wars. that is an extravagance we can do without. we can also make cuts close to home. i represent a farm state and i have a strong record of supporting a true farm income safety net. however, in this time of strong commodity prices, record lels of net farm income -- record levels of net farm income, the usda is still paying out nearly $5 billion a year in direct payments to farmers. having no relationship to farm income or commodity prices or to what they're even planting. no question, we can save some money here while still making sure farmers have a good, solid income safety net protection system. we also must find additional deficit reduction in the area of health care. once again, the tea party republican budget flunks the test. it doesn't reduce spending on health care. it just shifts costs. it shifts the cost to seniors

and others by making them pay most of the bills themselves. by contrast, the new health reform law, the new health reform law actually cuts health care costs. again, according to c.b.o., it reduces the deficit by hundreds of billions in the first decade and by more than $1 trillion. the health reform bill cuts the deficit by more than $1 trillion in the second decade while preserving and strengthening medicare, not just dumping it on the backs of seniors. it does so by rewarding health care providers for the quality of care, not the quantity t does so by placing a sharp, new emphasis on wellness and prevention, keeping people out of the hospital in the first place. and it does so by creating an independent commission of doctors, nurses, medical experts and consumers to examine patient data and recommend the best ways to reduce wasteful spending and ineffective procedures while

preserving the quality of care. we can and must build 0 on the health care savings in the affordable care act. but my friends on the other side of the aisle want to repeal the health reform act. but they don't say where they're going to get the known make up the $1 trillion hole that we'll blow in the budget in the next decade. madam president, the enormously successful deficit reduction campaign of the 1990's insisted on a balanced approach: spending cuts and refer use in increases. revenue increases were concentrated on the most affluent americans, those who could most easily afford it, and who benefited the most from the strong economy and the stock market that followed. this must be our template as we raise necessar necessary revenu.

by all means, we must allow the bush era tax breaks to expire immediately. to put it bluntly, they don't need it, and we can't afford it. the fact is, high-income americans did extremely well in the 1990's under the higher rates of the clinton years, and they will continue to do very well in the future. while contributing their fair share to bringing deficits under control. i also strongly agree with president obama's proposal to limit itemized deductions for the wealthiest 2% of americans, a regorm that would reduce the deficit by 320 over te $320 biln years. we need to cancel the gimmicks, those that allow hedge funds managers to pay taxes at just a 15% rate on part of their bonuses, a far lower rate than middle-class americans pay.

as i said earlier, in one recent year the top 25 hedge fund managers took over $892 million each. let's tax this income the same way we tax the income of teachers and truck drivers. in addition, i strongly favor a modest speculation tax on certain types of financial transactions. a .25% tax -- that's one quarter of 1% tax -- on each stock transaction and a similar tax on options, futures, and swap transactions in order to minimize the impact on ordinary american investors. this would exclude tax benefit pension accounts such as 401(k)'s and ira's and defined benefit plans. now, some might say, well, this sound -- this sound kind of pie in the sky. well, mr. president, great

britain currently levies a tax on stock transactions that's twice as high as what i'm proposing, twice as high as what i'm proposing. and there's no question that wall street can easily bear this modest tax. john vogel, the legendary founder of the van guard group has long advocated a speculation tax in order to -- quote -- "slow the rampant speculation that has created such havoc in our financial markets." we also should be working to eliminate the tax provisions which promote the shifting of jobs to other countries. the president's budget proposes the elimination of over $100 billion in international tax breaks in this area. mr. president, a prudent but aggressive mix of spending reductions and tax increases combined with economic growth and the entdz of the war in iraq and afghanistan will bring the federal deficits under control. this will restore the fiscal

discipline that was squandered in the years after president clinton left office. best of all, this restored fiscal foundation will allow us to continue making critical investments in transportation and infrastructure, education and energy, investments that will put americans back to work, strengthen our global competitiveness and prepare our workforce for the future. and make no mistake, we have no time to waste. while the united states has been descractdistracted and weakenedy foolish wars and speculative bucialtion our competitors have been charging ahead. we have lost major ground to china and to other rapidly growing economies, including brazil and south korea. we are playing catch-up and the stakes are enormous. across america, roads are crumbling, bridges are collapsing, our formerly world-class interstate highway system is increasingly overwhelmed, mass transit

systems, including washington's once-proud metro system, have fallening into disrepair. we have a backlog of $1 trillion in school construction and modernization. in infrastructure, we currently invest less than one-third of what western europe does as a percentage of g.d.p. china has tripled its investment in education and is building hundreds of new colleges and universities at a time that we're slashing school budgets and laying off teachers. the tea party republican budget makes thinvestment gap far worse. it proposes to cut fund for transportation by 25% and for education by 25%, and in future years would cut those investments even more deeply. congressman ryan has the audacity to tell us that this is -- quote -- "a path to prosperity."

common sense tells us it is a bridge to nowhere. mr. president, these statistics are not abstractions. investments in infrastructure, education, and innovation directly translight into more and better jobs, higher incomes, stronger economic growth. that's why we need to get america moving again. for starters, we need a massive new commitment to infrastructure expansion and modernization. truly a marshall plan for america. the first step is to adopt a solid six-year surface transportation reauthorization bill that will allow us to modernize our transportation system. we also need robust, new investments in clean, renewable, domestically produced energy. this will lower our energy costs in the long term and will reduce our dependence on some of the most unstable countries in the world. early in the 20th century, we provided the emerging oil industry with subsidies to

accelerate its growth. today we must provide similar policies to accelerate america's transition to a clean energy economy, including long-term tax credits for renewable energy generation and for infrastructure investments for biofuels, as we will as smart grid technologies to enable broader renewable energy use. the goal should be 25% of our energy from renewable resources by 2025. in the field of education, we need major new investments. this begins with federal support for universal preschool education to ensure that every child is ready to learn and succeed in school. it means an ambitious reauthorization of the elementary and secondary education act -- bill that closes the gap between world-class schools and affluent suburbs and struggling schools in poor, urban, and rural

communities. it means providing resources to ensure that the goal of graduating students who are college and career-ready aplies equally to students with disabilities. mr. president, this closing, in my remarks today i have offered not just an alternative approach to bringing deficits under control but an alternative vision of the role of the federal government. going back to the 1930's, the american people have supported and strengthened an unwritten social contract. this social contract says that we will prepare our young and care for our elderly. that social contract sthais if you work hard plaindz by the rules, you'll be ail to rise to the middle class or even beyond. that social contract says that a cardinal role of government is to provide a ladder of opportunity so that every american can realistically aspire to the american dream.

mr. president, in one fell swoop, this tea party republican budget rips up that social contract. it replaces it with a winner-take-all philosophy that, again, tells struggling aspiring people in communities across america, i've got mine,es you're on your own. mr. president, as i said at the outset, the republican budget is president obamaed on the idea that america's -- is premised on the idea that our best days are behind us, that we have no choice but to slash investment required to keep our middle-class strong. i totally disagree. america remains a tremendously wealthy and resourceful nation. we are an optimistic, forward-looking people, who are purposeful and can-do. and we expect our government to be on our side, the side of the middle class. we expect it to be an instrument of national greatness and purpose, allowing us to come together to achieve the big things that we cannot achieve as

individuals, things like building an interstate highway system, mapping the human genome, and one day discovering a cure for cancer. through our government, we come together to provide a ladder of opportunity to give every citizen a shot at the american dream, a ladder of opportunity that includes quality public schools and universities, pell grants, the g.i. bill, job training. through ash government, we come together to ensure that our citizens have a secure retirement with guaranteed access to health care and to ensure that the less fortunate among us are not abandoned in the shod dose of life -- in the shadows of life. i am convinced that the great majority of americans share this positive, can-do vision. we refuse to be dragged backward into a winnerrer-take-all society where the privileged and the powerful seize even a greater share of the wealth as

the middle class struggles and declines. americans are a tough and resilient and optimistic people. we can and will work together to meet the great challenges of our day. we can and will -- indeed, we must -- restore the middle class as the backbone of a stronger, rich,and fairer america. mr. president, with that, i yield the floor. mr. cornyn: mr. president? the presiding officer: the senator from texas. mr. cornyn: thank you, mr. president. earlier today we had a cloture vote on the nomination of jack mcconnell to be a united states district judge for rhode island, and 63 senators voted to cut off debate and to move then to a final vote on confirmation, which will occur i'm told around 5:30, shortly. but first i wanted to come to the floor and expand a little

bit on some of my earlier comments with regard to this nomination and why i am so strongly opposed to it. and just to make a few other comments. 33 years ago -- i counted -- i became a lawyer, a member of the legal profession. while i have heard as many lawyer jokes as a person can stand in a lifetime, i am actually proud of the legal profession and what tracted me to it -- and what attracted me to it was its study of the larks the rule of law, and the majesty of law being made by elected representatives of the american people speaking for the american people themselves. a profession that observes a rule of ethics, that is not just who is can get the most the fastest but one that actually requires lawyers to practice

according to a standard of ethicethics, and then third, the obligation and the responsibility that comes with representing a client. in other words, it's not the lawyer who is speaking on their own behalf but the lawyer who is speaking on behalf of a client whether they have been arrested around charged with a crime, whether they have been injured in an accident and seeking compensation for some wrongdoing, and to deter future acts -- similar acts in the future, or it is a commercial dispute over contract or some other relationship. i really, really believe that it is the rule of law and our adherence to ethical standards and the fact that the legal profession serves the interest of clients who need help, many of whom don't have a voice themselves or certainly the capability of representing themselves, who needs somebody

who can help them. but i have to tell you that it is because of my respect for, add admiration for the legal profession that it makes me angry when i see people making mockery out of the foundational principles i just mentioned. the rule of law, ethics and the fiduciary duty owed to a client. i had, after i practiced law for awhile, i had the great honor of being elected to and serving as a district judge in my home city of san antonio. not only did i represent clients as an advocate in court, i had the responsibility of presiding over trials and making sure people were treated impartially, the same and according to the rule of law, that it was not a matter of who you were and how much money you had, but that everybody could have access to our system of justice. later i was honored to be

elected to serve on the texas supreme court for seven years, where i was an appellate judge, and i wrote legal opinions basically grading the papers of some of those trial judges and making sure that indeed we had equal justice under the law. and then i was, served as attorney general for four years before i came here, during which time i became acquaint wad certain class of -- acquainted with a certain class of entrepreneurial lawyers that i think threatened the very rule of law that i have been talking about. i previously talked about my objections to jack mcconnell's nomination to serve and confirmation to serve as a federal judge because i believe he intentionally misrepresented certain facts before the senate judiciary committee. mr. mcconnell and his firm have been sued in ohio for stealing certain -- and maintaining custody of certain

stolen documents in a lead paint lawsuit that i'll talk about here in a moment. and, as a matter of fact, earlier today i introduced an article that demonstrates that that legal dispute still is raging and is not yet resolved. and yet, the senate is moving ahead and will likely confirm someone to a life teen neuro job -- ten life tenure job as a federal judge. why are we taking the risk that this individual will be given a lifetime job as a federal judge might ultimately be found culpable in something that is certainly disqualifying if he is responsible for it? but i want to talk just a little bit more about -- well, i want to tell a story.

and i think it helps make the point i want to convey. once upon a time there was an enterprising lawyer and some of his law partners who were trying to figure a new way to make a lot of money. and they said -- one of them said i have a plan to do that. first we have to pick a product or sector of the economy that is unpopular even though it's legal. for example, tobacco. exactly, one of the lawyers said. he said we pick a product like tobacco, sue the manufacturers and we make a lot of money. the problem is we already tried to do that in individual lawsuits that are designed to compensate victims and deter wrongdoing. but we lost all of those lawsuits. well, the enterprising young lawyer who suggested this plan

said we did, but now we have a new legal theory. we have a new approach. and legal theories that have never actually been embraced or accepted by the courts. one of the other lawyers said, how does that work? doesn't it -- what's the theory, stph* to which the other respond, well, the theory really doesn't matter because this case will never be tried. but it will be settled for billions of dollars. and that takes us to the second part of the plan. the truth is the client or the person who would be represented is not an individual victim who is harmed as a result of some wrongdoing by a manufacturer of the product. but instead of that, it's the state. a state. how do you get hired to represent a state? well, you've got to get the attorney general, my former job.

you've got to get the attorney general who is the chief law enforcement officer of the state to basically hire you and delegate to you the sovereign law enforcement power of the state, in this case to sue the makers of a product. and part of this scheme is you sue not just for damages to one individual or group of individuals, you sue for essentially everyone in the state, alleging billions of dollars in damages. the key reason this is so important to this scheme, of course, is because this is a break the company lawsuit. it is an existential threat to the existence of this company, far bigger than any legal threat they may have faced in the past because the damages are enormous. and every potential juror that would sit in judgment of the case being a constituent of that state would be -- would stand to

benefit in some way or another from any judgment rendered against this company. and of course there's the power of the state itself to launch perhaps a negative publicity campaign against this company or sector and erode the value, the stock value of this company in order to compel them or force them into a settlement posture. well, part of this scheme is that even though the chances of winning in court are very slim, even a small risk of losing everything, wiping out shareholders, retirees, pension funds and employees, that even that small risk is enough to cause the defendant to consider coming to the settlement table. and, true, that even if you have a chance, liability is very thin and you think that you aren't

responsible, that you still have to navigate the maze of litigation through the trial, the appellate and the supreme court. and you know, you might just win if they can outlast their adversaries. but in the meantime, as i indicated earlier, the stock price takes a beating, management is consumed with defending the lawsuit rather than running the business. and millions of dollars are being spent on their own lawyers in order to defend this case. well, in this story, the law partners of this enterprising young lawyer say that sounds like a great plan. we could earn a lot of money, to which the lawyer proposing this says, well, we could earn more than you can possibly imagine because our compensation may well exceed $100,000 an hour. how do you do that? no one can charge $100,000 as a

legal fee. this is the best part from their perspective. they won't actually negotiate an hourly fee under the supervision of a judge that reflects prevailing ethical standards. instead they'll negotiate a deal with this attorney general for the state on a contingency fee basis in a no-bid noncompetitive contract. and so then they would get a percentage of any amount of money recovered in this bet the company lawsuit. since there are no costs up front for the taxpayer, the state attorney general would look like a hero even if the lawsuit was unsuccessful. but if he seeds succeeds these lawyers would get a significant percentage of an astronomical sum of money. no funds would be appropriated by the legislator to finance the litigation, so the official, the state official can make the ethically fallacious and ethically dubious claim that no tax dollars will be used to pay

legal fees. the official enters this no-bid contract for legal services from lawyers whose future political support, including campaign contributions, is assured. and the official can expect to be lauded as a popular hero in the press by his willingness to take on an unpopular industry. now, as part of this scheme and story to leverage the chances for success, these lawyers then cherry pick the court where the lawsuit is filed, a court well known for being friendly to these sorts of claims. and seeing the handwriting on the wall, ultimately as part of this scheme the plan would be that the defendants, even though they're not -- the chances of proving them responsible are very slim, the risk of losing and losing the company are so huge that they decide to go to the settlement table.

well, here's the deal, these plaintiffs' lawyers say under this scheme, and in some ways it turns out to be a lifeline to the defendants. first, the good news. the defendants will survive. they won't be at risk of losing the company, the employees, the stock price, the pensioners, the retirees who depend on the existence of the company. secondly, the business will continue to operate. and here's the best part. the judgment that will be entered will ultimately, from the standpoint of the company, ultimately bar any future lawsuits. and the defendants agree rather than paying a lump sum settlement out of their current assets to pay hundreds of billions of dollars to these lawyers and the state out of future profits. well, how do you make sure you don't have to dip into your current assets? well, basically the defendants agree under this arrangement to

raise the price of their product for consumers. so ultimately the consumers pay, and the defendants will pay the attorneys' fees out of this same income stream. now, these lawyers in this story believe this is really a stoke of jean skwrus. while no -- genius while no person will receive a penny, and indeed as a result the defendant will not be deterred from engaging in that sort of conduct, nor will, as i say, any victim be compensated, the state recovers a windfall of damages without having to appear to raise taxes. although the increased price for the product is passed along to consumers. well, as a result of this deal, the defendant's stock price rebound, they can stay in business essentially as a partner with this law firm whose legal fees will be paid out of future sales revenue.

and the state official that agrees to this ingenious scheme is elected to higher office in part on the strength of this david versus goliath story. the only problem with this story, mr. president, is that it is no fairy tale. so who are these lawyers who dreamed up this ingenious scheme to partner with a state official to be able to be delegated the sovereign power of the state and collect fabulous wealth in the form of attorneys' fees that no judge will award and no jury will award because it's part this have settlement? well, jack mcconnell, the nominee, and his law firm whose web site says mcconnell played a central role in the historic litigation against the tobacco industry in which $246 billion

in all was recovered. it says on behalf of the state attorneys general he served as negotiator and primary drafter of the settlement agreement. as a result mr. mcconnell told us in the judiciary committee he expects to collect between $2.5 billion and $3.1 billion a year from now through 2024. and what's more, jack mcconnell now finds himself nominated to be a federal judge in whose court future ingenious but ethically dubious schemes can be expected to have a warm reception. mr. president, this is the type of thing that stuart taylor, a well-respected legal commentator, called -- he said the rule of law has now morphed under these sorts of schemes under the rule of lawyers.

he's talked about the sequel to this litigation i've described in this story which was the lead paint lawsuit which we've talked about a little before which was unanimously rejected by the rhode island supreme court frivolous litigation. as a matter of fact, mr. mcconnell and his law firm were assessed fees of over $200,000. but mr. taylor said it's litigation this have type which has perverted the legal system for personal or political gain at the expense of everyone else. strong words, hard words, but think the senate needs to know the type of nominee that we're voting on and the american people need to know what the record of this nominee is so then they can hold the senators who vote for his confirmation accountable. but this isn't a partisan issue. it really isn't. this isn't even about ideology. this is about ethics.

this is about upholding the rule of law. well, mr. president, i'd ask unanimous consent to -- after the close of my remarks to make part of the record a "wall street journal" article january 12, 2000, by robert b.ryke. the presiding officer: without objection. corning corning he was secretary -- mr. cornyn: he was secretary of labor during the clinton administration and he wrote an article in "the wall street journal," that i think is appropriate for what i'm talking about. the head of the -- the lead of the article from this prominent democrat, member of cabinet secretary under bill clinton, is don't democrats believe in democracy? that's the -- that's the title. and i won't read all of it, but i will read just a few sentences. in talking about this kind of government-sponsored litigation by outsourcing the responsibilities of the sovereign government and the elected officials to contingency

fee lawyers whose only motive is maximizing their personal profit, he said, the biggest problem is that these lawsuits are end runs around the democratic process. he says, we used to be a nation of laws. but this new strategy presents a novel means of legislating within settlement negotiations of large civil lawsuits initiated by the executive branch. this is faux legislation which sacrifices democracy to the discretion of officials operating in secrecy. well, i agree secretary wright. i think this is a threat to our democracy. again, i don't think it should be viewed as a partisan issue even though he has that provocative headline and he's talking about members of his own party who have endorsed and initiated some of this type of

litigation. we had an earlier vote, as we said where 63 senators voted to close off debate and we will have a vote here in short order. and i know some senators have indicated that they voted to close off debate because they felt that was the appropriate vote to make, but they were going to vote against mr. mcconnell's nomination. so we'll see how many votes he gets, but we know if it's a party line vote, there's 53 democrats in this body and 47 republicans. if it's a party line vote, mr. mcconnell's going to be a federal judge. but i think it is important to make the record crystal clear as to the type of nominee that -- that senators are voting on. i think it's my responsibility to my constituents. it's my responsibility to the senate to express the strong objections i have to this

nominee. surely -- i know there are better people for the president to nominate in rhode island. two of them serve in the -- in the u.s. senate here. i mean there are other people qualified -- qualified people who can be nominated. and i just believe that this ethically challenged nominee who has according to the words of stuart taylor perverted -- among a class of lawyers who have perverted the legal system for% and political gain at the against of everyone else is the wrong person for this job and so i will be voting against the nomination. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from rhode island. mr. reed: mr. president, i ask unanimous consent that the remaining time postcloture be yielded back and the senate proceed to vote on the confirmation of nomination of john j. mcconnell jr. to be the u.s. district judge for the district of rhode island. that the motion be

reconsidered -- the motion to reconsider be considered made and laid upon the table with no intervening action or debate, that no further motions be in order to the nomination, that the president be immediately notified of the senate's action, the senate then resume legislative session and proceed to a period of morning business for debate only until 7:30 p.m. with senators permitted to speak for up to 10 minutes each. the presiding officer: is there objection? without objection, so ordered. the question is on the nomination. yeas and nays are called for. is there a sufficient second? there is. there appears to be. the clerk will call the roll. vote:

vote:

vote:

vote:

the presiding officer: are there any senators wishing to vote or to change their vote? if not, the yeas are 50, the nays are 44. the nomination is confirmed. under the previous order, the motion to reconsider is considered made and laid upon the table, the president will be

immediately notified of the senate's actions, and the senate will resume legislative session. under the previous order, the senate is now in a period of morning business for debate only until 7:30 p.m. with senators permitted to speak for up to ten minutes each. mr. grassley: mr. president? the presiding officer: the senator from iowa. mr. grassley: i ask to speak for a much longer period of time. the presiding officer: the senate will be in order. the senator will suspend. mr. grassley: mr. president, i'd like to ask permission to speak for 45 minutes. i may not use all that time but i'd like to have permission to speak that long. the presiding officer: is there objection? without objection. mr. grassley: okay. mr. president, it's not going to surprise any of my colleagues or the public at large that a lot of times i come to the senate floor to speak about agriculture and to speak about ethanol. and what brings me to the floor today is the ongoing crusade by

the "wall street journal" to, in an intelly dishonest way -- intellectually dishonest way put out fact that resident true. and the latest -- way put out facts that are not true. and the latest barrage that occurred last saturday in the "wall street journal" interview with c. larry pope, c.e.o. of smithfield food. and in this article, there's a lot of misstatements about ethanol and about ethanol causing the price of food to rise dramatically. and i take the floor now to rebut some of those misstatements and also to set the record straight so that when a very fine c.e.o. like mr. po mr. pope, even though i disagree with him on this article, he is

a decent person and he is a good corporate executive. but so next time he speaks, he won't speak. but i can also say that -- that i don't like to have confrontations with smithfield food because they do provide a lot of good-paying jobs in the middle west and they do do a good job of -- of adding value to agriculture and things of that nature. but there's been a tradition within smithfields to kind of not really appreciate american agriculture and it goes back to some conversations i had with the previous c.e.o. by the name of joe leuter. and i remember joe leuter coming my office to tell me some thin

things -- try to explain some things to me that he thought i had some misinterpretation of what he was really talking about the family farmer and about the production of hogs and whether or not he was or wanting to put the family farmer out of business. but i remember very -- just as if it was said to me yesterday, a statement to me he made when he said you're running the family farmer, the family producer, the independent producer out of the hog business and you want to control everything. and he said to me something along the lines that i don't want to put your farmers out of business, i just want them feeding my pigs. so he was basically saying that he wanted the family farmer to be a employee of smithfields and not be really an independent

producer. another thing that he tried to argue with me -- and i'm referring to mr. pope's predecessor, mr. leuter -- he also argued that iowa farmers in a sense weren't smart enough to run a packing plant and, in fact, he offered to give a plant to a group of farmers and guaranteed that it would be out of business within six months. so i don't know whether i'm -- i have fault with mr. pope as c.e.o. of smithfield and ethanol in this case as opposed to leuter and who's going to raise pigs in the case of his predecessor, mr. leuter, but there may be an institutional bias within the corporate -- the corporation of smithfield. so anyway, with that as background, i want to go to this article that i pointed out was in the "wall street journal."

the article says, "it's getting harder to bring home the bacon." basically what he's saying in that headline, or the paper is saying in that headline, is that we're raising the price of corn because so much corn is used for ethanol that it's driving up the price of food. and i'm on the floor to say that that's a bunch of hogwash. this article was in the april 30 addition of the "wall street journal," so if people want to read it and check it with what i've got to say, i'm happy to do that. the article was based on an interview with c. larry pope, c.e.o. of smithfield food, the largest pork producer and the large pork processor. the opinion piece was intended to share mr. pope's view on rising food prices. and also on the price of pork.

mr. pope puts much of the blame on the federal ethanol program. i'd like to address a number of the claims made by mr. pope and claims made in the opinion piece, presumably based on statements by mr. pope. mr. pope claims -- and i quote -- "now, 40% of the corn crop is directed to ethanol" -- let me -- i want to start that quote over again. "now, 40% of the corn crop is directed to ethanol, which equals the amount that's going into livestock food." well, right there, statistically he's wrong. let me point out how he's wrong. in 2010, 4.65 billion bushels of corn were used to produce 13 billion gallons of ethanol. but ethanol production uses only

the starch from a corn kernel. so i want to hold up a bag of -- of corn kernels. it would be better if i would bring in an ear of corn but this is the best way to transport it. these are corn. now, when -- when ethanol uses only the starch from the corn kernel, the result is that more than one-third or 1.4 billion bushels of corn -- and it's called descriedried distillers d this is what dried distillers grain is -- is available as a high-value livestock feed. in fact, what's left over after you produce ethanol really is of much more value than if you'd take the original corn kernels and use that by itself for animal feed.

so, then i want to say, when he says that -- go back to that quote. now 40% of the corn crop is directed to ethanol, which equals the amount that's going into livestock food. well, then on a net basis now, ethanol production used only 23% of the u.s. corn crop, far less than the 40% that ethanol detractors claim. so once again, you have a bushel l of corn, 56 pounds. out of that 56 pounds of corn, you get 2.8 bushels of ethanol. when you get done make the ethanol, you have a got 18 pound much drietd distiller grain that's left over, that i don't think anybody that's ignorant about ethanol understands that there's still a food product

left over and soy can't say that you're making ethanol out of corn and using it all for ethanol and nothing for food because this is a very efficient production. and by the way, let me say this. you can tell about the ignorance of for example million to in this town because a lot of people pronounce it eethanol. it's ethanol. but people that are ignorant about it don't even know thousand prownnounce it. i don't know if mr. pope pronounced it right or not. according to the usda, feed use consumes 37% of the u.s. corn supply, much more than the 23% consumed by ethanol. -- ethanol production. so i hope mr. pope will put that in his pipe and smoke it, because he's wrong on that point. ethanol is not diverting corn away from feed use. next mr. pope claims, and i

quote, "ethanol policy has impacted the world price of corn. " i'm glad mr. pope raised this issue. i clearly has no idea how little an impact ethanol has on global grain market. in fact, u.s. ethanol use represents a mere 3% of the world's supply of grain. in addition, the global grain supply in 2010 to 2011 is 11% larger than in 200 t 2000-2001 . since 1975 farmers have doubled u.s. corn production from under 6 billion bushels to over 12 billion bushels last year. and they've done it using essentially the same number of

acres. corn farmers today grow five times as much corn as they did in 1930 on 20% less land. so for all these people out there that think there isn't enough productivity in the american farmer or in our land or in the efficiency of producing, i hope you understand that we're producing five times more corn than we did in 1930 but doing it on 20% less land. or let me explain it another way. in 1910, you know what powered agriculture: horses and mules. and in that day, it took 90 million acres of land just to grow the food that the animals that powered agriculture used to stay alive and to be productive animals and the power for agriculture. that 90 million acres is equal

almost to the 92 million acres that'll be planted to corn in the united states this year. farmers are continuing to meet the growing demand then of ethanol, livestock feed, and exports. so i hope that mr. pope will put that in his pipe and smoke it, because he needs to understand how productive the american grain farmer. the author of the opinion piece then makes a claim that has absolutely no basis in fact, so i guess i can't attribute this to mr. pope. it states that -- quote -- "the e.p.a. has found ethanol production as a neutral to negative impact on the environment." well, i've always said that ethanol is good for the environment. but here we've got e.p.a. being quoted that it's a negative impact on the environment.

neutral-to-negative impact on the environment. the fact is under the renewable fuel standard created in 2007, corn ethanol was required to reduce greenhouse gas emissions compared to gasoline by at least 20%. corn ethanol has exceeded that threshold. nerksdz the law -- in other words, the law says such and such, and ethanol exceeds what the law even rimplets a reduction of more than 20% compared to gasoline is not neutral. so e.p.a. has found ethanol production has neutral-to-negative impact on the environment. not soavment if you remove e.p.a.'s use of murky science surrounding emissions from what is called "indirect land use" dhearntiondz kind of complicated, so i won't go into that -- ethanol reduces

greenhouse gas emissions by 48% compared to gasoline. now, i've heard senators in the last two months on the floor of the united states senate telling all of us that ethanol was bad for the environment. a recent peer review study published by yale journal of industrial ecology -- now all the ivy league people in the senate ought to have some allegiance done by yale university. this is what that yale journal said, that ethanol reduces greenhouse gas emissions by up to 59% compared to gasoline. mr. pope also asserts that pilgrim pride went bankrupt because of ethanol. pilgrim pride was a food processor. he stated -- quote -- "the

largest chicken processor in the united states, pilgrim's pride, filed for bankruptcy. they couldn't raise prices, so their cost of production went up dramatically." end of quote. again, facts are stubborn things. on december 1, 2008, analys anas cited the primary cause of bankruptcy was their large debt load, the result of the acquisition of $1.3 billio billionrrivabillionrival -- the3 billion rival that they purchased in 2007. other actor factors including lw chicken demand and prices resulting from the recession and poor commodity hedging, but not anything about the price of ethanol and corn production being high.

so i hope that mr. pope will put that in his pipe and smoke it. another statement by mr. pope seems to place all the blame on corn farmers for rising food prices. he said -- quote -- "you eat eggs, you drink milk, you get a loaf of bread, and you get a pound of meat. all of those are based on grain." the last part of that at the same time is accurate but let me tell you what's wrong with the relationship between rising food prices and the price of grain. now let's look at the u.s. department of agriculture. the food value of every food dollar is 19 cents. in other words, if you spend $1 on food at the supermarket, only 19 cents that have goes into the pocket of the farmer, and those -- and of those 19 cents, the corn value of that farmer income

is 3 cents. so let's look at some of these prices. you buy a box of cornflakes, 12.9 ounce, 5.6 cents goes to a corn for bushel an acre -- or $4 bushel a. soft drinks: $4 a bushel. the farmer gets 6.6 cents. if it is $6 a bushel, get gets 0 cents. beef: farmer gets 18 moi 2 cents at the low end of corn prices. now, i could go on with pork and chickening and turkey and eggs and milk, but the point is,

don't blame the farmer when you buy a box of cornflakes, because the farmer gets a little over a nickel or at least, if corn is higher-priced, 8.6 cents. so the farmer gets 19 cents in a global way. corn only gets 3 cents. out of $1 of food you buy. the other 81 cents of that dollar goes to labor, goss energy, goes to transportation, going to marketing, and going to packaging. the world bank in 2008 stated that biofuels were large contributor to rising food prices. and you know what? taboo two years later they release add more thorough analysis in 2010 that essentially dismissed the idea. so i want to quote from the world bank report.

quote -- "the effect of biofuels on food prices has not been as large as originally thought and that," continuing to quote, "the use of commodities by financial investors may have been partly responsible for the 2007-2008 spike." end of quote. so, for mr. pope, i hope, you'll put that in his pipe and smoke it because he's wrong about the amount of corn and the price of corn and the impact on food prices and the world bank dismisses that as well. we even have the united kingdom -- i like to say great britain instead of united kingdom -- but their department for environment food and rural affairs concluded in 2010 that -- quote -- "available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity

prices. in 2009, the congressional budget office evaluated the increasing demand for corn to produce ethanol on food prices. they estimated that -- maybe i better start with the 5.1% increase in food prices for the year 2009. now, of that 5.1%, just .5 -- i better say, one half of one percent -- between that and .8% dish better say it more accurately. we got .5% increase in food prices. only .5% and maybe up to .8% points of that five and 1/10th percent was due to the demand for ethanol. and 10% of the increased price

of food was because of ethanol. in 2007 informal economics concluded -- quote -- "it is statistically unsupported to suggest that high and or rising corn prices are the causative reason behind high and rising meat, egg, and milk products." another point raced in this article by mr. pope needs to be addressed. he said -- quote -- "over the last several years the cost of corn has gone from a base o of $2.40 a bushel, today $7.40 a bushel. while true this all needs to be put in context. over that same period of time crude oil prices went from $50 a barrel to nearly $150 a barrel. and today are over $110 a

barrel. gold prices went from $50 a -- $500 an ounce to ove over $1,500 an ounce today. mr. pope would rather pay $2.40 a bushel for corn rather tha than $7.40. i understand that. but does he know what impact that would have on agriculture if corn were only $2.40 a bushel every farmer today would be out of business because the cost of production is around $4 a bushel. oh, i can see. he wants the farmers to subsidize smithfield if he wants to continue getting corn fo for $2.40 a bushel. but a farmer can't subsidize the big corporations. perhaps mr. pope would rather have us through government subsidies so long as they allow him to buy corn below the cost of production.

and i can tell you this, a lot of people say, well, ethanol's the reason corn prices are high. it might be part of the reason. but let's suppose you didn't have any ethanol and you had $2.40 a bushel for corn. you know darn well that a lot more would be coming out of the treasury to make sure that the safety net for the family farmer was working than we give for an ethanol subsidy. now, regardless at $7.40 a bushel the corn costs in a gallon of polling is about 40 -- one pound of beef takes about 92 cents worth of corn and the -- and relative to smithfield, because they're big in pork, one pound of pork requires about 39 cents of corn. so if that $4.54 a pound for

bacon in the grocery aisle contains only 39 cents worth of corn, perhaps mr. pope should explain to all of us, and most importantly, to people that buy it, the consumer, where the other $404.15 or 91% of the retail cost is going. in addition after the steep rise in commodities in 2008, prices of corn and other commodities retreated very significantly. i don't recall seeing from people like smithfield that when corn was $7 three years ago and it went down to $3.58, i didn't see a very dramatic drop in prices at the grocery store after the corn prices dropped,

which leads me, like i've so often said on the floor of the senate, that these food processors need to scapegoat something to increase the price of the product to the retailer and the consumer. and -- and then when the price goes down, they've increased their price, but the price doesn't go down accordingly. mr. pope claims rising prices are -- corn prices are hurting his business. he said rising prices are squeezing food producers 2% to 3% earnings margins. that's his quote. the statement is rather surprising given the contradictory earning report for smithfield's food that came out march 10, 2011. smithfield reported net income for the quarter -- for the quarter of $202 million, an

increase of $165 million over the same quarter in 2010. mr. pope stated at the time of the earnings report -- quote -- "we are extremely pleased with the record performance of our company in the third-quarter. year to date our earnings have suppressed that of our record year." the reality of smithfield's record profits failed to validate the -- the rhetoric. according to the article, and here i'm quoting the article and not mr. pope, "mr. field's economists estimate corn prices would fall by $1 a bushel if ethanol blaming wasn't subsidized." if it's smithfield's economists, it must be coming directly from the company. smithfield may want to invest then in better economists.

according to an april 2011 studied issued by the center for agriculture rural development at iowa state university, only 14 cents or 8% of the increase in corn prices from 2006 to 2009 was due to ethanol subsidies. the study also found that without the ethanol subsidy corn prices would have averaged only 4% less over the same period of time. finally, the article calls into question the value of ethanol to our nation's energy supply. it states -- quote -- "the ethanol industry would supply only 4% of the nation's annual energy needs even if it used 100% of the corn crop. " this is a strawman. no one is arguing that ethanol will replace our nation's entire energy needs. using 23% of the corn crop we're displacing nearly 10% of our

nation's foreign oil dependence. domestic ethanol production ranks behind only the united states and canadian oil production in terms of domestic transportation fuel supply. it's obvious that saturday's opinion piece in "the wall street journal," was just another coordinated effort to undermine and scapegoat homegrown ethanol. and america's corn farmers to help deflect criticism from big food producers. make no mistake that smithfield's c.e.o. larry pope is concerned about only one thing, smithfield's bottom line. while companies like smithfield perpetuate a smear campaign to boost their profits, american farmers and alternative fuel producers are working hard to produce a reliable and safe

supply of food, fiber, and feed for the nation and the world. that's the end of my reaction to what he said -- mr. pope said. but i would like to just end by saying that the marketplace will take care of this. you know, 30 years ago when we started an ethanol program, we produced about 100-bushel of corn to the acre on average. today nationally i think it's about 155-bushel of corn to the acre, in iowa it's probably about 168, and the year before it was 182. people that are experts in genetics can say that we'll able to double the production of corn over the next 50 years.

that's one way that we can solve this problem. the other way is that there's a massive amount of land a lot of places on this earth and a great part of it is in west africa, south africa, parts of east africa where if people would establish law, guaranteeing property rights, title to land, there wouldn't be governmental disincentives to growing food. there wouldn't be a cheap food policy. there would be a massive production of food stuff in this world. and in the united states we're going to continue to produce more. there's going to be four million more acres of corn brown this year than last -- grown this

year than last year and there's even some odd things being done because the price of corn is $7. from "the des moines register," this headline from a northern small community of iowa, the whiten-moore golf club, the golf course is going to be plowed up and planted with corn. so there's some extreme measures being taken here to respond to the demand for food or fiber or fuel. and just remember agriculture in america has -- has the capability and the demonstrated capability to produce all. we don't grow food -- or we don't grow crops just for food.

we've always grown for food and fiber. and for the last 30 years food, fiber, and fuel. and we can continue to do it and we're going to do it successfully and the consumers of america aren't going to pay for it. in fact, if we don't continue to do that and keep the family farmer of the united states healthy and strong and ethanol's a contribution to that, then we're not going to be able to meet the needs of our society. i yield the floor. the presiding officer: the clerk will call the roll. mr. grassley: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

a senator: mr. president? the presiding officer: the senator from oregon. mr. merkley: i ask that the quorum call be vitiated. the presiding officer: without objection. mr. merkley: i ask unanimous consent that the judiciary committee be discharged from further consideration of senate resolution 151 and the senate proceed to its immediate

consideration. the presiding officer: the clerk will report. the clerk: senate resolution 151, congratulating the university of minnesota, duluth men's ice hockey team on winning their first national collegiate athletic association division one men's hockey national championship. the presiding officer: without objection, the committee is discharged and the senate will proceed to the measure. mr. merkley: mr. president, i ask unanimous consent the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table with no intervening action or debate and any statement relating to the matter be placed in the record as if read. the presiding officer: without objection. mr. merkley: mr. president, i ask unanimous consent that the senate proceed to the immediate consideration of senate resolution 164 which was introduced earlier today. the presiding officer: the clerk will report. the clerk: s. res. 164, recognizing the teachers of the united states for their contributions to the development and progress of our nation.

the presiding officer: without objection, the senate will proceed to the measure. mr. merkley: mr. president, i further ask that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table with no intervening action or debate, and that any statements relating to the measure be printed in the record at the appropriate place. the presiding officer: without objection. mr. merkley: mr. president, i ask unanimous consent that the appointment at the desk appear separately in the record as if made by the chair. the presiding officer: without objection. mr. merkley: mr. president, i understand that h.r. 1213 has been received from the house and is at the desk. the presiding officer: the clerk will read the title of the bill for the first time. the clerk: h.r. 1213, an act to repeal mandatory funding provided to states in the patient protection and affordable care act, to establish american health benefit exchanges.

mr. merkley: i would ask for its second reading and object to my own request. the presiding officer: the objection is heard. the bill will be read for the second time in the next legislative day. mr. merkley: mr. president, i ask unanimous consent that when the senate completes its business today, it adjourn until 10:00 a.m. on thursday, may 5. that following the prayer and pledge, the journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day. and that following any leader remarks, the senate proceed to a period of morning business for debate only until 5:00 p.m., with senators permitted to speak therein for up to ten minutes each, with the first hour equally divided and controlled between the two leaders or their designees, with the republicans controlling the first 30 minutes and the majority controlling the next 30 minutes. the presiding officer: without objection. mr. merkley: mr. president, the next roll call vote is expected on monday, may 9, at 5:30 p.m. that vote will be in relation to

a nomination. mr. president, if there is no further business to come before the senate, i ask that it adjourn under the previous order. the presiding officer: the senate stands adjourned until 10:00 a.m. on thursday, may 5.

of a conversation about the life and work

now it conversation about the national debt ceiling and budget policy. from today's washington journal, this is just under 45 minutes. >> host: we are back with congressman stryker republican first term in congressting represents the fifth district oc arizona so we want to talk abou, spending deficits, part of that is this whole vote on whether to to ease the debt ceiling and

that is debt ceiling. that is starting to resurface again. i want to show the viewers what tech -- treasury secretary tim geithner had to say about it recently. >> two years away from a cataclysmic and enjoy a crisis, crime based runs stronger than what crossed the great depression, damage to our credit the melody, losses in the u.s.'s ability to manage its affairs prudently, just started to improve that. we have moved aggressively to recapitalize our financial system. we have got back most of our investments there. this will be historic reject as the most effective, least cost economic program in history.

the idea that having come out of that with unemployment still at 9%, huge amount of trauma still out there, the idea that washington would court that kind of risk right now, inconceivable. people were abdicated up there. they would say that there would be leverage in there, but that would be wrong. if they get too close, they would own responsibility for that this calculation. host: where are you on whether or not to increase the debt ceiling? guest: right now, i am a no without some pretty substantial changes. you heard what he talked about. he was first talking about the devastation that happened at the end of 2008, beginning of 2009, and was equating that with the

debt ceiling discretion. first off, that is a bit disingenuous. but there is more to it. you cannot use this harem fire argument of the world is going to come to an end, unless you get this cleaned debt ceiling raised. i am having discussions with folks who specialize in fixed income. i am blessed to sit on the financial-services committee. the comment is it is like threading a needle while jogging. if we just raise the debt ceiling, many say that we will punish u.s. sovereign debt because we do not think you are serious about dealing with the debt. on the flip side, if we can put together a package that says, here are a number of traders, if the debt continues to grow at

this in same rate, these traders kick in to bend the spending kerf. some folks want to balance the budget amendment. at least that tells the financial markets that we are serious. in multiple conversations i have had with market makers, they say, if you want to keep interest rates stable, it is not enough to raise the debt ceiling. you need to do what is necessary to deal with the explosion of u.s. sovereign debt. will we be able to put together a package that makes that happen? host: what if republicans and democrats are unable to reach a deal to include onto this debt ceiling vote? are you still know? guest: yes, and here is some of the logic that seemed to be slipping through. we have a 10-to-one dead coverage ratio.

our projection is $200 billion in interest on the debt. we've taken a bit over $2 trillion a year. we have plenty of cash flow to cover our interest payments and other u.s. priorities. within that is the discussion saying, okay, today we have to borrow money to keep the government going. but to say that to bondholders -- i used to be the treasurer of maricopa county, the third or fourth most populous county in the country. we have billions of dollars in bills, agencies. we used those dollars to hold, pay school teachers, sheriff's deputies. the fact of the matter is, we would want that interest to keep going because you cannot have

that type of default, but we have plenty of cash flow. that is one of the disingenuous thing that i hear in the argument. once you hit the debt ceiling, everything falls apart, and that is not true. host: your experience means that you will be able to explain this better to viewers. guest: that is the hope. host: here is a letter from secretary vendor to the speaker of the house on monday. he writes about a new date, august 2, instead of july 18. they had been able to reshuffle some things at the treasury. guest: wheat believe the tax revenues there were stated. host: he says --

are you concerned about this? guest: that is the kind of debt i was speaking of. you were taking our investment capital and putting them into t- bills. what you are seeing are some of the mechanical steps. fairly logical but the political game is coming. regimen of the theater and rhetoric. how do you get congress, how do you get a washington, d.c. to

look the american people in the eye and tell them the truth of how bad the financial situation is? it is one of my great frustrations. i am a freshman. i have only been here 125 days. i have been stunned at our friends who will stand in front of the camera, unlike what i am doing now, and make up numbers. anyone watching, i would encourage, we have been putting together fairly detailed set of slides. every week we had a few others on the website, trying to focus on the real math. at some point, this needs to be less about party. it is about math now. if you do not raise the debt

ceiling, all of these things will happen. first of all, that is not true. if we do not convince the markets that we are absolutely serious on bending the dead curve, i believe we will be punished. host: how big of a decision is this for you? guest: i fixate on it. i worry about the numbers, the math. if you spend some time looking at that curve, now that we have baby boomers -- someone is turning 65 every eight seconds. washington did not do their moral obligation of setting aside those resources. we have known these people would be turning 65 for about 65 years. i remember being in my statistics class and we were building resources -- models of

how much resources need to be set aside. here we are and it did not happen. host: during the process, have you ever thought, i am voting yes? guest: i have thought, what package would get me to say yes? there are a lot of things that could get me there. host: this includes balanced budget amendment? guest: there are some. there are other that would do as much damage as good. systemically, could you put in a series of mechanical budget reforms, agreement that would pass the house and senate, and with the president's signature that said, if we hit this level of debt, these automatic spending changes kick in? somehow coming to an agreement that we are taking this seriously. host: sell my is a republican in calhoun, georgia.

go ahead. caller: thank you for taking my call. i know that we are in a bad situation with the economy and everything, but do you think -- is there any hope for us out here with unemployment? we are having a tough time. could you ask him if they could please do something for the 99ers who still cannot find a job? i am a baby boomer but am still looking for work, but cannot find it. guest: you are hitting the single biggest issue that congress should be dealing with. with this huge debt overhang, we are doing damage to the economic growth of this country. if you are a business, if you are taking family savings and you are investing, would you do

it in this environment? particularly, this environment where you are constantly worried, myhow do we creek thaty for her family, her community? this congress, and particularly the white house, seems to be more engaged in two editions of if we tax this group more, that solves the problem. well, it does not. and i am hoping we can spend a moment on the folklore about the budget numbers i see around here. host: house leadership, are they doing enough to tackle unemployment? guest: there is an absolute fixation on dealing with regulatory items that are slowing growth down. dealing with the budget issues that i believe are suppressing

economic growth. there is not a meeting that i have with the freshman of leaders of membership for jobs, job growth, economic growth isn't the first, second, or third priority. host: sarah and maryland is next. caller: i have one comment and two questions. i think maybe the plan is to keep on printing money, because timothy geithner and fund for baben bernanke o we say they wat a strong dollar, but the action is opposite they're taking, which is printing more money. mr. byrd yankee is one of the bernanke rful -- mr. been an as one of the most powerful jobs in the world. he was repeatedly interviewed

in 2006 where independent economists had talked about the debt bubble, the credit expansion, the crisis that is , and every timehos he was asked about that, he said there is no problem. and even if the housing market would dip a little bit, it is something they could address easily. here is my first question, why is somebody who did not even see this crisis coming when it was pointed out to him be reappointed and reconfirmed by the president and congress of the united states? my second question has to do with -- host: who are you referring to? renominated? ernanke's termrdick was up and reappointed to be

head of the butter reserves, even though he had failed miserably. maybe that is why i am saying is job is to keep printing money. host: we have a tweet here -- what do you think about this concept? a couplet's touch on of her comments. maybe because i am from the phoenix area, wonderful area, very well educated. but even when i was county treasurer we were very nervous with the growth of mortgage debt, so we would not even put the county tax dollars into mortgage-backed securities. i think a lot of the economists out there had no concept of what would happen if we moved from a

realistic slowdown to literally collapsing in the mortgage- backed markets and the cascading effect of that would have. part of the argument and discussion here is look at interest rates right now. they are artificially low, and they are that because the federal reserve is buying huge amounts of treasurys. what are some of the numbers? 85% of the u.s. have learned that that is being sold is actually being purchased by the federal reserve. you would die right now have no idea what the real interest rates -- you and i have no idea right now what the real interest rates would be because we have this intervention over here. this circulates back into the discussion about the debt limit. if we do not convince the world market that we're taking seriously, what happens when qe2 starts to wind out of the market? what happens when japan, which

holds 20% of the foreign debt, starts to pay for their own infrastructure. do they start to liquidate their u.s. sovereign debt? what happens if china continues to take more of the u.s. dollar holdings and put some into commodities instead of bombs? -- bonds? we need to convince everyone else around us that we have acted other and keep interest rates low. we are ready project today, in 2011 we expect to spend $206 billion in interest. 2016, and that is four budget cycles a way, we expect to pay 562 billion justin interest. think of that. and for five years we're starting to pay as much on interest as we are on defense. the scale of this borders on

almost terrifying. i see so many of the talking heads talk around it because it is uncomfortable. this may sound to mean, but i am often concerned because many of the members of the political class care more about being reelected than doing the tough thing by looking the american people in the eye and telling them the truth. host: does that mean you would be in favor of tax increases? otherwise observers say the map does not add up. -- math does not add up. guest: actually a lot of the discussion about tax increases is partly disingenuous. these are the slides i am very proud of, because i am finding a way to make them digestible. in march we borrowed 6.1 billion

every single day. we borrowed 6.1 billion every single day in march. that particular slide is the tax extensions that were done last december's. this president and the previous congress extended them. if we got rid of those tax expenditures, not just for the rich, but for everyone, for every class, i have seen people around this place talk and say if we just did not have the tax cuts we would be fine. in march we borrow 6.1 billion every single day. without those tax cuts, assuming you do not slow down the economy, but every time comes in as revenue, 92 billion per day. that by issue about 2.5 minutes of borrowing. the same thing.

when you hear some of these folks discuss about the subsidies for fossil fuels, the depletion allowances and the sorts of tax cuts, which is one of the other pages here, you start to realize it is political theater. it is talking points, because the math is nowhere near what many of our friends say it is. year, allyou in and yea those things we count as subsidies, it is 2.77 per year. the entire fossil fuel subsidy does not even buy you half a day of borrowing. here is where the scale of

disingenuous is. we need to tax the rich more. ok, you just bought yourself half a day. if we did not let the big oil have these things -- you can see on the numbers it doesn't even by you half a day of borrowing. -- buy you even half a day of borrowing. it is about spending. but talking about spending is so much more painful. continue with the conversation. steve is a democrat in indiana. thank you for waiting. go ahead. caller: in my book you are just full of lies and stuff. number one, if you would get people back to work, you would have tax money. if you tax the rich back to where they were suppose to be,

we would have more money. guest: let's talk about this. caller: no, it is my turn to talk. you people do not care about the middle-class. you do not care at all about the middle class. all you care about is sending more money to all these rich people out there. did you do not care one bit about the middle class. all you would like to do is -- host: i think we got your point there. let's get a response. guest: what you're hearing is a beautiful case of the political theater. it has been setting up times that the republicans and the tax policy are for the rich, but we can see on the actual math that is not true. how you reach out to our friends like steve who is a

democrat and move something that is almost like a religious belief to saying let's all pretend you are not a democrat, i am not a republican, which just say we are mathematicians. say we arest mathematicians. when you realize it does not theou an hour at current rate of borrowing, maybe you can have a conversation. he did hit the number-one obligation we need to do, backing off the regulatory a obligations. of these too some prett achieve pretty good economic

growth. a lot of the discussion right now, and this is one of the happy moments in the discussion, because i see independents willing to discuss things. saying we need to go to a much broader base. we need to lower the marginal rate, but we also need to do with the lobbyist-driven special exemptions. when you do that, there will be a lot of folks who have site load out special tax breaks or special subsidies. a lot of those need to go away. the reality, in the ryan budget, a lot of the things you and i would have defined as corporate welfare are gone. i am hoping as we start to drill down into the details, the american people understand there really is about trying to create economic growth, but they need to understand the folklore that we keep getting.

just as last phone call, if we tax the rich -- well, it is a drop in the bucket. host: go ahead, catherine. caller: i am so glad to see you on the air. the united states has to understand we do not have a budget problem, we have a spending problem. we need to get our hands around this, because if we do not se solve our problems, than the imf will come and solve the problem. the other nations are doing everything like taking people's 401k's and using it to pay down the budget. if americans want that to happen, then go ahead. there are lots of other scary things going on in this country. you have boeing in south carolina cannot open the plants

because congress is telling businesses where you can and cannot open businesses. ost: let's hear from loretta first. caller: good morning. i am so florida about what i am hearing. -- floored by what i am hearing. if you were representing me, after the show i would be out collecting signatures. i cannot believe you would come on that air and say we have a spending problem, not a revenue problem, and tax cuts for the rich is just half a day. what is health care? what is education? is that five minutes of the budget? you have no problem cutting that. guest: actually, if you would

hand me back the slide -- loretta, i love your accent. you have a couple bits of reality we have to deal with. one of the interesting things you are hearing in the phone calls, and you could start to hear the divide between republicans and democrats across tax thentry is attacked th rich. you just saw less than an hour a borrowing per day. what you tend to do with the other 23 hours of borrowing that happens every day? at some point it does become about the map. -- about the math. here is where we are in 2011. what you see in the blue and purple is mandatory spending. that is the drivers of the debt.

this red over here, all of this is defense, all discretionary. when you fold the page in move and see 2016, look at how that has grown. and just basically four or five budget years you move from the previous life, which is 63% of the spending is mandatory. now you're into the mid-'70s. we have to deal with this demographic reality. baby boomers turn 65 every eight seconds. honeste not going to be about it -- loretta, i know she would be out recalling me, but

the about that, she would be are we calling because i told her the truth about the math. there you are seeing the classic problem in washington. washington has not told the truth to the american people, and when someone gets in front of a camera and starts talking about the numbers and the reality, the first reaction is i am greg to punish you politically. host: you have read republican ryan's budget. guest: correct. host: some others have said this about the budget -- saxby is absolutely correct. there is a whole bunch of discussion in the paul ryan budget.

how do you rebuild the tax system? how do you in the future deal with the explosion in the entitlement cost? are there ways to protect something like medicare, so that it exists in continues. this is not a game when standard and poor's put this on credit watch. when a private rating agency said yesterday if they were doing straight outscoring, you with sovereign debt would be a c in the reading. we need our brothers and sisters out there to be willing to pull out a calculator, remove the partisan labels, and deal with the reality of the math. host: harold, a republican in harrisonburg, virginia. caller: i hate to say this, but to get back to the birth certificate, the other one is

another purchase a ticket he has. we want to save 2.9 trillion dollars. host: i am going to get a response from him. guest: this is one of the things that drives me absolutely crazy. this is a good example of folks calling on the conservative side avoid dealing with the math. if we could have a discussion about the birth certificate or these sorts of things, you are avoiding the painful conversation of how do we save the country? when we have the secretary of state come in general, experts around the world saying the single greatest threat to the united states is our deatbt. let's talk about the debt. i have one side who says if we tax the rich. it does not really give you anything, but it may make you feel better.

the other side is saying the president is not legitimate because of this. come on, people. the single greatest issue is right in front of you, but it is tough to deal with and digest. i know members were there are 12 zeros on it is hard. -- numbers where there are 12 zeros on it is hard. if we did not have the tax extension that happened last december, it would have bought 2.4 minutes, assuming all of it came in revenues. now what do you intend to do with the other 1435 minutes in the day? it is time to step up and deal with this reality. i hear this all the time. we do town halls. we go through 66 slides.

by the end of it you are either medically depressed or you understand what congress has to what it needs tond do do. caller: we could easily eliminate the debt if we just got rid of tax credits and deductions. our military is taking a tough ent to wars. some two war guest: these are both very interesting. first off, if you are speaking of the tarp bailout, most of that has already been paid back. if you had to guess, and you went through the entire tax system and all tax credits would be removed -- caller: all tax credits and

deductions. guest: how much revenue do you think that would be, assuming it all comes in? caller: if i got a college student credit that would be $200 billion. guest: you raising $200 billion in new revenue. here is the problem. in march we borrowed 6.1 billion every single day. $200 billion,as it does not get you anywhere close. " even if we did an annualized average. -- even if we did an annualized average, you have only covered a couple of months with that come into probably dramatically slow down the u.s. economy. i appreciate you thinking it through mathematically.

it is real important to understand the scale. caller: i am still there. they pay taxes that 30 percent side, that would be a massive chunk of change. i do not think it is necessarily tax rates that created permanent job growth. i think it is the cold war ending in creating new markets for us. both sides talking tax rates does not really add up. guest: you have to get branded credit, he was trying to come up was something creative, and they did not my calculator on that one, but let's say his theory is $200 billion, if you are running 1.5 trillion in the year, it did not come close to dealing with the scale that we have to deal with. this is one of my favorite slides we have been dealing

with. this starts to deal with the tax folklore. this is marginal tax rates. this is gdp in revenues. it is a fascinating thing. this is important for even the last discussion. when we had very high marginal tax rates our revenues are about 18.2% of gdp. when we had very low marginal tax rates our revenue is about 18.2% of gdp. the discussion is not about raising marginal tax rates. it's about let's adopt tax rates that grow gdp. we can demonstrate this is a normalizing affected the economy. i do not know if it is because people change the way they are compensated. when we have had very low, the work more hours, but this is

normalizing affect that comes in around 18.2% of gdp yo. we have lots of data points on this. host: let me return to the callers. guest: i appreciate the comment, but that does not reach down into the math. here is one of my favorite facts. as of last week, we did a checking in our office, and the total cost of libya, afghanistan, iraq, for the entire decade we believe is about 1.2 trillion. ok, if we are at 4.3 trillion -- 14.3 trillion in total debt, 1.2 from the cost of the war's over 10 years, that is 8.3% of the

debt. that is assuming every penny of the military action was far road. 8.3% of the total debt. have had multiple town halls were a hand goes up and said if we just did not have the wars, we would balance the budget year did you would deal with 8.3% of the debt. that is a challenge with the folklore. they have been told this with pi by their politicians. i have been on television and the person i am doing it with says if we just did not have the wars, we would not have the debt. that is 8%. how can that be the solution? then they walked off the set. there are millions of people around the country to just sort of congress woman say that, but it is not based on reality. host: robert in california. go ahead. caller: he makes a lot of sense,

find outntil you where they are making their ofey from it makes a lot sense. who put them in office is what you need to know first before you start to believe any of these guys. guest: in my case a big portion came from my wife and i. we put a big portion of our own money into this race. this was one of those occasions where it was a passion. we want to save this country. if you look also at my donations -- it is a fair comment. lots of small donations, i am very proud of that. maybe that is just true in the entire political system, but go on something like

opensecrets.org, and where the resources from the election have all come from are on there. to the friends in california, let's say i paid for every dime of my election or a raise every dime in his great state of california, it does not make the math not true. there seems to be this constant attempt in the political theater to do anything except to bear down and deal with the scale of the debt in how you unwind it. host: 1 last phone call in florida. sharon, republican. caller: good morning. i would love to find out from him, if he keeps talking about spending is a problem, not tax cuts for the rich. given the rich tax cuts, isn't that spending? don't we have to pay for it?

host: let's get an answer, because we're running out of time. guest: two points. let's say you take certain, whether it be business or individual tax rates, and you raise taxes. will the consumption in the economy, investment, economic growth that they generate slow down? we actually have some really interesting data points over the years were certain types of taxes have been erased, and revenues from those come in less. a good example is a luxury tax in the early 1990's were you finally add up the cost from the job destruction, it did not make a dime and created a lot of havoc out thereeven then, if we

what if we took those tax breaks that happened, tax extenders' that happened in december, and got rid of them for everyone, it only buys you 2.4 minutes of borrowing. that means the entire discussion about taxing the rich ends up speaks about relations with pakistan after u.s. forces killed osama bin laden. he also touches on the west bank power-sharing agreement in hamas and the continuing conflict in libya. this is just under 20 minutes. >> good afternoon.

it must be for the time or something. wait, that's the same time. very quickly at the top. i do want to speak quickly at the top to the situation in misrata. the united states condemns the gadhafi regime's continued aboard what checks of the libyan people in violation of the united nations security council resolution 1973 which calls for a stop to the attacks on civilians and immediate ceasefire. in particular, we urge the regime to cease hostile to the cost of these in misrata port to allow the internal organization for migration and other organizations to much needed relief and evacuation services to civilians caught up in the libyan conflict. this and what's taking all

measures to facilitate international efforts to evacuate third country nationals and wounded libyans from the port city of speed. the international organization for the migration reports that migrations to become migrants from africa and asia remain stranded in misrata, including women and children. in addition, many devotee wounded a civilian currently in misrata's overwhelmed hospitals are in need of urgent medical evaluation. the international organization for migration efforts to deliver relief supplies and to evacuate additional migrants and wounded have been delayed by shelling as well as a threat of antishipping lines leading to the part. the u.s. is making available in addition to 6.5 million for the international organization for migration operations in response to the crisis in libya including evacuation from misrata. and this brings to 53 cui 5 million the total to the u.s. government is providing free emergency assistance. just to remind and before taking questions tomorrow we will have the assistant secretary kurt campbell and the department

treasury senior cord meter and executive secretary for china and strategic economic dialogue david brief the press before you. three kunkel 45 p.m. and that will be on next week's strategic economic dialogue with china. and i will take your questions. >> what did you make of the pakistani statement last evening that criticized the unilateral action by the u.s.? >> well, i am aware of the statement. we've been quite clear why we took the actions we undertook to carry out the operation against bin laden. and subsequent to that operation, the first call the president made was to present president zardari. and we've been quite clear moving forward why we withheld information and why operational security even within the u.s. government was paramount to the success of the operation. >> with the u.s. consider similar such operations in the future, despite the pakistani government's clear displeasure with this style of procedure?

>> welcome again, i think it's important also to stress that we've had very successful counterterrorism operation with pakistan in the years preceding this operation. the secretaries bouck 22 -- secretary spoke to it, the president spoke to it and it also highlighted the fact that the counterterrorism cooperation helped insubstantial ways to lead us to the defense of sunday night. it said, we recognize that al qaeda hasn't abandoned its intent to attack the united states. this is an ongoing armed conflict, and we believe that the united states has authority under international law to use force to defend itself when necessary. >> how you then kind of assuaged the pakistani authorities about this? because it's something you're

saying in this necessary, but at the same time you have a key partner that's quite miffed. how do you deal with that? >> will again, brad, i think it's important that this was a very secret operation was undertaken, that was the target of opportunity clearly, and operational security as an element to this mission was paramount. and so, the president made the decision to carry out the operation, and it was successful. we immediately notified the pakistanis of the operation and its success and we pledged our commitment to work with them on counterterrorism cooperation going forward. i think we will continue to build that cooperation, and we will continue to build these relationships. i think it's important to recognize that for both of the united states and pakistan, this kind of cooperation is extremely beneficial. no one suffers more under the scourge of terrorism and pakistan.

where thousands have died as a result of terrorist acts. so it's important to recognize, looking in the broad context here, this kind of counterterrorism cooperation is important to -- indy 500 come to the united states but also pakistan. i will take the lead to ask just one more. are you worried about the capacity from this event for corroboration to diminish, whether it's from the decree state from the u.s. congress, the pakistani government in a nod to some sort of popular anchor in pakistan limiting its cooperation with you? are you worried about that as a tangible consequence of this event? >> look, i feel we recognize that there were concerns raised and legitimate concerns by congress about in london, where he was discovered. we've been quite clear in our conversation with pakistan but we want to officer terrorism cooperation to continue. and again, that was in the

president's remarks immediately following this operation on sunday night, down to mark grossman -- who's been in pakistan for the last several days. he spat with president zardari, he's met with prime minister gillani as well as general kayani and in each of those meetings he's made clear that we want this cooperation to continue, though we believe that it is beneficial to both our countries. >> the white house just announced that they will not release a death picture of osama bin laden, and it's been

reported that the security also was against the release of a photograph. was the lead to what was her specific argument against releasing a photograph? >> i've seen those reports and i would just say -- i would refer you to the white house on the regarding the decision not to release a total and on the secretary's role i would just say that she conveyed the state department's views. this was an interagency discussion and as john brennan and others said it was a deliberative process towards making this decision, and she conveyed the state department's views but i don't want to get into the substance of those views. >> did she think the rosslyn to be a detriment into future relations with pakistan and other countries that may still be involved in looking for members of al qaeda and terrorism? >> will again, i think my colleagues of the white house have spoken and addressed some of these concerns are not to release, possible release of a photo. the secretary was part of this

discussion, conveyed the state department's views and i will leave it there. >> and a follow-up. >> the photograph was released the other day, the secretary obviously in the situation room, has she specifically announced what she was looking at, what she was doing that the time? was there any discussion of her feelings at that point? >> not that i'm aware of, no. i think everyone knows in the room or john brennan spoke to the tension in the room and it was a very refitting obviously moment. but beyond that -- >> she didn't say what that was? >> not that i'm aware of it. nope. >> the people who are being held off pakistan who were picked up at the compound, some children and some other people -- is the united states going to be given access to them, to talk with them, getting any information? >> jill, it's a fair question. i have to really refer you to the law enforcement agencies to find out if we have requested

access or to the government of pakistan for information about who the individuals are the might be holding. i'm not aware that we have requested access to them. >> another question. when the secretary said in the early on i think was monday when she said that information that the u.s. got, or i should say the cooperation between the united states and pakistan have led to information that led to osama bin laden and the compound. as i remember back in march, the country stopped cooperating, not least pakistan decided to stop cooperating on a routine issues because they were angry over the drone is about the cia agent. so what -- do you have any idea when this information might have happened as part of this cooperation? >> will come again, -- matt talked about this a little bit or asked about this yesterday. and i certainly can't get into the substance of these kinds of intelligence discussions and intelligence sharing, but we've

talked all the time about the sort of building this mosaic over many years that led to confirming or getting a good idea that this is where bin laden was, and then of course carrying out the operation. i think certainly our counterterrorism cooperation with pakistan helped build that mosaic if you will. >> but right now what's the situation? is it still in effect that there is no routine cooperation but you would cooperate on major issues? >> i'm actually not -- i'm not sure what the status is in terms of routine cooperation. i believe that we continue to interact and to cooperate with pakistan's intelligence agencies. go ahead. >> has the secretary had any conversations today with anyone in pakistan or any -- >> no, no calls in pakistan. >> no calls. >> and she's of course on the airplane now, but no. >> right. she's had no calls to anybody? >> she has talked to the norwegian foreign minister as

well as the canadian foreign minister. that would be foreign minister come cannon and foreign minister store. and i don't have to read out of those, so, sorry. >> yes, sir, david. >> can you change the subject? >> sure triet >> what's your reaction out of the palestinian reconciliation? and there are reports that in her call to abbas, the secretary didn't raise any objection to a reconciliation. >> welcome to the first question, look, we understand that there are -- the assigned -- dave reach out to this reconciliation agreement. it's important now that the palestinians ensure implementation of the agreement in a way that advances the prospects of peace rather than underlines them. and i think that we will wait to see as i said yesterday, with the details of this agreement actually mean. we don't know what this means

right now in practical terms. >> is it true that in her call with abbas, she didn't express any reservation about hamas joining? >> welcome again, i don't want to get into the substance of her private conversations, but we've been clear all along with principles to which we think any hamas element in the government would have to adhere to, and that is, you know, recognition of the state of israel, a commitment to nonviolence, and the acceptance of the previous agreements and obligations between the parties including the road map. we have been clear about those all along. if hamas wants to play a meaningful role in the political process, and indeed in the peace process, the need to adhere to these principles, these core principles. >> now that the deal was done,

any thought about continuing aid to the -- >> will again, david, you're right. i mean, this deal has been declared or agreed upon, but again, we will -- we will wait and see what this looks like in a real and practical terms. we still don't know that. we still don't know what if any changes there will be at the governmental level. >> the secretary said last month that the president is going to give a speech, a major speech -- on the peace process within weeks, which is supposed to be last week may be. did the president change his mind on -- >> he's been a little busy the last weekend at least. i'm not aware there's been a postponement. i would really refer you to the white house for the details on that. >> on the peace deal, our -- has anyone from the state department and in touch with palestinian officials? are there plans to go to mitchell for the region? and if hamas doesn't participate in the government, if it is just a government of technocrats, will the u.s. push the peace

process? >> will again it's important as you said to see what this indeed means in practical terms, and what hamas is' roll will be and whether the , again, would agree to those core principles before we make any judgments were decisions. in terms of mitchell, i believe he is -- i don't believe he's planning to travel to the region. he remains in contact with both parties talking about the middle east peace process and how to get it going. >> on afghanistan, maybe i was asleep at the wheel, but the last time i listened to what the secretary was saying about what the taliban had to do, there was the mantra of the three -- accept the constitution -- >> the asia society speech when she talked about -- >> yeah. but then in one thing i was reading she mentioned she had actually changed that to say that it doesn't have to miss a

surly be an outcome of negotiations. in other words, the three requirements were no longer the requirements. that he could have this interim thing which is a negotiation which would lead to those. and i'm asking this because with all of the osama bin laden stuff, and leading into the -- open the taliban will now come over, this could be an important plant. so what's the latest statement of the policy? what do the taliban have to do in order to be reconciled? >> welcome agile, i don't think there was any -- i think she was quite clear in her speech at the asia society that talked-about reconciliation come and that this be an afghan lead process, and again, that is the -- she was clear about with the taliban -- whatever you want to call them -- the requirement, their readiness -- rett once were. and those were a renunciation of violence and ties to al qaeda come and adherence to the afghan constitution, particularly in regards to the women,