discussions harder because they're hard enough and we don't want to do something that would reduce the prospect that we get people to come together on a sensible tax form and i think we'll have a chance to move this forward and we'll try to do that. >> your hope was to put out your options your white paper in may and june and now you're saying there needs to be some space and that would occur after the debt ceiling negotiations? >> again, we want to make sure we're getting these fiscal discussions in a good place. get those done in that process at least advance the next stage and then we'll have a chance to figure out what's a good strategy for getting corporate tax reform remembering. >> and now you're thinking about like paul? >> there's no reason why we have to wait that long. we just have to get this fiscal stuff done and then we'll try to start this process. you know in washington the challenge in washington that shapes everything we do is -- is how to design a strategy that the maximize you get legislation on terms that make sense.

so we have to choose the timing and the strategy based on what meets that basic test. >> so it sounds like late summer/fall, something like that? >> yeah. [laughter] >> pulling back the camera from corporate -- you said yes. [laughter] >> pulling back the camera from corporate taxes, what is the single tax cut that if you could snap your fingers would have the best impact on economic recovery? >> well, i think we did two very good things in december in the lame duck session. >> i'm sorry. go ahead. >> we give businesses for a limited period 100% expensing for investments in capital equipment. good catalytic effect on behavior and pretty good high return bang for the buck and we gave americans a very substantial temporary payroll cut and it's a temporary

incentive to help us but i think the -- now as you think about the economy going forward, you have to think of more permanent reforms that people can make investments over the long term against, know they're going to be in place. remember we live year to year now with huge uncertainty about what particular tax regime is going to be for different businesses, different tax choices and that makes no sense when you're trying to run a serious economy and a serious country under that tax regime. and we should be focusing on long-term investments that, you know, the test we try to meet is, where are markets likely to underfinance on their own? you know, where the returns don't get captured fully by the innovator and what are the kinds of changes that have big long-term bang of the buck for investment. those are the two tests we should apply and realistically we should be looking at permanent changes that people can plan for the long term. >> mr. secretary, are you going to be the first treasury

secretary in the u.s. history to preside over america falling on its long-term debts? >> no. congress is going to act to make sure we're paying our bills, avoid adult as they always have and they recognize the need to do. and we are going to put in place, i believe, a long-term comprehensive bipartisan fiscal reform plan that begins this process of getting us back to living in our means. i think we have a very good chance of doing that. and on the basis of what i've seen in these associations, i think we're -- you're seeing a fair amount of pragmatism, openness and recognition that's the right thing to do and we have to do that. >> this pragmatism is on the part of both parties? >> yeah, i think so. i think if you listen carefully -- you know, washington is a difficult place to read. people say the most unbelievable things. you have to ignore a fair amount of that. and look at what people are doing and what they're open to

doing and i think you're seeing more flexibility. i don't want to put anybody in a difficult position because, of course, ultimately nothing is going to happen unless people are overall comfortable with the basic balance but i think it's a right thing to do. i think right now, if you think about it, you know, we got a lot of challenges but all those challenges, unemployment, bringing better investment opportunities in the united states and making sure we have room to invest in like education, not just meeting our national security needs -- all those things depend on locking in a fiscal framework, fiscal reforms that make people understand that. and if you don't do then you lead people with more uncertainty and that will make the -- >> you've been clear about the risk in not acting on the debt ceiling. do you think members of congress get that? >> i think the leadership absolutely understands -- i think the vast bulk of congress understands it completely. i think there's some people who are pretending not to understand

it or think there's leverage for them in threatening default. i don't understand it as a negotiating position. think about it, again i read to the 14th amendment. >> we'll stipulate to the 14th amendment. it's paper clipped. >> the validity of the united states authorized by law including debts incurred for the payments of pension and bounties for services in suppressing insurrection, rebellion, it's the important thing. shall not be questioned. as a negotiating strategy you say you're going to go say, if you don't do things my way, i'm going to force the united states to default, not pay the legacy of bills accumulated by my predecessors of congress. it's not credible and it's not going to happen and again, the leadership understand that they have to do this. they also understand, as we do, that we want to take advantage

of this moment to try to people to do things they may not otherwise may have been comfortable in doing. and put this us on a long-term path that's more sustainable. >> as republicans next week have scheduled a test vote on the debt ceiling's designed to fail, to make a point, are you worried about market reaction to that or what will market reaction to that be? >> you know, this is a funny place, washington. think about this. i think if i understand this, i don't think i do. house republicans introduce a bill that they say they're going to oppose, ask their members to vote against and then go tell the investors of the world to pay no attention. so it is a strange place, washington. [laughter] >> you did get it right? >> did i? i really didn't understand it. let's do the positive side of it. i think the leaders in congress are trying to figure out a way to get their members to understand what's necessary. and they're trying to do a range

of things to maximize the chance to get the votes for doing this and, you know, remember this is going to require republican votes and it's going to require some democratic votes, too. and the house, of course, the majority party is going to carry the burden of getting this done but they know they need democrats for it so that's probably why, i think, you can be reasonably optimistic you can get something done on the budget front on reasonable terms because you can't do anything with just one party now. you need to do it together and that will force, i think, a bit more realism and balance into the overall package. >> you're right they're telling the markets to pay no attention, just kidding. will the markets listen? >> i think they will. you know, if you look at financial markets now, we pay very low interest rates to borrow short-term/long-term now. and some people misread that as -- as a lack of -- that we don't have a problem with

deficit. but it's really a reflection of confidence that we will ultimately do the right thing. that washington will ultimately act. and act to fix this problem much less make sure we pay our bills. so i think you see a lot of confidence in markets about -- on the ultimate capacity of this political system that we're testing, we're going to test to do this. if you take it too long, you might see that confidence erode. and you don't want to take it too long. again, you don't want think about a way. you don't want to -- you don't want to force people to start to prepare for the possibility that people will must calculate in washington. that would be terribly irresponsible. that's a phrase, i think, if you listen carefully you see the leadership saying, we're not going to take it too long. we're not going to take it to the edge. we recognize we can't play around with this. >> now, wall street, what about international markets?

have you reached out to the japanese, chinese and tell them what's up? >> you know, they spent a lot of time to understand what's going on in this country and they understand what's theater and reality. >> and you think this is theater. >> oh, yeah it's theater. but beneath the theater you're seeing people work together. you know, i went to dinner last night that pete peterson who's the iconic fiscal hawk is having a summit today in washington on the fiscal problems and one of the major combatants in previous fiscal war said to me last night, you know, what changed in terms of prospects for a good outcome on the fiscal side was when if you listened carefully you saw the republican leadership, conservative republican leadership and the president of the united states alongside bipartisan fiscal commissions say we need to do $4 trillion in deficit reduction. and to embrace a path to the

deficit largely the same. to bring the deficits down over the next to three to five years where the overall debt burden starts to shrink and when you see that broad of consensus in the american political spectrum about what has to be done and the debate is only about how to do it, about the composition, what's the mix of things you're going to do to achieve that, then that has changed expectations about the probability of a outcome that's good. and i think that's partly what -- i think smart people look at that. they look back, for example -- you look back to '96, '97 and when president clinton at that point joined with a bunch of republicans saying we're going to balance the budget and how are we going to do that, that's what shifted the balance. and people who are sophisticated outside of the united states they look at us today and they know washington is hard to read and they've got politics in their country and they will look through that and give us is a chance to prove again that this political system can do it.

>> mr. secretary, we agree that the -- the more important and the more interesting conversation are these long-term challenges that you talked about. what do you think now is the -- are the prospects for a sizeable deal on that this year? >> i think they are quite good because again you have people to $4 trillion of deficit reduction and about bringing the deficits down to a level where the debts fall in share of the economy and a recognition that you need to do as much as you can now in the form of a substantial down payment that locks in specific reforms, savings towards that objective. you don't need to solve it all at once right now. but you have to go as far as you can. and so that's why i think you got a realistic prospect for doing something useful. >> they say that payment might look like something 1 trillion of the 4 trillion over 10 years? >> you know, the vice president said that yesterday as did the

majority leader in the house. and so, of course, i think that's a realistic prospect. but remember, it's the shape of it that matters a lot. 'cause again, the -- why do we care about this stuff? we care about this stuff because we want to make growth in the united states, job growth, investment growth stronger in the future so the composition of the balance with the elderly and the young and how you can balance education against the obvious reality that the government is going to have to demonstrate it can save money, two things, do more with less. you know, how do you balance the knee for better investments against the need to -- how do you make it fair? how do you make sure that people feel like they're bearing a share part of the burden for bringing it down back to earth. so how you do it is important in terms of the credibility of the exercises. if they try to solve this -- if people up there try to solve

this by assuming away the problem, by using growth assumptions that create the illusion that we're going to solve it, by assuming there will be political incursion in the future then the markets will say it's not real. >> when you talk about political courage in the future you're talking about specific targets? >> we ought to have a targets and a debt cap that forces the debt down over time with an enforcement mechanism over time makes that happen. but as substantial a down payment now so that people can see and feel the reforms are going to happen. >> now, which would the real debt catastrophe come? i heard a panel on this very stage where the estimates were from 9 months to five years. like when -- if we didn't act, when will we start to feel it? >> there's no -- you can't know the answer to that question again. that's a judgment about the capacity of a political system to get its act together.

and we don't know what that threshold is and where it will. our debts are substantially high now and they have to come down but you you don't want to take the risk -- you know, you don't want to put yourself in the position where the market's forcing to you act. if you let yourself get in that position then it's much harder to fix and much more costly but i want to come to this point about balance. again, you know, people need to look at the shape of the package and say, is it realistic? is it fair? will congress hold to it over time? and that's why, you know, things like the balance between revenues and savings is so important. you know, realistically, you're going to have to find a way through tax reform and other changes to get revenues that's going to help to reduce the deficits. one more thing, i don't think americans aren't going to be open -- maybe should not be open in doing that until they can

demonstrate, we can demonstrate that the resources you get through tax reform are going to be used for deficit reduction. just like the other side of it, people are not going to accept, you know, the dismantling of medicare or deep cuts in medicare that shifts costs to seniors, results in huge shift costs if those savings are going to be devoted to sustain tax breaks for the most fortunate americans. it's just not realistic. it's not going to happen. it's not possible. so this thing about balance is important not just for fairness but for the credibility of the plan. again if you put a plan out there and the market looks at it and says it's not realistic it has implausibly deep cuts and politically unfair balance then they'll think it's less credible. >> who are three people if you lock them in a room that you would trust and believe who could solve the deficit problem? >> there's a lot of people who could solve it.

i don't think -- this is not a difficult economic challenge. it's not a hard financial thing. there's lots of paths to a reasonably balanced deal that will not put unfair burden on the economy. and people understand it. it's a fundamentally political challenge now. it's a challenge of how you build a coalition that can support that at a time when the country is so divided. and that's the challenge. >> now, there are a few more than three but there are only a couple key players in these conversations right now. you're one of them. the vice president is running this process. what style does the vice president biden have in these meetings? >> before i go to him the, around the president you have an exceptionally talented group of people who have been at the center of all the successful bipartisan fiscal reform of the last two decades so in jack lew and jean sperling and bruce read and jason furman just

exceptionally talented people and the vice president is spending a huge amount of time not just talking to the leadership on the hill, was down one, with exceptional care and discretion, he's spending a huge amount of time making sure he understands the economics of the choices and he brings -- you know, i watched him in these rooms. he makes sure he understands everything. and he's got a very good approach of trying to make sure he understands where everybody is coming from, what they need, what they can't do. how to get them to the place where they can do something? and that's one of the reasons i feel reasonably confident that we can land this in a sensible way. >> dr. scott allen in north carolina, he emailed me this he was just ranting. >> what does he do? >> he's an electrical engineer. >> okay. >> he was ranting and i told him i would find out. why does the greek debt crisis make the stock market go down. greek has a total public debt of

488 billion. the total market cap of world stock markets is 50 trillion. a complete default would only cost the world 1% of its net worth. why would the markets fall further? >> he sounds pretty good. >> i told you he's a smart one. [laughter] >> well, let's look back to last spring. last spring as the european fire was building, you saw huge damage to confidence globally. the s&p 500 fell 15% over that period of time. and i think that was in part because, you know, again people were still very shaken by the great recession, by the trauma. and it like sparked just a huge new wave of fear and it's partly because people have a hard time understanding what is the magnitude of these problems? are those governments -- do they understand and are they going to solve it sensibly? now over the last six months or so, even as the crisis deepened

in europe, people have been more able to separate that from their concern about their confidence in the broader global economy in the united states. you see much less contamination but it's still a very serious problem. and apart from what your brother said, they could say he was pointing out this is a relatively small financial challenge to solve, i think people should understand that it's completely within europe's capacity to manage this in a way with no collateral damage. it's not expensive. it's complicated but it's not rocket science. and they have the political -- they have the financial means and i think the political will to do it but people want to see them do it. but i think it's a containable problem both for them and should be for the world. >> mr. secretary, you were the imf director of policy development for '01 to '03 you've seen some of the stories this week about people who worked there. you said there was a predatory atmosphere. the "new york times" had a memorable phrase.

they said like the pirates of the caribbean, men on the prowl, women on guard. were you aware of those problems? >> i think to be fair, i think it's a hard question to ask a man. you could ask a woman that question. i think it's hard to find any -- no offense to men. [laughter] >> i think it's very hard for men to understand about what it's like to be a woman working anywhere in that case so you should ask a woman about that case. but, obviously -- >> it sounds like, no, you weren't. >> no, i wouldn't say that. even if i were aware or say i was aware, i wouldn't have any feel or appreciation for it. but i would say that of course you'd want to make sure any institution like that has in place the highest basic standards for bad ethics and behavior so no person working there, whatever their gender or their background, faces that sense of insecurity and risk. >> now, since being arrested

dominique strass-kahn has resigned. has he reached out to you personally? >> no. >> and europe seems to be rallying around on having a european successor. where are you on that? >> if you step back for a second, i don't you to understand what's sort of driving our approach these institutions. you remember these were formed in the wake of the second world war. and they were set up in a really different era. and they were set up with a balance of power, governance structure that reflected the balance of power at the time and the world's changed dramatically since that time. and we have been leading, working with, not just emerging economies but even with europe, too, to make sure we change the governance structure to better reflect the reality of the balance of power in the world today and that's a very important thing to do. we made a lot of progress in doing that. but we've got some stuff to do. part of that is to try to make sure that people -- that you have a contestable appointment process for these institutions

and people want to be confident that they are made on the merit and the talent of the individuals. now, you have -- i think you're about to have two people now, christine laguardia and augustine carson as the administrative of france and augustine carson an ambassador some mexico two very credible people said they would like to run the institution and there may be others that join them. but i think -- i think you can look at this now and be much more confident that you're going to have an open process where people are going to look for the candidate that not just has the most experience but who can command the broadest base of support. they're very talented people. christine laguardia is exceptionally capable person. an excellent mix of financial talent and the kind of political will and augustine has that as well. and, you know, we want to see a

process where we look to the broadest support. >> do you expect that you'll wind up weighing in between those two candidates. >> we ultimately will. but again, what we want to do is to make sure -- i think it's good for the institution that there's a contest -- remember christine lagard's standpoint is not principally that she's european and her strength -- and it should be the strep of anybody what's the scompleerns and talent skills they bring to the job but, of course, ultimately, you know, we're the largest institution and we'll play a role not just in making sure the process is fair but the outcome is good. >> a lot of you in this room know ben white an amazing bulletin. >> i got to say asking questions after mike allen is never a very happy circumstance because he asks everything under the sun and does it incredibly well.

so just a couple of quick follow-ups. on the issue of the debt ceiling and the budget negotiations, i wonder if you think the result in the new york special election has a meaningful impact on that debate? it seems from the outset republicans were very embodien pushing the debt ceiling to the ultimate limit and have a hard bargain on the $4 trillion target and essentially take it to the wall thinking they had a mandate to do that. do you think that's lessened and there's a less of an appetite amongst the public for some of the cuts republicans are seeking? has the nature of the debate changed on that, do you think? >> i don't think the republicans ever had a mandate to default on the country's obligations. not a chance. i think in terms of the election, i'm not a political person so i'll say the following, what is clear is that

we need to build on the reforms in the affordable care act to find a way to get more savings out of the health care system including medicare over the long run so we can afford to give people who retire access to health care with an adequate benefit and an adequate burden to them. it is absolutely clear that we're going to have to do more reforms, more savings from the health care system going forward but it's also clear that you do not need to and we will not dismantle that basic commitment to seniors and shift it to a defined contribution plan that shifts costs massively to the seniors. remember, the house republican budget illustrates when you have a to do if you're unwilling to touch revenues. if your objective is to leave in place these exceptionally low

tax rates for the most unfortunate americans, then you are going to have to do transforming dismantling of basic commitments to our seniors to the poor and to the elderly. there's no alternative to that. it's not going to happen. but absolutely we have to make sure that we're trying to find ways to get more savings out of the health care system looking forward. >> and what do you make of the new york result? >> well, that's what i make of it. we're not going to dismantle but theories no risk we're going to dismantle. that basic commitment of the safe net for the seniors but it's also true and this is an important reality for people to accept and if you listen carefully the democrats, chris van hollen said it, we all recognize that we're going to have to build on the reforms on the affordable care act and go beyond that and get more savings out of the health care system going forward. if we want to do that in a way that leaves intact an access to health care for seniors that

doesn't leave them bearing unfair health care costs. >> i'm sure you saw the ugly dust-up between elizabeth warren and the republicans in the house oversight committee and i wonder what your thought is whether the republican should use an recess appointment to assign elizabeth warren or has she become so polarizing that she's a distraction to the dodd-frank implementation process and he should go ahead and move on to find another person to head the agency. >> i didn't watch that but i think it's deeply unfair to her personally. i think she's done an exceptionally good job of not just starting up this agency and hiring talented people like petraeus to run this noble task of better protection and you saw her just recently lay out very important reforms to simplify disclosure of a mortgage application so that people know what they're getting to make

better choices and can protect themselves against people who take advantage of them and that's a very important objective. and, you know, i would just say, you know, the oversight process is a very important thing to preserve and make strong and credible. and i think what you saw yesterday will leave everyone to question whether the oversight process is like on the up and up. how much is political theater? how much is the necessary tough job congress has to do to hold public officials accountable? you know, i've testified more than 50 times since i took office. and, you know, it's a hard, tough thing to go through. it's necessary to go through, but for the oversight process to be viewed as fair, and not just tough but good and credible, you have to try to make sure you take as much of the political theater out of it. it's impossible to take all the politics out of it but you want to do that and that's what i think yesterday happened which

is nottun fair to her but not good for the integrity of the process. >> and mr. woodward appearance question. >> hi. on debt ceiling, as you know, there are members of the house of representatives who think this is not theater. >> not -- >> not theater, the brinksmanship on the issue. >> are you using theater in a disparaging way? [laughter] >> in what way were you using it? [laughter] >> i was just giving it its appropriate context. go ahead, bob. >> to use your phrase, they're human beings and as you know they feel quite strongly about this. and the question is, what is your contingency planning that must be going on in case there is some sort of default? >> let me just say clearly the united states will never default on its obligations. this country will never put itself in a position where

people believe we're not going to pay our bills. it would be a catastrophic failure of basic governance to do that. and congress will do what it has always done which is to pass the debt limit so our plan is for congress to pass a debt limit. ..

>> and i am very confident they will act, but i'm also confident that we have a chance to do something very important so -- >> there is no fault plan. >> i would just repeat again. congress will do the right thing here. i think the hardest thing, and i think it is the more important thing, is to make sure we find a way to build a bipartisan comprehensive balanced fiscal reform plans who we are living within our means, and that we're not leading the economy vulnerable to futures to the kind of concerns that can build come if you look like you don't have your arms around it. >> we are about to get the hook your. final question. the present is a smart guy but not an economist. was the toughest or toughest question the president has asked you? >> asked me? >> yes.

>> that's an interesting question. i will tell you a story, this is a fair story to tell. i remember going to him the first day after i was confirmed and i went to the oval office and the vice president was there and larry summers was there. and the first time we have spent a lot of time talking about strategy in the financial system but there were a whole range of things that were happening within the system that we hadn't really talked about. i went to him and i said, and we have these five very complicated potential catastrophic problems we had to diffuse still. and they're going to be expensive. aig was one of them and was going to take a lot of resources and it was going to be politically terrible to go through it. but nothing was possible unless we did that. and then as you know we laid out a broad financial strategy that people didn't regard with much affection and enthusiasm at the

moment. but it was an excellent strategy. we did everything we said we're going to do. and it ain't a huge impact in turning things around. that was not evident at the time. immediately. and he did as you would expect. he ask him and he did this all the time. he would check and how are things going? and he would ask me are you confident this will work. and that's a tough question because you know, if you look back it took economist 60 years to figure out what caused the great depression, what made welcome what was the lesson from that period of time. so i said to mr. president, nothing is certain in life but i'm very confident that strategy is better than the alternative strategies as the best chance for working. but that's an example. >> in august you're going to be 50. how are you going to celebrate?

>> i usually am just with my family come and i am sure i will be with him again. near an ocean. >> ben white says you have tried surfing. is that going to be a regular? >> i want to make it clear for the record. i do not surf well. [laughter] >> i would remind you i'm almost 50. [laughter] >> but you might try it again this summer's? >> well speak what would be your sport of choice of? >> i would do anything that involves the water or a sale or the surf or the ocean. you know, it's the coolest thing. >> mr. secretary, we really enjoy this. thank you for doing this. [applause]

>> coming up in just under half an hour the u.s. senate will gavel in at 10 eastern, and about 30 minutes or now. world -- >> he emphasized importance of maintaining social safety nets in those regions to allow countries the chance to pursue changes in governance and opportunities for economic growth and job creation. this 40 minute if it took place at the international monetary fund headquarters in washington. we will show you as much as we can and to the u.s. senate gavels in at 10. >> bob zoellick, president of the world bank, and former senator chuck hagel, distinguished professor at

georgetown university. both are known to you, but we will yield by telling you that bob was like chairman international of the goldman sachs group when he came to the world bank in 2007. prior to that he was one of the longest running public service acts in washington, serving as treasury, state and the white house, and at the ustr and the bush 43 can't. earned an mpp and a j.d. magna at harvard. chuck hagel, after he graduated from the senate, also became an academic, both at georgetown university and at the university of nebraska. he serves on the boards, advisory boards of some of the world's largest corporations. he's the chairman of the atlantic council. and he serves on important policy boards for both the secretary of defense and the secretary of energy.

he's a twice purple heart veteran of vietnam, and most importantly to me, a former businessman. the title of this segment is called the helping challenges in a resource constrained area. but since the resources are unconstrained, they can go where ever they in this discussion. chuck is the integer. bob is the interviewee. when it's over you can described which of them was the straight man. [applause] >> thank you, william. well done. >> good morning. i'm the straight man, chuck hagel. we are very pleased you're here, and i personally am most

appreciative to have an opportunity to share some of bob zoellick spot. with you. president zoellick, thank you for coming and for taking time this morning. we have planned ourselves this morning, you in particular with your responsibilities, in a very serene world, much going on these days anywhere. so, with that we will try to invent some issues so that we will stimulate some questions this morning and did your very cogent and wise counsel. on the great challenges that face our country, and the world more to the point here at the early end of the 21st century. bob, as we all know, the president and a couple of hours, the president of the united states is going to give a speech about a part of the world that

as we all appreciate, combustible, complicated, interconnected. all 7 billion citizens of the world are affected, will be affected by that part of the world. when i say that part of the world i'm talking about the arc of nations that fall within north africa across the middle east, down into central and south asia. now, let's begin there because i know you were recently in north africa to i know you recently gave a speech last month about some of these issues in this area. if you could take a few minutes to give the audience your sense of where the world bank is goi going, in light of these complications and challenges, assistance programs, your role, the world banks will come is the

world bank relevant, what can the world bank to? before you answer that, let me remind the audience that we'll take half of our time this morning for your questions. so, with that. >> first, chuck, if you would permit i want to have a special thanks to you and bill and i also want to thank others but i told chuck yesterday i was just up visiting a member of the u.s. senate, and i will be up early next week before going into the g8 again with congress. and all of you are well aware with the understandable budget pressures, international affairs council is always under some significant stress here. and i very much appreciate the ongoing interest that chuck has had. when he was on foreign relations and banking and bill frenzel has been adequately strong supporter of his. it's been great for former members of the house and senate. they have continued to be very active in trying to make the case. but i also want to thank all of

you, when you have a chance, because all of you can see this in the newspapers and in some ways chuck's question kind of identifies this. when i often go up to congress and talk about the world bank or the imf and what they're doing in the world, this kind of the sense of separation, and yet at the heart of all the issues of the day, whether it be dealing with middle east and north africa, whether do with afghanistan and pakistan, whether the global climate, energy, you know, we are at the heart of the issue. and, in fact, if you think about it given arising place of the emerging markets, we are much more active, engaged in that, anything that will happen in this world is something that we are interconnected with, whether be the public or private sector. and so one of the things that i know that bretton woods committee has done over the years, i remember i was with secretary baker, of the treasury department, late '80s the last time we had a general capital increase was to be able to help get a broader representation of groups about the importance of

these institutions. and we hope we can get some of your support and help as we go forward on the. and just to give you one little particular piece, if you permit me. as many of you know with the financial crisis, the bank and the fund stepped up in significant ways financially. since july 2008 we have done about $170 billion, and a very, very large amount of disbursements as well, adjusting kind of our programs. now, we then had our shareholders agreed to the capital increase. i have to say about two-thirds of the came from other funds beyond general capital increase, price changes, getting access to some of the prior shareholder commitments, new funds from some of the emerging markets. but we now have 85% of the votes in from the country so we have the capital increase. the u.s. hasn't yet acted. and so yet one of the points on this to communicate to people in the congress is while it's

important obviously to get the additional sort of contribution from the united states and the capital, that's really not my fundamental concern. my fundamental concern now is does the u.s., what happens with the u.s. if it doesn't of its authorization of a capital increase. does it decrease and give all the discussions about the role of yours with international or it's a question of what the u.s. going to come along with the others. these are issues very much on the front and center as we're dealing with today. and the middle east and north africa could be a better place to start. i think as everybody's going to be well aware, and insert the president will be emphasizing this today, this is one of those issues that while i wouldn't draw a direct analogy to 1989, it's one of these seismic events. and i personally believe the reverberations are going to be felt, you know, not just this year but years to come. and there's going to be ups and

downs and twists and turns and each country will have different circumstances. if you look at the history of successful economic development, for example, in east asia, one of the political economy lessons was the importance of having models of success. so one of the aspects that i know we and the imf are looking at very closely and we are working very much arm in arm also with the african development bank and soon i hope to ebrd in this area as well, is to try to make sure that while we customize each circumstance, that the more we can move some along more quickly in terms of their broader reform process and their ability to draw private capital for their growth strategy, that's going to be good even if some have some twists and turns in the process. now more particularly, a couple of the basic themes that i've been trying to explore, i was recently in tunisia and morocco, and saw the finance minister

yesterday again, is that while finance is going to be important, policy is equally if not more important. this is not just a question of filling financial gaps. this is a question of kind of how you use this moment to take advantage in some countries was a revolution in some countries which is a fast-paced evolution, but to transform the policy has done. but it also requires that we as institutions change. so many of your family that traditionally economy us are weary of short-term job creation. they are always concerned this would just be kind of throwing money at an issue. the good news is in part to run on the work that has been done at the bank over the course of a number of years we now have some good experience about ways you can help create jobs in the short term so you can get to the medium and long-term in a way that is constructed.

we done this in liberia, afghanistan, and part of it depends on the structure of the program, part of it depend on wage rate. given the fact that you use in this country trying to help them design short-term job creation and is one important element. another element which you can we learn from the financial crisis in the '90s with east and latin america is the criticality of good safety net programs. it's not just a question of stability because if you don't manage to get nutrition in school you can lose a generation. the good news again is that when i go talk to two nations and the moroccans and the jordanians and egyptians, it's not a question of sharing perspectives on the u.s. or europe or japan, but now we have wonderful examples from mexico and brazil. is not about 40 countries have done these conditional cash transfer programs that for under 1% gdp you can have some pretty good social support programs. a third aspect is obviously focusing on the private sector. i would just say that two nations, even in the midst of a transition i think are truly

cognizant of the fact that what they really want to do is sort of get through an interim period, and then be able to draw the private financing they need. so there are steps they need to take on the regular tour site, welcoming private investment, and i think at the g8 meeting which i'll be at next week i'm going to try to urge some of the developed countries to encourage the foreign direct investment, encourage on the trade side, doing some interesting things in solar energy as well. so as to make sure that there's a strong private sector component developed. frankly, it's further along in tunisia and morocco than in some others that are still in a sense working their way through the process. this is where the model system is important at another point that i emphasize in his speech in that we have the bag going to be stressing with increased intensity is we organized in the weeks after some of the revolutions very interesting sort of voices. we connected by using technology

with people in the countries, whether they be students or ngos, universities, and what kept coming out again and again were cries if you will for dignity and respect. and connect with the calls for freedom and liberty and change. and so, one of the points that i stressed in this speech in april is how we do business and that we work with countries also needs to change in terms of connecting the politics with economics. so, the openness, the transparency, the anticorruption effort, the good procurement process. and again, with the early budget support that we pledged to tunisia, we've got a very interesting and powerful set of legislative changes that fit the calls industry, but also i think we'll leave for better programs. and i think this is critical important because in a number of these countries, tunisia and egypt in particular, you're in a transition figure get transition government, going to have

constituents assembly is in some cases, elections and others. and that's all of you know from your experience, its fundamental in such an environment not to leave uncertainty about people doing privilege or special deals or other arrangements, moving in an open process. so what we are emphasizing is an issue that, in fact, in a way jim started at the bank, sometimes a ton of is traditionally say, these are political issues. it's not economics. this is what people said when jim started to talk about corruption or transparent or gender. we don't think that's the case because what we have seen out in countries with different political systems is these steps on corruption, transparency, openness, social accountability, engaging beneficiaries in the process, that's good economics as well as what we believe is good politics. this is again what is a need to transfer the bank as an institution and how we operate, but i think it very much fits the type of things going on in the middle east and north

africa. >> before we get to the audience, let's go to sub-saharan africa. many of the same kinds of challenges and issues, but yet different. focus sort of world bank activities. >> there's a interesting piece, some of you may have seen in the financial times on today that is focusing on increasing what we've seen, which is the recognition of sub-saharan africa as the economic and business opportunity. and as all of you know, this is an incredibly diverse regions is difficult to generalize. but if i would put countries into subcategories, i would try to repair one is you have about a third of the population in countries that have been growing five, 6% a year over the past decade. and what those countries are most interested in our infrastructure, energy, regional integration, linked to global markets, because a lot of them are small and their landlocked

economies. using agriculture as part of building sort of productivity and overcoming some of the poverty issues, and the health and dynamic private sector. and in some ways if you cast your mind back 50 or 60 years, that isn't too different what you had in what you're trying to do 50 or 60 years ago as an agenda. those countries are some significant growth. you have another third of the population in countries that are primarily energy. and for those countries is really going to be a question of governance. it's a question of whether they manage the energy resources in a way that counter corruption, whether they have the energy resources in a way that is supports growth, whether they do with the dutch disease problem for exchange rates. and again, the benefit, one of the strengths of the bank of course not just a financing role but the experience we have gained the hard way over time that we can show with countries about way to do this wisely and ways that don't work. there's about another third in a set of countries that we just

their most recent report on which are the most conflict, these are the ones that drag down themselves, dragged dragged down the neighbors. there are stories where you have a cycle of violence and poor governance and lack of development. one of the race we did this report was tied to say let's cross the discipline, let's go beyond in my experience in foreign affairs or other areas, you often have the security guy saying one thing, the development team same thing, the political teen think another thing. and it says lessons like importance of short-term job creation, how you build inclusive enough coalition starts to strengthen institutions, all these become critical element. but if i could summarize in this together, one of the interesting test that we're finding about the potential for sub-saharan africa is that at some of you know we have created within iac the private sector arm, and asset corporation. within that asset-management corporation we have agreed a

billion dollars fund that is focusing on equity investment, sub-saharan africa, some for balance in latin american and caribbean. so we do a number of sovereign fund, some pension funds as an investment in this. and building on iac's record of about a 20% internal rate of return on investment over a number of years, what was striking was when i talk to the dutch pension fund investment, i said what brought you into this, they said well, we now know develop markets are risky, too. the growth is going to be in these markets but, frankly, we don't yet know where to go. we don't have, where the transactions costs and information cost. and so what we are trying to do in a way is to set the pathway for these as potential investment vehicles. for the bank is very important because to recognize this is a fun and a couple mature traditional mediation of raising debt and even making loans or in some cases i is he equity investment. because when i basically doing

what willie sutton did. we're going to where the money is and we're trying to connect this as an intermediary to our asset management function. this offers a huge potential to be able to challenge capital and finance to emerging markets in different ways. over the next couple days we're going to be talking about something we've been working on with singapore as infrastructure fund to focus on east asia and work more broadly. so a huge potential, and if it's within i think the larger theme which you can't miss today which is half of the global growth is coming from emerging markets. if you're in business you better be paying attention to these markets. and another element that connects the bank with this is increasingly whether it's on the policy side or the business side, there is opportunity. when you talk about sub-saharan africa, there's interesting business models that you can draw from india and china that could be applicable here. >> bob, thank you. we've got so many issues to

cover, and a short amount of time, but i think you have framed it up pretty well on not just the general issue in the area we're talking about, but overall. we've got 20 minutes for questions. yes? [inaudible] >> if you want to start out. >> robert with international investor. as you know, mr. zoellick, there's a reevaluation going on in u.s. policy to try to address some of the hypocrisy of a supporting democracy on one hand, in many of these countries, versus some of our policies which have supported dictatorships in others. the world bank has a similar problem, does it not, in terms of let's face it, you were active in supporting some of the very regimes that have been

displaced recently. so my question to you is, especially in terms of your arm of the international corporation which has been working hand in hand with some private equity firms, that are still helping many of these corrupt regimes, even though the leadership may have left, we are still seeing corruption from the top. what will you be doing to try to address similar hypocrisies in terms of world bank policy? >> well, it's a good question that really cuts all across the banks activities. we have 187 shareholders. they cover all different types of political assistance. one of the judgment calls that we have to make is, you know, where we feel we can make a difference in the country in terms of whether it's dealing with malaria, whether it's dealing with improving public financial management. and those to have to become judgment calls, but our general approach is to do it in a

transparent way, in an open way. but let's also recognize, some of these revolutions that were created were because you started of a middle-class. when i was talking about dignity, talking about people who felt they weren't repress. some of this was the benefit of some of the economic growth. let's take egypt as a good example. you know, egypt is a case where you have a group of reformers start to operate from about 2005, one should recognize they have some reasonable growth, they had some reasonable reserves, they did some things, but it's still a sporadic system. there's going to be historians debating for a long bit of time what exactly led to the revolution and the people in the square, nepotism, the bureau of the takeover and other aspects. there's an interview of that with some of the military today that molly wayman did in the post. but, nevertheless, what i think you have is a situation where there is a critical need not to

retreat from reforms, not to close down, but, frankly, try to learn the lessons from other developing countries about how to have safety net, job creation, international orientation. so let's take the middle eastern countries. other than oil, they stand out as not being connected to the international economy. south korea has about 60 million people. egypt has about 80 million. south korea exports more manufacturing goods in a week in egypt does in a year. there's lots of reasons for that. but i think one of the challenges will be, can be, for example, take the lessons of brazil and mexico about safety net programs that are much more effective than broad-based subsidies that egypt has had, which the bread subsidy which grossed about 85% of the people, all these budgets, so now they can learn from other developing countries. but at the same time try to focus on the changes that can be

done in terms of openness, for example. we work with the egyptians on our freedom of information law with reforms. they couldn't get it through the system, but then the question is shoe we stop? do we wage a things to be perfect? you talk about corruption. you give me an economy where there is a corruption. that doesn't mean that we turn a blind eye, and not only in our own systems, but, frankly, these things are talk about what social accountability, one of the best ways to fight corruption is to get the beneficiaries involved. get the beneficiaries with transparencies so they can see what's happened on the ground. post at the school the textbooks that are supposed to be delivered, the teachers, then you might use electronic meeting, and we're developing these capabilities so that they can report back and say we are supposed to to teachers, only one is showing up. so, you know, i think it's a copout to sort of say we should wait for this as a perfect environment. because what we have seen is there is the ability to transform countries. you emphasize ic and the private

sector. we are very, very careful in terms of who we do business. we are not only careful in terms of sort of checking the parties, but, frankly, we are at the frontier of pushing principles, understand is, whether it be environmental, whether it be human rights stand, whether the other issues. that should have an effect on some of the not only companies we invest in but the overall business climate. >> just a couple minutes left in this discussion on the global economy. you can watch it in its entirety on our website, c-span.org. u.s. senate is about to gavel and. senators begin with an hour a general speeches before continue work on a bill extending certain provisions of the u.s.a. patriot act terrorism law that expires at the end of the day. and now live coverage to the u.s. senate you on c-span2. enable us to lie down in green pastures as you restore our hopes. let your love fill and rule our

senators as they seek to serve you by serving this land we love. may they be willing to pray for one another with the awareness that they are wrapped in a blanket of mutuality and are the heirs of a common destiny. lord, empower them to live such exemplary lives that people will see their good works and glorify your name. relieve their necessities. lighten their burdens as they cheerfully submit to your gracious will.

we pray in your sacred name. amen. the presiding officer: join me in reciting the pledge of i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., may 25, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorablekirsten e. gillibrand, a senator from the state of new york, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. mr. reid: madam president? the presiding officer: the majority leader. mr. reid: following leader remarks, the senate will be in a period of morning business for an hour, with the majority

controlling the first half and the republicans controlling the final half. following morning business, we will resume consideration of the motion to concur in the house message to accompany s. 990, the legislative vehicle for the patriot act extension. filed cloture on the motion to concur with respect to the patriot act extension. the vote will occur one hour after we convene tomorrow. we are working to reach agreement to vote on the house republican budget. we will notify senators when votes will be scheduled. madam president, s. 1057 is at the desk. it's due for its second reading. the presiding officer: the clerk will read the title of the bill for the second time. the clerk: s. 1057, a bill to repeal the volumetric excise tax credit. mr. reid: i would object, madam president, to any further proceedings with regard to this bill at this time. the presiding officer:

objection having been heard, the bill will be placed on the calendar under rule 14. mr. reid: madam president, for weeks americans old and young have been speaking out against the republican plan to kill medicare. it's not just democrats. republicans have been speaking out against it too. newt gingrich called it a radical plan and -- quote -- "right-wing social engineering." end of quote. several republican senators have similarly spoken out calling it what it really is, a plan that would shatter stone the cornerstone of our promise and break the -- cornerstone of our society and break the promise to the old and the sick. last night americans had a chance to do something about it. they went to the polls and resoundingly rejected that plan and the candidate that ran on the plan's promise to dismantle medicare. in a special election in upstate new york, the republican plan to kill medicare was the number-one

issue. it was the number-two issue. it was the number-three issue. it's what voters most care about and are most scared about. here's what it would do. turn over seniors' health to profit insurance companies. it would let bureaucrats decide what tests and treatments seniors get and ask seniors to pay for their health care in exchange for fewer benefits. that's a bad deal all around. what's telling is not just that the voters rejected this plan. it's that the republican candidate pushing the republican plan to kill medicare was rejected in a very republican district. the district which stretches from buffalo to rochester has been in the republican hands for four decades. it produced influential republicans like jack kemp, who i served in congress with. he served in the cabinet. he ran on the presidential ticket as a vice presidential candidate. last night's special election was held to replace a republican

congressman who won that seat by a 3-1 margin. john mccain won the district in 2008. george w. bush won the district four years earlier. last year's republican candidate for governor in new york lost in a land slight shrao*eud but -- landslide but won big in that district. democrats in congress and even some republicans know the plan to kill medicare is irresponsible. last night voters showed the country and the congress that they know it too. would the chair announce morning business now. the presiding officer: the republican leader. the republican leader. mr. mcconnell: madam president, sometime today or tomorrow senate democrats will have an opportunity to show what kind of future they believe in. they can vote for one of the republican plans to get our nation's finances under control, each of which involves the kind

of tough choices we'll need to make to bring down both deficits and debt. or they can vote on the president's plan which continues the unsustainable status quo, a vote to preserve our very way of life or throw it in jeopardy. it's interesting, when the president first announced his budget, most people panned it as tepid and irresponsible. "the washington post" summed it up pretty well by saying the president punted. yet senate democrats embraced it. the senior senator from new york said the president's budget should have bipartisan support. the chairman of the budget committee gave the president -- quote -- "good grades for a beginning." other democratic senators called the president's budget a step in the right direction, an important step forward, a good start, and a credible blueprint. one even described it -- quote -- "wise." that was then. how about today? well, if we're to believe the news reports, every single

democrat in the senate now plans to vote against the president's budget. they don't even want to use it as a starting point. why? we got the answer earlier this week from senator schumer when he indicated that democrats now believe avoiding this debate altogether helps them in the next election. in other words, they think it's better not to keep track of our nation's finances at all than to support any plan that does. so much so that they're about to reject a budget that even they embraced a few months ago. they'll vote against every budget that comes to the floor, including the president's. six weeks after the democratic cochair of the president's own debt commission told us that our nation's deficits and debt are like a cancer that threatens to destroy america from within, democrats are ready to call it a work period without supporting any of the proposals that have been made, without producing anything of their own. nothing.

that's their answer to this crisis. their focus son an election that's -- their focus is on an election almost two years away. at a moment when our debts and deficits threaten the future of our nation, democrats have no excuse for proposing no vision whatsoever of their own. there's simply no defense for that. washington is currently on pace to spend about $1.6 trillion more than it takes in this year alone. three times the biggest deficit we ever had before president obama took office. members of the president's own cabinet admitted last week that medicare is in need of urgent -- urgent -- reform if we want to preserve it for future generations. congressman ryan has shown courage by proposing a budget that would tackle these problems. democrats are showing none by ignoring our problems altogether. this is the contrast americans will see in the senate this

week. more than two years have passed since democrats have produced a budget of their own. this is a complete and total abdication of their responsibilities, and there's no excuse for it. we have an obligation to the american people to come up with a plan. democrats are officially abdicating that responsibility this week. mr. president, i yield the floor. the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business for one hour with senators permitted to speak therein for up to ten minutes each, with the time equally divided and controlled between the two leaders or their designees, with the majority controlling the first half-hour and the republicans controlling the final half.

a senator: madam president? the presiding officer: the senator from massachusetts. mr. kerry: thank you, madam president. what is the order we have? the presiding officer: we're in morning business. the senator is authorized to speak for up to ten minutes. mr. kerry: thank you very much, madam president. in the course of our lives, one of the most difficult moments anyone faces is to say goodbye to a parent. no matter how old we are or how old those parents are ou how long they -- or how long they may have struggled with illness or infirmity, when people lose a mother or father, they are all always reminded of how much we are just children to our parents. that is one of the -- that is

the transition and experience that the o'bryan of massachusetts was feeling when they lost their patriarch. edwin o'bryan was extraordinary to his family and friends but also to the country he loved when he served in world war ii and his passing is a great loss to everybody. madam president, ed o' brayan leaves behind his wife, his brother, six devoted children and 17 adoring grandchildren. and his son drew has served the people of massachusetts as my state director for almost a decade, living the spirit of public service that his father instilled in him and inspired in

all of his family. ed was, to borrow a terrific phrase from former speaker tip o'neill, who reserved this for special people that he liked so much, he said so and so is a beautiful person. and he said it with that special twang. that was ed o'brien. he was a beautiful person, and i enjoyed meeting him on several occasions. our last meeting will be with me forever because i had the privilege of presenting him with his world war ii medals for his service in the pacific. he was so content, and he had such a great smile on his face, a twinkle in his eye which he never deserted, which never left him as he battled pwraeufpl and accepted -- bravely and accepted the illness that would take him from his family after 86 years extraordinarily well lived. ed o'brien served proudly in the

united states navy during world war ii, including the invasion of okinawa. he embodied what we now know is the greatest generation of americans who defended america and saved democracy for the world. he earned numerous decorations including the combat action ribbon, asia particular pacific campaign medal with a silver star and bronze star and he was a patriot who stood by his country and his family with equal measures of devotion. indeed, the mass lovingly put together by his family told the story of a man who loved his friends, loved his family and loved his god, the god who, in the words of the old irish hymn he enjoyed so, was his vision, his battle shield, his sword for the fight, his dignity and his delight. in his eulogy for his father, drew o'brien offered unbelievable comfort to all who

mourned with him, especially ed and marriage's 17 -- and marg's 17 grandchildren. he said carry him with you in your heart, never forget the lessons he taught, the stories he told or the fun you had with him. drew's eulogy was a wonderful tribute to a father's legacy and enduring love. today i would like to share it with colleagues in the united states senate by having it included in the "congressional record." with that request, on behalf of our entire office and all those who know and love drew, again extend our deepest sympathies and condolences to the entire o'brien family. to drew, personally, i would say having lost my own father 11 years ago this summer, while the hurt never goes away, with the passage of time, you remember the good moments and the best lessons more and more. the memories sustain you going forward. and because drew is such a gift

to all of us, i want to thank ed and margaret, his dearest margie, for the extraordinary family they created, nurtured and loved. and to ed o'brien, the great navy man now at rest, bid him fair winds and following seas. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: mr. udall: madam president? the presiding officer: the senator from new mexico. mr. udall: i would ask consent to dispense with the quorum

call. the presiding officer: without objection. mr. udall: thank you, madam president. i know that senator blumenthal is coming to speak and senator kerry ended a little bit early, so i -- i just want to get up for a couple of minutes, and when senator blumenthal comes in, i'll obviously yield to him because i know he has some time reserved here. i -- i wanted to get up and talk this morning just a little bit about the procedure and what we have gone through in terms of the patriot act. and i -- i'm very discouraged to see the path that we're headed down in terms of the patriot act, and i was here in the congress as the presiding officer knows when we voted almost ten years ago on the patriot act, and it was a sad occasion then because it was right after 9/11, and this horrible thing had happened to

our country, but we rushed in a -- in a very, very big way to move forward with a piece of legislation. it was the so-called patriot act. that act ended up being something that -- that i think many of us and many of us regret. i just want to read a short passage from the "washington post" at the time which i think showed the haste in which we acted and where we infringed on our constitutional rights, and i think the post really says it all. "the washington post" noted -- quote -- "members of both parties complain they had no idea what they were voting on, were fearful that aspects of the bill went too far, yet voted for it anyway." end quote. and i can tell you at the time that's -- that's the way it was. we were on the floor, we had to vote, nobody knew what was in

the bill. i remember one congressman waving a copy of the bill, saying there's only one copy on the floor and it's hot, it's hot off the xerox machine. so it's very unfortunate that we moved so quickly and in so much haste. ten years later, almost ten years later, we haven't had the debate that we need to have on this piece of legislation. the greatest deliberative body has not weighed in with amendments. we have not moved forward in a serious way to try and tackle this piece of legislation that's so important to our country, important to our freedom, important to our liberty. and what are the problems that we should be dealing with? just very quickly -- and i know my colleague, senator blumenthal, is here and i'm going to quickly move off this and put my full statement in the record, but two things have happened that indicate we have

some serious problems with the patriot act. number one, in march of 2007, the inspector general of the department of justice in a report concluded that the -- and this is a quote from that report -- -- quote -- "concluded that the f.b.i. engaged in serious misuse of national security letter authority." and the report also said -- quote -- "in many instances the f.b.i. misuse of national security letters violated n.s.l. statutes, attorney general guidelines or the f.b.i.'s own internal policies." end quote. so there we have an inspector general telling us that the executive branch with the piece of legislation has moved way beyond where they should. that's something we should take a hard look at, and i have an amendment and i know other senators have an amendment on that.

there have also been -- there have also been courts which have looked at parts of the patriot act and found that act to be unconstitutional. it's only incumbent upon us when you have a ruling like that to take a look at it, to offer amendments, to try to make changes. i -- i really hearken back to what i remember reflecting on in that day when we passed the act. benjamin franklin saying -- and he was talking about our precious freedom and our precious liberty. i'm paraphrasing here, but he said something along the line, those who would sacrifice liberty for security deserve neither. so that's where we are today. madam chair, i would move

consent to put my full statement in the record as read, and at this point, knowing senator blumenthal is here, i will yield the floor. the presiding officer: without objection. mr. blumenthal: madam president? the presiding officer: the senator from connecticut. mr. blumenthal: thank you, madam president. i ask for permission to extend my remarks to 15 minutes, if necessary, if there is no objection. the presiding officer: without objection. mr. blumenthal: thank you, madam president. madam president, we all have a shared commitment to our nation's veterans. that shared commitment is reflected in many of the programs that are supported by yourself and my colleagues in this body every year. i deeply respect the knowledge and dedication that my fellow senators have brought to this

critical issue. each of my colleagues, almost without exception, has supported measures that have helped our veterans over the years, and i rise today to introduce my first piece of legislation, a bill to help our nation's veterans. our nation must keep faith with the men and women who have served and sacrificed for our nation. unfortunately, and unconscionably, america is still failing them and their families by tolerating unemployment, homelessness, inadequate health care. we must renew our commitment to more than 250,000 veterans in the state of connecticut and 22 million across the country to ensure that no veteran is left behind. our commitment to veterans must be unwavering. despite our best intentions, we

fail all too often to accord our veterans the support they have earned. unfortunately, according to the department of veterans affairs, more than 76,000 veterans are homeless on any given night, and twice that number will be homeless at some point during the year. the unemployment rate among veterans has doubled over the past three years. 27% of veterans in their early 20's are unemployed. that number is almost twice the unemployment rate of their peers who have not served in the military. the bureau of labor statistics recently imported -- reported that unemployment for veterans who served in their country after september, 2001, is 11.5%. again, a figure far higher than the national unemployment rate. 20% of iraq and afghanistan war

veterans are estimated to suffer from posttraumatic stress disorder. when veterans return home, they must wait at least half a year, half a year on average for their claims decisions to be decided by the department of veterans affairs before they can receive benefits. those numbers are simply unacceptable. as i speak today, america's longest war continues, and less than 1% of the nation is in uniform. never in the history of the country have so few fought for so long at such great personal cost and sacrifice. under the leadership of secretary chinseki, the department of veterans affairs has taken strong and welcome steps toward the goal of building a 21st century system

that supports caregivers of serious injured iraq and afghanistan veterans, improving services to women's veterans, expanding the availability of health care and preventing veteran homelessness. but the gaps in the system remain, and they are debilitating and destructive, really devastating to many veterans. we can do better, and we must do more. so the legislation i introduced today is entitled "honoring all veterans act of 2011. "it's 16 comprehensive provisions -- its 16 comprehensive provisions are only a first phase. this legislative proposal is a comprehensive package, but only an opening salvo in a sustained, unceasing campaign to ensure that no veteran is left behind. it's a down payment on a larger

debt. the goal is to give all veterans the homecoming and the services they need and deserve. our military men and women have kept their promise to serve and sacrifice for this country, and we must now keep faith with them. america's commitment to our veterans should reflect the depth of their sacrifice. this measure is entitled "honoring all veterans act" because all veterans are brave service men and women serving today in places that we can barely pronounce the names of, are deployed around the globe, and they deserve to be honored in defending our freedom and democracy. and we must honor that service, not only in words but in deeds. this legislation comes from veterans and their families

themselves. veterans and families whom i have met. seeing and hearing their struggles and dreams, their achievements and defeats, as i've worked for them during my 20 years as attorney general and four-plus months as a united states senator. in the v.f.w. halls and american legion halls, in living rooms and school auditoriums, in countless gatherings across the state of connecticut, i have been privileged to listen and learn from veterans and their families who have shared their personal stories and insights. so this legislation simply continues the work that i have done as attorney general. i'm proud of that work and proud, most importantly, of my partnership with veterans in connecticut in proposing this legislation. my goal then, and it has been

continuously, to keep faith with our veterans, to honor our promises to them. this honoring all veterans act of 2011 will address four key areas. first, expanding job opportunities for veterans. second, assisting homeless veterans. third, improving veterans' health care with a special emphasis on mental health services. modernizing, fourth, the department of veterans affairs, and i ask unanimous consent, madam president, for a summary of this legislation, a full summary to be inserted in the record. the presiding officer: without objection. mr. blumenthal: thank you. first on expanding job opportunities. to honor all veterans and give them the welcome home that they have earned, we need to focus first on jobs. like all americans, veterans are striving for their families to participate in the economic recovery to find jobs in our slowly recovering economy.

good jobs require education and training, as well as independent living services for veterans. our nation has done much to address this issue, such as the expanded post-9/11 g.i. bill, but gaps in the system remain. they are all too glaring. my legislation will expand job opportunities in five significant ways. first, the legislation raises the statutory cap for the vocational repweubl ation and employment independent living program to welcome hundreds of additional veterans. this vital program helps veterans with severe service-connected disabilities, enabling them to live independently. it helps veterans with those kinds of disabilities participate in family and community life and increases their potential to return to work. second, the legislation authorizes veterans to reuse the

department of defense transition assistance program, known as tap, and meet with counselors at any military installation for up to one year after their separation. this program was developed to assist military personnel leaving the service with information about jobs, education, career development, and veterans returning to connecticut wishing to participate again in the tradition, in the transition assistance program should have that opportunity, in effect, to participate for a second time, maybe even a third time. third, the legislation authorizes a study of how best to ensure that civilian employers and educational institutions recognize veterans military training. the military recruits, the most talented men and women in america to serve, and then it invests heavily in their

professional development. and yet when they trade their uniforms in for civilian clothes, employers and others, such as professional accrediting organizations, often refuse to recognize or understand how to make use of their military experience and the expertise they've gained at the expense of taxpayers. the iraq and afghanistan veterans of america reported that -- and i'm quoting -- 61% of employers do not believe they have a complete understanding of the qualifications of ex-service members, and recently service members with college degrees earn on average almost $10,000 less per year than their non-veteran counterparts. one way to close this gap is to have the department of defense review the list of military occupational specialties such as the 22 m.o.s.'s in army

engineering or 16 m.o.s.'s in army communications, and ensure that completing m.o.s. qualifications will provide those service members with credentials recognized by civilian employers. the study authorized in this legislation will start that process, and i am commited to working in the senate to see this problem resolved. fourth, the legislation reauthorizes the veterans education outreach program to provide money for campus-based outreach services to veterans. this program was first established in 1972 to provide colleges with a significant number of veterans on campus with additional resources to make sure that those students get the most out of their educational experience and use v.a. benefits available to assist. and, fifth, the legislation

authorizes a comprehensive program at the department of labor to assist veterans with ptsd in the workplace. it provides technical assistance to employers of veterans living with those conditions and provides best practices relating to help those employees develop successful strategies for on-the-job success. this legislation also reaches veterans in a variety of other key areas. recently a female veteran visited my office. she and her two children were homeless and needed help. in their case, we could find temporary shelter. but on the issue of homelessness, many veterans do not know where to turn or are hesitant to do so. this proposal, the honoring

veterans act, will provide a -- for homeless projects, for other services to aid in stopping and reducing homelessness. on improving veterans health care and mental health services, as i've traveled connecticut meeting with veterans, i've seen firsthand how veterans with traumatic brain injury or post post-traumatic stress face unique challenges in facing the department of veterans affairs for medical assistance. veterans deserve the best possible medical care, particularly when it comes to treating t.b.i. or post-traumatic stress. these are the signature wounds of the conflicts in afghanistan and iraq. more than a quarter of these injuries are undiagnosed. according to the military itself. and then too often even if they're diagnosed, service

members are screened but do not receive a full course of treatment. to address this issue, my legislation requires the department of defense to identify and then close the gap between screenings and treatment. simply diagnosing a soldier or a marine with symptoms of ptsd or t.b.i. does not heel them. this -- heal them. this legislation addresses the question of finding qualified sigh -- psychologists by accessing graduates from the uniformed services university of the department of -- of the health services department. and it goes on to provide other means of dealing with this issue. modernizing the department of veterans affairs is the final

section of this legislation. it addresses the d.o.d. and v.a. transition process through improved monitoring and oversight. it increases pension benefits and gives veterans grounds for appeal at the board of veterans appeals if the v.a. has misplaced or misfiled their documents. i hear about this problem as my colleagues do, again and again and again as i listen to veterans. recently a veteran visited my office. he's been waiting on a hearing date with the board of veterans appeals for over a year. his story is typical. this legislation provides one much-needed improvement to the board of veterans appeals. i look forward to working with my colleagues to address other much-needed improvements. we can honor our veterans whose

claims are stuck in the board of veterans appeals by confirming judges to the court that reviews them. three of those nine seats are now vacant, and each judge must preside over 600 cases per year, far more than any other federal appellate courts. finally, in closing, let me acknowledge the many veterans throughout the state of connecticut who helped me to draft and craft this measure. i'd like to thank commander richard defredericko of the v.f.d. and commander daniel thurston of the american legion for their dedicated work not only of assisting me but on behalf of veterans. i'd like to thank bob jeniky who spent recent years after serving this country in the united

states marine corps during the vietnam era in providing help to homeless veterans and veterans seeking jobs. paul bud buka is a veteran and friend with a most distinguished service record possible in winning medal of honor and his life after military service, giving back to other veterans and managing several successful companies has been an example of how veterans continue to provide leadership with courage and vision. master sergeant frank alvarado has made a tphufrp of very -- number of helpful suggestions including reauthorizing the veterans outreach program. i'd like to acknowledge our commissioner of veterans affairs, dr. linda schwartz who has been a tireless advocate for all veterans. connecticut is blessed to have the leadership of veterans who help evil other, care for --

help each oh care for each other and look out for each oefrplt i look forward to working with them to assure this legislation. i have no illusions that accomplishing passage of these kinds of measures will be easy, but i hope for support across the aisle, this kind of goal certainly ought to unite us, not divide us. we have so much more in common on this issue than in conflict. and i'm hoping that we can work together to assure that we keep faith with our veterans, that we honor their service, assure that we welcome them home with the kind of services they need and deserve so that no veteran will be left behind. thank you, madam president. and i yield the floor. a senator: madam president?

the presiding officer: the senator from south dakota. mr. thune: madam president, last week i came to the floor to talk about the crushing burden of debt that will soon be coming our way because of government spending. mainly driven by entitlement programs. and i noted that our unfunded liabilities in medicare and social security are over $40 trillion. in fact, last week when we got the reports from the medicare and social security trustees, which noted that medicare is already running a cash deficit of about $46 billion. social security running a cash deficit of about $32 billion. and for those who think that we don't need to do anything because these so-called trust funds are not going to be in trouble until some point into the future, i think the important point to remember is that the trust funds and the i.o.u.'s that are in the trust funds are not an economic asset that can pay cash benefits. and so at some point that's

either going to have to be a massive tax increase, a huge reduction in benefits, or an incredible amount of additional borrowing. so, what we project will happen with social security at some point into the future is there will be a 20% to 25% reduction in benefits when we hit that wall, which suggests we ought to be taking steps right now to avoid that. and i think the important point, when you start seeing cash deficits where the payroll taxes that are coming in no longer exceed the amount of benefits they're paying out, but rather you're running deficits, that also adds to the overall deficit that we're dealing with as a country. so we don't have the luxury of time. we can't afford to wait. this is an issue that is upon us now. social security and medicare reform are issues that need to be undertaken. if we don't do that, as i mentioned last week as well, madam president, you will see enormous increases in the amount of debt, the amount of deficits as a percentage of our g.d.p. in fact, in the year 2035, if we

don't change our ways, the amount of government spending -- and this is under current projections, which i believe are going to be very conservative and probably these numbers could be much, much worse -- but would comprise 35.2% of g.d.p. government spending kpraoeupls 35.2 -- comprise 35.2% of g.d.p., which is 60% higher than the historical average. the historical average what we spend on the federal government has been 20.6%. this year it is over 24%. if we stay on this current trajectory, as i said, in the year 2035 based upon what i believe are very conservative assumptions, this could be much worse than that, but we would be looking at 35%, over 35% of our entire economy spent just on the federal government. and as i said, that's 60% higher than the historical average. in the same year deficits would be about 16% of g.d.p., and debt to g.d.p. would be 185%.

so we would actually vacuum la alternative debt -- have a cumulative debt almost twice the size of our economic output, entire g.d.p. for that year. these are more than just numbers for economists to look at. these have real impacts in real time. they affect people across the country today. and i wanted to point out again, as i have mentioned in the past, the study done by economist reinhart and rogoff which took a good look at countries, and particularly developed countries that have acquired or accumulated the sort of debt level that we're looking at in this country and what that, impact that has had on their economies. in their analysis and their study, they came to the conclusion that when you reach a certain level of debt to g.d.p. -- in this case 90% debt to g.d.p. -- that you lose one percentage point of economic growth. in other words, economic growth would be one percentage point less than it otherwise would be

simply because of that high debt to g.d.p. level that the country is sustaining. they said that's at 90%. if you look at where we are today, debt to g.d.p., we're at about 93%, 94%. according to the white house's own economist, every time that you lose a percentage point of economic growth, it costs you about a million jobs. so having the kinds of debt levels that we are carrying today creates a cloud over our economy, reduces economic growth and reduces jobs, where it's costing us job creation in our economy, which is the thing that most of us, i think, believe we should be focused on. if we're going to focus on jobs, it is also -- i think we have to say there is a correlation between spending, debt and jobs. i think the sooner we acknowledge that, the quicker we move to address that, the better off we're all going to be and the sooner we're going to see the economy start to recover, expand and create jobs again. so that's the impact that is

happening now. it only gets worse if changes aren't made. when the government borrows money, obviously, there is an impact in the private economy. there is less money for private companies and individuals to invest in equipment, plans, housing and training. it crowds out these investments, and instead allocates money, spends money on less efficient, less necessary, duplicative and oftentimes down right wasteful programs and projects. we don't get our arms around this level of spending and debt. it also means higher interest rates for individuals who want to borrow to buy a home. it's clear that individuals and businesses across the country, even if it isn't clear to everyone here in congress, that the government cannot continue to spend ever-increasing amounts of money without raising taxes. and that creates uncertainty among individuals and businesses across this country and acts as a disincentive for them to invest. so you have got uncertainty

about what the impact of all this spending and debt and what it's going to have on future taxes, and so a lot of capital continues to sit on the sidelines not being deployed, not being put to work simply because there is this uncertainty about what's going to happen and whether or not washington is serious about getting this spending and debt issue under control and focusing on the fiscal problems that we have as a nation. i mentioned last week that social security benefits would automatically be cut by over 20% if that program is not reformed. this is not the result of the house-passed budget, contrary to what many are saying. this is the result of the current situation that we face today with social security. likewise, according to the medicare actuaries alternative scenario, the health care bill that was passed last year would lead to significant numbers of providers becoming unprofitable and would presumably stop providing services if health care costs are not contained.

and this, madam president, assumes that we don't have a debt crisis. now, the former chairman of the federal reserve, alan greenspan, said recently that the odds of a debt crisis happening in the next two to three years is about 50%. so if you take that analysis, you take what standard and poor's has now said about the american credit rating, they have warned of a possible downgrade in the u.s. credit rating in the next two to three years if serious changes aren't made, and i think you can see why there is such a cloud hanging over our economy right now. now, some believe that the debt crisis may not occur for a few years down the road, but i think one thing we know is that it is coming, it is predictable. we don't know exactly when, but we know it's coming because you cannot continue to have these types of signals, this kind of not only anecdotal information but hard data describing the current state of our economy, the current state of federal

spending, the amount of debt to g.d.p. that we are continuing to increase year over year and not believe you're not going to have some significant and measurable impacts on our economy, and that's why it is so important, madam president, that we take the steps that are necessary to avert this crisis. if we don't, we know what's going to happen. as our debt burden increases, investors from around the world are going to increasingly demand higher yields to lend us money. that will further exacerbate our deficits and interest alone will consume increasing amounts of our revenue until we can no longer pay our bills. we have seen this happen in countries around the world, and we know the magnitude of the actions that these governments have had to take in response to these debt crises in other places around the world. greece, for example, was forced to take loans out from the international monetary fund and has had to impose a variety of austerity measures. these austerity measures include

laying off private sector employees, cutting their pay, freezing their pay for many years at a time. they included a 2% increase in their v.a.t. tax, they have a value-added tax in that country, and a 10% increase in other taxes. dramatic cuts to pension programs and reforms to entitlement programs as well. and they are still paying -- after all that, madam president, they are still paying very high interest rates. the yield on two-year debt is over 24% in greece. in ireland, they had to implement austerity measures of more than 9% of g.d.p., 9% of their entire economy. that's the equivalent in the united states, if you were to translate that into the impact it would have on our economy, that is the impact in the united states of raising taxes and cutting spending by by $1.3 trillion in one year. an astounding amount. but this wasn't enough. after they looked to implement another austerity plan of tax

increases and spending cuts, that one was estimated to cost the average family in ireland ireland $5,800 a year. those are the types of measures that have been forced upon, imposed upon some of these other countries in the world because they have seen the debt crisis that we're trying to avoid in this country, and at the same time that all -- they have taken all these austerity measures, they have seen massive contractions in their economy, because we all know that perhaps when you start raising taxes and you create the amount of economic urn certainty that i have described earlier, it becomes very, very difficult for small businesses to invest and to create jobs. so not surprisingly, you have seen these austerity measures leading to violence, protests and general discontent. it appears now that greece is seriously considering at least a technical default on some of their debts. and so that's, i guess, a

picture of what our future will look like absent changes, madam president. we have a shrinking economy, fewer government services and dramatically higher taxes. that's what the experience has been in some of these countries that i just mentioned. that is what we are headed toward, absent serious, meaningful action in getting our spending and debt and our entitlement programs under control. there is no reason to go down this path. the senate is going to have the opportunity over the course of the next few months, i hope at least, to vote on legislation that would start to address not only the near-term issues of discretionary spending and capping that and capping it into the future in the near term and the midterm, but also to address the issue of entitlement reform, which as i mentioned earlier you cannot solve the debt problems, the fiscal problems and the crisis that our country faces without taking on the issue of entitlement programs. if we don't, greece and ireland are what our future will look like, madam president, and today

we will vote -- or today or tomorrow, i'm not sure exactly when, on a series of budget proposals which are in each and every case, i think, somebody's attempt to try and address this issue. we have seen the house of representatives act on a budget earlier this year, the so-called ryan budget. they passed that. we're going to get a chance to vote on that here in the senate. we have a couple of our colleagues on the republican side who have come up with their own ideas about budgets and what we might do to address this fiscal crisis, and we're going to vote on the proposal the president put forward, which is completely inadequate to the challenge. in fact, increases spending over ten years, dramatically increases debt and dramatically increases taxes, which would have an incredibly detrimental impact on the economy. that's what the president had put forward. we're going to vote on that today as well. now, having said that, madam president, all these votes, although they are -- i suppose you could argue important in some respects, they are going to

end up being more symbolic votes because i don't think any of them are going to get the necessary votes here in the senate to pass. the ironic thing about the debate on budgets this week is the only budget that we are not voting on is the senate budget. we don't have a budget now for 756 days in the united states senate. this government spends spends $3.8 trillion a year. it has been 856 days now since the senate has passed a budget. and so we have got a couple of our republican colleagues who are putting forward alternatives. we have got the house that's put forward an alternative. but the democrat majority here in the senate has not for 756 days moved to bring a budget to the floor of the united states senate so that we can have a debate and vote upon the priorities, the fiscal priorities for this country and how we are going to spend spend $3.8 trillion of the american people's tax money.

that is a stunning, stunning development. now, i'm on the budget committee in the senate. we have yet to even have a markup. i don't anticipate probably that we will in the near future. but having said that, we cannot afford to wait to take on this nation's fiscal challenges. now, i hope that absent action on a budget here in the senate that these discussions that are occurring right now between the vice president and the senate leaders will yield a result that will enable us at least to move forward and address these -- these fiscal issues, but it doesn't negate the responsibility, madam president, that we as united states senators have to -- to put forward a budget and to debate that budget. ironically, we're going to vote -- we're going to vote on the house of representatives-passed budget. i -- i don't know this for a fact, i have heard this is the case, that this will be the first time ever that the united states senate will vote on the budget passed by the other body,

in particularly by the other body when it's controlled by the other political party. first time in history. i think the leader, the democratic leader wants to do that to make some political point, but i think we all know that us not passing a budget or at least debating a budget here in the united states senate is a complete abdication of the responsibility we have as united states senators to be good fiscal stewards of the american tax dollars. and so i -- i would just close again today, madam president, by saying that we have seen our future. you can look at what's happening in greece, you can look at what's happening in ireland, you can look at the type of austerity measures that have been imposed by outside entities who have said you make these changes or you're not going to continue to get i.m.f. funding, for example. and even after that, you're still looking at these interest rates in the 20% range, you're looking at economies that continue to contract rather than expand and grow. we need to create the conditions here that will enable our

economy to grow and to create jobs, and it starts with getting federal spending and debt under control. now, one final point i will make, madam president. i just wanted -- it has to do with an issue that pertains to my state of south dakota. i think it ties into the broader point i'm making about the economic uncertainty that's being created out there today for businesses. there was a piece of legislation that passed a little over a year here, the credit card act, which put in statute a number of changes with regard to subprime credit card companies. all fine and good. i voted against it. we have companies in south dakota who play by the rules. they have abided by the laws. they are a heavily regulated industry. and yet, congress decided over my objections to move forward with legislation that would change the rules by which they play. well, that was all fine and good, but when it came time to implement those regulations, the federal reserve decided that they -- that the statutory

framework that was created wasn't quite good enough. and so the initial regulations that were out there, this company reeked to those, tried to adapt its business model. and, well, the fed decided that wasn't good enough, and so they took in regulation steps that went beyond what the statute had called for and made it even more difficult. we predicted at the time, we said this is going to cost jobs in our state of south dakota. just this last week, that particular company announced that they are closing their operation in spearfish, south dakota. that will impact 330 jobs in a town of about 10,000 people. incidentally, the mayor of that city worked for this company. and there is a story here from the rapid city journal which describes the economic impact of these job losses, what it will mean to that community, what it will mean to the entire area. and i can't help but thinking, another example of regulatory overreach, of regulatory agencies deciding that they know

best and going above and beyond even what this congress had called for in terms of the legislative requirements, the legislative intent and taking regulations beyond that. and so you have got real-world impacts on people out there as a result of decisions that are made here in washington, d.c., and when we tried to make these arguments to the -- to the regulators, they couldn't have been less concerned about jobs. we said this is going to cost us jobs. this is the beginning, by the way. there is another location in huron, south dakota. there is one in sioux falls, south dakota. i think this is the tip of the iceberg of what we're going to see in terms of the job losses caused, caused by regulatory overreach because a federal agency decided they knew best and went above and beyond even what the united states congress had said with regard to this particular issue. so, madam president, these are, again, real-life examples of decisions made here in

washington, d.c., and the impacts they have in the real world. i hope that we can -- we can put policies in place here that will enable and encourage economic growth and job creation, not hinder and inhibit it. with that, madam president, i yield the floor. a senator: madam president? the presiding officer: the senator from nebraska. mr. johanns: madam president, i rise today to talk about an issue that i have found the debate to be very fascinating about. that is the proposed medicare reform. i find the debate so fascinating because it's proceeding as if there had been no changes to medicare recently. anyone telling you that there have been no changes just isn't being straightforward. sweeping changes to our medicare system, they were debated, they

were passed in the most partisan way possible. only democrats voted for them. and they were signed into law by president obama. the president's new law already puts this fundamental health care program in significant jeopardy. now, some may come down to the floor or some may rise up and say, mike, you're all wrong about this. they'll want you to believe that the $500 billion in cuts to medicare in the new health care law will actually extend the medicare program. but in reality, the health care law isn't giving new life to this program at all. the congressional budget office reports that medicare will be insolvent in 2020, just nine

years from now. yes, that's right. complete insolvency in nine years. that's the current plan voted on and signed into law by the president. and that analysis doesn't even account for the $500 billion cuts that were taken out of medicare to fund the health care law. now, don't believe me. we've consulted the experts. the experts say that the health care law counts, or attempts to count the same dollar twice. the medicare actuary says these cuts -- and i'm quoting here -- cannot be simultaneously used to finance other federal outlays such as the coverage expansions under the health care law and,

and to extend the trust fund. unquote. this can only mean either the new health care law doesn't have enough funding to the tune of $500 billion, or in the alternative medicare is in more serious jeopardy than even the trustees' report points out, in jeopardy of becoming insolvent much sooner than the experts predict. so i stand here today and i tell you if you are 56 years old or younger and you're thinking about the day when you apply for your medicare benefits, well, the experts say the trustee says, sorry, you're out of luck. under the current law of the

land, that's the case. the president's health care reform, which again i point out was passed on the most partisan of partisan votes, did not get a single republican vote. and every medicare beneficiary will be impacted by the cuts of this program, to this program. so if you're out there and saying, well, mike, i want to protect the poor, all i can tell you is the president's plan does not do that. if you're saying, but, mike, i want to protect the middle class, all i can tell you is that the president's plan doesn't do that. and what do we get out of that? according to trustees, complete insolvency in nine years. you see, the president's reform

is founded upon the unrealistic assumption that doctors will continue providing the same services to patients with a 30% cut in a medicare program that's not covering their costs today. i just had doctors in my office saying, mike, we can't continue to provide medicare services if that cut occurs. and yet, that is the current law of the land. by comparison, one of the plans we may vote on this week protects medicare beneficiaries over 55 by just saying, look, we are going to hold you harmless. your benefits will not be changed at all. the plan says let's fix this

physician payment formula so they don't have the 30% cut, so access for medicare patients can continue. the plan says let's protect those who are especially deserving of our support, those who are below 150% of the poverty level and truly can't afford the health care they need. you're probably say, but, mike, what plan is that? the plan i'm talking about is paul ryan's plan. now you tell me which sounds more severe in its approach, a plan that puts government bureaucrats in charge of controlling health care costs, robs medicare of any potential savings to start a new entitlement, and at the end of

this, in nine years, bring bankruptcy to medicare. or a plan that empowers patients to choose their own unique plan, ensures medicare savings are reinvested back into the medicare program and preserves medicare by bringing costs back to sustainable levels, which is the ryan plan. i want to be clear about the fact that there are some things about this plan i would love to debate and change. for example, perhaps we could devise an incremental transition within the medicare proposal. maybe we need to evaluate if the medical savings accounts for those most in need should be indexed to something better than the general inflation rate. maybe those below a severe poverty line should be exempted entirely. perhaps some of the tax reform,

including elimination of certain tax deductions, needs to be eliminated. we will have the opportunity to debate and make improvements, but only if we vote to proceed to the bill. but you know what? arms are going to be broken all over the place here this week to make sure that that doesn't happen, because this isn't a serious attempt to try to fix the problem. this is all about messaging for campaigns and political consequences. the reality is no plan's going to get enough votes, and i'll stand here and i'll observe those arms getting broken. we'll need orthopedic surgeons on the senate floor to fix them. sadly, passage was never the intention here. these plans were scheduled for votes purely for the sake of messaging on an important program that provides health

care for seniors, that by the trustees' own definition will be insolvent in nine short years. these votes aren't designed to fix this problem. these votes, i guarantee, are all about political fodder for next year's election season. well, i just believe this isn't what we were elected to do on the senate floor. these antics are what rightfully embolden those who say congress is incapable of solving these very, very hard problems. as the senator from south dakota indicated, today we mark 700 -- 756 days since the senate passed a budget. as a former governor, i can't imagine going to the people of

the great state of nebraska and saying, you know, i've been thinking about it; we won't be doing a budget this year. i'd be looking for a new state to live in. well, 756 days in this week -- and this week we're not even making a serious attempt to deal with it. with a deficit khaoegd $14 -- exceeding $14 trillion, our nation needs something greater than political symbolic votes which we all know will fail. maybe, just maybe we can muster the courage to take seriously our responsibility to seniors and to all americans. madam president, thank you. i yield the floor. a senator: madam president? the presiding officer: the senator from iowa. mr. grassley: i ask unanimous consent to speak to my colleagues as if in morning business for 30 minutes.

the presiding officer: without objection. mr. grassley: on february 14, president obama delivered his budget to the congress. i often describe to my constituents that washington is an island surrounded by reality. nowhere is this more apparent than with president obama's february 14 budget. in presenting and defending his budget, president obama and his staff have said his budget -- quote -- "lives within our means." and an additional quote -- "that it will not add to the debt." and an additional quote -- "that we're not going to spend any more money than we're taking in." well, obviously all you have to do is study the budget and you come to the conclusion that these astonishing statements don't equal the facts. the congressional budget office recently projected the deficit

for fiscal year 2011, the year we're in, will exceed $1.5 trillion. this is on top of a trillion-plus deficit in 2009 and 2010. today of every dollar spent, more than 40 cents is borrowed. our country is on an unsustainable path. but you wouldn't realize that by looking at the president's budget proposal. it doesn't recognize the serious fiscal crisis that our country faces. what it represents is the status quo. over the ten-year period, president obama's budget adds more than $10 trillion in a publicly held debt and $14 trillion in gross debt. does that sound like on february

14 that he put before congress a budget that we're going to live within our means and not spend any more than we take in? during this period of time, going up to 2021, debt held by the public would reach 87% of g.d.p. compared to a 50-year average of 35%. according to the congressional budget office -- quote -- "if those trends were to continue beyond 2021, the resulting path of the federal debt would be unsustainable. in fact, c.b.o. estimated that by the year 2040, under president obama's budget, debt held by the public would would . is this the budget the democrats will support? is this the fiscal path we're

going to endorse? while president obama claims that we're living within our means, the smallest annual deficit will be $748 billion. his budget doesn't even begin to put our country on the right path. the final three years of his budget have annual deficits totaling over $1 trillion. as former comptroller general david walker has stated, our country was founded on principles such as limited government, individual liberty, and fiscal responsibility. the president's budget falls short on each of these three principles. it increases spending. it grows government as a percentage of our economy. it is clearly fiscally irresponsible. and because of the legacy of deficits and debt, it creates --

it will undoubtedly infringe upon the liberties of future generations. in 2006, then-senator obama argued against raising the debt limit. he believed at that time that the very need to raise the debt limit was a sign of leadership failure. by his own standard then, president obama is not living up to his standard, so is that leadership failure? would he admit that today 1234* -- today? his no vote in that year was to make a point about needing to get serious about fiscal discipline. we're in the third year of president obama's presidency. we're in the midst of the third consecutive year of a trillion dollars of annual deficit. deficits have gotten larger, not smaller. now, of course, i recognize that

many of my democratic colleagues will come to the floor and argue that they support the policies that president obama put forth in a speech later on -- i guess april -- at george washington university. unfortunately for the democrats, the leader of their party doesn't deliver speeches in legislative text. speeches alone aren't going to solve the big problems that we face in this nation. we need serious solutions to our country's very serious problems. we need real leadership. the future generations of this country serve no less -- deserve no less, and that's what house budget chairman ryan has offered, and that's what we have colleagues here on our side of the aisle like senator toomey and senator paul are going to

offer to the united states senate. what have the democrats offered to address the looming fiscal crisis? and the answer is no resolution at all. so i have a blank page here representing the fact that they have no plan whatsoever. are they going to allow a debate so that they can offer their ideas to address our fiscal calamities? well, you just heard the senator from nebraska postulate that that's not going to happen, that we're having a series of votes, but they are for show, not for real. the american people have sent 53 democratic legislators and senators here to washington. a budget can pass the senate with just 51 votes. it doesn't take the super 60 votes that so many issues on the floor require if you're going to

get to finality. so far, you can see that they have shirked their responsibility. nothing. it's been more than 750 days since senate democrats offered a budget. what's the delay? i want to ask them where is your budget? i suppose they'll argue that our nation's fiscal situation doesn't require a budget. or perhaps they have simply run out of ideas to address our deficits and our debt. admiral mike mullen, the chairman of the joint chiefs of staff, said earlier this year that our debt, meaning our national debt, our cumulative debt, is the greatest threat to our national security. surely, the senate democratic leadership would want to put an honest plan forward to address that threat. they don't even want to debate a budget. this exercise is a motion to proceed to a number of budgets,

none of which were written by the democratic majority. i guess they intend to vote against proceeding. they don't want to even debate a budget. well, by this time, most of the time in the last 35 years, we have had a budget through the united states senate. instead of leading, they would rather demagogue the serious efforts put forth by republicans. they are not going to stand and defend the defenseless budget that their president submitted to congress just three months ago. they're not going to write their own budget. it's still blank. they're not even going to vote to allow debate on budgets that were drafted by others. so are we witnessing a leadership failure similar to the one that senator obama referred to in 2006 in his speech here on the senate floor?

the democratic majority would rather demagogue medicare than produce and defend their own budget. i presume there is a lot of speeches in this town today. democrats hitting their chests, saying we run a special election in new york state yesterday based upon the fact that republicans want to kill medicare. well, i want to put forth the fact that if you do nothing as the trustees have said recently, there isn't going to be any medicare in nine years. i can put forth ample evidence that in obamacare, that bill puts medicare on a path to rationing of medicare and reducing the number of doctors that are going to take medicare patients. so already medicare is on a path to destruction if we don't intervene and do something about it, and the sooner we intervene,

the better, and we ought to be intervening now in a bipartisan way instead of all the talk about partisanship and destroying it just because people -- there are some people in this congress who know that medicare is a problem, and the sooner you deal with it, the easier it's going to be to deal with it. medicare is a very, very important part of america's social fabric. it was intended to be that in 1966, and it's still that today. and i intend to work to make sure it stays to be a part of our social fabric. it's a commitment made to seniors today and to people who are not seniors today yet. it is a commitment made to all for the future. so it's very important that we as stewards of the medicare program take serious our charge to make sure it remains for

future seniors. with that in mind, i come here to call out the most dangerous threat to medicare -- to a medicare program that we face on the floor this week. and let's be clear. it's not the budget resolution authored by congressman paul ryan and passed by the house of representatives. the most serious threat to the medicare program this week is to those who propose to do nothing or offer no plan whatsoever for saving medicare. mr. president, doing nothing is the most serious threat to medicare. for all the talk about killing medicare as we know it, the democrats' do-nothing budget that i have held up here so often, the do-nothing budget is the surest way to kill medicare as we know it. the folks coming to the senate floor with nothing in their hands but criticism of these

briewgz then are irresponsible. by attacking the house budget resolution while proposing absolutely nothing, the democrats are plunging their collective heads into the sand like these ostriches sometimes are described as doing. ostriches acting like everything with medicare is just fine and that nothing is a viable -- and doing nothing is a viable option. let's look at the facts. last week, the c.m.s. actuary -- and that's a professional person, that's not a political person, but he's the president's actuary -- submitted his annual report on fiscal health of medicare -- the medicare program. frankly, his conclusions are very disturbing. the actuary confirms that the medicare program is already

contributing to the federal deficit. it is spending more than it takes in, and it will continue to do so throughout the coming decade. the actuary found -- this professional person, this person that is the president's actuary, found that the medicare will run out of money by the year 2024, five years faster than his projection last year. for the sixth straight year, the report issued a funding warning showing that the medicare program is taking a disproportionate share of its funding from general revenue, thus crowding out programs like defense and education. the situation is only going to get worse. in 1965 when medicare was created, baby boomers retiring today were then just teenagers. today, we have 10,000 baby boomers retiring every day, with fewer and fewer workers paying into medicare to support these

additional retirees. the average couple turning 65 today paid over $109,000 into medicare over their lifetime but were receive over $343,000 in benefits. now, stop to think about that. everybody wonders why medicare might be in trouble today. the average person retiring today has paid in $109,000 but will receive about $343,000 in benefits. that just does not add up as a sustainable program. and anybody who says that you don't have to do anything about medicare, it will take care of itself, well, you can see how misleading they are. medicare was created, the average american -- that would have been in 1966. the average american lived to be age 70. today, thanks to incredible advances in medical care, the average american lives to be 79. these are the facts.

so now, knowing these facts, is the time for congress to recognize the reality of medicare's fiscal crisis and not just recognize it but recognizing it, doing something about it. put simply, medicare is unsustainable without serious, thoughtful action, and this blank sheet of paper without a budget being offered is not a serious, thoughtful action. to say otherwise is to ignore the facts and to stick your head in the sand. the ryan budget as it relates to medicare has been -- has had much discussion lately. it is simply a blueprint. a budget -- even if this page were filled in, a budget never becomes law, never goes to the president of the united states.

it's a discipline for the congress of the united states. it does not become law. so anybody that says that voting for a budget is voting to do something to medicare is crazy. it's not even because actual policy, as we know, is going to be determined by other committees other than the budget committee. in the house, most often the ways and means committee. in the senate, the senate finance committee. that's the committees that write the bill that you can say what's happening or not happening to medicare. anyone here telling the public that if this budget blueprint is adopted, it will be a law doesn't understand how the legislative process works. but this vote isn't even about a budget blueprint. the debate that we're having today is about a simple motion to whether we ought to even

debate a budget. if the democrats were willing to proceed to an honest and open debate, we could talk about where we want to go with the medicare program at that time. if the democrats are willing to proceed to an honest and open debate, we could debate steps to save the program. if the democrats were willing to proceed to an honest and open debate, we could have amendments to improve the resolutions as offered. of course, the democrats are not willing to proceed to an open and honest debate. i agree that changing the nature of medicare is a significant step. requiring people who are ten years away from retirement to expect to pay more for their health care in requirement is a significant change in policy. it should be considered, however, thoughtfully in the context of medicare's serious fiscal difficulties. they aren't going to go away.

describing this policy as ending medicare for seniors is irresponsible and factually false. people who engage in this type of demagoguery are endangering coverage for the very people that they claim to support because they continue to propose nothing. where is the democrat bill? this is it so far. a blank piece of paper. produced nothing. i have great respect for the chairman of the senate budget committee. i know he has tried to produce a budget, but apparently his leadership thinks that demagoguing republican budgets is far more politically profitable than standing behind one of your own plan, and so they have squashed all of his efforts to produce a budget. even though we don't know that the democrats have turned into ostriches when it comes to saving medicare, we are

fortunate to have a record over the past several years to examine. so let's look at obamacare. passed solely in a -- a partisan vote of 2010. it took $500 billion, a little more than $500 billion out of medicare to fund a new entitlement. so medicare's in trouble. so take away $500 billion from it, start up a new program, does that sound fiscally responsible? i have no doubt some folks may come to the floor to argue medicare savings extended the life of the medicare program. but every reputable source that has analyzed that claim has appropriately tagged it as double counting. the c.m.s. actuary that i've referred to in the past today continues to call for some of

the productivity cuts made by the democrats in their health care reform bill as unsustainable and unrealistic. and i say -- he doesn't say it; i say it, going to bring rationing. so down the road what sort of health care are seniors going to have? it isn't going to be what they know today. and of course we all know that the democrats failed to resolve the sustainable rate problem, growth rate problem which is a formula for doctors' reimbursement. so the problem of physician payments continue to haunt fiscal future of medicare. if we don't do anything this year, medicare physicians will face a 30% pay cut. imagine that. today many medicare patients already are being denied care and personal choice that they deserve because the a.m.a., the

american medical association, has said one in three primary doctors is limiting medicare patients. and more than one in eight of those doctors is forced to deny medicare patients altogether. our seniors already face the pain of a broken medicare system. yet, the democrats remain ostriches with their heads in the sand because they have no medicare solutions that they want to offer. perhaps i'm being too hard on the democrats. president obama perhaps speaking for the democrats, or perhaps not, has put an option on the table for addressing medicare spending. he did it in a speech at george washington university december 13. now, of course, we won't be able to vote on that here today because senator mcconnell said yesterday you can't vote for a speech. but at least we should consider the option that the president put on the table.

in his speech, president obama suggested that we should control costs on medicare by tasking the independent payment advisory board that was set up under obamacare to do even more than what we proposed a year and a half ago when the bill was passed. now you might ask, what is the independent advisory board on obamacare? it was created by the democrats' health care bill. it's a 15-member panel of unelected advisors that would make binding recommendations on how to reduce medicare spending when spending is projected to exceed a certain level. effectively, their recommendations had the force of law without congressional intervention to replace the cost -- to replace the cuts that they might suggest. and that under the law would take a 60% majority. aupbd know that -- and you know

that's very difficult, to get 60 votes in this body for any one thing. that law says that the board cannot make decisions that directly relate to premiums, deductibles or kpoeuplts that medicare -- co-payments that medicare beneficiaries pay. it says the board can't change the eligibility criteria for medicare benefits. so what can the board do, you may ask. it's going to zero in on provider payments, doctor payments. so i want to repeat a statistic i quoted earlier, because after the payment review board gets done, you're going to have more than the one in three primary doctors not taking medicare patients that presently is the situation. and we have one out of eight doctors denying medicare patients altogether. in other words, they aren't going to see medicare patients. and that's today, and it's going to get worse when this payment

review board gets done. according to the joint economic committee, today medicare allows medical providers to collect 89% of the cost of services provided to seniors. under the president's proposal, by 2022, medicare providers will only be allowed to collect 66% of the cost of services provided to seniors. reductions will clearly restrict seniors' access to the quality health care. so let me sum up what we do know about democrat actions on medicare, because it's already on a path to destruction. so, of course, i get a little bit upset when i hear people on the other side of the aisle saying republicans want to do away with medicare when it's part of the social fabric of america and we want to keep it as part of the social fabric of america, and we want to do it not only because it's a federal program, but we want to do it because it's tied in with a lot of corporate retirement health

plans where it becomes a primary payer, and the corporate health plan becomes a secondary or additional payer. so, summing it up by saying they've enacted already $500 billion worth of cuts to fund a new entitlement called obamacare. many of those cuts are described by the independent c.m.s. actuary as unsustainable. they have yet to find a way to fix the doctor reimbursement formula called the sustainable growth rate. and still the president has proposed yet further reducing payments to providers. of course what's that going to do with seniors of america? it's going to reduce access. this will make it harder for seniors to find providers willing to treat them.

this will provide -- this will drive some providers out of business, of providing services to seniors. in other words, they can't afford it. there's one simple word to describe this approach, a word that i do not take lightly. the word is "rationing of health care for seniors of america." it may not be direct, overt rationing, but you have to have your head buried very deeply in the sand not to realize that that's going to be the outcome of policies already put in place by this president through obamacare on medicare. and then they want to accuse us of destroying medicare. so, i get back too what today -- i get back to what today's debate is all about.

i think we ought to seriously be having a legitimate floor debate rather than a series of political show votes today. i will vote for the senate to begin debate on the ryan budget and the other republican budgets as they are offered, because i don't have a chance to vote on anything from that side of the aisle because, see, it's just a blank sheet of paper. there's nothing there that the other -- that the majority party. not the minority party; they are the majority party, have suggested. i will vote to begin debate, not that i support any of their budgets in their entirety, i will vote to begin debate because our fiscal situation demands serious efforts or giving serious consideration. and in no area, as i've made clear in my remarks today, is this more critical than in

medicare. because medicare is on a path to bankruptcy. people who support the medicare program and care about those who will count on that program today and for many years to come are willing to put serious plans on the table for debate. it is our responsibility to ensure medicare survival for future seniors. doing nothing is the worst for medicare. the surest way to kill medicare as we know it is the democrats do-nothing plan. demagoguery is irresponsible. so i would suggest pull your head out of the sand and join a real debate to save medicare for the future. i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call:

a senator: mr. president? the presiding officer: the senator from rhode island. mr. whitehouse: is the senate currently in a quorum call? i ask that it be vitiated. i ask that following my remarks, senator mccaskill be recognized to speak for up to 15 minutes. and following her remarks, that senator sessions be recognized to speak for up to 20 minutes. the presiding officer: without objection. morning business is closed. under the previous order, the senate will resume consideration of the motion to concur in the house message to accompany s. 990, which the clerk will

report. the clerk: motion to concur in the house amendment to s. 990, an act to provide for an additional temporary extension of programs under the small business act, and so forth and for other purposes, with an amendment. mr. whitehouse: madam president, i ask unanimous consent to speak as if in morning business for up to ten minutes. the presiding officer: without objection. mr. whitehouse: madam president, 50 years ago on this day, john f. kennedy addressed a joint session of congress and he presented to our nation a bold challenge. he said -- quote -- "i believe that this nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to earth." it was and remains a memorable challenge. to meet it would require long-term commitment and unprecedented resources. it had great risks and it had no simple solutions, but president

kennedy put his faith in the talent and dedication and discipline of america. he believed that his challenge could mobilize our country to meet this challenge and succeed, and he was right. president kennedy's goal to in ten years put a man on the moon and return him safely was clear, was direct and was accountable. the result was a vast mobilization of private and public resources that collaborated in innovative ways to achieve that singular purpose, and we did. i come to the floor today to call for a similar challenge to reform our health care delivery system. while the goal now is different, the urgency and the need to mobilize both public and private sectors towards a common and vital purpose is the same.

madam president, our massive budget deficit poses a real threat to our economic and national security. the chairman of the joint chiefs of staff identified it the other day as the single greatest threat to our national security, our nation's debt. there is also common ground that the skyrocketing costs in our health care system are at the part of our nation's fiscal problem. i do not agree much with congressman paul ryan, but we do agree on that point. he has said if we are to be honest about our debt and deficit at its heart, it is a health care problem. so now is the time for our country to set out a clear challenge, as president kennedy did, that will address our health care cost problem. that challenge must stand on two facts. one fact is that our health care

cost problem is a systemwide problem. republican proposals to end medicare as we know it, misdiagnose fundamentally the problem. most everybody in america knows that it doesn't matter who your insurer is, whether you're insured by medicare or medicaid, the v.a. or tricare, united or blue cross, in the last decade, costs across all insurers have gone through the roof. indeed, just today in the news, secretary gates is reported to have said about his defense department budget -- "everybody knows that we're being eaten alive by health care. we have a systemwide health care cost problem, not a medicare

problem." health care expenditures are nearly 18% of our gross domestic product. the next least efficient country in the world spends only 12% of its g.d.p. on health care, and you would have to go far down the list of our competitor nations before you find a country that has as poor health outcomes as america has, even though we spend vastly more for our care. we have a system-wide health care cost problem and a system system-wide health care quality problem. the second fact is that the health care cost problem and the health care quality problem are related. we have at our disposal an array of health care reforms that will reduce the cost of health care while improving the quality of health care. these types of reforms, new

models of care coordination, quality improvements in hospitals, paying for quality, not quantity to our physicians and reducing overhead costs in the system, we all have one liability and that is they don't lend themselves easily to estimates of cost savings. and because of this, there is less attention than there should be to the great potential of these reforms. bowles and simpson, domenici and rivlin have all conceded this in our budget committee hearings. the promise of these reforms is immense. the president's own council of economic advisors has stated that 5% of g.d.p. can be taken out of our health care system without hurting the quality of care. that's about $700 billion a year. the new england health care institute says it is

is $850 billion a year. the lewen group has estimated the potential savings at at $1 trillion a year, a figure echoed by former bush treasury secretary o'neill. the savings are there and they are considerable. the question is how do we get at them? well, let's first look at the affordable care act that we passed. the affordable care act's delivery system reforms provide many of the tools that we need to drive down costs and improve the quality of care. as we were working on that bill, i had a regular meeting in my office of experts from around the world -- from around the country, from the business community, from the labor community, from the n.g.o. community who really were dialed in to the delivery system reform problem in this country, and we met regularly, we met early in the morning, and every time we

asked the same question: what more can we put in this bill to make sure that it has the tools to get these reforms done? by the time that bill passed, we were in agreement that everything that you could want was in that bill. it provides a toolbox with five major strategies that we need to deploy. the first is quality improvement which will save the cost of medical errors, of miss diagnoses, of disjointed and uncoordinated care. the clearest and simplest example is reducing hospital-acquired infections which affect nearly one in every 20 hospitalized patients in the united states. and they cost us about about $2.5 billion in unnecessary health costs every year. the tens of thousands of deaths that are associateds with these these -- associated with these hospital-acquired infections are

tragic, and it's made even more so by the fact that they are preventable. simple reforms like following a checklist of basic instructions, washing hands with soap, placing sterile drapes over the patient result in huge reductions in rates of infection and in cost. so first, quality improvement. the second strategy is prevention. the most inexpensive way to deal with disease is to prevent it in the first place. more than 90% of cervical cancer, for instance, is curable if the disease is detected early through pap smears. the third strategy is payment reform. we must pay doctors for better outcomes, not for how many tests and procedures they order. rhode island has a promising medical home, primary care payment strategy already under way. the fourth strategy is simplifying administrative processes to reduce overhead costs. the insurance industry in this country has developed a massive

bureaucracy dedicateed to delaying and denying payments to doctors and to hospitals. so to fight back, the doctors and the hospitals have had to hire their own billing departments and expensive consultants, and all of that, the entire war over payment, between insurers and hospitals and doctors, adds zero health care value. it only drives up costs. and finally, the fifth strategy is a robust, secure health information infrastructure. health information technology was years ago estimated by the rand corporation to save save $81 billion a year, and savings may very well be higher as the system builds itself out. not only is a robust health information infrastructure a good end in itself, but those four other delivery system strategies are empowered and

advanced and expanded by robust health information infrastructure. these five delivery system reform strategies hold the promise to deliver the enormous savings we need to extract from our health care system, and to do so in the most humane way, by improving the quality of care. the debate that we need to have on our health care cost problem must focus on delivery system reform, on how we can implement these delivery system reforms from the recent health care reform bill as quickly and as effectively as possible. and this is what brings me back to president kennedy's speech on space exploration. president kennedy did not say i am going to see to it that america bends the curve of space

exploration. had he said that, the speech would have been consigned to object live yeah, and -- oblivia, and we would likely not have put a man on the moon on time. instead, he made a memorable challenge with a clear objective -- put a man on the moon, bring him back safely within a decade. everybody could know whether that had been done or not. it was a clear and accountable purpose, and it galvanized the entire federal bureaucracy towards that common purpose. we can and must do the same thing with health care delivery system reform. we can and must have a clear challenge to strive toward. it is not enough to talk about bending some health care cost curve. our country has the talent and the discipline to accomplish extraordinary things.