tell me the pluses and minuses. usoco, an office of contingency operations by the inspector general. another one is multinational pooled funds through world bank or the region of development banks. another is the multinationally pooled funds through nato. another is national security council level office. we had some support in the previous hearing particularly from seth jones, who talked about that may be a way to move. and finally making current and structural work better through additional resources and that would be through you mr. herbst. i'll start with you, dr. schear. respond to some of these proposals. tell us what the strengths and weakness of them are? so let's talk about the joint stabilization funds. what's the strength? what's the weakness.

i'm not asking you whether your department supports it or doesn't support it. >> it's basic strength, it incentivizes collaboration and that's the basic incentive and that reflects the fact that both departments have very significant inequities in the stabilization area. its principal downside or the principal challenge is congressional oversight, quite frankly. if you have eight committees with jurisdiction here, that does create a major challenge for us. that's how i would -- >> that's very helpful. i thank you for that. usoco, strengths and weakness? >> its strength is systematic focus and its weakness it would be a red-haired stepchild and it would create antibodies and create a challenge for coordination and it would not replace. it would merely add on to

existing command relationships, both on the defense and on the foreign policy side. so it would complexify rather than simplify. >> and what's the positive part? >> the positive part is that it could be a steward, if you will, for contingency contracting and all the critical elements that go into that. the human resources piece, the i.t. piece, the contract management piece. but that's -- >> multinational of pooled funds through the world bank? >> i probably don't have an expert enough to give you a good sense of the pluses and mines uses sir. >> pooled funds through nato? >> same. >> national security council office? >> the plus there is responsiveness to the president, to the national security advisor and their principals. the paramount and chronic

question for the nsc is its ability to focus especially on operational-level issues which ought to be outside its domain. >> and making the current structure work better through additional resources? >> i never deny the need for additional resources. we have a list of things that we need to look at very hard within our own agency's way to improve it. >> do you think ambassador herbst needs a lot more resources in order to help him coordinate the effort? >> i think he has put his finger on what i see is the principal need, which is human capital. and that's the -- has been the long pole in the tent. i think state department impact in a positive extent is not simply an issue of sizing. it's the function where the

level of bureaucracy something which dr. zakheim has raised. >> mr. bever, would you run through -- do you want me to -- let me bring them in the order that i did. the s/crs? >> yeah -- >> is your mic on. >> yes. >> take the s/crs providing -- i'm sorry. i apologize. right, the joint stabilization. >> i think each of these has potentially some merits that bear more careful attention. my own view and this is my view, in the intergovernmental process is that each of our agencies our government works best when each of ice agencies work to its own comparative advantage. >> okay. thank you. >> and when our authorities are not usurped in such a way, where the authority rest is different from where the accountability -- >> let me say it in my terms to

see if you agree. if everybody is in charge nobody is in charge? in other words, you feel you would have more accountability? i'm hearing you say you would have more accountability if you're in charge of the funds you're in charge in rather than grouping them in other funds? >> yes. this is why i like the notion of a continuing and involvement by the national security council. the nsc is the one entity that is able in my experience to pull all the actors of our government together. but i do agree -- >> usoco? >> operationally that's really not it's forte. sticking with the overall policy is. on usoco, similar to somewhat on the joint stabilization, i'm going to defer because i do not want to -- >> no, but is there a strength and a weakness you can just point out. not that you're going to -- tell us the strength and tell us the weakness that's helping us.

>> i think it's an interesting idea but i think to operationalize it would take an enormous amount of effort by all of our agencies that will divert and distract us from getting our job done. >> the pooling of world bank fupdz? -- funds. >> multinational trust funds can work well if they are well managed and i would point to the national afghanistan trust fund. it's where the donors do work well together. they have responsible lead from the finance ministry. they have reasonably good accountability on the inside. and i think it's a model that can be built upon. >> nato? >> frankly, whether it's on world bank implementation monitoring it could be the nato mechanism. i'm kind of intrigued by the nato mechanism. >> what about the nsc? >> my experience with the other administrations and the office of vice president were able to pull together fractious elements of our government towards a national priority in ways that nobody else could.

as far as making all the current structures better, i think we could do a lot more in that area. and frankly i'm -- in our case, i'm looking for ways and i think dr. schear mentioned it. it ultimately gets down to our human capital. and what do we do to recruit our people to retain them to promote them, to keep them in theater? we spend so much effort getting our people out to afghanistan, for example. what do we do next year? >> you know -- >> we faced this in iraq as well. >> we're looking at that issue, obviously, through the issue of contracting but we want to know what's inherently governmental and do we have an overreliance on contractors so it get us into the very issue you're mentioning and i'll end with you, ambassador herbst. so the joint stabilization funds, the strength and weakness of it. >> well, jim pointed out that it does ensure coordination. on the other hand, though, if

you're concerned about the militarization of foreign assistance you have to wonder. >> okay. >> on usoco, it's the point that i already made. you have a mechanism which can work. it's finally getting momentum. if you want to try and create a new mechanism, that's going to take you a couple of years. it will set back the effort to build a civilian response capacity. regarding multinational pooled funds, bob is good and it can leverage capital from around the world. the problem, of course, you put it in the fund and you lose control. on nato, pooled funds, there too you're putting funds in and you leverage it. it's a good thing. it's also true we have more influence probably in nato than we do in the world bank where we have a fair amount in the world bank. so you reduce the liability there, the downside. on an nsc level level, you certainly need to have an nsc engaged in the process.

and they are the place in theory where this can be done best but it really depends on the administration. >> and finally, you can end -- you get to be the closer in terms of my questions. and making the current structure work better. >> i think when you're in a fight and you need a capacity, you go with the capacity you have. you make it better. you empower it. again, we have the civilian response corps. it's small but it's growing under a steady rate. first let us build it. secondly empower us to use it. and you'll see what we can do. >> thank you, gentlemen. >> okay. what we're going to do is a brief wrap-up. we're going to give you the allotment of time that we said. we'll go around one time for any final comments. and then if anyone has a burning question, they can deal with it. i really don't. i have an observation. which is we've referenced

because this was just an excellent presentation by the secretary. and i think it could have been by either secretary except that the initiation came from defense. i'm taking away first of all, thank you, gentlemen, a significant need for evaluation but not the need to -- you know, you make comments about there's certainly a lot that we can do immediately. well, that's what's not in my view being done. and i think it comes down to a couple of points, which is the statement that we need to incentivize collaboration versus the existing structure and processes left over from the cold war. that's very powerful. now, a person could argue well, we've done a few things that aren't the cold war and that was just for brush coarse but it's hide-bound but my second point

is as i listen to it -- and not you gentlemen, you seem to be very collegial but all the examples of the lack of coordination that was presented today, you know, felt like organizational ego or said another way. different organizations with the responsibility they're kind of protecting their territory with the concept that they never met a good idea that wasn't their own. so if you've got it -- you know, hey, it won't work for these eight reasons. if i've got it, i've already presented it and it's a good idea. so that comes down when in doubt default to the status quo, which gets us back to the cold war system. so for me it was a great hearing because there's a lot of work to do. but this commission has had -- this is the ninth hearing. we've been briefed pushing 400 meetings and briefings by organizations in the field that we've documented. and made available. very substantial data analysis. we have three hearings coming down in the short term and we'll

continue to press on. and thank you, gentlemen. bob? >> nothing further. i thank the witnesses for attending today. >> dov? >> just to reiterate what you just heard. i think you all are trying mightily especially ambassador herbst. i think your organizations are simply not cooperating. i think it's become clear in this hearing. i think there's -- i sense a degree of frustration that you folks were trying very hard to hide. thank you. >> commissioner green? >> mr. bever, not to get an answer but an area that you're going to have to deal with or somebody over there is going to have to deal with is spot. you're going to have to figure out a way that is acceptable to usaid to intergrate yourself either into that system or some other system. the last point is just to reiterate what i said before.

i think we've got a lot of momentum now on this activity. and if you guys don't figure out a way to take advantage of that, i can guarantee you what will happen. it will atrophy and die. >> commissioner schinasi? >> i'm just going to go back to resources for a minute. mr. bever, in your statement, you know, you said that your peak a.i.d. spending was $4.8 billion in 2003-2005. that's less than a week's spending by the department of defense. so -- i mean, that just gives you the idea of the magnitude of resources. and if you look at the fy2011 executive budget summary for state and a.i.d., you see that the foreign military assistance just to pick one is the biggest -- maybe the fourth largest expenditures in here. and that compares to $2.5 billion for contributions to peacekeeping and peacekeeping operations.

so if we're going to talk about, you know, militaritizing our foreign aid and foreign policy i think we already see through the numbers where we are now. thank you. >> commissioner tiefer? >> thank you, mr. chairman. mr. bever, i think i said some things earlier that were subject to misunderstanding leading to me what was the surprising the word minimal and the word corruption could be put in the same sentence. and i think i understand what i said was unclear. and i'm do some preliminary but then i'm going to ask you whether there's a substantial level of corruption in the afghan political economy which might affect the united states. the place that i was drawing on -- i did not mean to surprise you in some way. i don't have another copy. sigar's report january 15th, 2010, on the afghanistan energy supply. it's not the kabul plant. it's on the energy supply.

the heading, which is, i think, where it would have been helpful to you is simply afghan government lacks the capability to collect revenues to fund fuel costs and operations and maintenance expenses. so this is a section on that the afghan government can't get the money from the energy system. and it includes what they've had to do instead like coming to us and saying well, you fund our operation and maintenance. will you fund our field costs? that's not to say that the u.s. government's projects themselves are suffering from corruption. and if i gave that impression that's what i was asking, and i think i did, then i withdraw my question. but with that being the mechanism, they then do describe corruption in the energy sector affects afghanistan's ability to collect revenue. and they give the example that it takes as many as 25

signatures to get an electricity connection in kabul. though you don't need any significant issues if you get it through bribes. and as a result, this is a quote from sigar, the cost to obtain permission to build a connection could well exceed the actual cost to connect to the distribution system. the bribes cost more than the cost to connect. so with that being my background, is there substantial corruption in the afghan economy which may indirectly affect u.s. efforts? >> commissioner, yes, i can say yes. there is and it's been growing. and you can track it pretty closely with the corruption that came with the drug business. but if you'd like a question for the record, we can fill you in on more. >> i would like -- >> it's a very serious issue and it discounts the effectiveness of our aid dollars, no question about that. >> i would like nothing better.

i have some other questions for the record and i will stop now. thank you. >> all right. commissioner shays. >> no question. as i'm sorting this out i'm thinking it was mentioned the cold war. the cold war has ended and it seems to me like the world is a more dangerous place particularly for the every day civilian. i'm struck with the fact that we have smart power. in the beginning it's totally hard. we go in and we use our hard power. and the challenge that we're trying to all address is the combination of hard and soft power. but then eventually there's a hand-off. dod is out. and then it's all state. i am struck by the fact as well that you make, mr. bever, is that everyone is exhausted. and we got to deal with that in a very honest way. so obviously coordination is

hugely important for obviously dealing with the waste, fraud and abuse and the waste of money and also to ensure that we don't lose people because we haven't coordinated well. so we're going to obviously -- we're looking at all of these issues. we haven't taken a position on how we coordinate. i think you all make arguments well for the different options that are out there and probably it's a combination of a few of them. but we'll look forward to working with you in getting the right answers. thank you. >> thank you, mr. chairman. now, consistent with our prior understanding, you all, all three of you, can put anything that you need to clarify the record on the record but ambassador herbst, any final comments you have to share. >> i have to leave in a press conference and i have your permission for that.

i would like to reiterate one point. we've got something that's going. it's relatively new. it's not been tested but it's growing quickly. we're starting to use it. give it a chance. >> okay. mr. bever? >> we've welcomed being here today. thank you very much for inviting a.i.d. i would just say on the corruption issues, i would welcome the opportunity for us to continue to engage with your commission on those important topics as well as the reforms in kabul even in the energy sector which we've been working on. i think we have to wait for a little bit more political evolution related to various appointments in the government. and i'd rather not get into that here in this setting at this point. on spot, commissioner green, we had a meeting with department of state. and the congress, congressional staff on friday. i think we found a way forward there. we are seized with that challenge. and we look forward to some more discussions on that.

and finally, commissioner shays, i just want to say i'm sorry. i may have misunderstood your original assertion about lost lives and lost money. i'm a firm believer that the -- it's in the united states' interest to do whatever we can to mitigate conflicts ahead of time. and that's why a.i.d. created a small office of conflict mitigation and management a number of years ago. partly out of the spinout of the early afghan issues. but i think those kinds of efforts need more and more and more attention and i can see a country further out in the southwest where there's problems coming. and it's extremely important to save lives, soldiers lives and civilians lives to get -- to apply lessons from your commission now for that future possible area of conflict. finally, i would just say on

qddr, i would urge the commission to engage with our agency and with the state department and i know my colleague had to leave because the issues you're raising are the ones we're grappling in between us how to deal with these issues in the future. >> thank you. that makes sense. dr. schear? >> i have found this engagement very enlightening. i'm taking a lot of homework back to my department. i'll keep my leadership closely informed on this.nj and i do appreciate the opportunity. i'd just underline two things which i think chairman shays and others have actually mentioned. sustaining the time, attention and energy in front a contingency over a persistent long period is really a challenge. as general mcchrystal has said unfortunately after the taliban, our rotation policy may actually

be one of the biggest threats we face. we have been trying to fight one eight-year war and it looks more like eight one-year wars. in order to give the time and attention and energy that's required especially in the contracting world where results have to be sustainable. where there's local ownership and we want to leave things behind that the local communities can embrace that aren't seen as a monument to foreign intervention but something that is used, we have to figure out a better way to work in these persistent environments. we don't have the answers yet and we're working on them and i'll do my best to engage my colleagues on this and a continuing dialog with you. thank you so much. >> thank you, doctor. and last item we always thank staff, which is the real reason why we're here in terms of our ability to deliver and prepare our sessions. this is the part that i always like to -- we're done.

[inaudible conversations] [inaudible conversations] [inaudible conversations]

>> over 1,000 middle and high school students entered this year's c-span studentcam documentary competition with a short video on one of our country's greatest strengths or a challenge the country is facing. we'll announce the 75 winners on march 10th and show you their winning videos at studentcam.org. >> and now world bank president robert zoellick talks about his organization's role in the global economic recovery. he spoke friday at the annual meeting of the brenton woods committee an international group of business and finance leaders aimed at promoting economic growth and development. this is just over an hour. >> well, it's a great pleasure for me to welcome the 11th president of this institution.

someone whose ability is well-known but whose special contribution to this organization is becoming apparent every day. and i think all people associated with the world bank are very, very happy indeed at your leadership, bob, and thank you for your commitment and very hard work. bob's ability to lead the institution is based on a very distinguished and very broad record including a position as deputy secretary of state, the 13th u.s. trade representative, negotiating the doha round and before that, a whole variety of positions that have interestingly fit him for this ranging from his work in fannie mae to agriculture. even a short stint at a a little known investment bank called goldman sachs where he spent a short period of time learning

about the world outside. and so we have in this president someone who has an an extraordinary breadth of vision, breadth of experience and deep commitment to the challenges that face us now. in the international community and in particular in this organization which is in such acute need to have additional resources from which he is an exemplary advocate. bob is going to talk to us today about global recovery, the role of the world bank and modernizing multilateralism. it's a great pleasure to introduce robert zoellick. [applause] >> well, i want to thank all of you for coming here today. i first encountered the bretton woods committee when i worked with secretary baker at the treasury department in the late '80s.

and i know that this institution and the committee has played a very, very important role. i know in particularly on the u.s. scene it's been very important in trying to pull together bipartisan support for the bretton institutions and multinationalism so i want to have a particular thanks to jim and to bill friends, and richard and executive director james orr who does a lot of the lifting. i also want to have a special word of appreciation to jerry corrigan who served as cochair for some 10 years. and as i mentioned i want to thank all of you for your interest in this. i started the week in an event with shakira so it just seems appropriate that i close with the bretton woods committee on friday sort of the total book ends of my life and existence. i don't know if we can match the crowd that we had here on monday, which was pretty astounding. it's always wonderful when you have those events and you can see that your main job is to get off the stage as quickly as possible.

for the main guest. but i appreciate the excellent program that has been put together. i see that i'm sandwiched between pasquel and dominique and spending my time with french socialists and two good ones to do so. i thought it was most useful today to share some impressions and then hear from you with your questions or your comments. obviously it's a pretty extraordinary time in the world economy in general and for development as well. so i thought i'd open with some brief observations on how i see the world economy. and the increasingly important role of the developing countries to recovery and sustain growth. and then outline a little bit about some of the world bank groups response but then close with some of the challenges we face and perhaps some ways we can work with the bretton woods committee on those challenges.

the good news is that the world economy is no longer staring into the abyss that i think gave us all a great fright last year. but we're definitely not out of the woods by any means. and one point that i've been trying to make at g7 or g20 meetings or in my visits with developing countries is i think we have to be alert to the evolving nature of some of the dangers we face in the international economy. but also to some possible opportunities. i believe we're in a recovery. and i don't believe that a double-dip is likely. but i think the pace of the recovery is going to be quite uncertain. the reality, of course, is we have multiple paces. we're in a multispeed recovery. stronger in east asia. and this will pose some particular challenges for the nature of the policy cooperation. 20 discussions.

unemployment is likely to remain high in the developed economies. this means we have to be al#@ r create different nature of problems for some of the financial institutions depending on their business models. we'll see some institutions do very, very well on the overall conditions and some struggling with bad losses. i had an opportunity to listen to my friend pascal, and of course as he properly said so far, we've dodged the bullet of a strong protectionist response but i think we have to be alert any time you have continuing unemployment, people are uncertain about tools, one

has to be careful about protectionism because political leaders will feel pressure to do something and that is always a tempting tool. another issue that we're watching is the fact that a number of the stimulus programs really run their full force through the later part of last year and through the middle part of 2010. so the question of a handoff to a private sector recovery. i try to watch this relatively closely and reach out to others. be interested in your view. i think we saw some signs of some inventory recovery, some business investment just gradually in some sectors. obviously people don't expect the consumer to play the role he or she played in the past but frankly i still have a sense that the uncertainty seems to leave all good reports as spot market news and there is no forward market for positive expectations. if you get a good news story, seems to last about a day.

we're not really capturing any momentum on this i see a couple of our board members here. the first week in january we had an informal lunch, i cautioned that an issue i think was going to be important throughout 2010 was challenge of repricing sovereign credit risk, which was before greece and i think it extends beyond greece. in the case of the u.s. i think this will also be an issue for states and municipalities. there is a good piece in "the wall street journal" today pointed out, for many of them it is spending, not purely a debt issue. you have to look at ratings of debt instruments and there is history in using them as structured products just as us used for some mortgages and aftereffects of that i'm not trying to forecast a problem here. i'm saying this is an area we have to have a close watch. i think this will run through other credit markets. with all the liquidity out there you saw a big pressure on spreads that you've seen

in past weeks. the high-yield bond have gone you and you've seen some pullback in the corporate markets. this is an area will one have to watch all year. from the perspective of developing countries, obviously we're concerned about their continued to finance reasonable cost without crowding out their private sectors. i had a chance with dominique to attend the g7 finance ministers and central bankers meeting up in canada near the arctic circle. it was a wonderful opportunity to see a very special place. but just to share with you a little bit of a sense i got, i had a feeling for a number of the ministers, there was a sense that, they have been able to cooperate effectively when their backs were against the wall. but now they were all feeling political pressures at home and there was going to be a sense of fatigue on coming together on some of these challenging issues. i think a desire to do so but i think it is going to be a challenge. from the central bankers a little bit on the side, one had a little bit of caution

that in the early crisis phase, people could respond strongly with monetary policies and sometimes fiscal policies, but we're now in a phase where it's not so clear that the heavy use of those won't create a counter reaction. so the usefulness of some tools we had earlier in the period may not be quite effective. what all these add up is, that i think, we're in a period where there's still considerable uncertainty. now, in east asia we face a very different issue. when you take the combination of the recovery of the growth you see in china but also in some of the other countries and liquidity, you have this danger of the asset price bubbles. i wrote a piece about this in "the financial times" last autumn because after the g-20 finance ministers meeting i was worried we were not getting the full attention. what you see in some countries such as australia they are responding by raising interest rates.

but i think challenge the many central banks in east asia wait to follow the fed. if they wait to follow the fed in this case they may find the asset price bubbles growing. they're caught in a bit of a bind. if they increase interest rates, you will secure currency appreciation and of course what does that do to their export-led growth. this is the changing nature of balance discussion for years. this is one of the question of u.s. and sometimes europe and china. you're now getting some sense from other developing countries of some of the challenge of this. and it leads to the broader question that when you attend ministerial meetings is always present which is, how does one move to a broader rebalancing beyond the exchange rates with savings and consumption? another part that may be inevitable but i think is kind of a issue and that is undoubtedly we have a huge economic downturn like this it focuses a whole new look on public policy issues much

and so that creates its own sense of uncertainty. so if you would look at potential investors in health care, in financial services and energy and the environment or in autos, it is not clear exactly how these are going to be working out. so i think that's one of the other tensions that leaders are going to have to face because if the consumer isn't the source of growth and you're looking for business investment, how will business investment respond? now, what i think is really worth noting and it is pretty hard to miss this in newspapers it is developing world that is leading the recovery. so you've seen the picture in china, you saw some very strong numbers coming out of india as well. and what was different going into this crisis, compared to the '90s, one jim dealt with was a lot of developing countries had paid down their debt. a number of them had better physical space, and coming back to the trade issue you just heard from pascal, some of the numbers that i just saw in this over the weekend tell the story. the imports for the

developing countries now exceed their prior peak, which was april 2008, by 7%. for the high income countries, the imports are 14% below that peak. so what you're seeing is the developing countries are the source of demand in the system. now, this is one reason why we and others have tried to support them with the appropriate level of financing. we've also tried to learn some of the lessons of the past. and again, complimenting jim and others i think one of the things coming out of the '90s a look at what worked and what didn't. one of the key lessons that macroeconomic stabilization was not enough. if you didn't focus on targeted safety net programs, you could lose a generation. and or part of a generation. and that's really what happened in some of the countries because, with poor nutrition, kids didn't get a fair start. a lot of them got pulled out of school. devastating effects. and so one of the things we've tried to do in the

response on the policy side with our developing country clients is share the experience about programs whether they be conditional cash transfer programs. you've heard a lot from mexico and brazil, how to expand those, how to build those. or in some countries that didn't have capacity, work with u.n. partners like the world food programme and school feeding programs and other nutrition programs and school for work programs. one always have to keep one's fingers crossed so far we've been able to try to support that. now another area we looked at, this again draws on a '90s experience, for many of you looking at chinese situation in the '90s you recall they put a lot of money into infrastructure. they created jobs but also created a future productivity and growth. whether it be the roads and highways and ports. we've been trying to work from both the public and private side to see if we can support countries with the infrastructure push because it's not only a question of what one's

keynesian demand response is but it is a question whether the money is going into investment that will be future productivity. so we're trying to emphasize that as we're going forward. i'll come back to this again through the leadership of lars at isc has done a fantastic job. we've put up new facilities to try to deal with some particular challenges to have the private sector response. so question of handoff to the public to private sector is not only a undeveloped country issue but developing country issue. i think from a bretton woods conceptual issue, some of the issues pascal was touching on, a important observation over the medium and long term we'll be moving to an international system with multiple poles of growth. the response is no longer going to be one with, what happens in north america and europe. you can't open up the newspaper without seeing discussions of what is the developing world and compare that with the late '90s where the question was, will china hold the currency peg? if you go back and look at

the stories you really didn't expect the response to come from those countries. well, i believe over the next decades this is not going to be just a china or india story. it will be a southeast asian story. it will be a latin american story. there is potential in other points as well that is where we come in on the development side. to give you the bottom line number, since the crisis hit its full force about the middle of 2008, we've done about $89 billion of financing across all our arms. that is the ibrd lending, ifc private sector, the ida for the poorest and some mega risk insurance. if you go back and look at the numbers in the '90s there was a big, increase in support but this more than dwarfs it and the demand is frankly not slacking in any amount. now, what i also emphasized and i really compliment the team here at the world bank group, while we were trying to support our clients in this fashion we also tried

to keep an eye on particular problems and to innovate. here we had a little bit of a head start. as many of you recall from many of the poor countries before the financial crisis hit it was a food and fuel crisis. we worked with our board to put in sort of a fast response facility to try to help with some of the problems particularly in food prices. whether some programs like school feeding. whether it be fertilizers and other types of support that has morphed into a broader agricultural effort you saw out of the g7-g8 meeting and the united states played a particularly important role on this but on the private sector side, pascal was referring to trade finance. our is c-team identified early on that the guaranty programs we had weren't getting picked up because at that point it was a problem of liquidity. so we were working very closely with clients to add global liquidity pools. as many of you know, at that point, credit markets were so, sort of frozen, the key

was to bring back the private players, create finance, is normally not a risky line of business. but everybody had pulled back. so we tried to design these so every 40 cents, we and every other public players put in we get 60 cents from larger public banks and tie in international trade finance network to some of the smaller players. with help of the japanese government, they put in $2 billion and they put in a billion dollars to bank capitalization effort. part of the discussion you read in developed countries, what would be how you support the banks and, did you nationalize and put money in? we were concerned that in many developing countries, if there were nationalized it may take a long time for them to come back. so we used this fun to partly capitalize them. this has been very, also valuable working with other partners, for example, the european bank for reconstruction development, and, the eib, because as many of know, you had this particular problem in the banking system and in central and eastern europe.

microfinance, people know the value of microfinance. many people are unaware, most microfinance ears are not deposit institution. they depend on cross-border flows. we work with the german government, french government, others to help microfinance. infrastructure, ifc putting something together with public/private infrastructure because we wanted to make sure that we didn't lose the process that had been starting many developing countries of how do you connect the private and public sector together not only in fpsing but financing but in management of these projects. one of interesting changes about what is happening in the world economy there is fantastic innovations happening in developing countries such as india in the infrastructure sector that frankly it would be useful for some of the developed countries to look at. i met with a couple of the governors from the u.s. national governors meeting and people are talking about the problems of obviously large budget deaf systems frankly a lot of states

are -- deficits. states are sitting on big as settles of infrastructure. there is possible using financing methods we see in india to help financial needs in some of the developing countries. this is partly what i think we're going to see. fwent years ago and the start of bretton woods system. it was north-south exchange. receive south south exchange and i believe we'll see possibility of some south north exchange in terms of knowledge and information. another key area that ifc came up with, distressed debt. we've tried to help in some cases, i was just in russia. we're working with them. we're working central and eastern europe and some others so as to help some countries be able to restructure their debt and get back on their feet and sort of move forward in the process. some interesting inno valgs. what was particularly interesting about this when these different facilities we created really over the course of the past 12 to 18 months we bought in 10 million dollars of fund from

others so it is a good mobilization device. we're also plan planting some seeds i think will be very important for the future, to be a little cautious with some of the sec requirements but probably early next month we're going to be launching an equity fund with some sovereign fund investors and some long term pension investors for equity for africa and some in latin america. and what we, this was an idea some of you may have known i talked about when i came here about trying to go where the capital was, to tap some of sovereign funds. see how we connect that to development. not as charity but as an investment. intriguingly after this crisis we had a number of long-term investors say, well, we recognize there are serious risks in the developed world. maybe we can get very good growth returns in the developing world. but we really don't know where to go. we don't really have those platforms. we don't have the information. we've had a very good record at ifc over the years. the concept here i find really important over the long term, many of you know

the history for the bank or the ifc is to raise debt and either make loans or make equity investments in the case of ifc. this is complimentary intermediation model. we've created an asset management corporation as a subsidiary of ifc to help manage some of the capital flows using our platform. now fortunately, as the crisis hit, we were in a position where we had the capital to expand and, again, one of the great, sort of unsung success stories here and it really, due to vin chen sew lafiya and financial team. this is really sophisticated financial institution. this is not plain vanilla stuff we do around the world. we do local currency financing. we do financial swaps. we're all over the place in innovation doing risk management for developing countries. frankly we're under the big institutions that didn't get hit badly in the process and

that is really a compliment to the financial team. at the last annual meeting we had in istanbul in october i alerted our governors and ministers that while we're in a position to lean forward and support the developing countries for a time, we were going to have to look at the possibility of developing more financial resources if we were going to continue to do so. so, as jim mentioned we're in the process of seeking the first general capital increase since the bank had since 1988. old friends will remember this from the ways and means committee. i ironically remember it because i was with secretary baker at the time so i get the book from the other side. the other part that is important, this again i think is important changing nature of the bretton woods institutions. we've designed this request as part of a larger financing package. and what's most striking, if you think about the

developing world area where there is question of, whether you have liberalization in some of the growing developing country markets or if you think about the meeting in copenhagen where there is big question about sharing the question of low carbon growth, we're putting together a package where 50% to maybe 2/3 of this will come from the developing world. so this is really emphasizing the mutualty of this institution. part of this is the question we raised prices once and we're looking at another price change related to maturities but another aspect is we're combining this with change in the voice. we're moving up some shares for developing countries where they will have to pay for those shares. one other aspect i'm very appreciative of willingness of major developing countries to work with us is the history of the bank was if you were developing country, purchased your shares with 10%, sort of reserve currencies, 90% with local currencies. we often didn't have access to those local currencies to be able to count as capital.

we've now worked with the chinese. i was in russia last week and they were forthcoming. need to work with saudis and number of the mexicans have been forthcoming and we'll pick up at least a billion dollars capital with access to those terms and these were things and jim were pretty untouchable 10 years ago. and as part of this, we've committed to also be keeping a flat real budget. but, as important as this is for the financial resource package, the point that i stressed, i was in paris last week with president sarkozy, i've been talking with members of congress this week, this is a very important model bringing developed and developing countries together and seeing a common set of interest. maybe people will contribute in sightly different ways but it is also something we're trying to think about as we look at the next ida replenishment. ifc is constrained now in terms of its growth but we're looking at a special capital increase for isc and, one of the things that's

quite interesting is, for some countries that might actually go down a little bit in their ibrd shares, they're interested in contributing more through special capital increase of ifc. we have a little bit of a market test about willingness to do this frankly the amount we wan raise on this depends how much the u.s. is willing to let its share come down. another good aspect of this is many of you know the u.s. share of the ibrd is a shade under 16%. it is 25% at ifc. people haven't bought the shares. so this lessens the burden for the u.s. if it is willing to go down into the some degree and we're having those discussions with the u.s. at the same time it raises capital. another idea we're exploring i think has its own merit we're looking at a rather long-term debenture of almost a council nature that we believe has substantial percentage would allows to be counted as capital. i think that's a useful

device for ifc to have as any event t multiplies as financing t would not change the voting pattern. a lot of purchasers of this would be some developing and transition countries and it's a way where we can get resources to do good things. get buy-in but also emphasize some innovative methods. one the things that at the start of the last ida when i came in we were able to do was ifc had some very good returns and so really for the first time we were transferred about $1.75 billion of ifc's earnings to i'd today. now, -- ida. frankly danger is you get much more volatile returns at ifk -- ifc. one of the issues we're trying to work with if we can change the core basic business of ifc and this is what dollars and his team have been tag spoke cus on ida countries.

sub-saharan africa, some fragile conflict states that might also emphasize a way the broader holding company nature of this now as part of this capital request, the development committee also wanted us to develop some papers and approach the compliment the general capital increase. one is, what will be the directions after the crisis? another is this voice issue where we've got a commitment to try to work out the numbers to increase the ibrd shares for the developing and transition countries from 44% to at least 47%. we also added another chair already for sub-saharan africa and a set of internal reforms. i think together we'll put together a pretty impressive pack on this. we'll continue to focus on africa and the poorest, an area where i've had a particular interest and i see it, residence of this everywhere. special challenges of post-conflict countries or ones that suffered natural disasters, afghanistans,

liberias, frankly the haities where you have a special mix of security, governance, development, rebuilding legitimacy. these are really special problems beyond the traditional development discipline and this year owes world development forum will try to bring together the state of knowledge on that. collective action issues, for example, global climate change where we've done, i've been very impressed with the work kathy shear and her team, we created these climate investment funds with contributions about $6.5 billion from some of the developed countries and so far with our commitments we've been able to leverage these about 10 to one. so at a time that the developed countries are worrying budget expenditures i was again up on the hill yesterday saying, look, we can multiply these 10 to one with other bank resources. 30% is private sector. it is a powerful case and it build as commonality of interest on climate change. we continue to focus heavily

on government issues and anti-corruption which are obviously fundamental to this. but going back to the point i mentioned about this recovery, recognizing this is not just a world of developed and poorest. it is a question how we get these multiple poles of growth and how they also contribute to the other players? then the critical development of the private sector. on internal reforms is a list, to give you a flavor of some, all of you know how multilateral institutions work. a lot of these took a lot of lifting but i'm proud of people that pushed them. we're instituting a access information policy basically like the freedom of information act that the u.s. has. so unlike the traditional approach where you would just have what's called the positive list, you would list the information you release, we are moving to a negative list. you release everything unless you exclude it. we're putting up a special appeals body, outside in a sense judges to make this determination. what is also interesting the part of success of this was the strong support we got from india because india put

in a new freedom of information act. so you can see again, some of the commonalities across traditional lines. mr. volcker's doing a lot of subjects these days. one of ones he did with us on the corruption issue. he put together a commission that identified a series of changes we needed to implement and we've got those well-implemented and he's been very supportive. many of you know the traditional lending from the bank was the investment loan. given the structure of the institution, huge amounts of time spent on investment helpedding to bring the presentation to the board. perhaps not the proper balance in terms of monitoring what happens to the loan afterwards and frankly making a risk management calculation based on the nature of the loan. so we're changing the nature of the investment lendinging. one of the things that jim started here which i'm in some way always amazed how it operated without it was decentralization policy we're at a point where we decentralized a lot to the countries but we have to recognize if we're bringing

knowledge and learning we can't have experts in each of those countries. so how do we use the matrix of the organization to combine knowledge and learning across countries? we do that relatively well within our six regions. we don't do it as well we need to across regions. we're looking decentralization and matrix and knowledge and learning issues. in general, also only works if it relates to the people and, our head of human resources has started to move the system in some very significant ways. many of you who know the bank and know multilateral institutions would recognize how sensitive this is. we have started to edge towards an increasing use of term contracts. doesn't mean they can't be renewed. doesn't mean that we won't have people in a permanent position but frankly, if you're going to change with the changes in the international community you can't have everybody tenured for life. it just won't work. if you're not going to be

growing adding personnel. if you look at some of the early changes in the bank, it came at a time personnel was increasing. this requires a lot of sacrifice by people within the bank. for people who think this is easy, just ask your self how many civil services are willing to go to term contracts. this package is trying to come together for our spring meeting and that's why this session is very, very timely. in a way this is a wonderful connection to the bretton woods committee because what i refer to what we're doing is modernizing multilateralism. we're taking one of the grand institutions created out of a multilateral bretton woods system, 1944 and years afterwards and trying to overhaul it for a being part of a different network that pascal described. a key part of this is a sharing of responsibility. some of you know when i worked at china i coined the phrase, responsible stake-holder. you have a stake in the system, you share the responsibilities. this is a lot of what we're trying to do here.

it recognizes this is a network system. to be effective we have to work with ngos regional development banks, private sector. we're not by any mean as mow no poe lift or ollie gop owist. this is something always a change. we have a lot of people in this institution, very smart, very analytical. we need to always empta size focus on solving problems for clients. not enough to analyze a problem. sometimes the first and best solution doesn't really solve the problem if it doesn't meet political. frankly, create the space for people to do so. people respond very well. something we need to keep focusing on. key point made to me by one much european colleague i thought it really hit it at home, still when i go bach to members of the congress, parliamentarians in france as i did last week, there's a sense the world bank is there as a, sense in

american english it is a charity for the poor. in europe, it's a sense of solidarity for the poor and that's a transformed world because, what we are really talking about is mutual self-interest. if you're talking about sources of growth in the world and from the developing country, if you're talking about sources of ideas, if you're talking about having developing countries help you on climate change, if you're talking about having brazil help you in haiti, this is a transformed type of model that we're talking about here. and so, we as an institution are trying to adapt to play that role and it fits well with the types of changes that pascal related about a move from a world of a g7 to a g-20. last point i'd say since many of you are from the u.s., the u.s. administration has been very, very supportive and, obviously congress has a lot on its hands. by and large response we've had is pretty good.

assuming that we have this package done in late april, coming out of our spring meeting, we'll face the challenge of the authorization process for a general capital increase. senator kerry has already been supportive and chairman frank of the banking committee has been, as many of you may recall, in the case of the bank we go through the foreign relations committee in the senate, the banking committee in the house. . . when you think about the benefits in the case of the u.s., it's leveraged atñi 30-1ñr with othe shareholders and other borrowing. in germany, it's 100-1. you get a lot of development benefit for the investment. another issue of this and because i know many of you have broader interests. this will be done as a package with some of the regional development banks. we work it$ them on their

resources, their reforms to bring this together. and then we will face, as i referred to the challenge this year of bringing the momentum for the next and then, we will face as i referred to the challenge this year of bringing the momentum for the next ida, the 79 poorest countries where we give grants or long-term loans without interest and again in the spirit of trying to think through these issues, we are going to be talking with the donors about some different ideas about trying to approach this. one thing, just i know at times they bretton woods committee has been of help and i know bill is somebody who has soldiered on this over the years, this process were obviously require authorizations and appropriations. issa the senior house appropriator this week in the senior senate appropriate this weekend we have pretty good relations. at a time where there is a lot of conflict i've been trying to emphasize that these from the u.s. perspective this could be a bipartisan issue because if you look at what the bank does we

are one of the key players in afghanistan and pakistan. as many of you may not know but i got an e-mail this morning already we have a fantastic team in afghanistan but bombs have gone off and they are taking care people. some of the best excesses whether it be the solidarity program, health education micro-finance to tell the telecoming occasions and the ones that banks being at the center about. when you read about tony blair working with the palestinians creating some hope and opportunity those are our people with resources and we pair up with him just as jim had done after he left the bank. liberia, yesterday we approved some lending again for iraq connected to some of the reforms. probably a week from now i will be headed down to haiti and we are trying to work with the different constituencies on haiti. i dealt with central america at various points in my life from diplomatic to economic and trade and one of the things i would like to try to do is as again you some of the developing regional integration and support

in the central american process, food security. a lot of this lending if a few thinking if you think in countries that gone too and you think of u.s. interests, frankly we have done a lot of lending to mexico. i think mexico stability and growth is pretty important in the united states. colombia come egypt and indonesia and what we are seeing is it does not hurt u.s. companies. we are ready got a lot of support from the business community. they have put together support on this issue in this dimension in the area of climate change, frankly i think we have not only brought more people into this in the developing world but we have been able to use the resources quite innovatively for different clean technologies and also for adaptation. so we look forward to working with the bretton woods community. you've been great partner in the past. we know particularly as we deal with some of these legislative issues we can tap some of your expertise and relationships and bill you and i have done this in different aspects before, and they think in particular one of the things that i know that may

give a better chance here, when i talk with some of the republicans about this i get some resonance on some of these issues and i think we can bring some people along and it wouldn't be so bad to have something done in a bipartisan way in washington, so thank you. [applause] >> well, i think i can appreciate more than most people they breadth and the innovative quality and the stamina that bob has brought to this institution and firstly that we thank you on behalf of all of us or the leadership you have given and are giving and the great strength that you are bringing to conceiving the institution and building upon the good things of the past and adapting to the present. i think all of us are grateful to have you in this job at this time. i have a series of questions,

and let me ask the first, which is, as follows. congress will soon be asked to fund major capital increases for the world bank, as indeed you mentioned, and some of the regional institutions. what are the best arguments that can be used to convince lawmakers to support support assistance that seems to go to the countries that compete with the united states? you touched on it but if you could amplify it cometh would help this question are. >> one of the nice things about economics compared to some fields is there is win-win possibilities. in the core.here is, i think in the case of congress and the american people, they can help themselves if they are helping to provide the financing for a number of these countries, not only because it is important for their stability but also it becomes an important source of growth. what i sounds jim, probably the most effective way with members

of congress is the way i touched on at the end. you bring it home to real countries. i talk about what we are doing in afghanistan in the middle east. there is a lot of interest in liberia and i just met with ellen johnson sirleaf when i was in africa about two weeks ago, but also some of the bigger countries. if you think about the roles of indonesia or mexico or colombia, these are countries where as i mentioned, the dollar in the capital in the united states, with 15% share you get a multiplier effect of at least six and on top of that we borrow four or five times do you get a 30 21 u. so when people want money spent that is a very important dimension. another key part which i touched on is this notion of a shared responsibility. and i really am very pleased and this is a complement to our board board and the board in the capital's working on this, we

are able to come up with a package where everybody kind of share some of the load in the process which i think will help politically along the way as well. so i think those are some of the core arguments, and i think also, from the perspective of some of the issues that in an american political context are important under a reform agenda we have got a pretty good record. we are driving goes forward pretty effectively as i mentioned, so i guess one of the things that was interesting was, when the prospect of a capital increase first came up, we were without much trouble and a colleague who was here was part of this and we were able to get ngo's as well as american business groups writing letters of support. this is partly the testament of what you started years ago in geos were not always quite so friendly so when we can get lenders that based on the work of opening doors here and working with partners and the work we did in food security but

also get the business community, that is not a bad place to be in terms of the political model. one other.you mentioned is kind of the competition aspect. here again, one of the things that is important to keep in mind is 70% of the poor people in the world are still living in what our so-called middle income country so if you are concerned about issues of health or concerned about education are giving kids a fair chance, those are programs that we need to customize for those that might not be the absolute poorest. >> i have a second question, and in fact i have many questions but the second one is despite major balances in the fight against poverty the global economic and food crisis has now raised questions about whether the millennium development goals are still obtainable? what is now the realistic assessment of the attainment of these goals? >> well, i always felt that these goals were important to try to focus the attention of

policymakers in developing and developed countries on priorities, whether it be cutting poverty in half, some of the nutrition issues, some of the health topics and not surprisingly he were going to see the results vary by country and region. this crisis, it was already difficult before this crisis in some countries were clearly not owing to attain them. but some countries would attain some, but not others. but i think it is in a way, it is a northstar for us to navigate towards and continue to try to emphasize these points. let me again give this in a very realistic context. one of the issues that came out in the millennium will that i have tried to advance is the first millennium development goal which is to cut poverty in half as a subpool related to nutrition. actually, right before the start of the food price crisis i read an article in the "lancet" that talked about nutrition is being

in a sense the forgotten millennial development or goal or subgoal and didn't get the attention and resources. yet when you look at the criticality of nutrition for a healthy start, to give kids a chance to go to school and brain development and other aspects of productive society, it is absolutely fundamental. that is part of the thing that led to the event we had with shakira which is the matching event with bretton woods committee, because she is in early childhood development. we have experience with this. we are going to try to use some of the latin american summits to try to drive this higher on the agenda in latin america and what i would also like to do is take that experience here with this region and try to expand it to others. so why hughes, i use, i see the goals not in a sterile sense but i see the goals of sort of a target for what should be guiding some of the policies. >> thank you. you touch significantly on india and china and the move in the

current economic climate. but could you give some further amplification on your views on the future for africa, given the increase in population and the projections of reduced per capita income compared with asia and many other countries? >> l., i was just in africa two to three weeks ago. i did a stop in west africa. i was in sierra leone and it is frustrating because it needs to move forward with the electoral process to play the role it can play in west africa and then i went to the african union summit. and i guess, sub-saharan africa is such a diverse place. it is always risky to generalize, but i would divide the development prospects into three categories. the first is, there are about 17 or 18 countries with about one third of the population, that prior to the crisis, were

growing at 5.5 to 6% year over 10 years, not insignificant progress. and, these are the countries that are growing more in investment and equity fund possibilities. and in general, if you visit the leaders of these countries and you asked them ask them what are their priorities, it is very interesting. they talk about energy, they talk about infrastructure, they talk about regional integration because many of them are small markets or don't have access to the sea, link the global markets , the point that pascal was making. they want a healthy private sector and of course they want to focus on the basics of social development so people can participate. if you think about that agenda, it struck me sense i have always had an interest in history, very similar to the agenda you would have heard in western europe in 1945 or 46, the energy common infrastructure and regional integration to the markets. the only difference was at least

if you take your appeal thinking circa 1950 in and african thinking in 2010 the africans have a higher value for the rugged sector but the europeans have come around. those are, those are markets we want to invest in and help. the second category, and maybe nine or 10 countries also grew quite well in fact maybe 9% a year over a decade, were the oil producers and they are the challenges. it is a question of how you make sure that the benefits of energy or other production gets more inclusive growth, how it benefits other people. how you avoid exchange rates problems like the dutch so that the finds the nature of the challenge with those countries. the third comment is references a particular interest we have in post-conflict or config countries, is those that drag themselves and their neighbors down, because of conflict insecurity which is one reason we focused on it.

in west africa it is so striking to see, when i was talking to people than sierra leone, many people in the united states may not recognize part of that problem was dems by some of the forces with charles taylor from liberia coming over the border and stirring up other difficulty, the reason i mentioned coated dfar it is a higher per capita and infrastructure is good until you get the unification of coated dfar it will hurt all of west africa so these notions about conflict states are important not only for their own people but we have now come the economic research that shows if you are a neighbor of the conflict state your growth will be on average 1.7% less per year so it is important to see those issues in the broader development context, so i am actually bullish on african prospects. there is a "newsweek" piece that came out this week or last that was looking at some of these. there is a great investment possibility. take one that was at the african union summit.

this is a good example of the potential and with a little bit of novel thinking. in the past, i think it was eight or 10 years there has been $50 billion invested in sub-saharan africa's telecommunications industry. this wasn't all done by government. the government created the enabling environment and you had people who created incredible systems. now, we are doing work with ifc that is looking at some off solar grid development. we are looking at private health care. we are doing a project with the gates foundation and again, some people don't recognize about 60 to 70% of the health care in africa is done through the private sector in business and top then stopped. the public sector is not providing it. in india it is 80 or 90%. india has got some fantastic examples now that not only of hospital-based care that frankly we are looking to see how it can be applied in africa by the but if some of you may know, if you look at the cataract and the heart surgery work being done in

india in hospitals it is as good as what is done in the u.s. and much cheaper probably because they don't have some of the lawsuits for malpractice but it is productivity. they move people in and out, so there are some very interesting lessons here am a particular combining with technology and since i mentioned the telecommunications this is another one from the indian context where you can see the south south connection. for any of you who have worked in the telecommunications industry denote that it is a business model, you get the customer and revenue per customer whatever services you can put out. in india it is minutes. you know how that technology read each or they each have a certain amount of minutes and you can add a lot of revenue. technologically that may be too possible a decade ago but not now. these are just examples again, where he think i think if people look at the african market with its true potential and we try to deal with some of the basic issues of security, regional integration and infrastructure that can make a huge difference.

one last point and that is to connect china with the africa model. one of the intriguing things coming out of this crisis and i don't want to oversell this but i think it is quite interesting, is that the crisis started, the provincial party secretary, one of the newspapers points out kwon if it were a country would be within the top 10 exporters of the world. at the start of the crisis said something that wasn't too popular with everybody but it was a very pointed observation. he said maybe as this crisis moves beyond we shouldn't just be involved in the christmas toy and the shoe market. maybe we should take some of the lower value added labor-intensive production and move it elsewhere. and again if you look at one of the new stories today it is labeled shortages. they want to move up the value chain. i admire his courage. if he had said this in any country when you have 30 million people losing their jobs it is not very popular but what if signal that they followed up with the ministry of congress

with the interests and some of these chinese firms to relocate basic manufacturing operations to africa as well as other places in southeast asia irca what do they need? they need courts come infrastructure and industrial zones and it is not just for export because if we can create slightly larger integrated markets in sub-saharan africa, if you get up from a dollar a day to $2 a day you start to create demand for some basic consumer and other types of goods. just-- archie the comments when he saw prime minister in ethiopia came to the meeting abroad a number of goods from local stalls in ethiopia. they were all made in china and he said these are things you could be making years of the system and import substitution model but how do we take some of that knowledge of labor-intensive manufacturing from china and bring it to an african context and then support the overall development process. the other thing for those of you who've seen the development starts with textiles and apparel to moveon keep in mind one of the things i was so powerful about the apparel market was

because of the old quota system and trade you had business people that started out in about four different economies whereas hong kong, taiwan, i guess maybe korea, and they moved their operations to different countries so when they moved basically, they have the marketing networks so if you could build a basic production, they would be able to market it for you and that many countries that is the challenge. even if you can build a production facility how do you get into the marketing? so these chinese firms have the marketing networks. so if we can make this work, this would be huge because i think all of us have seen the east asia as an example. they have gone different ways but basically started with low-level manufacturing and moved up the chain. one of my worries traditionally in africa is what the africans be able to follow that pathway given the amount of low-wage labor in china? what you are now saying that there is an opportunity. speak thank you. there are a whole series of questions and i apologize as

some of the questions i wouldn't be able to post but let me ask the next question. are steps being taken successfully to harmonize policies and procedures into improved division of labor and reduce overlap? >> yes, i hope so. i think, as the world bank we have a particular responsibility here. from the time i came and i wanted to emphasize closer cooperation with the region development banks and unfortunately we have an excellent set of residence-- across all of them. but we have now done this, we have regular calls from our chief economist, our chief financial officers who have been integrated at that level. we are going step-by-step. it is part of the anticorruption efforts. we build tribunals and others. it is a fixed cost so we are trying to work for with some of the other development institutions to see whether we

can combine efforts and here is what should be a no-brainer. for sanction a company for corruption why should they be able to do business with somebody else in the development world? there is a lot of opportunities. when it comes to capital increase i think reality jim has forced all of them to say let's scale down to see what we really need, so we have been trying to look at the amounts to try to see the respective roles. the one tricky thing about, you've used a phrase about at the end, division of labor. yeah. this is one you really have to customize and you would have seen this in your own experience. there is a point where people said zero well the bank should get out of agriculture and there was a point where people in the bank should get out of infrastructure and the bank should get out of the financial sector. we learned the hard way that those were not smart things to do but on the other hand depending on the competencies of the other players in here i don't just mean the regional governments, we will adjust and let me give you an example from

the human services area. a decade ago, something you were involved with, the bank was one of the leaders and in hiv-aids. you know how vertical funds. we are still doing significant work in hiv-aids but starting to transition to more of the health care assistance issues in other words you have funds from malaria and funds for tb and hiv/aids but the real challenge is how do you interconnect some of the systemically? we are saying to see how we can provide the best comparative value. so it is a critical area and i guess one other thing i . to and this is one i was pleased with in particular, in this crisis, some of you who watch central and eastern europe no central central and eastern europe got really hammered because it was the integration model over the past 20 years that was put in reverse, the financing came back, the trade came back in the remittances came back in the people came back, very hardly had. because in part by my own historical exposure with that region i felt it was important for us to be supportive but i

also felt that was important for us to your european institutions, and the head of the european bank and reconstruction development is as good a partners you can get so we worked closely with him and the european investment bank and brought in the commission is a process to to that we put together a combined funding mechanism that we tried to do something similar in latin america. this will have to be the way of the future and the only way i would say it is we can't stop with them. we need to work with the u.n. agencies with this, we need to connect with private sector players see it as a much more complex network model. >> i think we have time for just one last question and again i apologize for the questions i didn't ask. would would you discuss a little more the direction you see of your anticorruption program, whether it's primary and immediate program objectives? >> well, the key in this to really start is that jim started

this effort, and anytime you deal with an issue like corruption it is going to be sort of potentially contentious and the question was really how do we mainstream it into our work? and, to be very frank when i came here one of the problems was, we had a series of reports and the best way i can describe it is my first week i got a number of 50 to 60 page report in sealed envelopes that said only you can look at this and you can't talk to anybody about it. not exactly a system that works. one of the things that fulcher full or did any yet specific recommendations, and it was a tremendous help, was that he basically went through the wiring diagram of when we do this work how is it shared with the regions, with the board, how with the countries and that is a lot of pure execution of blocking and tackling, which we are trying to do. but, in addition, the point that

i have tried to emphasize and again we have a series of milestones in each of these areas, we need to integrate it with her perfume their procurement work, our work risk management work in the hardest thing for people is you don't want to create a culture where people retreat and just try to avoid the issue. but, the key is to get people to understand this is part of a risk management challenge like other risk management challenges, how to share permission, how to draw on to others and probably one of the most valuable things we have launched and this is something that is a work in progress, is to take the knowledge we have from cases, and be able to develop preventative measures. and to give you a practical sense of this, when i was in india in december the former congressman, the head of national highways has got ambitious plans. you look around the world. highways are always full marble

in any country, developed or developing, basically cartel so we have learned some red flags. we went and briefed him on the red flags, but none of the other issues here is whether we can sort of built into the design of those projects ways that you frankly minimize the risk of corruption going forward. so we had artie started a project looking worldwide on what we learned in the roads areas and kind of moving faster to try to support the indian context. so it really runs through everything we do and i guess one last point, when i meet with their procurement officers i emphasize another aspect of this. and that is it is not just a question of dollars and cents. you know the more i spend time in this field of more i recognize the criticality of governance and a public that has some sense of trust in its governing authorities. it is true for developed or it developing countries and i often point out from some of our more

junior people that they are going to be observing these countries so if it looks like the dollar here or dollar there does not matter to them that is going to be the lesson that people will take and that is not only a question of waste of resources but frankly a question of the russian of trust in the government. in developed countries they have been doing this for hundreds of years or more so you have got some residue you can deal with and in developing countries you could lose it and you do not get it backs a part of this is really building a sense of integrity, not only as financial fiduciaries but public sector fiduciary so it is a critical element. i guess in some ways, there is an analogy to gender. the challenge is how do you integrate this in everything you do and not just make a series of one investigation? >> thank you so much. on behalf of everybody-- [applause] thank you for today and thank you for the way you are running the institution.

[inaudible conversations]

>> it is a guidebook, a travelogue if you well but it is also kind of a mini-history, work of biography of each of these presidents and let's face it you can tell a lot about people at the end of their lives. speedy resource guide to every presidential gravesites, the story of their final moments and insights about their lives. who is buried in grant's tomb

now available at your favorite bookseller or get a 25% discount at the publishers web site public affairs works.com. type in grant's tomb at checkout. >> now, former u.s. ambassador to the united nations, john bolton on the foreign-policy of the obama administration. he spoke at the conservative political action conference recently in washington. this is about half an-hour. >> thank you and welcome to the third day of cpac and very glad you are here. i want to start off with a sad note but i think it is important that you know. this morning from her secretary of state alexander haig died. he was a great patriot, a true public servant. [applause] and certainly our thoughts and prayers are with his family.

i want to spend some time this morning talking about the current state of play and america's foreign-policy. to describe a little bit about what i think motivates the president, to describe some of his failures to date, and then to talk a little bit about the further dangers that we face going forward. and to look at this in a very, very fundamental way. on january the 20th, 2009, barack obama was not qualified to be president of the united states. [applause] today, today exactly 13 months later, barack obama is still not qualified to be president of the united states. [applause]

now, with that happy beginning let's look at the basis of where the president derives his foreign-policy. first is, he doesn't care that much about foreign and national security policy. it is not what energizes him when he gets up in the morning. it is not where he spent his career. it is not uppermost on his mind. that makes him very different from almost every other american president since franklin roosevelt but it is a fundamental fact. he would rather talk about restructuring our health care system, restructuring our financial system, restructuring our energy system, you get the point, he doesn't really care that much about foreign-policy. he addresses foreign-policy issues when he has to but that is not where his main interest

is. second, the president is not really see the rest of the world as dangerous or threatening to america. he made that clear during the campaign. he has made it clear in any number of his actions since then. we no longer have a global war on terror. he told us iran was a tiny country. i believe he sees the inevitability of american decline as a natural phenomenon and this combination of views he does not care much about national security and doesn't think the world is a threatening place ties directly into the next characteristic, and that is it is not that he concludes from this that it is right to be isolationist as many others would. instead he brings to the presidency a belief that multilateralism unequal since woodrow wilson. listen to what the president said in september at the united nations. it is my deeply held belief that in the year 2009, more than any.in human history-- aren't you glad you are alive when barack obama's a life? more than any.in human history the interest of nations and

peoples are shared in an era where destiny is shared, power is no longer a zero-sum game. no one nation can or should try to dominate another nation or go no world order that elevates any nation or group or people over another will succeed. no balance of power among nations will hold. now listen to woodrow wilson. the interests of all nations are also our own. he advocated in world war i, peace without victory. sounding familiar? president wilson said there must be not a balance of power, but a community of power. not organized rivalries, but didn't organize common piece down did on the moral force of the public opinion of the world. so, this fits in with the final defining characteristic of president obama. he is what i have called the

first post american president. [laughter] [applause] now, let's be clear-- let's be clear, not un-american, not anti-american, post american, beyond all that patriotism stuff. and i think it is clear, because fundamentally the president doesn't believe in american exceptionalism. now, this is a subject that itself can go on for a while but we have believed in the exceptionalism of america right from the founding. we must consider that we shall be as a city upon a hill. ronald reagan in his way a and amended that to say, shining city on a hill. some have called it the new jerusalem. but we have seen ourselves that way for a long time and do you know what? so did many foreign analysts, the first in fact he used the word exceptional to describe

america was none other than a frenchman. alexis de tocqueville the great analyst and democracy in america in democracy in america said the following. the position of the americans is therefore quite exceptional, and it may be believe that no democratic people will ever be placed in the a similar one. now, the president was asked on his first trip to europe thursday believed in american exceptionalism and he gave a classic answer. he said in the first third of his answer, yes i believe in american exceptionalism and the second third part of his answer, second to 30 contradicted them self i sing by saying just i sing just as i believe the bricks believed in british exceptionalism. there are 192 members of the united nations. he could have gone on, just as the ecuadorians believe in ecuadorian exceptionalism, just as they popular new guineans

believe in popular new guinea and exceptionalism. obviously, the real answer that he gives is that he doesn't believe in american exceptionalism and even analysts of the administration favorable to the president has have made the same, come to the same conclusion. is senior editor of the badly misnamed publication "newsweek" -- [laughter] describing president obama's speech at speech at the 65th anniversary of d-day, contrasting it with president reagan's remarks on the 40th anniversary, edmund thomas said the following. we were the good guys in 1984, it felt that way, it hasn't felt that way in recent years. so obama has had really a different task. reagan was all about america, you bet. reagan was all about america. [applause]

obama is, we are above that now. we are not just parochial. we are not just chauvinistic. we are not just provincial. we stand for something says evan thomas. in a way, obama standing above the country, above the world. he is sort of god. he is going to bring all the different sides together. now leaving aside that reference to god, which is a little over-the-top even for establishment media, the description of obama's view of himself i think is very much on.. so i say he is above, are you people in this room patriots? [cheers and applause] obama is above all that. now, he is the first president i think to hold these views, but his philosophy represents a pretty deep-seated stream inside

the left of the democratic party. for example back in 1988, george h. w. bush accepting the republican nomination described his democratic opponent michael dukakis this way, said bush about dukakis. he sees america as another pleasant country on a u.n. roll call somewhere between albanians and zimbabwe. [laughter] that is obama. that that is obama. so he doesn't care very much about national security. he doesn't see the world is very threatening and he basically thinks our international problems can be handled by sweet reason and not by power. let's look at some of the specific examples of this failure of the obama administration to date and let's be clear there are a lot of areas where the verdict isn't in yet but i do want to focus on some where he think he has made just absolutely critical mistakes. let's start with iran. we have seen over the past 13

months in many respects a continuation of the failed bush administration policy, believing we could negotiate iran out of its nuclear weapons program. in fact our intelligence services told us in 2007 that iran had actually suspended the weaponization aspects of the program. just this week the international account-- atomic energy issued a report that was more concerned about iran's nuclear program then they 2007 national intelligence estimate irca were in fact iran is well underway toward nuclear weapons. they are not going to be talked out of that program. sanctions that are being proposed are not going to be adopted by the u.n. security council. iran will continue to make progress just as it continues to be the world's largest financier of terrorism and yet the president is recently as the last 10 days has said that it is

still open the possibility is still open to iran to come back to negotiations. if you are the regime in tehran, if you are mahmoud ahmadinejad working your way toward nuclear capacity to fulfill your dream of wiping israel off the face of the map what conclusion do you draw from an american president who keeps saying i keep saying i want to negotiate with you? the conclusion as you have got no difficulty at all. in the face of this policy, the president of france, nicolas sarkozy, has been heard to say several times why is obama so weak backs when the president of france criticizes an american president-- [applause] you know we are in trouble. even where the president takes decisions that i think are sensible, as in the case of

increasing our troop levels in afghanistan and as in recognizing that we need more pakistani involvement in the struggle against the taliban, not only to defeat them in afghanistan but to make sure the taliban don't take over pakistan with its substantial arsenal of nuclear weapons, even when he announces that policy as he did at west point he couples it decouples it in the same speech with the promise that he is going to begin withdrawing american forces by the summer of 2011, conveniently right at the beginning of the 2012 election cycle. this is another signal to al qaeda, to the taliban, to terrorists around the world that if you just wait long enough this administration will run out of patience and find something else to do. our military is demonstrating and has in the past week in afghanistan, how to win this war. [applause]

the real question is whether the president is going to allow them to do it or whether he is going to constrain them. we face a similar problem in iraq where the precedence is wedded to a withdrawal timetable rather than to a continuing assessment of the western west are teaching interests in iraq, and if people think you are going to withdraw pursuant to a timetable they are obviously going to let you do it in and wait until the american forces have withdrawn. these are the signals of weakness that obama repeatedly sends that our friends and adversaries alike can see very clearly. and, in terms of examples let me just conclude with a middle east peace process where 13 months of fruitless efforts by the administration have actually left the united states and a weaker position in the middle east and left israel more in jeopardy than when we started. when the u.s. expands its political prestige and negotiating effort and fails, we do not end in the same position

we started. we and in a worse position because everyone concludes that we have made this effort and couldn't succeed and that is exactly what the president did. this is perhaps the best example i can think of his completely naïve faith in negotiation for negotiation sake. here is a little secret, negotiation is not a policy. it is a technique. [applause] and if you don't have any substance behind the policy, obviously it is not going to succeed and the efforts in the arab-israeli circumstance i think of complicated america's national security not just in the middle east but around the world. now, the president has three years left. i say that's very confidently. [applause] so, you can count on these and

other problems that we have seen in the first term getting steadily worse but i want to spend a little bit of time here telling you what else i think is going to happen in the next three years, because as difficult as this first year has been i think there is worse ahead. number one, the president will announce any day now a new arms control agreement with russia that will substantially reduce both our operationally deployed strategic nuclear capabilities and our delivery systems. i think that this is something that will reduce the american deterrent around the world. it will trouble our allies. japan, europe and others who depend on the american nuclear umbrella. i think it is consistent with the president on believably naïve idea that if we could just get to a world without nuclear weapons, if the u.s. could somehow dispose of its nuclear weapons, like iran and north korea would give up their nuclear weapons, peace would

break out all over. this treaty that he is negotiating is something that we need to draw a line in the sand over in the senate, when he sends it up and defeated if we have the chance. [applause] even worse, even worse there are reports that the president in this treaty will agree to limitations on our ability to construct national missile defenses. now, i have to say one of the things i was proudest of doing in the bush administration and one of the things i think will be president bush's legacy was getting begin a out of 1972 anti-ballistic missile treaty so we could build a national missile defense. [applause] this treaty will be bad enough on the strategic offense side. i would say this, if there is one word limiting our capability

for strategic defense, bad and that alone would be a reason to defeat that treaty. [applause] but, the president isn't going to stop there. vice president biden announced this week that the administration will resubmit the conference of test ban treaty which would prevent us from testing the safety and reliability of persisting nuclear weapons, prevent us from testing they developed new nuclear weapons. this was defeated in the senate during the clinton administration, the first major treaty to be defeated since for side. we have a smaller group in the senate then we did then, when we had the majority, but we have got 41 now and more to come. when that treaty comes to the senate it should be defeated again. [applause] and, this is an administration that believes in arms control as if it were an element of theology. we are going to cf fissile material cutoff treaty, treaty

in in the arms race in outer space, efforts to strengthen how they consider strengthening the non-proliferation treaty and something called an innocuous leave the arms trade treaty, dealing with conventional weapons. the hidden agenda for many groups supporting that treaty has nothing to do with real conventional weapons team ship internationally. it has to do with the limitation of the prohibition on the private ownership of firearms, and that is something all of us here need to keep our eye on into watch as it comes forward. [applause] now, i know know i am an old arms comptroller and i know arms-control terminology glazes people's lives over but i'm telling you americans national security rests on the strong nuclear on roe and rests on strong defenses. we cannot give in on any of these points. [applause]

the second major thing coming from the obama administration is the continued pursuit of what today is euphemistically called global governance. no more local government. they know that sets people off so they have got other phrases they used. many of these proposals will result in palpable reductions in american sovereignty and need to be resistant. this is something that will have differences with our friends in europe. we need to understand that. dns country are sovereign. be the people. so when you hear, when you hear the media and academics talk about the need to share sovereignty in a complex world they are saying you have too much control over your government. and you need to share some of that with international organizations. i don't need to say anymore on that point but let me "back to you, so that it is clear where

this is coming from. from comments made by the new president of europe. herman-- the european union on november 19th when he took office. europeans take the presidency of europe seriously, so i suppose we should but anyway-- [laughter] hermann von rhomboid sets and this was before copenhagen but he said 2009, remember the epic year the top-- 2009 is also the first year of global governance with the establishment of the g-20 in the middle of the financial crisis. the climate conference in copenhagen is another step toward the global management of our planet. now, nobody in europe laughed when the president said that, and it is important when you remember the adulation of one student after a speech the

president made on his first european trip. he said with awe and his voice, he sounds like a european. that is where the problem is. we are going to see more efforts on climate change, the collapse in copenhagen has not discouraged the advocates. and this is something that we need to be concerned about, whatever you think about the extent of global warming, whatever the extent you think about its mandate causes because the people who support the sorts of state-controlled state regulation and international taxation that were being talked about in copenhagen would advocate the same policies whether the problem with global warming, global cooling or the ers temperature was not changing at all. this is a statist agenda we have to reject. [applause] the threats to american sovereignty are going to come in

a variety of various as well. i foresee at some point the president will find a way to once again sign the treaty creating the international criminal court,. secretary of state clinton said last year, that it was and i quote a great threats but a fact we are not yet a signatory to the rome statute which created the accord. again the bush administration took the u.s. signature off that treaty, which was a direct threat to american sovereignty. [applause] something president bush cared personally about. we obviously can't stop the president if he re-signs the treaty, but if he submits it to the senate, this is another guy in the ditch die in a ditch issue for conservatives. that treaty needs to be defeated by the biggest majority that we can make. [applause]

the president has made it clear he wants to see a lot more of american foreign-policy running through the united nations system and he also, he also wants to see the u.s. perceived as more engaged internationally, so there are a lot of treaty south they are fed up that have weathered for a long time. i think the appropriate moments, the administration will make another effort to get them ratified by the senate. the u.n. convention on the rights of the child, the convention on elimination of all forms of discrimination against women, the conventions for the rights of persons with disabilities. there is a theme here. the united states has dealt with questions of discrimination on the basis of disability and gender are cow and a whole range of issues. we in this room would probably disagree over what the appropriate measures are. there would be a broader disagreement within the american population as a whole but do you

know what? as americans we are capable of passing our own laws on these subjects. [applause] you do not have to have a substandard position on these treaties or questions like the death penalty or anything else to say if they are not matters for international negotiations. they are matters for chemically allowed-- democratically elected to decide on our own. [applause] and then finally, i should go one with a lot of other examples but finally one that i know is important is the threat of international attacks is. now, the u.n. and other international bureaucracies

despise the american system where congress has to appropriate money to pay our system and to pay expenses to these organizations because congress is so un- corporate it. so they have looks for years to find ways to fund international organizations without having democratically elected representatives make decisions. prime minister brown of the united kingdom is proposing an international bank tax. the french are proposed taxes on international airline tickets. the whole.is obviously banks and airlines don't pay taxes, you pay taxes and you would on bank transactions and the purchase of these tickets. it is to get a way of funding whether it is the climate change organizations, the international monetary fund, the u.n. itself, these various taxes come in complex guises that are often hidden.

whenever anybody identifies one of these taxes it doesn't matter what the purpose is. it doesn't matter how grave the situation. once the american people lose the ability to determine where they will be taxed we have lost the revolution, my friends. [applause] so, let me conclude, you know many reporters ask the question are we more secure today than we were a year ago? i don't have any trouble saying we were but honestly that is not the right question. the real question is if president obama continues the kinds of policies he has been pursuing so far, they are right question is how secure will we be three years from now compared to when he was inaugurated, and that is the most troubling aspect of all. what we need to do is keep up the debate for the next three years, not be distracted by other issues. we need a sustained, unremitting effort until 2012 where we can

evaluate our presidential candidates based on their ability to defend our national security and our message to president obama in the meantime should be this. we will not let you reduce american sovereignty. [applause] we will not let you make america vulnerable. [applause] and as the president's oath of office says, we will prevail over all enemies foreign and domestic. thank you very much. [applause] ♪ >> one more time. >> ad for clock eastern on c-span, a discussion of recent and upcoming supreme court decisions affecting gun ownership rights.

>> it is a guidebook, a travelogue if you well but it is also kind of a mini-history, work of biography of each of these presidents and you can tell a lot about people at the end of their lives. speedy resource guide to every presidential gravesites, the story of their final moments and insights about their lives. who is buried in grant's tomb now available at your favorite bookseller or get a 25% discount at the publisher's web site at publishers affairs.com.

speedy the u.s. senate is about to gavel in for the week. senators will begin a day within our general speeches before turning to a bill to extend the number of tax breaks. unemployment benefits cobra insurance and highway funds. 2000 federal transportation workers are being furloughed without pay today and federal reimbursements to stay for highway programs will also be halted amounting to $190 million a day extension of unemployment benefits was also stopped. the temporary furloughs and free some payments result of a decision last week by republican senator jim bunning to block legislation to extend the programs which expired at midnight on sunday. senator bunning objected to the $10 billion measure saying it would add to the budget deficit. live senate coverage now here on c-span2. the chaplain: let us pray.

o god whose approval we seek above humanity's hollow applause, we pause today to experience the warmth of your presence, as you lift the light of your countenance upon us. give to the members of this body pure hearts and a passion to faithfully serve you and country. across their toiling hours, keep their hearts fixed on you, the author and finisher of their faith. in a world of suspense and suspicion and turmoil, breathe

now in this quiet moment your peace on every heart. lord, prepare solutions for our senators' complexities and resolve their conflicts in a way that will glorify you. we pray in your sacred 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, march 1, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable mark r. warner, a senator from the commonwealth of virginia, 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 the leader remarks, there will be a period of morning business until 3:00 p.m. senators permitted to speak for up to ten minutes each. at 3:00 p.m., we'll turn to the consideration of h.r. 4213, the tax extenders legislation. senator baucus will be recognized to call up the amendment. as previously announced, there will be no roll call votes today. the first vote of the week will occur at 12:15 p.m. tomorrow. that vote will be on the motion to invoke cloture on the nomination of barbara keenan to be a united states circuit judge for the fourth circuit. mr. president, there are two bills, i'm told, at the desk due for second readings. the presiding officer: the clerk

will report. the clerk: h.r. 4626, an act to restore the application of the federal antitrust laws to the business of health insurance to protect competition and consumers. h.r. 4691, an act to provide a temporary extension of certain programs, and for other purposes. mr. reid: mr. president, i would object to any further proceedings with respect to these two bills. the presiding officer: objection is heard. the bills will be placed on the calendar. mr. reid: mr. president, every night, too many out-of-work nevadans and americans, people who want to work, who need to support their families but can't find a job, go to bed with at least the comfort of having unemployment insurance and health benefits. last night, more than a million

of them, people throughout america, went to sleep relying on those benefits woke up without the confidence they will be there now. early this morning when they would rather be spending their mornings working, mothers and fathers in every state woke up at the unemployment office in a long line. news reports today that these lines are really long today, all over the country, from virginia, nevada, to kentucky. they are long because these people are worried about how they are going to put food on the table and pay the bills. for far too many americans, those benefits were set to expire last night. so six times last week, democrats asked to extend their unemployment benefits for a short time while they work on a longer extension. six times, republicans said no. they didn't just say no to us,

that is members of the senate. they said no to their families in their own states and all our states count on us to act when we need action. they count on us to respond in the event of an emergency. this is an emergency. the republicans in the senate are standing between these families and the help they need while these benefits expire and expired. it might work under the senate rules they can do that, but it certainly doesn't work for working families. the need to buy groceries does not expire. the need to heat your homes, put gas in your car, make payments for the furniture you bought, the car you bought, your house payment. the need to take medicine or support an aging parent or take care of the kids, they don't expire. those opposed to helping our fellow citizens at the time of greatest need want to talk about

process, process. my republican colleagues came to the floor and talked about process. they had a right to do that. well, under the rules, i guess that's true, mr. president. if you can't afford to feed your kids, that doesn't mean anything anything -- mean anything to them about process. we talk often about the cost of inaction. it's the reason we insist on creating jobs and making health care more affordable and strengthen our international security. when we talk about the cost of inaction, it's more than just rhetoric. it comes with dire consequences. the americans who woke up this morning without the benefits they need now know that better than anyone else. mr. president, associated press runs all over the country, news wire. among other things, this article says this morning, 2,000 federal transportation workers will be furloughed without pay today.

and, mr. president, the reason we're talking about 2,000, this doesn't count the thousands and thousands, up to a million people who are not going to have any -- have jobs as a result of not extending the highway bill. that's what we want to do. let these people work. because that's what happened is even the inspectors can't go out and do their jobs, so people are just walking away from these jobs. secretary lahood, the secretary of transportation -- by the way, a republican congressman until he was appointed here -- said construction workers will be sent home from job sites because federal inspectors must be furloughed. they mean a long list of construction sites that will be halted -- george washington parkway in virginia, humpback bridge -- i don't know where that is, but in virginia. bridge construction in cord ca

lean, idaho. all over the country, it's happening. the transportation inspectors, safety inspectors, no pay so they have to leave, and nothing is happening. this is going to lead to untold numbers of people. i said up to a million people won't be able to work. it's just really wrong what's taken place here, mr. president. it's not too late to right that wrong. i hope republicans will reconsider, think about their constituents standing in the unemployment line as we speak. i hope they will reconsider. based on that, mr. president, i would ask unanimous consent that the senate proceed to h.r. 4691, which is a 30-day extension of provisions which expired yesterday. unemployment insurance, cobra, the health insurance for people

out of work, flood insurance, satellite home viewer act. a million and a half people are unable today to watch the tv that they could last night at midnight. highway funding -- and i've talked about that. s.b.a. business loans, small business provisions in the american recovery act, and the doctors fix, s.g.r. and poverty guidelines received from the house and at the desk. that the bill be read three times, passed, the motion to reconsider be laid upon the table. the presiding officer: is there objection? a senat: i object. the presiding officer: objection is heard. mr. reid: thank you, . president. mr. bunning: mr. president? the presiding officer: under a previous order, the leadership time is served. there will now be a period of morning business until 3:00 p.m. with senators permitted to speak therein for up to ten minutes each. mr. bunning: mr. president? the presiding officer: the senator from kentucky. mr. bunning: thank you. just a brief explanation of why we are where we're at with this

extension bill, the brief extension of 30 days. there was an agreement between the majority leader of the finance committee and the minority leader in the finance committee, senators baucus and grassley, on a three-month extension of these very same provisions. there were more provisions in the bill also. it cost a little more than the the $10 billion that is asked for because it was a three-month extension. senator reid pulled that bill from the floor of the u.s. senate. he did it. the leader of the democrats pulled that bill from the floor. i support extending unemployment

benefits, cobra benefits, flood insurance, highway bill fix, doc fix, small business loans, distant network television for satellite viewers. if we can't find $10 billion to pay for something that we all support, we will never pay for anything on the floor of this u.s. senate. i have offered several ways to do this, including trying to negotiate with the majority leader's staff. none have been successful. we cannot keep adding to the debt. it's over $14 trillion and going up fast. if the budget that is before us passes, it will add another

another $1.5 trillion to the debt. last week, -- well, now it's a little past last week -- we passed pay-go. for those who don't know what pay-go is, it means you have to pay for everything that you bring before the senate, and you can't charge it on the debt. you can't charge it. that's what pay-go says. so understanding that, i hope the american people understand my serious objections. now, i would like to ask for unanimous consent that the senate proceed to the immediate consideration of h.r. 4691, that

the amendment at the desk which offers a full offset be agreed to, the bill as amended be read a third time and passed, and the motion to reconsider be laid upon the table. the presiding officer: is there objection? mr. reid: reserving the right to object. the presiding officer: the majority leader. mr. reid: mr. president, history is something i think you have to be involved in to understand what really transpired. first of all, there was no bill on the floor for me to take off the floor. there was discussions between democrats and republicans on the thursday before we left for the last week-long break that we took. i was in the back hall here with senators grassley, baucus, and

mcconnell, and senator mcconnell, my friend, said that they weren't ready to agree to anything yet. well, it's very clear, mr. president, that if we're going to extend benefits for a lot of tax provisions that are very important to business, we should at least consider extending benefits for people who are down and out for the same period of time. so understand the bill that came before the senate included a jobs package that extended the highway benefits for one year, saving a million jobs, creating jobs by allowing small businesses or any businesses to hire somebody that has been out of work for 60 days. they don't have to pay their withholding tax and they get a a $1,000 tax credit at the end of the year. in addition to that, small businesses, mr. president, made a provision in there to allow small business to write off, not

depreciate up to $250,000 of purchases in a year. very important to stimulate businesses. we also had a froition stimulate the economy by extending the build-america bonds that was so successful in our recovery act. those funds have expired. so, mr. president,, we can have all the excuses one wants. the fact is my friends on the other side of the aisle are opposing extending unemployment benefits for people who are out of work. i would also say this: paygo is very interesting. i'm glad my friend brought that up. i'm glad he brought up the big deficit because it is very big. but where was my friend from kentucky when we had two wars that were unpaid for during the bush administration? tax cuts that cost more than $1 trillion, unpaid for, where was my friend and the republicans objectinobjecting to that?

now, mr. president, paygo is important, and we passed paygo here -- we, the democrats, passed it. my friend didn't vote for it. it passed because democrats voted for it. not a single republican voted for t we had these in effect during the clinton years, and it worked. we paid down the debt in the last clinton years. we also understand how important the debt of this country is, built up -- started to build up so strong during eight years of the bush administration. we brought to this floor that the presiding officer -- no one worked harder than the presiding officer to come up with something to address the debt, with the chairman of the budget committee and others. we wanted a debt commission, and we brought to this floor a debt commission, a good one, mr. president.

it was based upon what we did with base closings, military base closings. we tried for decades to close bases that were unnecessary in the country anymore, after world war ii was gone, korea was gone, vietnam. we didn't need awful those bases. because of what happens in trying to close a base because of local politics, we couldn't do it so we passed a bill that said, we're going to have a debt closing commission. they will come back with recommendations, and the house and the senate has a choice: either vote "no" or "yes" on their recommendations and they voted "yes," both the house and senate, and we closed numerous bases all over the country. the debt commission we established was based upon that the same thing. and we voted -- we democrats voted. it would have passed. why didn't it pass? because seven republicans, who cosponsored the legislation, voted against it. so, mr. president, we don't need lectures here on debt. what we need is to recognize

that there are poor people all over america who are desperate today, and people who are working, making good money on these road projects all over america today that are being told to go home because we don't have inspectors to take care of your work. therefore, mr. president, i object. the presiding officer: objection is heard. mr. reid: mr. president, unless my friend has more to say, i'm going to suggest the absence of a quorum. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. alexander: mr. president? the presiding officer: the senator from tennessee. mr. alexander: mr. president, i ask consent that the quorum call be vitiated. the presiding officer: without objection. mr. alexander: mr. president, i ask consent to speak in morning business for up to 15 minutes. the presiding officer: without objection. mr. alexander: thank you. mr. president, wit would the chr please let me know when i have consumed 12 of the 15 minutes. the presiding officer: yes, sir. mr. alexander: thank you very much. mr. president, it was my privilege last thursday, along with some other members of the senate, to attend a health care summit at the invitation of president obama. it went on a long time, and we learned one thing we already knew, that our president is smart, knows a lot about health care. and so i stayed the whole time. but it gave those of us on the republican side a chance we don't have the opportunity to

have as often, which is to be on center stage and let the american people know, a, who we are and, b what our ideas are. so it was a terrific idea for us to say, for example, that we are -- our goal is to reduce health care costs, that we'd like to move step by step toward that goal. we identified a number of areas, for example, allowing insurance to be transferred across state lines, limiting junk lawsuits, which would bring down the cost of premiums, which is what americans want. during the discussion early on, actually, the president and i had a little disagreement about whether his plan, which is based on the senate bill, which passed on christmas eve, would raise premiums. what i had said in my opening remarks on behalf of republicans was that millions of americans under the democratic plan would pay higher insurance premiums because of government mandates

and taxes. the president says that's wrong. i cited a congressional budget office report to show i was right, and rather than dispute the president of the united states in public, i thought i had had enough time to make my case -- i said i would send li him a letter, which i did that same day. so i would like to ask unanimous consent the letter that i gave to president obama on thursday. the presiding officer: without objection. mr. alexander: the president's argument -- but today what i'd like to do in the next few minutes is explain why i believe i am correct; that under the president's health insurance plan, which is based upon the senate plan, for millions of americans premiums would go up, because of one-size-fits-all government mandates, because of taxes that are passed on to consumers, but for other reasons as well -- by shifting costs -- when you dump 15 million people or 18 million people into a program called medicaid, what happens is, we don't pay the

doctors and the hospitals well enough to take care of those folks so they shift the cost to people who are paying with private insurance and premiums go up. costs for young people will go up under this plan because if you put in a rule at that says my insurance at my age can't go up more than a certain amount, compared with my son's insurance, then his insurance goes up. and because in a scheme like the democratic plan depends upon requiring everybody to buy insurance, there is a weak provision for that, and i suspect many young people would just rather pay the $750 fine rather than the $2 -- by a $2,500 insurance policy, which they think they can't aforward. the president made the point in his unusual very persuasive way, that wait a minute, you'd be getting better insurance.

as george will said on abc's "this week" yesterday, he said, "if the government required you to buy a better, more expensive car, even if it was better than the car you've got, it would still be more expensive, wouldn't it?" and that's the case with the president's health care plan. in fact, premiums will go up for millions of americans. up more than they otherwise would over the next several years, and we all know how rapidly they're rising. and the whole exercise that we're going through over the last year is to bring premiums down. not help drive premiums up. what i said to the president with respect was that the congressional budget office on november 30 said this about the senate bill. the congressional budget office -- quote -- "and the joint committee on taxation estimate that the average premium per person covered for new nongroup" -- that means individual policies -- "would be about 10%

to 13% prior in 2016 understand that the same in the same year under current law. if you buy an individual policy that means not a policy with your employer, that by 2016, it will be at an average of 10% to 13% higher than it otherwise would. mr. president, i ask unanimous consent to include in the record the relevant parts of the congressional budget office letter of november 30 to senator hevan bayh on this point. the presiding officer: without objection. mr. alexander: the president said wait a minute, the premiums in the individual market will go down 14% to 20%. that's also in the same letter. and, of course, he's right about that, they go down because of administrative efficiencies and new enrollment, but he left out that there are other factors there that the government mandates will drive them up 27% or 30% or, in the end, the

average, as the c.b.o. said, premium per person covered in an individual policy would be up 10% to 13%. now, the bill has subsidies in it for some americans. the same letter says about half of americans who buy in the individual market will get a subsidy. well, we are paying for that subsidy but let's concede that point. still, that leaves half of the people in the individual market for whom premiums will go up on an average of 10% 2013%. now, why -- my 10% to 13%. now, why is that? one reason is because the senate bill says people will have to buy a richer policy than they have today. that means it has a higher actuarial value. they call it in the bill minimum creditable coverage. it means this is the amount of insurance i think you should have before you buy a policy. that might be a good decision.

it undoubtedly would be good to have the insurance. it just costs more, 27% to 30% more than today's average. the national federation of independent businesses wrote a december 12 letter in opposition to the senate bill saying -- quote -- "that the benefit mandates will put small business owners" -- quote -- "at risk of having to drop coverage due to cost preeses tha increases thate their health budgets." mr. president, i'd like to ask unanimous consent to include the letter from nfib from senator reid and senator mcconnell of december 8. the presiding officer: without objection. mr. alexander: the one-size-fits-all provision in the democratic bill says that all individual and small group policies muff an actuarial -- must have an actuarial value of 60%. now, senator susan collins of maine, who was the insurance commissioner in maine herself, made a speech on the senate floor and pointed out that 87% of the policies, the individual policies that are purchased in maine today would cost more

under the reid bill. mr. president, i'd like to ask unanimous consent to include in the record senator collins' reports of december 18. the presiding officer: without objection. mr. alexander: she used the example the most popular individual market policy sold in maine cost a 40-year-old about $185 a month. under the senate bill, that 40-year-old would have to pay at least $420 a month, more than twice as much for a policy that meets the new minimum standard or face a $750 penalty. now, it is true that maine citizens, like all americans, about half of them would receive subsidies to help them buy that policy, but the other half of the 87%, their average premium is going to go up under the democratic bill. we believe americans ought to have more choices than that. that's a fundamental difference of opinion. should washington decide you need to buy a richer policy or should you decide that for yourself based upon the other

needs in your family? the congressional budget office does state, as i have mentioned, that there are a number of enrollees, about half, would have the subsidies and that's in the letter that i've already introduced into the -- into the record. but someone's paying for those subsidies, mr. president: the taxpayers are paying for them. which brings up the second reason that i said on thursday that premiums for millions of americans in the individual market will go up. the commonsense idea is that if you tax an insurance company or a medical device company or a manufacturer of drugs, they'll pass the taxes on to whom? to us, who are buying insurance policies, or medical devices, or drugs. so we end up paying. in fact, one part of the president's proposal deliberately does that. it's a 40% excise tax on

insurance company for what we call cadillac plans, the high-cost private insurance plans. the joint committee on taxation on february 24 -- and i'd like to ask consent to include their letter in the record -- the presiding officer: without objection. mr. alexander: -- says that that 40% excise tax will raise $32.7 billion, all of which will be passed along to consumers in the form of higher insurance premiums. now, that may be a good thing, mr. president, because, in fact, i think it is because it helps to discourage the purchase of more expensive policies but it does raise premiums in the individual market. and the -- the joint committee on taxation memorandum on high-cost plans dated september 29 says the excise tax would be mainly passed along through increases in premiums. i'd like to ask consent to include that letter in the record. the presiding officer: without objection. mr. alexander: and because the

new taxes index to regular inflation plus 1% instead of medical inflation, which goes up very much higher and quicker, the new tax, like the alternative minimum tax, will pretty soon start to hit chevy and buick insurance policies and not just cadillac policies. but there are other taxes in the president's proposal -- they're up to $500 -- half a trillion dollars in new taxes -- which will be passed on to consumers. $20 billion on excise taxes on lifesaving medical devices, $33 billion on drugs, $60 billion on health insurance companies. in a c.b.o. and j.c.t. letter to senator grassley of december and october, both of last year, both said these taxes will be passed on to patients, increasing health insurance premiums. i'd like to include those letters in the record. the presiding officer: without objection. mr. alexander: the center for medicare and medicaid services, the chief actuary of the obama

administration, said "we anticipate such fees would be generally passed through to health consumers in the form of higher drug and device prices and higher insurance premiums." that was on december 10 of this year about the senate bill. i'd like to include -- i ask consent to include the relevant portions of that letter in the record. the presiding officer: without objection. mr. alexander: the lewen group said on october 30 -- quote -- "costs would increase steadily reflecting the various excise taxes included under the act. total health insurance spending would increase by 32.1% by 2019." i'd like to ask consent to include within the record the relevant portions of the lewen group report. the presiding officer: without objection. mr. alexander: the national association of independent businesses letter says the same. i thank the president. there are other reasons why the premiums will go up. there is -- mr. president, seeing no one else here, i wonder if i might ask for five additional minutes. the presiding officer: without

objection. mr. alexander: i thank the president. here's a third reason, in addition to government mandates and taxes, that will cause premiums to rise. we call it cost-shift. premiums will increase because the bill dumps 15 million -- 15 million to 18 million more americans into the government program called medicaid. this is the analysis of the chief actuary on january 8, 20 2010. i'd like to include the relevant portions -- i ask consent to include that in the record. the presiding officer: without objection. mr. alexander: the point is, is medicaid only pays doctors and hospitals about 60% of the costs of serving the 60 million patients who are now there. the democratic bill would add 15 million to 18 million more patients, so what do the doctors and hospitals do? they see these patients but then they shift the costs to the patients they see who have private insurance. the president himself said that that adds about $1,000 to every

policy today, this cost-shifting. and i -- and i've included that from -- that comment from the chief actuary. the price waterhouse coopers report on the senate finance bill on october 2009 said -- quote -- "the net effect of the bills before congress will made the medicare and medicaid cost-shift even more severe, raising the cost of private insurance premiums for large employers by $255 a year between 2015 and 2019." i'd like to ask unanimous consent to include the relevant portions of the pricewaterhouse coopers report. the presiding officer: without objection. mr. alexander: younger americans will pay higher premiums under the democratic plan because, as i mentioned earlier, it will mandate that there can't be more than a difference of -- that i can't pay more than three times as much as my son could pay for an insurance premium. that might help keep my premiums down but it's going to send his

up, pretty far up, because 42 states, including tennessee, allow more variance of that. so young people across america, who include about 40% of the uninsured, are in for a big surprise when their policies jump up 30% to 35%, is what the oliver wyman report of september 28 said theirs might do. or when, since they're uninsured, they're required to buy insurance and they find the insurance they're required to buy is very expensive. i'd like to ask unanimous consent to include in the record the relevant portions of thely oliver wyman report. the presiding officer: without objection. mr. alexander: finally, mr. president, the young and the healthy can skip out of that. that will drive up premiums. they may decide they will pay $750, fine, than pay $750 for an insurance policy they think they don't need. the american academy of actuaries wrote a letter on the reid bill on november 20, said, "any premium vairgses by age limited to 3.1 ratio between the

highest and lowest premiums," and then it goes on to say, "would cause higher premiums on average relative to current premiums." i ask consent to include in the record the letter from the american academy of actuaries, november 20, 2009. now, all in all, mr. president, these factors suggest why, when senator collins took a look at maine, she found that 87% of people in maine are paying less for their individual policies than the policies would cost under the reid bill. it is true that half or more of them would receive some subsidy which would reduce their cost, but around half of them will pay more. and in tennessee, bluecross blueshield, which covers about one-third of ten's individual market -- of tennessee's individual market, estimates the premiums for those individuals will increase by 30% to 45% under the reid bill. and i ask unanimous consent to

include a chart which demonstrates that. the presiding officer: without objection. mr. alexander: at our summit on thursday, there were a number of good ideas about reducing health care costs that the president seemed to share with republican members who were there, and there was some obvious irritation on the part of the majority leader and others when we said things like, there ar ta trillion dollars of cuts in medicare, which there are, mr. president. and our real objection to it is that the cuts are not used to save medicare, which is going broke, but spent on a new program. and there are a half a trillion in new taxes. there are a half a trillion in new taxes. and as i just said, they tend to increase premiums for millions of americans. there are premium increases. there is a deficit increase. now, it is true that the c.b.o. has said that what was presented to them didn't increase the deficit but what was not included and wha -- included int was presented was paying doctors to serve patients in the government program.

that's like having a horse race without the horses. i mean, how are you going to have a comprehensive health care bill and not include within its cost paying doctors to serve patients in the government programs. and when you put it in, the deficit goes up. and then there's the problem of the passing off to states these expanded medicare -- medicaid costs without paying for them. i know as a former governor -- and i see the former governor of virginia in the chair -- i struggled with that every single year, and all the governors are today of both parties. they don't want us sending them a bill for expanded health care. they can't pay the bills they've got. and -- and we shouldn't do that. if we want to expand it, we should pay for it. that's another part of the bill. mr. president, i came to the floor today to, one, to express my appreciation to the president for inviting us thursday. it gave us a chance to show who we are and what we're for. i thought it was a good discussion. i believe there are eight or

ten, maybe a dozen different good ideas senator coburn and people on both sides of the aisle suggested. some differences between those ideas, but basically they represent a way to move forward to reduce health care costs. that's really what we ought to do. we don't do comprehensive very well in the united states senate. immigration, comprehensive immigration failed of its own weight. comprehensive economy-wide cap-and-trade seems to be failing again of its own weight. comprehensive health care is very difficult to pass. that shouldn't be a surprise to any of us. this is a very big, difficult, complicated country with people of many different background. in my judgment, we're just not wise enough for a few of us to rewrite the rules for 17% of our economy, and i think the american people have tuned in to that. they want us to fix health care, but they want us to reduce costs. i would say again that we on the

republican side are ready to set that goal. and as we said 173 different times on the senate floor last year, we've offered six steps to move toward that goal. maybe the president can think of six more. maybe we can think of six more. we did that with the "america competes" act. we asked national academies what are the ten steps that would help us to become more competitive as a country. they gave us 20. we passed most of them. in clean energy we're coming closer together on nuclear power, offshore drilling and energy development. those are steps towards a goal that would be a more sensitive way for us to work. in the meantime, the unpleasant truth is the current bill that's being considered -- cut medicare and not spend it on medicare -- will raise taxes. and it will, as i've tried to demonstrate today with respect to the president, raise premiums for millions of americans because of one-size-fits-all government mandates and tax

increases. mr. president, i would finally like to ask unanimous consent to include, following my remarks and the other documents, today's editorial from the "wall street journal" detailing how the massachusetts health care plan has unexpectedly caused premiums to rise over the last couple of years and what lesson there might be in that for us. i thankhe president. i yield the floor. i notice the absence of a

quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

the presiding officer: the senator from montana. mr. baucus: i ask that further proceedings under the quorum call be dpens with. the presiding officer: without objection. morning business is now closed.

under the previous order the senate will proceed to the consideration of h.r. 421 which the clerk will report. the clerk: h.r. 4213, an act to amend the internal revenue code of 1986 to extend certain expiring provisions and for other purposes. mr. baucus: . psident? the presiding officer: the senator from montana. mr. baucus: mr. president, i ask unanimous consent that the following staff be allowed floor privileges during consideration of the pending bill: randy osenberg, aslyn baker, brittany durrell, dustin stevens, greg sullivan, max updike and ashley zuelike. the presiding officer: oab. -- without objection. mr. baucus: i now call up my

amendment and by number to be considered. the presiding officer: the clerkthe clerkwill report. the clerk: the senator from montana proposes amendment number 33 -- 3336. mr. baucus: mr. president, martimartin luther king, jr. sa, life's most urgent question is: what are you doing for others? mr. president, pretty much all of us came to the senate to work on that question and pretty much all of us came here to help other americans. and, mr. president, on a number of levels the legislation before us today is urgent legislation. the legislation before us today is urgent because it would prevent millions of americans from falling through the safety net. the legislation before us is urgent because it would extend vital safety-net programs that

expired yesterday. the legislation before us is urgent because it would put cash in the hands of americans who could spend it quickly, boosting economic demand. and the legislation before us today is urgent because it would extend critical programs and tax incentives that create jobs. and the legislation before us today is urgent because it is an important thing that we here can to for other americans. mr. president, since the recession began, more than seven million americans have lost their jobs. the unemployment rate remains nearly 10%. for americans without a job, this great recession is a great depression. if you tonight have a job, it's a depression. last week with a solid bipartisan vote we passed legislation to help create jobs. we can and should do more. and extending this package of

vital provisions we can do just that. the provisions in this bill are important to american families. they are important to communities that have suffered from a natural disaster. they are important to businesses competing in the global economy. they are important to furthering america's commitment to energy independence. and, mr. president, the need is urgent. yesterday many of important provisions expired. millions of americans are being put at risk. the expiration of these provisions have left gaping holes in the safety net. among the provisions that expired yesterday are these: expanded unemployment insurance benefits, cobra subsidies to help people keep their health insurance. the provision that keeps folks

at the poverty line from losing their benefits. the small-business loan program. the temporary measure to prevent a 21% cut to doctors under medicare. the flood insurance program, the satellite home viewer act. unless we reinstate the programs in in bill, there will be real world consequences for the people who depend on these programs today. take unemployment insurance, this bill would extend the program for expanded unemployment benefits. these benefits expired on sunday. the bill would extend what's called federal emergency unemployment compensation. this bill would extend 100% federal extended benefits. that's a program where state the governments normally have to pay 50%. and we would also extend the additional $25 a week for each

beneficiary receiving unemployment benefits. according to the national employment law project, 5.6 million people are currently benefiting from one of the federal unemployment benefits, 5.6 million people today benefiting. between march and november of last year, we distributed near nearly $8.3 billion in additional benefits to the additional $25 week supplement. my office received word of one unemployed montana worker who lived in a homeless shelter for more than a month. he used unemployment benefits to move closer to an out of state relative. the relative helped the montanan during this difficult time. with the help of the unemployment emergency compensation and the help of a family, this montanan was able

to find employment again. it also makes good economic sense. the nonpartisan congressional budget office estimates that every dollar spent on unemployment benefits generates up to $1.90 in additional gross domestic product. that is $1 to $1.90. it makes unemployment benefits one of the most cost-effective policies for stimulating the economy. by helping our unemployed neighbors through this long recession, we hope to keep the neighborhood gas station operating. we help to keep a house from foreclosure. and we help to keep our economy from further damage. we must act immediately to help the more than one million people who have lost their benefits yesterday. my heart goes out to them and their families. i hope that they can hold on while we work to clear up this mess or to -- in order to clear this bill to bring them the help

that they deserve and they've been depending on. the second vital program in this bill that expired yesterday is a program that provides a tax credit for cobra health benefits. what's that? that's the program that helps workers who lose their jobs to keep their health insurance. when workers lose their jobs, they lose more than just their paychecks. unfortunately, they often lose their ability to afford health care coverage as well. today roughly 60% of the nonelderly population receive health insurance through their jobs. in most cases unemployment workers have the right to keep their work coverage for up to 18 months through the cobra program. but to receive cobra health benefits, workers must typically pay all of the premium costs plus an additional 2% for administrative costs. they pay $102%. that's not right. for a family of four the average monthly cobra premium is rough

roughly $1,100. for most people who are out of work, that's simply unaffordable. how can a family that is out of work pay health benefits at at rate of $1,100 a month? they can't do it. the act helps to cover the costs. it has helped millions of unemployed families to maintain health insurance while they look for a new job. unfortunately cobra assistance expired yesterday and that's the provision that they gave 65% subsidy. it expired yesterday. that means that workers who lose their job today or afterwards will not be able to have cobra assistance. they can have the health insurance through the cobra program if they can find the class to pay full freight. that's 102% of their current premium. so for many folks, that's simply unaffordable. and so unless we act, the ranks of those living in fear without health insurance will grow even

more. third, without this legislation physicians who treat our seniors and military families will face an immediate 21% pay cut. that's right. an immediate 21% cut in pay that's more than families lost in net worth during the worst of the recession in 2008. that's nearly twice as much as home prices fell last year. this cut would force doctors to stop seeing patients. this cut would mean less access to care for our parents and our grandparents. this cut would mean that our doctors would be forced to cut their own costs potentially forcing them to lay off staff. thanks thankfully the administration -- thankfully the administration announced on friday it will use its existing authority to delay this cut for the immediate future. but that's not going to last very long. we cannot delay action any

longer. seniors, military families and physicians deserve better. in montana 2,000 doctors serve 140,000 seniors who depend on medicare for lifesaving health. and montana has 2,000 military families who should not be turned away from their doctor's door. they deserve the best health access we can give them and they deserve a senate that puts politics aside and help them first. this bill would avert the 21% cut because of so-called sustainable growth rate. we adopt here another short-term stop gap. next team we hope and expect to come back for a longer-term solution. we muss find one. by exempting part of the s.g.r. for the new statutory paygo rules. the senate realized that a long-term solution requires a short-term investment. the house followed suit. i hope that this push will aid us in finding a permanent

solution for the sake of our seniors continued access to medicare. a fourth provision in this bill affects the 2009 poverty guidelines. why is this important? let me tell you. dozens of programs are available to help lower income americans. we all know the important role these programs play in keeping those less fortunate fed, keep them healthy and safe. i'm talking about programs like medicaid, the supplemental nutrition assistance program, formerly known as food stamps, the school lunch program and the low-income home emergency assistance program, otherwise known as liheap. eligible -- eligibility for these and many other programs is based on the federal poverty guidelines. these guidelines are updated every year for inflation. the update for this year, 2010, will cause people who are

currently eligible for and benefited from these programs to lose their eligibility. you may wonder why in a time of economic crisis our poverty based program eligibilities would decrease. you might think that's sounds counterintuitive. one of the effects of the current economic crisis is that inflation went down. that means that the average cost of everyday things like clothes, transportation, and rent is less than it was the year before. however, because the federal poverty guidelines are based on the average cost of everyday goods, the poverty level for 2010 would be less than it would be for 2009. this is the first time in the history of the guidelines that such a decrease would occur. that clearly is not the right outcome, though. we should not make fewer people eligible for poverty-based programs at precisely the time when those safety net programs are serving the very purpose for which they were created. safety net programs are there to

help people when times are tough. that's their purpose. but there is a simple solution. we can simply leave the guidelines developed for 2009 in place. that way, people who are eligible can remain eligible. leaving the 2009 guidelines in place would mean that people would not lose their health care by being kicked off of medicaid. it would mean that families would not go hungry because they lost their eligibility for a number of nutrition programs. it would mean that low-income folks could still keep their homes in a cold and snowy winter, thanks to liheap. keeping the 2009 guidelines in place would not increase eligibility. it would mean that we would avoid pulling the safety net out from under the people it is there to protect. fifth, for individuals and families, this bill provides a much-needed tax relief at a time of economic uncertainty. for example, many students don't have the books or supplies they

need. some teachers have to buy classroom supplies using money from their own pockets, if you can believe it. this bill extends the teacher expense deduction for teachers buying school supplies for their classroom and extends the qualified tuition deduction to help with college costs. the bill provides much-needed relief to families who have suffered from natural disasters. it extends a package of disaster relief provisionses declared to give all disaster areas with immediate, reliable, and robust tax relief. and it extends important business provisions to extend jobs and make our companies competitive in a global economy. the we rank first among all countries in research and development, but relative to the size of our economy, america is in sixth place, and the trends show that maintaining american

leadership in the future depends on increased commitment to science and research. yet our r&d tax credit expired at the end of last year. this will put american corporations at a competitive disadvantage. corporations are unsure if they will be able to obtain the r&d credit next year, and they need to plan for the future. the american financial service companies successfully compete in world financial markets. we need to make sure that the u.s. tax rules do not change that. this legislation extends the active financing exception to sub part m. in so doing, it preserves the international competitiveness of american-based financial services companies while creating safeguards to ensure that only truly active businesses benefit. this provision had put the american financial services industry on an equal footing with foreign-based competitors who were not taxed on actual financial services income.

several entering tax incentives also -- several energy tax incentives also expired at the end of last year. this bill extends those incentives to encourage continued investments in technologies that promote continued energy independence. for example, the bill extends incentives for a new corporate battery technology in the construction of new energy-efficient homes. sixth, in addition to these important provisions that provide direct assistance in job creation, the bill includes other proposals that will provide relief for businesses and individuals. one such provision is pension funding relief. these days american employers are faced with a need to make higher pension contributions. all factors that combine to require these higher contributions. there are the funding changes of the pension protection act of 2006. there was a slide in the stock market in 2008. and then there is the ensuing

great recession. these requirements for higher contributions are coming upon employers just when they are facing lower asset values and lower cash flow. meeting these requirements could divert resources that employers could use to keep workers on the payroll. we address this bind temporarily in the worker retiree and employer recovery act of 2008, but employers are still facing the prospect of closing plants and stores. employers are still faced with the possibility of terminating workers or to make up for lost asset values. the bill contains additional temporary targeted and appropriate relief for these employers, and at the same time the bill still maintains the pension security system. seventh, this bill would also extend several important "help" provisions that expired at the end of 2009. notable among these is the

exceptions process for medicare therapy caps. extending this provision will help ensure that many care beneficiaries will continue to receive access to the therapy services that they need, and several rural policies are also extended. eighth, these tough economic times have hit the states hard as well, so included in this bill is a six-month extension of the additional federal financial assistance for state medicaid programs. this will allow states to plan for the next fiscal year with the certainty of continued help from the federal government. additional federal medicaid match money known as fmap, helps the economy grow, and according to economist mark zande, this funding has returned on the investment of about $1.40 for every dollar invested. the nation's governors have repeatedly asked for an extension of this federal assistance, and this bill

answers their pleas. with so many americans out of work, our country needs congress to enact this legislation. this bill continues valuable tax incentives to families and businesses that will help them in these difficult economic times, and the bill sustains violate -- vlt safety net programs will also help foster economic growth. as i said at the out-of-the, -- at the outset, mr. president, there is just no ordinary legislation, this is urgent legislation. it would prevent millions of americans from falling through the safety net. it would extend vital programs that expired yesterday, expired yesterday and put cash in the hands of americans who would spend it quickly, boosting economic demand. it would extend critical programs and tax incentives that create jobs. it is an important thing that we here can do for other americans.

and so let us help america's businesses to create more jobs. let us join together to work across the aisle on this commonsense legislation, and let us enact these tax incentives and safety net provisions into law. mr. president, i suggest the abnce of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. grassley: mr. president? the presiding officer: the senator from iowa. mr. grassley: i ask that the calling of the quorum be suspend. the presidg officer: wut objection. mr. grassley: i yield myself such time as i might consume. maybe i better ask, are we under a time agreement? the presiding officer: there is no time agreement. mr. grassley: okay. mr. president, today the senate starts debate on expiring tax and health provisions for people outside of washington, around here those tax provisions are generally referred to as -- through the word "extenders." but before i discuss the bill before us, i'd like to make a couple of points on the process before i get into the substance of the substitute before the senate. while i find -- what i find surprising is that we're taking up a package that, like last week's exercise, absolutely belongs to the senate democratic

leadership, that is to say that we're not taking up a a bipartin package that i put together with my friend, finance committee chairman baucus. to be sure, some of the structure reflects the agreement that i had with senator baucus, but this package is almost three times the size of a package that we agreed upon. virtually all of the additional cost is due to proposals that i would not have agreed to in representing the people of iowa or the republican conference. i was under the impression that the senate democratic leadership was genuine in its entire to work on a bipartisan basis, but clearly i was mistaken. although the senate democratic leadership was highly involved in the development of that original bipartisan bill, they arbitrarily decided to replace it with a bill that excuse towards -- that skews towards their liberal wing.

so my first comment to my colleagues, also to the media and to the entire nation is, don't let this passage be mislabeled as the baucus-grassley package. it is not the package that my friend, chairman baucus, and i negotiated. again, the package before the senate dramatically differs in cost, balance, and dramatically different in intent from the baucus-grassley compromise announced on february the 12th. my second preliminary comment goes to the way in which these expiring tax provisions have been described by many on the other side, including those in the democratic leadership. if you roll the videotape back a week or so, you'd hear a lot of disparaging comment about these

routine bipartisan extenders. from my perspective, those comments were made in an effort to sully the bipartisan agreement reached by chairman baucus and this senator. if you take a look at newspaper accounts of a week or so ago, you'd come away with the impression that the tax extenders are partisan work of republicans and only for republican interest. a representative sample comes from one report which describes a bipartisan bill as -- quote -- "an extension of soon-to-expire tax breaks that are highly beneficial to major corporations, known as tax extenders, as well as other corporate giveaways that had been designed to win g.o.p. support." end of newspaper quote. "the washington post" included this attribution to the senate

democratic leadership in an article last week -- quote -- "we're pretty close," said friday during a television appearance in nevada, adding that he thought -- quote -- "fat cats" would have been fitted too much -- would have benefited too much from a larger baucus-grassley bill. and that happens to be from the majority leader. the portrait that was painted by certain members of the majority echoed without critical examination, and in some press reports were outright inaccurate. for one thing, the tax extenders included provisions such as deduction for qualified tuition and related expenses and also the deduction for certain expenses for elementary and secondary schoolteachers. now, if you're going to go to school or if you're going to

have a grade school teacher -- if you're going to college, i should say, or if you're a grade school teacher, the senate democratic leadership apparently views you as a fat cap. cat. if your house was destroyed in a recent natural disaster and you still need any of the temporary relief provisions contained in the present extenders package? well, too bad, because helping you would amount to a corporate giveaway in the eyes of some. so such a distortion of the extenders, some of them have been on the books for a long period of time. some of them passing this body by consensus, and belittle helping some people that have needs. again, i want to say the tax extenders have been routinely passed repeatedly because

they're bipartisan and, quite frankly, very popular. democrats have consistently voted in favor of extending these tax provisions. let me tell you what house speaker nancy pelosi released recently, a very strong statement when the house passed these very same tax extenders just at the end of last year, saying -- quote -- "this was good for business, good for homeowners, and good for our community." well, that's the end of the quote. december of 2009 was not very long ago. in 2006, the then-democratic leader released a blistering statement -- quote -- "after bush republicans in the senate blocked passage of critical tax extenders because american families and businesses are paying the price because this

do-nothing republican congress refuses to extend important tax breaks." recent bipartisan votes in the senate on extending expiring tax provisions have come in the emergency economic stabilization act of 2008, the tax relief and health care act of 2006 -- and, by the way, that passed the senate by unanimous consent -- and then we had the workers -- the working family tax relief act of 2004 which originally passed the senate by voice vote, although the conference report only received 92 votes in favor and a whopping three ge against. so let me give you what the nonpartisan congressional research service has to say about the history of these extenders which are now before us, which should have been passed in december, have -- have

been consistently widely supported. because they mention the tax relief extension act of 199 9, which passed the snalts by unanimous consent and one vote against it -- which passed the senate by unanimous con is one vote against it on the other side. one party said, "our side isn't sure that the republicans are real interested in developing good policy and move forward together. instead, they're more inclined to play rope-a-dope again. my own view is, let's test them." so we're testing each other when we're talking about merely reimposing some policy that's been on the books for a long period of time and just happens to sunset to force some review by congress. we had another member of this large 59-vote majority exclaim -- quote -- "it looks more like a tax bill than a jobs bill to me."

what the democratic caucus is going to put on the floor is something that's more focused for job creation than tax breaks." now, reading these comments, i found myself, obviously, scratching my head. the only explanation for this behavior is that certain senators decided last week that it serves a deeply partisan goal to slander what have been for several years bipartisan and popular tax provisions benefiting many different peop people. "the washington post" article i quoted from earlier includes a statement from a democratic senate leadership aide saying that -- quote -- "no decisions have been made, but anyone expecting us immediately to go back to a bill that includes tax extenders will be sorely disappointed."

you can imagine that today, a little over a week after these comments, i can scratch my head once again. we have before us the expiring tax and health provisions that were disparaged just a short time ago. have they morphed from corporate tax pork? have they suddenly required their -- reacquired their bipartisan character? are these time-sensitive items now expired for more than two months suddenly jobs related? now we're beginning other debate, a jobs bill debate. so i want to focus on the economy, small business and jobs after giving you that partisanship that shouldn't have existed a week ago, to explain that it existed, and not much

has changed since then, but all of a sudden some idea of being bipartisan. so we're going to talk about the substance of this bill. we all agree that our nation is currently facing challenging economic times. while there have been some signs of improvements, such as the recent growth in our gross domestic product, job losses continue to mount and many hard-working americans are struggling to make ends meet. according to the bureau of labor statistics, over 8 million jobs have been lost since our economy officially slipped into recession december 2007. the unemployment rate is currently 9.7%, which is simply an unacceptable level. the lack of job creation continues, despite aggressive action taken at the federal level in order to stablize the economy.

this includes the enactment of tarp and the $800 billion stimulus bill. however, these bills were all missing a critical ingredient for spurring job creation, and that was substantial tax relief targeted to small business. and everybody knows that small business is where the jobs are created in america. 70% of the net new jobs. in october 2008, congress enacted the troubled assets relief program that we all call tarp around here, t-a-r-p. that was ads 700 billion financial bailout tbhail we were told had to be enacted immediately in order to deal with the so-called toxic asset s to prevent credit from drying up, which would have choked off the lifeblood of american economy.

what we actually got, because we sure didn't take out those toxic assets. so what we actually got was direct infusion of cash into the largest wall street banks, which was a 180 degrees different than what we were told by treasury before that bill was voted. and the purpose of that bill. -- and the purpose of that bill as well. and later came the bailout of general motors and chrysler using tarp money after the senate had just voted not to bail an gm and cries chrysler o. this created uncertainty in the financial markets and the business community. moreover, exorbitant bonuses were paid to executives and managers of firms that would have been out of a job if not for congress and treasury and federal reserve intervening.

and how effective was the bailout at improving the credit markets? in october 2009, the government accountability office released a report reviewing tarp's first-year performance. the g.a.o. report found credit had improved based on certain market indicators. however, they were not able to determine how much, if any, was atribilitied to tarp -- was attributed to tarp as compared to general market forces or other federal action. while it is unclear to the extent credit had been freed up as a result of tarp, it is clear who has reaped the benefits of those programs. this past year many financial firms, including goldman sachs, j.p. morgan choice and others who received tarp funds, posted

record or near-record profits. while wall street executives have clearly benefited from tarp, small businesses and their employers have not been that fortunate. small businesses continue to struggle to obtain credit in order to expand their operations, purchase inventories, and even make payroll. the so-called stimulus bill enacted almost solely by an overwhelming democratic majority in congress last february has not spurred job creation either. this massive $800 billion spending bill was hastily rushed to the floor with little time to deliver its merits. lawrence summers, the director of presiden president obama's nl economic council, said the test for stimulus is whether it is timely, targeted, and temporary. this stimulus bill hits the trifecta. it's failed in all three.

through a report issued in january 2009 by the current chair of president obama's council of economic advisors, christina roa roemer, the administration predicted that the stimulus would create 3 million jobs. we were told by the barack obama that if the bill was not passed quickly, we would experience unemployment of 9% and at this point i want to -- we have a chart here of the middle line where it says 9%. the white house projected unemployment if no stimulus. however, we were also told by the obama administration that if the stimulus bill, unemployment would not go over 8%. and that would mean the bottom

line. well, the bill was passed, but what did we get for the $800 billion in debt before interest that was laid at the feet of our children and our grandchildren? the unemployment rate jumped from 7.7% in january right before the stimulus was enacted to a high of 10.1% in october. while unemployment recently dipped slightly to 9.7% -- and you can see that's the red line at the top there -- this was not due to job creation but because millions of individuals have literally given up looking for work and obviously don't show up in the unemployment statistics. the obama administration also stated that -- quote -- "more than 90% of the jobs created are

likely to be in the private sector" -- end of quote. in all, .3 million jobs have been lost since the still us will bill was enacted. and that's the 3.3 million compared to the 3.7 million that the president said. and of course we've had 3.2 million of those jobs were in the private sector. so let's go back to -- 3.2 million of those were in the private sector. the obama administration was inaccurate regarding its stimulus jobs protection. at the time the stimulus bill was passed, i raised concerns that the bill was not targeted enough at small business and job creation. however, my point of view lost

out and less than .5% of the bill included tax relief for small business. the money in the stimulus bill to give tax credits to people who buy electric plug-in golf carts or to pay for rattlesnake husbandry among other ill-advised provisions would have been better allocated to small business tax relief, the place where businesses -- the place where employment starts. since the stimulus, small businesses have been bearing the brunt of job losses in our economy. however, the words of those on the other side regarding the importance of small business and job creation does not match their actions when looking at the paltry amount of small business tax relief being provided. again, in the jobs bill or stimulus bill or whatever you

want to call it that passed the senate last week, there was only one provision directed solely to small business tax relief. that was a provision that i supported increasing expensing of equipment purchased by small businesses. but it is a very small provisi provision, and it only gave small businesses what they've already been getting for the last couple of years, just extending -- in other words, just extending that figure. that provision was only $35 million out of $62 billion. the $15 billion that everybody talks about plus the $47 billion for the highway trust fund that is typically not mentioned. last year i introduced s. 1381, the small business tax relief act. my bill would double the amount of equipment that small business could expense and would make those higher levels permanent

instead of just for one year, as the reid bill did. in my negotiations on the jobs bill, i sought to include provisions from my small business tax relief bill, but there was no agreement to put small business tax relief provisions from my bill in the bipartisan compromise that we reached. instead, we were asked to defer those provisions to a future tax bill. according to 80-p national data from january 2009 through january 2010, small businesses with fewer than 5 employees saw employment drey klein -- with fewer than 500 employees saw employment decline by 2.67 million jobs while large businesses with 500 or more employees saw employment decline

by 694,000. while i'm sure many of us disagree about the effectiveness of the financial bailout and stimulus spending in getting our economy back on track, i know for sure that we all agree that there's been a lack of job creation and too many people continue to be unemployed. because the stimulus bill has so clearly failed what it was supposed to do, which is to create jobs, and the administration and congressional democratic leadership are running away from the word "stimulus" that of ther than the triple-crown winning horse secretariat, everything proposed now is called a jobs bill, even if it includes proposals that were always labeled "stimulus" in the past. only 6% of the americans believe that the stimulus bill created jobs. that's less than the 7% of the

americans who believe that elvis is still alive. last week the senate passed a bill that included a provision designed to increase hiring. this includes a payroll tax holiday for businesses that hired unemployed workers and a tax credit for the retention of newly hired individuals throughout all of 2010. the payroll tax holiday part of this proposal is likely to spark some modest hiring at businesses at the margins. among those that have seen some improvement in their business. but are on the fence about whether to hire somebody now or wait a while. however, many businesses continue to struggle and won't hire new employees just because it is the stated policy goal of congress. before a business can hire a new employee, they need to know that that new employee will generate additional revenue that exceeds

the cost of the employee. the latest survey of the small business economic trends -- and that's produced by the national federation of independent businesses, or nfi bnchts as we mow it -- shows that many small businesses may not be in a place that they could afford to hire new employees, even with the provisions of that bill passing the senate last week called the payroll tax holiday. i have a chart from the national federation of independent businesses that i now want to refer to. that chart has selected components from the small business optimism index. while many components of this index improve slightly from december, it is clear that small businesses continue to struggle. you'll see from the chart a net negative 1% of owners plan to

create new jobs in the next three months. you'll see from the chart a net positive of only 1% of business owners expect the economy to improvement only 4% of business owners said it was a good time to expand. a net negative 42% of owners reported higher earnings. this last component is especially important for businesses when it comes to hiring new employees. if earnings are declining, there's a little -- if earnings are declining, there is little a payroll holiday will do to spark hiring since businesses need to know that the revenue generated from the additional employees will exceed the cost not just

today, but in the future. before i go on to this nfib survey, i want to tell you, at the grass roots of my state i had the opportunity not this last weekend, but the previous weekend, to spend part of a friday and part of a sunday afternoon at what's called the des moines home and garden show; probably been around for 30 years or so that one weekend a year. on the saturday in between, i had an opportunity to attend a light show called the home improvement show in waterloo, iowa. you walk around and you talk to these vendors, small-businesspeople. you kind of look at what do they expect congress to do about creating jobs. i never got anything positive about something we might do, but i got a lot of ideas that they want us to do that said you've got to give us some certainty. you know what they quoted?

they quoted this big tax increase coming up at the end of this year at some of that uncertainty. you know, they quoted the cap-and-trade tax that possibly could pass the senate. and then they quoted -- they quoted the potential cost to small business, because the health care reform bill. and they said just take all of those potential things out of the picture, and we'll start hiring. but it's the uncertainty that's out there of what congress is going to do to us that's keeping us from hiring people. i want to go back to the nfib survey. when business are asked what the single-most important problem facing their business is, the answer is: lack of sales. that's in addition to the uncertainty i just told you

about. but this is closely followed in by what i did say. taxes and then government regulation and red tape. i'm glad that my colleagues on the other side have recognized that the true job creation comes through the private sector and have, thus, sought hiring incentives through payroll tax relief. however, this minor tax relief is a drop in the bucket considering the challenges small businesses are facing due to the economy and proposed increased taxes and red tape included in the federal president's budget. whether we're speaking about cap-and-trade that will drastically increase their energy costs, health care reform, that would mandate small businesses to offer health benefits that will increase the costs of labor or the call for tax increases on the so-called wealthy taxpayers earning over $200,000 that will largely fall on the backs of small businesses. if our intention is to increase long-term employment, the last

thing we should be doing at this time of economic uncertainty is to increase taxes and place additional burdens on those who are responsible for creating 70% of the jobs in our economy, namely, small business. providing small businesses a payroll tax holiday while intending to impose increased taxes, regulations and mandates amounts to throwing them just a few peanuts while taking away their supper. in recent months i've spoken at length about the impact of tax increases set to kick in ten months from today. i've examined the impact of these tax increases to the small businesses. and i think you ought to take a closer look at it before we actually enact these big tax hikes. the president and my colleagues on the other side of the aisle have proposed increasing the two marginal tax rates from 33 and 35 to 36 and 39.6% respectively,

increasing the capital gains and dividends to 20%, reinstating the full exemption phaseout for those making over $200,000 and fully reinstating the limitation on itemized deductions for those making more than $200,000. with these provisions fully instated the individuals in the top two rates could see their marginal tax rates increase over 15% or more. my colleagues on the other side of the aisle respond that these proposals will only hit quo, unquote wealthy individuals and only a percentage of small businesses fall into this category. i've been trying to tell them for three or four years that what they want to talk about a small percentage of small businesses falling into that category, i'm not going to convince them because i don't know what they're reading, but they're just wrong because small business is going to be hit very definitely by these increases.

what my colleagues fail to understand is that the businesses that fit in to this group is not static, but consists of different businesses over time that go in and out of the top two tax brackets, depending on what? the market. data from the joint committee on taxation, which is a nonpartisan official congressional scorekeeper on tax issues, show that 44% of the flowthrough business income will be hit with increase in the top two tax rates proposed by the president. this hits small businesses particularly hard since most small businesses are organized as flowthrough entities. it will increase taxes on single small-business owners that make more than $200,000 per year even if they plow all of their income back into their small business to keep paying their workers and hire additional workers. increasing taxes on this group

punishes their success. it limits their ability to reinvest in their company. it prevents them from putting away funds for tough economic times to keep their business afloat. government is currently creating a climate of uncertainty where the private sector does not know what we will do next, what taxes will be raised and what regulatory barriers will be put in their way. we can start to put some certainty back into the business world by declaring we will not increase taxes on businesses one dime, by making the 2001 and 2003 bipartisan tax measures permanent. let me be clear. businesses do not want to be certain that the government is going to raise their taxes and make them go up through more red tape. they want to be certain that's not going to happen. until then many will simply sit on the sidelines and not hire

more workers as i reported to you from my weekend at a couple fairs in the state of iowa weekend before last. moreover, we can directly provide targeted relief to small businesses. last june i proposed legislation to do just that. so i introduced the small business tax relief act to lower taxes on job-creating small businesses. since the democratic leadership barred any amendments last year -- or last week, i'm hopeful that we'll debate and vote on an amendment offered by senator thune. many provisions in my bill are contained in the thune bill. my bill contains a number of provisions that will leave more money in the hands of small businesses so that they can hire more, continue to pay the salaries of their current employees and make additional investments. this includes allowing

flow-through small businesses partnerships, s-corporations, l.l.c. and sole partnerships to deduct 20% of their income, effectively reducing their taxes by 20%. my bill also includes tax relief for small-business owners from the unfair alternative minimum tax that takes general business credits such as the employer-provided child care credit out of the alternative minimum tax. this would allow mom and pop retail stores that provide child care for their employees to get the same relief that fortune 500 companies get when it provides child care for its employees. my bill would also allow more than nearly 2 million small "c" corporations to benefit from the lower tax rates for the small "c" corporations. there are so many small "c" corporations because they were formed as "c" corporations before other entities such as

l.l.c.'s became more widely used. among other provisions, my bill would also lower the potential tax burden on small "c" corporations that convert to "s" corporations. the nfib has written a letter supporting my small-business tax relief bill stating -- quote -- "to get the small-business economy moving again, small businesses need the tools and incentives to expand and grow their businesses. s*t 138 -- s.1381 provides the tools that small businesses need." end of quote from the nfib. i want to talk about an opportunity for two bipartisanship that would killed by the democratic leadership. the same day that chairman baucus and i released a bill that contained significant compromises behind closed door the democratic leaders cherry-picked just four

provisions out of the larger bill that chairman baucus and i agreed to. those provisions had been agreed to in a meeting of senior members of the other side only while chairman baucus and i were negotiating. i was extremely disappointed to see the democratic leadership blow up the bipartisan deal that chairman baucus and i reached. to pour a little salt into the wound, the democratic leadership then prohibited any senator on either side of the aisle from even offering an amendment to improve a bill that he hijacked. one of the four provisions the democratic leaders cherry-picked is the bill "america buys." fundamental been just me drafting the -- if it had been just me drafting the bill, i wouldn't have included the provision. however in the same of compromise, i reluctantly agreed that putting this provision in the bill would not cause the overall bill to lose my support. build america bonds is a very rich spending program disguised as tax cuts.

bloomberg reported that large wall street investment banks have been charging 37% higher underwriting fees on build america bonds deals than on other deals. therefore, american taxpayers appear to be funding huge underwriting fees for large wall street investment banks as part of the build america bonds program. the democratic leadership has said that the build america bonds program is about creating jobs. so, i want to know whether it's about lining the pockets of wall street executives. so last week i asked goldman sachs c.e.o. a number of questions about these much larger underwriting fees subsidized by the american taxpayers. i expect to have that discussion shortly. turning back to the bill being debated this week, the thune amendment, which incorporates many of the provisions from my small-business tax relief bill, provides substantial

small-business tax relief and should be adopted. in this bill, i hope that we can all work together towards improving our economy, not through more government, by letting the engine of job creation -- meaning small business -- keep more of their own money in the form of substantial small-business tax relief. and i yield the floor. a senator: mr. president? the presiding officer: the democratic whip. mr. durbin: let me serve notice on the republican side that i'll be mak a unanimous consent request about the extension of employment benefits so that senator bunning or someone else on his behalf will be on the floor if they care to object. let me say before my friend from iowa leaves the floor, one of the reasons we can't get to the issues that you want is because we're in the midst of a filibuster by the senator from kentucky, who has stopped us from extending unemployment benefits, cobra benefits for 30 days. as i understand it, that filibuster now applies to a noncontroversial judicial

nominee. so we have multiple filibusters that are holding us back from considering some of the measures you mentioned. i might say that some we might find appealing and hope we can make them part of the package. the reason why your initial agreement with senator baucus met resistance on our side of the aisle is we thought there was a lack of balance there. though i support the tax extenders being extended for the remainder. year, in your initial agreement with senator baucus, the extension of unemployment benefits with cobra was for a few months and we felt both should be extended until the end of the year and i hope we can reach that agreement as soon as the filibusters that have been initiated by the senator from kentucky are completed. let me say a word about those filibusters. we tried last week to extend for 30 days unemployment benefits that were going to run out across america. starting literally at midnight last night. and there was one objection from senator bunning from kentucky,

who objected to extending unemployment benefits and cobra benefits. the net result of this one senator's objection is to put us into a procedural process that could literally take days. now what happens to the people who were on unemployment during that period of time? they're cut off. 15,000 people on unemployment in illinois were cut off because of the objection of the senator from kentucky and roughly 400,000 nationwide have seen their unemployment benefits cut off. i met with two of those people in chicago yesterday. they have been unemployed for extended periods of time and they have spent literally every day finding a job. one of them has a 3-year-old daughter, and i asked what's going to happen now that you don't have an unemployment check? he said, i don't know, the first thing i'll do is default on the student loan. i'll have to do that. i can't make that payment if i can't put food on the table.

there are real-life consequences to your objection. and the real-life consequences are to innocent people who have lost their job and can't find one in an economy where we have five unemployed people for every job that's available. my state, your the state, virtually everybody is struggling. some of them have reached the end of their rope. they're making decisions that neither you or i want to face. about whether to give up a home. literally whether to give up a home. it could happen. it's great to have a debate in the senate. we should. that's what the senate should be about. but when the victims in the middle of the debate are unemployed people, i don't think that's fair. i don't think it's fundamentally fair. these people are trying. this one young man, david senior, showed me a list of 300 applications that he had made to try to find a job during the last year.

he said i go online every day. and this is a man who worked for years. had a strong work record until he was laid off. and he said i just can't find anything. i'm desperate. i'm trying everything that i can think of. and now you're going to cut off my unemployment benefits. so, frankly, we came to the floor last thursday night to urge the senator from kentucky to reconsider his objection. you know, the net result is going to create hardship across america and it gets worse by the day. we estimate that roughly 2,000 more people tonight will lose their unemployment benefits in illinois and so by next sunday night instead of 15,000 losing their check, it will be up to near 30,000. by the end of march the total is estimated to be 65,000 people who will lose their unemployment checks because of the objection of senator bunning of kentucky and this initiation of a filibuster. i don't think that that is what we should do. this is an economic emergency facing this nation.

it is not the first time that senator bunning has been asked to extend unemployment benefits that were not paid for. you see, that is his issue. you're not paying for the unemployment benefits. you shouldn't extend them. senator bunning voted for the fiscal 2008 war supplemental bill which extended unemployment insurance benefits for 13 weeks. he also supported ending debate and didn't object to the voice vote of a measure to extend unemployment benefits for an additional seven weeks for workers who exhausted their current compensation by march 31, 2009. that bill also extended benefits for an additional 13 weeks. half the duration of regular unemployment compensation for workers in states with unemployment rates of 6% or higher. neither of the extensions which he voted for won in -- one in record vote and one by voice vote had any budget offsets. so to argue that now we're taking a stand on principle, the

fact is that twice, at least, i don't know if there were more times, the senator has reached an opposite conclusion. agreed with the majority, the bipartisan majority that we were truly in an economic emergency. there is one other aspect to this, which is troubling, and that is the first casualty of most people unemployed is health insurance. the employer is not paying any longer. if you want to continue health insurance, cobra let's you pay for it all. and it's too expensive. roughly 1,300 a month for a family in my state of illinois and the unemployment compensation is about $1,100. do the math. understand that most people can't do it. president obama said as part of our effort to thunder economy around, we will help people pay for their health insurance through cobra. we'll pay, i believe the figure is 65% of the premiums so that people will be paying one-third of their health insurance premiums when they've lost a job.

still a substantial sum of money. $300 or $400 that they'd have to pay each month. but, imagine, if you had a sick child at home and imagine if that child needed at least the possibility of coverage should they be hospitalized for diabetes or cancer or whatever the cause may be. if you get a gap in coverage and you lose your health insurance because you can't afford to make the payment, you can find yourself in a predicament where you not only have health insurance, but the prospect of buying additional health insurance is next to zero. senator bunning's objection cut off this benefit, the 65% benefit, on health insurance. and we had to try to extend it for 30 days. so that means these people will not only lose their unemployment check, they will lose this help with their cobra benefit. i can't -- i have been once in my life in a predicament of being a father with a sick child and no health insurance. and, mr. president i want to

tell you, if there's something that tears you apart as a dad, it's going it into a hospital with no health insurance with a sick baby. i've been there. i've done that. thank god it happened years ago and my little girl made it through that episode. but we are forcing literally hundreds of thousands of americans into this situation because of the objection and the filibuster of one senator from kentucky. that is unfair. not only unfortunate, but unfair. if we're going to fight a battle over our budget deficit and get involved in lengthy debates, as we can, there are plenty of chances to do it. we'll have a budget resolution in just a few months. we'll have scores -- or at least a dozen appropriation bills to fight this battle over it, and i think the battle can be joined. now, we said to the senator from kentucky, if you want to offer an amendment to pay for the unemployment benefits and the cobra benefits, you're entitled to offer that amendment. you're entitleddom to the floor,

express your point of view on how this should be paid for and to accept the will of the senate. let them vote on your amendment. if they agree with you, fine. if they disagree, it will be a matter of public record. you'll have your day on the floor of the senate, which is about the most of us can hope for in this job. but the senator from kentucky said no, i'm not going to do it because i might lose my amendment. well, yes, you might win and you might lose. and that's what we all face when we come forward with an idea on how to deal with the budget deficit. i don't think it's fair to insist that it's my way or the highway when it comes to something as basic as unemployment benefits and health care for the people who are unemployed across america. as i visit these unemployment offices and meet with these people, i find a lot of determined folks who you think would have given up a heck of a long time ago still trying. they consider it a victory if at the end of the day one of the

posted jobs on the internet leads to an interview. they're that desperate. and, yet, we are saying to them we're going to cut off the money you need to feed your family in an effort to make a point about deficit reduction. now, i think, is unfortunate. we have asked for extension of unemployment benefits repeatedly because we're in the worst shape of our economy than we've been in 75 years, an lot of people are -- and a lot of people are really struggling to make ends me. i know there are those who argue at some point we have to cut off these unemployment benefits. i would say to them to consider this as well, unemployment assistance is the most direct infusion of money into the economy. those who are economists tell us if we will -- the first dollar that you give in unemployment assistance is going to be spent immediately. it isn't going to be banked, saved or invested. these folks need it and they'll spend it the day after they get

it for obvious needs. and that creates more economic activity. so you're not only doing the right thing, but a caring -- that a caring nation does when so many of us are facing hard times. it really is an economic stimulus. it -- number one, incidentally by the congressional budget office in terms of what we can do to get this economy moving forward. it isn't just a matter of helping those who are helpless. it is a matter of injecting money in the economy in the most efficient way. i'm afraid that this has happened before. the last time the senate extended unemployment the other side of the aisle objected three times. the leaders on both -- on those three occasions. and, incidentally, that extension of unemployment benefits was completely paid for. so it appears that whether it was paid for or not paid for, there's objection on the republican side of the aisle. i don't get it. i don't understand it. president obama's doing his best

to get this economy moving forward. he inherited a weak economy that was losing 700,000 to 800,000 jobs a month. things have improved somewhat though they're not where we want them to be. i feel we ought to be standing behind the people in our nation who are struggling to find a job and get back to work. many of them are trying to keep families together and care for their children. last week nearly 5 million americans filed for unemployment for the first -- 500,000 americans filed for unemployment for the first time. the number surged to just below 500,000. i wish that weren't the case, but it is. you see that the economy is still struggling. and file the first thing that we ought to do is to care for our own. if someone came to the floor with an emergency request now because of a drought, a flood, a hurricane, a tornado, we would honor. it we'd do that almost on a regular basis here.

because at some point you say, first, help these poor people, then deal with the budget challenge that it brings at another time. but now when it comes to helping our own, the citizens of this country are out of work. that, unfortunately, is not the case. right now over 4.6 million americans continue to collect unemployment. that's up $6,000 from the preceding weeks number of claimants. in addition to the filibuster initiated by senator bunning, hurting those who are unemployed, it also is going to have an impact on the small business administration. most everyone agrees that the key to bringing this economy forward is helping small business stay in business an create jobs -- and create jobs. the small business administration loans money to small businesses, which during difficult times need a helping hand. the senator's filibuster and his objection has closed down s.b.a.

programs that provide credit to small businesses. what are we thinking? to stop assistance to small business at this moment in our history? most of us believe this is central and essential if we are going to turn the corner and move forward. and, yet, the senator from kentucky has objected. it also has some ramifications in cutting back on money that's available for transportation. i don't know if the senator is even aware of what he has done when it comes to his objection. but in my state, and many others, we are finding that people are -- are losing their jobs today. we've been running our federal transportation program with short-term extensions since september 30th of last year, almost five months. these stop gap -- stop gap extensions were underfunding our transportation system, hurting our states, cities, and counties, and workers. the short-term extensions

created an unstable environment in the federal transportation program. we passed a year-long extension in last week's jobs bill, but the house could not pass the bill in time to keep the transporataion department authorized. so we came to the floor to pass a 30-day extension of transportation law along with the cobra and unemployment benefits. senator bunning's objection has basically shut down the highway trust fund. the highway trust fund, the federal highway trust fund. this is unchartered territory. we don't let surface transportation legislation expire. it hasn't happened before. the department of transportation's shutting down highway reimbursement to states, that means hundreds of millions of dollars that should be flowing from the federal treasury to these states are being shut down. the department of transportation is furloughing nearly 2,000 employees without pay as of today because of senator bunning's objection. the department of transportation is removing federal inspectors

from critical construction projects, forcing work to stop on federal lands. d.o.t. safety agencies, like the national highway traffic safety administration, furloughing employees who work on safety programs. programs like drunk driving, reducing traffic injuries and increasing child passenger safety because of the objection of the senator from kentucky. in my state we're going to lose 50 federal highway administration employees furloughed today. these workers have been instructed not to report to work until we pass this extension. second, the illinois department of transportation will not be receiving federal reimbursement for projects because of this objection by the senator from kentucky. they were scheduled to submit the next federal bill for reimbursement as of tomorrow. the illinois department of transportation will submit a bill of about $25 million for work already completed that they're entitled to. but because of the objection of the senator from kentucky, that

bill cannot be paid. there's no question that my state's entitled to it. i imagine that the state of kentucky has a similar situation. the question is, whether there's anyone to process it? and because of his objection, there's not. delays in federal reimbursements make it difficult for the illinois department of transportation to pay the contractors and workers on these projects. so the ripple effect is that the money doesn't go back to the construction companies or to the workers and their family leading to unemployment. and the senator from kentucky is opposed to extending unemployment compensation. the unemployment rate, incidentally, in the construction industry is 24% nationwide. laying off more construction workers at this time is exactly the opposite of what we ought to be doing in this economy. future work on illinois transportation projects could be in jeopardy if we do not pass an extension. the illinois department of transportation is scheduled to release the largest bid lettings

on april 23 for projects under way this construction season, and so the construction season will be delayed. i'm trying to give the whole picture here. as we wait for the senator from kentucky to agree to a short-term extension of these critical programs, we are jeopardizing jobs, more people will be unemployed, and we're jeopardizing future projects which will be shortchanged because of the construction season that's very limited. this one-month extension of transportation -- and that is all we're asking for -- has already had overwhelming bipartisan support in the past, and the one-month extension itself costs nothing. last week, we passed a one-year transportation fix as part of the jobs bill. the following groups have written letters telling us, urging us to move on this extension. the american association of state highway and transportation officials, the american road and transportation builders association, the associated general contractors of illinois,

the u.s. chamber of commerce, the laborers international union and the american automobile association. the house did its work last week and passed this 30-day extension, sending it over to us where we learned thursday night that the senator from kentucky was going to object. we took to the floor thursday night, nine of us, and made a request several times for him to withdraw his objection, which he refused. another request was made on friday morning by me here on the floor and the senator continued his objection, and then several today. so i'm going to make the 11th request of the senator from kentucky on behalf of the people that i represent in illinois, some 15,000 who have lost their unemployment checks because of his filibuster. and 400,000 across america who are wondering what happened, what did we do wrong here? why aren't we receiving the check we need for the necessities of life? mr. president, i ask unanimous

consent the senate proceed to the immediate consideration of h.r. 4691, the 30-day extension of provisions which expired on sunday, february 28, unemployment insurance, cobra, flood insurance, satellite home viewer act, highway funding, s.b.a. business loans and small business provisions of the american recovery act, s.g.r. and poverty guidelines received from the house at the desk, that the bill be read three times, passed, and the motion to reconsider be made and laid upon the table. the presiding officer: is there objection? mr. bunning: i object. the presiding officer: objection is heard. mr. durbin: mr. president, keep in mind that we have offered to the senator from kentucky repeatedly an opportunity for a vote. bring your approach to the floor. let the senate decide. accept the decision of the senate. win or lose. that's the most any senator can ask for, and yet he wants more. he wants a guarantee that he wins. well, there's no guarantee that you will win in the senate, there is no guarantee you win in baseball.

you do the best you can. under these circumstances, i think we have reached a point that's difficult to understand and explain. i would like to invite my republican colleagues, all of them, to come to the floor and express themselves on this. if they believe we should cut off unemployment benefits, health insurance benefits, close down the u.s. department of transportation's work in the states, close down the s.b.a. programs for small businesses, i hope they will come and express that point of view. they should if they feel that way. if they feel as i do that this is unfair and unfortunate, if they will come forward and join us on the floor, we can try to build up some momentum for moving this issue forward. there are people in every state of the union who are suffering today because of the objection of one senator, because of the filibuster of one senator, and that, i think, is a sad indication of what has happened here in the united states senate, that we have reached

this point, that even offering an up-or-down vote on an amendment is not enough. what the senator is looking for is a guaranteed result. we can't give him that guaranteed result. i yield the floor. the presiding officer: the senator from kentucky. mr. bunning: mr. president, it's -- it's amazing to me that the senator from illinois has what we call a convenient memory just last week, there was a bipartisan bill proposed by senator baucus and senator grassley that would have covered these extension of unemployment benefits, cobra health care assistance, flood insurance, highway bill assistance, the doc fix, small business loans and the rural satellite television

viewer act, and his convenient memory loss allowed him to forget that his leader, senator reid, did not allow that bill to come to the floor, and instead intiewd his jobs bill which was also not fully paid for, by the way. $10 billion wasn't, $5 billion was. and so $10 billion from the jobs bill that was passed went to the bottom of the deficit. there comes a time when 100 senators are for something that we all support. if we can't find $10 billion to pay for it, we're not going to

pay for anything. we will not pay for anything fully on the floor of the u.s. senate. now, he said i only offered one way to pay for this. that's untrue. i offered more than one way. i negotiated with the leader -- the leader's staff, rather, and we had worked out two-week extension to $5 billion with a different pay-for. the debt that we have arrived at , even the head of the federal reserve bank, chairman bernanke, said it's not sustainable. it's unsustainable. what does that mean to the american people, to the same people that are struggling to

pay their bills, that are on unemployment, that could have been covered had the baucus-grassley bill been considered, and could have been covered not for 30 days but for three months? now, because there were some tax extenders in that bill, the democrat majority stopped the bill from being considered. i'm not filibustering the bill. a filibuster is -- a filibusterer is somebody who talks a long time. i am exercising my right as a senator duly elected from kentucky to object to a u.c. that's completely different than filibustering. everybody knows that's a member of this body that anybody, 100

of us, can object to anything that is brought to the floor of the u.s. senate, whether it be a nominee, whether it be a judge, whether it be somebody that is appointed to the treasury. anybody can object. and there is a procedure that takes place that you can overcome that objection. why doesn't the democratic majority use that procedure? so i'm going to make one more shot, and as long as we continue to have the extenders being brought forth and paid for, i'm going to make it. i ask unanimous consent that the

senate proceed to the immediate consideration of h.r. 4691, that the amendment at the desk which offers a full offset be agreed to, the bill be amended -- as amended be read a third time and passed, and the motion to reconsider be laid upon the table. the presiding officer: is there objection? mr. durbin: mr. president, reserving the right to object. the senator again is asking that he win without a vote. i object. the presiding officer: objection is heard. mr. bunning: well, we tried and we will continue trying. as many people that get up and propose that u.c., i will be here, whenever it is. i want that passed as bad as he

does because i have people also in kentucky that have the same problems as his people do in illinois, and all these states that are represented by two senators right here. but let's do it and do it and pay for it because the money is available in many areas. the money was available for the grassley-baucus bill, which extended things for a year in some cases and extended these provisions that i'm talking about and the senator from illinois is talking about for a full three months. we would not be in this position unless the senator from nevada had pulled and not allowed that

bill to come to the floor. thank you, and i yield the floor. the presiding officer: the republican whip. mr. kyl: mr. president, until my voice gives out, i'd like to address the bill that's on the floor here. the bill that has been denominated by my colleagues on the democratic side as a jobs bill, but which won't create any new jobs, and when considered in conjunction with the health care legislation, that the president has proposed will actually cost jobs, and i'd like to address that. this legislation extends some current provisions of law, including tax provisions, unemployment compensation, cobra insurance. it extends a provision of federal subsidies to the states

for medicaid, and there are a few other provisions. none of these create new jobs. the tax extenders are youthful. that's our washington, d.c., speak for provisions of the tax code that last one year and have to be renewed each year. they are generally to enable businesses to deduct from their taxes ordinary business expenses. and include things like research and development tax credits which i think are supported by all 100 senators here. so we do this every year. we extend these tax provisions for another year. it should have been done at the end of last year. it wasn't so it has to be done now and made retroactive to the end of the year. you could argue that some of those may theoretically create a few jobs, but they are something we do every year and they are not for the purpose of creating jobs. they are simply good business practices. so this bill really takes on the usual business of the senate.

there is nothing new, as i said, to create jobs. what of the subject of unemployment coverage extension which we have just been debating , that doesn't create new jobs. in fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work. i'm sure most of them would like work and probably have tried to seek it, but you can't argue that it's a job enhancer. if anything, as i said, it's a disincentive. and the same thing with the cobra extension and the other stengz -- extensions here. so it's not a jobs bill, and it's beyond me how it could be denominated as such. moreover, and the reason for my colleague's objection to the temporary bill is that the congressional budget office preliminary estimate shows that this bill adds $104 billion to the deficit over the next ten years, and that's in addition to the $10 billion that would be added that my colleague senator

bunning has been talking about. this number is primarily due to the extension of unemployment insurance, the expanded cobra extension, and the new federal assistance to states for medicaid patients. these are given emergency designations, and as a result, we don't have to supply an offset of spending reduction to pay for the cost of these provisions. now, this comes just a week after our democratic colleagues were bragging about the fact that they passed a bill called the paygo bill. the paygo bill is supposed to require that if we're going to spend money, that we find an offset in the form of a spending deduction or revenue enhancement that covers the cost of that new spending. we predicted that as soon as we passed the paygo legislation,

our colleagues would come to the floor and seek to have their next legislation exempted from it, and, sure enough, that's exactly what was done. both the matter that senator bunning has objected to and the bill that we're on right now have to be exempted from the paygo requirements and, therefore, add to the federal deficit. in this case, $104 billion. now, some of these provisions are useful provisions, but the truth of the matter is, you can't on the one hand say that everything we do around here has to be offset with spending cuts or tax increases and then waive the paygo legislation every time you want to do it, as it turns out so far, every time we've considered legislation. the reality is that we could pay for this legislation, and as senator bunning noted, we could also pay for the so-called temporary extension of unemployment benefits because we have money that we authorized and appropriated earlier in the

so-called stimulus bill that would more than offset the cost of this legislation. republicans, of course, would like to offer an amendment to pay for it from the stimulus funds. according to recovery.gov, the official web site for the stimulus bill, this web site reports that only $186 billion of the $499 billion in appropriated and direct spending -- that's the money actually available from the stimulus -- has been spent so far. that means $313 billion, or 63%, remains unspent. $160 billion of the funds haven't even been made available to spend yet. and the original c.b.o. estimate of the stimulus shows that 21% of the money, $122 billion, won't -- of the spending, won't occur until the year 2012 or thereafter. we've got an immediate crisis.

our democratic colleagues say we have to extend unemployment insurance. in fact, it's such an immediate crisis that they have to waive the paygo requirements that would ordinarily apply because it's an emergency. if that's the case, then why not simply take this money that isn't going to be spent until after the year 2012 and pay for the legislation that is before us right now? why would we put aside stimulus money to spend in 2012 when people need it today? it's the very argument that my colleague from illinois was just making to my colleague from kentucky. why pile on the deficit if we have this store of money available? and i think, therefore, my colleague from kentucky made a good point when he suggested that this money should be paid for out of the stimulus funding. and i am sorry to see my democratic colleagues object to that request. the conclusion is, therefore, that the bill will do nothing to create new jobs, and what's

more, when considered, as i said, in conjunction with the health care legislation, will actually cause a loss of jobs. the president, who talked about his plan last thursday at the so-called health care summit, noted that the bill costs a lot of money and, therefore, they had to raise taxes in order to pay for it. and among other things, the president's plan, unlike the plan that passed the house or the senate, would raise the medicare payroll tax on small businesses. it would raise the taxes by 31%, mr. president, and it would also apply the medicare payroll tax to income, interest, dividend, rents, that sort of thing. now, we all know if you tax something, you get less of it. taxing investment income would, therefore, reduce investment in the economy. putting a tax on the employment of people means businesses are going to hire fewer people or

they're going to keep fewer people on their payroll. we can't afford to lose more people to unemployment. we need to begin hiring people back. so how do we do that? well, you sure don't do it by making it more costly to employ people, by increasing by almost one-third the medicare payroll tax. that makes no sense. and to apply it now to investment income will directly drive down productivity and economic growth. less investment will obviously lead to lower productivity, slower economic growth, weaker wages and salaries, lower household wealth. each new dollar of tax paid by a small business is one less dollar that could go toward hiring new employees. heritage foundation just did a study on this proposal and it found that between 2011 and 2020, with regard to this investment income proposal alo

alone, it would result in an average of 115,000 lost job opportunities per year. 115,000. it radio reduce household disposable income by $17.3 billion per year. it would cut wages and salaries by $14 billion per year and decrease household wealth by $267 billion per year. now, last week congress passed a new job hiring tax credit to great fanfare. my colleagues on the democratic side of the aisle said this is the way to help small business to hire more people. the whole idea was to put more people to work. in the very same week, the president announces his health care proposal that, as i just said, will make it harder for people to get back to work. so if the goal is to get more people to work, then i submit that my democratic friends should shelve their health care

plan, which will have exactly the opposite result. it's very hard to justify legislation that's going to hurt job creation. and so, as i say, when you consider the fact that, number one, the bill before us creates no new jobs -- and i challenge my democratic friends, show us how doing what we would always do and should have done last year, extending the research and development tax credit, the other tax credits, extending cobra insurance, extending unemployment benefits, what's the estimate for job creation by c.b.o. on this? it can't be very much. now, finally, mr. president, my colleague from illinois, in responding to senator bunning a little bit ago, said that republicans had objected, that we always object or we had objected on many times previous occasions to consideration of unemployment legislation. well, i recall back october --

in fact, i'll quote from a story here. the story is dated october 13, 2009. story by dan freedman. he says, "last thursday, democrats announced a deal that gave all 50 states a 14-week extension." i think this was about three extensions ago, i've forgotten exactly. "senate finance committee chairman max baucus within hours of that announcement sought unanimous consent to pass the bill, even though republicans had already indicated that they would object so that they could try to amend the bill to replace the extension of the tax or, rather, to provide a pay-for in the democrats plan with the use of stimulus money" and noticed th"and noted thefact that i hadt we see a c.b.o. score on it. it also noted that reid and baucus and other democrats quickly bashed republicans. the delay is a threat to millions of workers struggling to feed their families as they

retain or search for a new job, my friend, the chairman of the committee, said. earlier in this particular column, by the way -- this article, in fact, i'll just read how it starts off. "senate democrats in recent weeks have repeatedly used unanimous consent agreement requests to rack up talking points against senate republicans, a tactic that g.o.p. aides said the majority is using deceptively to blame republicans rather than internal disputes for stalled legislation. senate leaders have long used the tactic of asking for unanimous consent to pass legislation they know will draw an objection from the minority then blasting the objectors for obstruction." mr. president, i fear that's what we're seeing here. as i said before, immediately after democrats behind closed doors developed legislation, they immediately come to the floor and say, let's pass it. republicans say, whoa, let's at least see how much it costs and give us a chance to amend it so we can pay for it. we thought you democrats liked to pay for these things since you passed the paygo legislation. oh, no, can't -- can't have that, not when it applies to

unemployment extension. and that's all my colleague from kentucky is trying to do. and as i said, that's $10 billion not paid for. the bill before us is another $104 billion not paid for, a bill that doesn't create a single new job, and yet my colleagues on the other side of the aisle run willing -- were unwilling to use stimulus money to pay for it. now, i'll be very interested, mr. president, when we do have an opportunity to amend the bill that's before us -- i assume we will -- and i assume that one of those amendments will be to pay for the bill with the stimulus funds, maybe we can make it clear that these are not funds that would be spent until after 9 year 2012 -- after the year 2012. it will be very interesting to see if my senate colleagues who supported paygo would be willing to support that kind of an amendment. after all, if this is spoatsed to be the stimulus bill in terms of job creation, one would think it could be used for that purpose. so i would just hope that my colleagues would consider that every time we pass one of these

bills, we're adding to the deficit and that we're not creating new jobs. and it's a legitimate point for republicans to make. i hope we'll have the opportunity to address that subject with amendments as this bill goes forward. mr. baucus: mr. president? the presiding officer: the senator from montana. mr. baucus baucus: baucus: the m arizona argues that unemployment insurance is a disincentive to jobs. nothing could be further from the truth. i don't know anybody who's out of work and is receiving some unemployment insurance believes that that payment is sufficient not to find a job. the payments are so much lower than any salary or wage would be, it's just ridiculous. i might add, there are five unemployed americans today for every job opening in the econo economy. five. there are five people -- unemployed americans, five people looking for work that just can't find it. and that's the case for -- it's been the case for a long time.

people are looking for work. they're not unemployed because of choice. they're unemployed because of the recession that struck -- mr. kyl: mr. president, would my colleague yield? mr. baucus: the economy put people out of work. it's not because people don't want to work. i might also add an additional point, the congressional -- when we asked -- many of us asked the congressional budget office to rank what measures would be most effective if they were passed in helping the economy, the one we came up with from the nonpartisan congressional budget office was unemployment benefits because unemployment benefits generate about dollars 1.90 -- $1.90 in gross domestic product growth for every $1 that we've paid out in terms of unemployment benefits. so i just want to make the point, and i don't know if the senator really meant this but he certainly strongly implied, in fact, i took him to mean that unemployment insurance is an disincentive for people to look for work. i don't think it's a disinsin

active at -- disincentive at all because the benefits are so low and there's so many looking for work and it's the economy, the recession is the cause of loss of jobs. mr. kyl: if the gentleman will yield? mr. baucus: absolutely. mr. kyl: my colleague quoted me correctly -- almost correctly. i said, in fact -- i said, it's not a job creator. if anything, it could be argued that it is a disincentive for work because people are being paid even though they're not working. i certainly did not say and would never imply that the reason people don't have jobs is because they're not looking for them. now, it is true that a lot of americans have gotten so tired of looking for jobs or -- or believe that they're not going to find them that they have stopped looking. and as a result, the actual unemployment numbers are probably higher than the roughly 10% that's quoted now. some people say it could be as much as 17%. and this is why i have supported every extension of unemployment benefits. i have voted for them.

because, as my colleague says, there are five people looking for every job that exists, and if they can't get jobs, they need the support. but i think -- what i said is true, and if my colleague could find a source that says it's not true, then please show me. but providing unemployment benefits does not create jobs. and the bill we have before us is denominated around here as a jobs bill, and this is the biggest single expenditure in the bill and yet it doesn't create jobs. that's the only point i was making. mr. baucus: i might ask, if my colleague will yield to a question, first of all, unemployment benefits in my home state of montana is about $300 a month. that's all. $300 a month in my state of montana. and i know doggone well that that's not enough to keep anybody very long. and those -- a lot of folks in my state are looking for jobs. they're just not available. second, failure to pass this