president? the presiding officer: the senator from kansas. mr. brownback: madam president, how much time is remaining on our side? the presiding officer: 4 minutes and 55 seconds. mr. brownback: okay. madam president, i'm happy to go back and forth if that was the agreed-upon order of things. that would be certainly acceptable to me. i just wanted to make sure what time we had on our side. the presiding officer: without objection. the senator from vermont. mr. sanders: thank you, madam president. madam president, in a little while, we are going to be casting votes on an issue of

enormous consequence and that is whether we reappoint ben bernanke as chairman of the fed. and i'm here to argue that that would be a very bad decision, that we should reject this nomination, that we need in this country a new wall street which understands that its function is not simply to make as much money as it can for extraordinarily wealthy people on the street but begin to integrate the functions of wall street into our productive economy, make credit available to small- and medium-sized businesses so we can break out of this horrendous recession which is causing so much pain from one end of this country to the other.

and in order to create a new wall street, we need a new fed and we need a new fed chairman who is going to provide new leadership. the sam same-oamed, same-old ist going to work. mr. president, everybody in america agrees and understands that a little over a year ago, our nation -- in fact, the world's financial system -- came to the edge of a major collapse, a major collapse. and, madam president, everybody also understands that the function of the fed is to protect the safety and soundness of our financial institutions. that is its main function. can anybody deny with a straight face that the fed and its chairman, mr. bernanke, failed at its task?

they failed. this is not a personal attack against mr. bernanke. but while wall street became converted into the largest gambling casino in the history of the world, where was mr. bernanke and the fed, whose job is to protect the safety and soundness of our financial institutions? they weren't there. and it seems to me to be a very bad idea to reward somebody with reappointment who failed at an enormously important task which has driven this country into a severe recession so that 17% of our work force today is either unemployed or underemployed. millions of our fellow americans have lost their homes, they've lost their savings,

they've lost their ability to send their kids to college. they've lost their hopes for the future. mr. bernanke failed at his job. he should not be rewarded with reappointment. further, madam president, many of us, after eight years of the bush administration, we said it is time for a change, it is time to change the priorities of this nation. time to move us in a new direction. the evidence is overwhelming that from an economic perspective as well as many other perspectives, the bush administration failed. let me quote from "the washington post" earlier this month, and this is what they said about the bush economy. quote -- "the past decade was the worst for the u economy in -- for the u.s. economy in modern times. it was, according to a wide

range of data, a lost decade -- let me repeat, a lost decade for american workers. there has been zero net job creation since december 199 9, zero. middle-income households made less in 2008 when adjusted for inflation than they did in 1999." a lost decade. standard of living for american workers, down. creation of wealth, down for american workers. ben bernanke was not only appointed by george w. bush to be chairman of the fed, madam president, he was a member of the bush administration. in fact, he was the chairman of president bush's council of economic advisors. why do you not want to reappoint somebody who not only failed at his job as chairman of the fed in terms of protecting the

safety and soundness of our financial institutions, but was an architect of the bush economy, which was a disaster for american workers. madam president, we need a new direction at the fed. and it's not only looking back at the failures of mr. bernanke, it is looking forward and saying, how can the fed respond to begin to protect the middle class and working families of our country? and here's something that has not been discussed enough. the fed today has enormous powers. now, many will remember that as part of the bailout, mr. bernanke and the bush administration not only pushed "if a $7 -- not only pushed for a $700 billion bailout for wall street, but on top of that, mr. bernanke

provided trillions of dollars -- let me underline that -- trillions of dollars in zero-interest loans to large financial institutions. as a member of the budget committee, i had the opportunity to ask mr. bernanke which financial institutions received those trillions of dollars. i don't think that's an unreasonable question on behalf of the american people. and mr. bernanke said in so many words, sorry, senator, i'm not going to tell you. the american people don't have to know who received trillions of dollars of their money. that, to me, is totally unacceptable. we need transparency at the fed and mr. bernanke has not provided that transparency. i have introduced legislation to bring that transparency to the fed, somebody whose views are

very important than mine on many issues, ron paul in the house, brought forward similar legislation. we need transparency. we need a chairman of the fed who will give us that transparency, and that's something that mr. bernanke can do tomorrow. madam president, in my state of vermont, and i'm sure in your state of new york, people are calling you every single day and they are saying, we are sick and tired of paying 25% or 35% interest rates on our credit cards from the same banks and bunch of crooks that we bailed out who got us into this recession in the first place. now, imagine that. you've got people who act on wall street in a reckless, irresponsible, illegal way, taxpayers bail them out and they say, thank you, taxpayers; by the way, we're going to raise your interest rates on your credit cards. have a nice day. all over america people cannot

believe, they're outraged that this is happening. well, you know what? mr. bernanke and the fed have the authority today to lower interest rates on credit cards. they could do that today, and that is what they should do,because one of their responsibilities is to protect consumers against outrageous and fraudulent activities. and, in my view, charging people 25% or 30% is outrageous and fraudulent and use russ is user. madam president, all over this country -- the president mentioned it last night, appropriately so -- all over this country, small- and medium-sized businesses who are making a profit are crying out for low-interest loans in order to expand their businesses and to hire new workers. one of the great economic problems we're having as a

nation -- the president touched on it last night -- is the need for small, productive businesses to get the low-interest loans they need. well, mr. bernanke was there. the zero-interest loans, the large failed fraudulently, dishonestly run wall street firms, but he ain't there for small businesses all over this country who desperately need low-interest loans. the fed has the authority toda today -- not tomorrow, today -- to provide low-interest loans to small- and medium-sized businesses so that we can begin to hire new workers and bring our economy out of the severe recession that we are currently in. madam president, the reason, as i understand it, that the taxpayers of this country -- against my vote, i should say --

were asked to bail out the crooks on wall street was because they were too big to fail. you see, if a small business goes under, that's okay. somebody's worked his whole life building the business, fails, no problem. we don't help them. but if you're a big, large financial institution and you engage in reckless, illegal behavior, we bail you out, because if you go down, you're going to take a large part of the economy with you. you're too big to fail. well, many of my colleagues might be surprised to know that three out of the four largest financial institutions in this country that we bailed out because they were too big to fail are bigger today than they were before we bailed them out because they were too big to fail. that may make sense to somebody. not to this united states senator. it seems to me that what common sense suggests is that we break up these large financial institutions so, a, that the

american people are never again put in the position of having to bail them out because they're too big to fail. and second of all, that we begin to understand what teddy roosevelt understood 100 years ago, is that that concentration of ownership is dangerous for the economy. today you have four major banks who are writing -- who are providing two-thirds of the credit cards in this country. four major financial institutions, two-thirds of all the credit cards. you have four major financial institutions who are writing half the mortgages in america. that's wrong. break up the large financial institutions, as we've talked about all over the world. ben bernanke has the ability to begin to do that tomorrow. i've not heard one word from him to suggest that he will do that.

madam president, the american people are angry. the american people are frustrated. and what they are angry and frustrated about is that in many instances they are working longer hours for lower wages than they used to if they are fortunate enough to have a job. the american people are frustrated and angry because this immediate financial crisis and severe recession was caused by the recklessness and irresponsibility of a handful of people on wall street. and the american people are frustrated and angry because they are not seeing the kind of accountability and change in terms of the activity on wall

street that they expect and demand to happen. quite the contrary. after having bailed out people who acted in an illegal and irresponsible way, what they are seeing is wall street pumping millions of dollars into campaign contributions and lobbying so that we can bring them back to where they were before the bailout. the american people want change in the way our financial institutions run. the american people want change at the fed. and i believe the american people want a new chairman or chairwoman at the fed. now is the time to say to the american people, "we hear you. we are going to bring about change. we are going to deny the reappointment of ben bernanke as chairman. we are going to ask president bush to give us a new nominee who is going to stand up for the

middle class and working class of this country rather than for the big money interests on wall street." thank you very much, madam chair. and with that, i would yield the floor. mr. brownback: madam president? the presiding officer: the senator from kansas. mr. brownback: madam president, i ask first unanimous consent to add the following cosponsors to my amendment number 3309, the carfa amendment: senators barrasso, crapo and johanns. the presiding officer: without objection. mr. brownback: thank you very much, mr. president. i want to point out something. the carfa bill that will be voted on here shortly has passed this senate every congress since the 107th congress. it's either passed by roll call vote or unanimous consent. so this is nothing new. it's something that's passed this body multiple times. only now it counts. now when people vote on it, this will count. the carfa bill breaks the federal government into four pieces.

a fourth of the federal government is looked at each year and then recommendations made out of that commission on a privilege motion that must be voted on. it is a spending commission. it is targeted at reducing federal spending, which is clearly where the american public wants us to go. they don't want to raise taxes. they want to focus on our spending, getting wasteful spending under control. this is it. it is a mechanism we've done before, a mechanism that passed this congress multiple times in the budget agreement, and this times it counts. i'd ask my colleagues to look at this and say if you voted on it and support it and passed, do it now. the president spoke about the need to track on the deficit last night. he was very clear that we need to get this deficit under control. the first step in getting the deficit under control is reduce your spending. get your spending under control. and here is the latest chart on this, on the gross federal debt as a percentage of the g.d.p. i point out to my colleagues that this year we passed the 90%

tkrerb hold of debt to -- threshold of debt to economy. of the total economy size, about $14 trillion, we're going to have 90% of that is going to be debt. this is publicly and privately held debt combined. this is the level at which economists say this starts hurting your economy, can drive down your growth as much as 4% per year. we've had many years where we haven't even had 4% growth. so you can put your negative economic growth by the virtue of carrying this level of debt. you pass, you blow through that number this year. blow through it headed towards 100% of g.d.p., debt to g.d.p. that's this year's number. that's the one that's just out. here is a breakdown of that. you want to see it in this graphic form. some people will say we're at 60% debt to economic activity. that's of the publicly held debt. that's the piece the chinese own and a lot of others. but if you look at the total

debt, this is what we owe to ourselves: social security trust fund, other trust funds that we have, which i think we ought to pay back. i think we ought to be responsible with. that's way up here, over the 90% level. it is in the danger zone. it's time to get it under control. carfa is the way to do it. carfa is a simple mechanism. eight people, appointed four in this body, four by the house. programs must pass by six of eight members that vote on that. that then is reported to the committee structure that is in the applicable areas of the recommendations for elimination. the committee has 30 days to look and review the recommendations. they can't amend it but they can review those recommendations, say to the public here is what this is going to do if we make these cuts. then it's subject to a privilege motion. the report comes before this body as a privilege motion. ten hours of debate before you

go to the bill. then there is debate on the bill and a required vote with the 51-vote margin to pass it. that's all set in the statute. this is the brac process, the base closing realignment commission process we've used in the past successfully to close military bases and to save us $60 billion annually in spending on military bases. it has saved us $60 billion annually in closing down bases. putting in more efficient alignment. this will do the same at the federal level. and it's not as if we don't have some wasteful spending here at the federal level. this is the score card that the o.m.b. does on federal spending by agencies. you can see a bunch of our agencies get d's or f's on the program reviews that they have done. department of labor, department of education get f's on their spending for as far as its utility and its measurable for what it was intended and targeted to do.

if we got the entire agency rated at f's or d's or d minus', don't you think there are a few programs in there that ought to be eliminated and we can do without hurting the overall government or people or the economy? absolutely. that's what the american people is screaming for us to do. they don't want us to raise taxes. they want us to cut spending. that's what the public is doing themselves in this process. this is just very clearly the process by which we should follow. this is the time that this vote counts. my colleagues have been willing to support this concept in the budget resolution, and now's the time that they would have the force of law if we're able to get it on through and clear. i would also submit to you that this is one that the public is going to hear more and more about as everyone gets focused on spending and what we need to do online spending. this will be the -- to do on spending.

this will be the type of process we need to do and need to use. i urge a "yes" vote on the carfa amendment and would hope my colleagues would put that in the bill so we could get a process by which we could legitimately start cutting federal spending in a responsible way. madam president, i would yield the floor and rvef time. the presiding officer: under the previous order, the senate will resume consideration of h.j. res. 45, which the clerk will report. the clerk: h.j. res. 45, increasing the statutory limit on the public debt. mr. brownback: madam president? the presiding officer: the senator from kansas. mr. brownback: as i understand, i have two minutes to speak on my amendment that's

come up? the presiding officer: that is correct. mr. brownback: thank you very much, madam president. i want to show two other quick points here. this is not a new bit of information, but i think it's pretty dramatic. and it's a presentation, the level of massive addition of federal debt at levels we have never seen before, looking at over $1.4 trillion in deficit -- deficit -- that's the annual edition. we have not seen numbers this size before. we haven't seen these percentages since world war ii. the massive war effort we went into world war ii. this is a critical situation. must be addressed. the answer isn't just to extend the line of credit, which is the what the base of the bill does is extend the line of credit $1.9 trillion. which is nice we have the ability to say we're going to have a line of credit extended $1.9 trillion. it doesn't address this. it allows this to go on. the carfa bill gets at this line

and it starts cutting that, and it starts cutting irresponsible federal programs. it starts cutting duplicative federal programs, it starts cutting federal programs that have accomplished their purposes. we've got things we're funding that were started 50, 100 years ago. there is no culling process that goes on here. the federal government hasn't cut its only funding system for 100 years. when i first came to congress, we made a one-year cut in federal spending of 1% from one year to the next year. and we eliminated 200, 300 federal programs. i used to give a speech asking people do you remember any of those programs that we cut? can you give me two? i would pay people $10 if they gave me two federal programs we eliminated. they used to give one. but they could never get a second one. think of the number of programs that are rated as failing that

we could eliminate and nobody would notice. nobody would know. but they would applaud the fact that we are actually cutting federal spending, which has been very difficult for this body to do, to get done. here's a mechanism -- the presiding officer: the senator's time has expired. mr. brownback: i urge a yes vote on my amendment. mr. baucus: madam president, the day before yesterday the senate voted on an amendment to create a budget commission. the senate rejected that amendment. 60 votes needed were not offered by senators. they fell 60 votes short. they failed. i also opposed that amendment because it would have forced the senate to consider the commission's recommendation to use the fast-track process and would have outsourced our job to the commission. the senator from kansas proposes a commission that also would

create a fast-track process. it would put sraoeulgt programs like medicare and veterans programs in the cross hairs and thus i also oppose the conrad-gregg commission on process grounds i believe should oppose this amendment. the brownback commission would address only the spending side of the budget. those whoptd a broader commission -- who wanted a broader commission would have that reason to oppose that commission as well. senator conrad joins me in opposing this commission. i urge my colleagues to oppose the amendment. i yield back the balance of my time. mr. brownback: i ask for the yeas and nays. the presiding officer: is there a sufficient second? there appears to be. the clerk will call the roll. vote:

rirksz vote:

vote:

the pring offir: on this vote the yeas are 51 and the nays are 49. under the previous order requiring 60 votes for the adoption of this amendment, the amendment is withdrawn. who yields time on the sessions amendment? a senator: madam president? the presiding officer: the senate will be in order.

a senator: madam president? the presiding officer: the senator from missouri. mrs. mccaskill: madam president, i want to take a minute to speak in favor of this amendment. the presiding officer: the senate will be in order. mrs. mccaskill: you know, this should not be as hard as it appears to be. all this amendment is doing is asking us to live up to our vote last year on the budget bill. what we all decided to do last year on the budget bill was set some limits on spending for the next few years. all we're doing in this amendment is saying we're going to have to live up to our vote. it's 2% increases every year, and people who have said well, there's going to be a problem because the 67-vote threshold. well, i've looked over the emergency votes we've had in this chamber, and there's not been a time that we haven't gotten on katrina or other

things, any time congress has authorized force -- i want to emphasize that for my colleagues. any time congress has authorized force of our military, it exempts it. somebody said, well, the veterans. you really think we can't get 67 votes for the veterans in this chamber? seriously, it is time that we begin to live up to what we say. and in the budget bill, we all voted to do this. so let's put it in the law like we had in the 1990's. don't ask me why we let it expire in 2002. i wasn't here. but we had both pay-go in this kind of freeze in the 1990's and we balanced the budget and we created a surplus. let's go back to that time for the sake of our grandchildren. e remainder of the time. mr. inouye: madam president? the presiding officer: the senator from hawaii.

mr. inouye: madam president, let's make it clear. this is not the plan that president obama presented last evening. the president allows growth in homeland security. this amendment does not. the president's proposal doesn't put a cap on emergency spending. yes, we have aside for imagine, and yet it doesn't mean -- for an emergency, and yet it doesn't mean all of us will agree. the president's plan will request more than $700 billion for defense. this amendment allocates $614 billion. to exceed this amount, you need 60 votes. does the senate really want to put the defense budget up for 60 votes? i agree that everyone should tighten their belts.

the problem with this amendment is that all the tightening will be done on a small portion of the budget while the revenues and mandatory spending will still be unchecked. so this is a flawed amendment. it is not the president's plan. i urge my colleagues to vote "no." i yield the floor. the presiding officer: all time is back. a senator: i ask for the yeas and nays. the presiding officer: is there a sufficient second? there appears to be. the clerk will call the roll. vote:

vote:

vote: offir: are

there any senators in the chamber wishing to vote or change their vote? on this vote, the yeas are 56, the nays are 44. under the previous order requiring 60 votes, the adoption of this amendment, the amendment withdrawn. mr. reid: move to reconsider. madam president? the presiding officer: the majority leader. mr. reid: madam president? the presiding officer: the senate will be in order. the majority leader. mr. reid: i ask unanimous consent that the next three votes be ten minutes in durati duration. madamsiould have order. the presiding officer: could the members please take their

conversations out of the well. mr. reid: madam president, let's not kid ourselves. we're in this financial situation and these pay-as of pay-as-you-go rules are necessary because we spent the decade spending money we didn't have. we spent too much money on corporations and other red ink policies. those days should be over. we simply can no longer afford t the idea behind pay-as-you-go is very simple. the rule we're proposing for the government is the same one americans use every day in their own individual lives. the same ones we teach our children. in order to a dollar we have to have that dollar in our wallet this. will enforce that commonsense approach. here's what it doesn't do. here's what it doesn't do. it doesn't block emergency spending t doesn't keep businesses from creating jobs, and it doesn't prevent congress

from cutting taxes. for all the republican rhetoric on sensible spending, their recent choices call their seriousness into serious question. we drafted a health reform tbhail reduced the deficit by as much as $1.3 trillion over the next 20 years. that's a fiscally responsible plan, and zero republicans supported it. senators conrad and gregg proposed a commission with the explicit responsibility of reducing our deficit even further. that's a fiscally responsible plan. and seven republicans -- i repeat, seven republicans voted "no," even though they sponsored the legislation. the legislation that we voted on, the conrad -- the conrad-gregg amendment would have created an entitlement

commission to look at what's wrong with the financial condition of this country. and seven republicans who supported that by offering their name as a cosponsor os of it, voted against it. had they -- had six of those seven voted for that legislation -- i'll use leader time -- if six of the self hadn't voted for that legislation, madam president, it would have passed. we would now have a commission that would have been similar to what we did with the base closings. we did some terrific things with base closings that we could have never done but nor that legislation. but i repeat, seven republicans who cosponsored the legislation voted against it. the american people can see right through that doublespeak. and i'm confident, as we all are, that they're tired of it. as the president pointed out last night, pay-as-you-go in the 1990's led to record surpluses.

the absence in the next decade led to record deficits. the road back to economic recovery is a long one. if we're to travel it successfully and prudently, if we're to create jobs and govern respon of that hampshire. mr. gregg: first, i want to thank the leader -- democratic leader, majority leader, for his endorsement of the conrad-gregg initiative, although this is not what this amendment is about. this amendment is about paygo. paygo is one of those terms of art around here that has a political life of its own. its political life is independent of its substantive action. yes, paygo worked when we had it in the 1990's. we had a congress which was willing to enforce it. regrettably, over the last two years, when paygo has been in place, as a budgetary item -- and not much different really than doing it statutorily --

paygo has been waived by -- the presidin [banging of gavel] mr. gregg: thank you, madam president. paygo has been waived by the senate, specifically by the majority party, on a number of occasions. it has been waived, it has been gamed, it has been gone around it has been stepped on. it has been ignored to the tune of $1 trillion, $1 trillion of spending has occurred in the last two and a half years which should have been subject to a paygo point of order, which should not have survived a paygo point of order, but against which no paygo point of order was made because paygo was gamed. and so the idea that paygo is a substantive exercise around here is just politically inaccurate.

it's political -- basically, paygo is used to make a statement that you're going to be fiscally responsible, but it doesn't happen. and so this is a nice political cover vote. i'm going to vote for paygo and i'm going to be tough on spending when in fact we know whenever an item comes to this floor, for all intents and purposes, that should be sphow t to a paygo point of order, it isn't. paygo is swiss cheese-go. it is full of hoassments i have great respect for the other side of the aisle. so if they will r rename this "sways cheese-go," i may vote for it. so i ask unanimous consent that we change the name to swiss cheese-go -- mr. reid: mr. president? the presiding officer: the is there objection? mr. reid: i'm using leader time. this is not time for being funny. this is time for addressing a

problem we have in this country with a debt that is going on and on and on. no one can dispute what i just said. that is, during the 1990's when we had paygo, we had record deficits, record deficits were gone. because of paygo, we created a situation in this country where we were spending less money as a government than we were taking in. think about that. as a result of that, we had unending optimism by the business community and economic growth that's been unparalleled. so this san time for jokes. this is a time for addressing a serious problem. and my friend, who has the knowledge of the financial situation of this country, as much as anyone in this country, knows that this is not a time for jokes and trying for funny. we have a situation in america today that calls for action. and, of course, we can waive the paygo rules if there's an emergency. but it's up to this body to determine if there's an emergency. and so, i would hope that

everyone understand this legislation does not block emergency spending. it doesn't keep businesses from creating jobs, and it doesn't prevent congress from cutting taxes. i would hope the republicans would join with us in restoring fiscal stability to our country. mr. gregg: independent? regrettably, i'm not a leader, so i don't get leader time. but i would ask unanimous consent for another minute so that i might respond to the leader. the presiding officer: is there an objection? without objection. mr. gregg: you know, a little humor, even in serious times, doesn't really hurt things, you know, i don't thivment but the point is it's substantive, even if it was humorously presented. which is that paygo around here has become farc farcical. iit is not used to discipline or budget process at all. that's why over $1 trillion of spending has rultded, which should have been subject to paygo points of order. so i don't think that you can

present a paygo statutory point of order as being something other than what it really will be, which is basically something so full of holes, it will have virtually no effect on our capacity to discipline ourselves, because we've already shown we don't discipline ourselves under the present paygo rules that we have. so, from my standpoint, this proposal does not hold water as a way to discipline ourselves and brings our fiscal house in order, and i appreciate the courtesy of the leader in allowing me to take an extra minute. and i didn't hear him object to my offer, but i will withdraw it anyway. the presiding officer: the majority leader. mr. reid: madam president, paygo, as we have -- are attempted to legislate, has not been in effect. that's what we're trying to do. that's why this legislation is so vitally important. i appreciate the work of the budget committee and the finance committee, getting us to the

point we are today where, with the legislation we're attempting to pass, we're going to bring about in this country something that people can understand. they're going to understand that we're going to proceed in this body like they do paying their car payment, their housing payment. that's what we're trying to do. that's what this legislation is for. i'm terribly disappointed in my republican colleagues. let join together and do something good for this country as it relates to the economy. this is a step in that direction. the presiding officer: question is on the amendment. mr. gregg: i ask forfice ys to . the clerk will c vote:

vote:

the presiding officer: a senator wishing to vote or change his or her vote? on this vote the yeas are 60, the nays are 40. under the previous order amendment, thetes for the amendment is agreed to. under the previous order the motion to reconsider has been made and is laid on the table. there are four minutes equal divided prior to a vote on amendment number 3299 offered by the senator from montana. mr. baucus: madam president? the presiding officer: the senator from montana. mr. baucus: the senate is not in order. the presiding officer: the senator is correct. the senate will be in order.

the senator from montana. mr. baucus: thank you, madam president. madam president, the next amendment is about whether the united states will pay its bills. it's about whether the united states will continue to pay the interest it owes on the money it has borrowed. the spending laws that created the debt are behind us. the only question that remains is whether the government will honor its obligation to pay the bill. we have gone to the restaurant we have eaten the meal, now the only question is whether to pay the check. it's that simple. congress does not enact in legislation, the treasury will default on its he debt and for the first time in american history, which means lower social security payments, would fail to pay full payments to beneficiaries of other federal programs an many others, that would pale, madam president, in comparison to the cataclysmic