head of a national organization. typically, you pick people who have had experiences in that regard. and when we, and that's not the case with you and, again, you seem like an outstanding individual in many ways. >> thank you. >> you had announced that you wanted to run for governor of ohio which makes it even more odd. typically, we don't have regulators come up here running agencies that can make rules over the entire financial system quote that might be able to make a name for themselves in doing so when their goal is to go back to their home state and run for governor. you seemed to indicate maybe that wasn't the case now, but i wondered if you would speak to that because, as you can imagine, especially in the way this organization that's been set up, that would create some question marks and flags. >> yes. and appreciate the opportunity to address that issue squarely. ..

>> and i supported those changes in the rules which eventually were adopted by congress in the car to act which i think was a good set of reforms in the credit card industry. one of the jobs of the pure will be to monitor in compliance with those new laws. and we had a conference early this year which we found in eventually that compliance was pretty good with the new laws,

and it had not restricted credit and did not seem to be raising the price of credit for people. so those seem to be sound and sensible reforms that congress had adopted. >> you're not concerned about people who pay their bills on time having fees higher because of people who don't pay their bills on time? while you're answering that, just defaults in general, we are creating an environment it appears to me in this country where we are encouraging people on economic grounds, self-interest grounds, to default. i mean, we have agencies of government that now are encouraging that. do any of those kind of things concern you, especially someone who is going to be in major ways overseeing big parts of the? >> they do, senator, and i think that's part of the balance that has to be drawn with any these types of regulation. i'm somebody who, i have credit cards but i try to pay those ballots is very diligent on target i do want to be in addition fees beyond have to.

i do not want to be build for the problems of others. i also think that the credit card practices as they were reform by the card act have been good reforms but i think congress acted wisely and we'll be attempting to ensure that that law is being followed as congress enacted it. so i guess that's my attitude toward the issue. >> the chairman has been very generous. i might stay for a second run. and thank you for your testimony in thank you for bringing your family. >> senator reed. >> thank you very much, mr. chairman, and thank you for your willingness to serve in a very difficult time in a very difficult office. you've also served as the state treasurer in ohio, that's correct? >> i did. >> so you come to this job with multiple skills. one as an attorney general who had to go out and protect

people, but essentially the chief financial manager for the state of ohio. and so suffice it to say, you can elaborate, you are certainly i think aware of, not only aware of it sensitive to some of the legitimate concerns of the banking industry about the predictability about the soundness of financial institutions, about the needs that they have, is that. is a? >> i think im, senator, as you mentioned i was both a state and county treasurer, aaa rated county which is unusual in american local government finances. but most notably perhaps is my tenure as treasurer of the state was the time leading up to the financial crisis. it was 2007-2008, one of the most difficult time to try to manage and safeguard public funds that i think we've seen in my lifetime. we were very careful and conservative about how we invested the public's money, how we safeguard that money. we suffered no losses when i was

the state treasurer in any of our funds including our state and local government fund which was not true of a number of states around the country. i'm very proud of that but i also think that work gave me a very close working relationship with banks in ohio because they partnered with us in a lot of the work we did to manage the state finances, both as custodians of pension funds in terms of debt management and debt issuance, and the like, both large and small banks so he gave me a good working sense of their operations, of their concerns. i created a banking advisory council and a state treasure and carried forward the same approaches as attorney general. so we would meet regularly i would hear their concerns and he was talking about whatever whatever issues were on their mind. i think that's the accessibility i've tried to foster, and i would bring that to the bureau. but i do have that background and i think it's part of what may be would be kept in mind in accessing my qualifications. >> one office within your

purview is the servicemen's affairs, led now by holly petraeus. can you -- many of us you think it is a critical because these are employees of the federal government, and they are usually far from the home and the ability to connect a local attorney, general our state's is limited. and you know, this goes back about 35 plus years. i can recall how they were victims of many consumer frauds, and now and then because of the internet it's even worse, even more difficult for local authorities to deal with it, but now we have a federal office. you might comment on that. >> thank you, senator. i had some awareness of these issues when i was ohio attorney general, we had a pro bono group that provided legal advice to soldiers service members were being deployed often on short

notice and to the families. but i will sit since coming to the bureau, i've learned a lot and i expect to continue to learn a lot. part of what i've learned has been from mr. petri soon as you say is an outstanding colleague of mine and has her office as service members of your pictures does all a thing for special needs of service members, how deployment and even forced transfers within this country create hardships for their families. she herself talks about, she and her husband have moved i think she said 23 times in 36 years over the course of his long and distinguished career. but also the fact that they are now finding that if you have consumer finance issues as a citizen, they are bad enough, tough enough you might face bankruptcy or foreclosure. as a serviceman or you can lose your service clearance. that's not good for the service member, not good for the military, not good for the country. these are very serious issues. she continues to bring them to our attention. recently she and i met with the

jaguar of all branches of the service to begin to coordinate on enforcing the law, to protect servicemembers and the special needs around military bases which are a magnet for a lot of financial predators. and so this is something we're excited about his and we hope to be up to deliver for those service members, someone will stand on their side. and i hope that will be one of the successes of the new bureau. >> thank you very much. thank you, mr. chairman. >> senator shelby. >> i have no questions. i have an observation. [inaudible] i'm sure you have a good background, you have a fine family. >> thank you. >> you are caught between a big substantive debate here as you know. that's going to have to be resolved i think before we moved his nomination farther. and i have discussed data with you. i want to join senator corker as

record, mr. chairman, senator corker and i were very involved in the banking legislation. and we had a consumer agency. but we wanted accountability, and we still do. thank you. >> senator brown. >> thank you, mr. chairman. i appreciate senator shelby's comments because that's really the point that, that during this whole process that senator corker and senator shelby and senator dodd and others were in the midst of negotiation to work at legislation. that's what we do around here. that many, many elements of the consumer part of the bill, and title ii especially i know. senator corker, you worked on, were done with major concessions on both sides. there were some things in the bill senator shelby support an amendment i had, largest banks were in fact too large and we

should find a way to do something about those six largest banks. he and i tried on the senate floor. we lost. and so that's what happened here. you win some you lose some, but i guess i'm puzzled by senator corker's comments about excessive partisanship you because we wrote this bill. it pass with some number of republican votes but it got over 60 votes but they were certainly consistent and frequent republican input, much of which was accepted in this bill. i understand any and you didn't didn't vote for legislation that passed by both houses. it was signed by the president. i go back to what the senate historian told me that never have we seen in the senate a party saying no, to confirming putting people in place to run an agency because the one party, minority party, large minority, and is supposed to parts of the law. so we are going to just take our vote and go up and then call it

partisanship. i don't really, i just don't quite understand it. i think in the end the question is richard cordray quality for this position, and i don't think anybody has made the case that he is an. and most of us has made the case that he is. it's a pretty strong case. let me, so, you know, i hear that sort of the unaccountability question that one senator said it's an unaccountable consumer protections are. and they want to run through and then get your comments, and i will speak for a couple of minutes. walking through this, what i think the bill does about the so-called unaccountable rulemaking process, and i will give a couple of examples before proposing the law, if there's a consumer disclosure involved, the paperwork reduction act requires utc to review and clearance of omb. you must consider the potential benefits and cost to consumers and financial consumers provided, banking regulars and other federal agencies regarding

the rules. this is all before proposing the rule. this is significant economic impact. you must follow the small business regulatory enforcement fairness act. you must under the ragged reflects ability act prepare an initial regulatory flexibly announces. and proposing the role the way i read the law is you must give public notice proposed rules, offer the public opportunity, under administrative procedures act, consult with your corporate banking agencies, pursuant to the regulatory flexibly act, conducted final flexibly announces. after the rule has been finalized, again, this is all, this doesn't sound unaccountable to me, but after the rule has been finalized and if any member of the console object to regulation they can petition, if a member agency objects can petition the fsoc to get it removed. they can stay or set aside the regulation has pursued, submit a report to the house, senate and gao. under dodd-frank requires the

cfpb to review each with significant rules or orders within five years of enactment to address the rules effectiveness. is your understanding similar to that of the whole process of accountability, statutory requirements that you would face as director? and i'll ask another question in estrogen if you would. does private party have an opportunity challenge one of your regulations in court, what recourse only does the president have? can the president remove a runway director because he or she is unhappy with the directors ideology, or direction or rulemaking, or whatever? and our these checks summer to those that apply to other agencies? i would like you to sort of spell that out fourth. >> all right, that was several questions that i will do my best to address them. first of all, as with any independent agency, the leadership of the consumer bureau as with every other agency is not subject to direct

removal by the president as a cabinet departments. my understanding is congress sets up agencies in that manner energy keep those agencies close to congress. our job is to enact, to carry out the laws enacted by congress, and where subject to your oversight in doing so. the long list of restrictions and/or process guidance that you laid out in terms of rulemaking by the bureau i believe was pretty comprehensive. i was trying to take notes as you went. i would also say that force in particular one thing i want to emphasize is i think where the real opportunity here in hurting many regulations from other agencies that we did that help to right. and that in the aggregate may have created undue burdens, particularly as it was sort of a fever for disclosure over the last 30 years and they got to the point where often the disclosure for so long and confusing that they didn't help consumers but they certainly post burdens on lenders. there's an opportunity to try to

streamline that and cut it back. that's something that will be a priority for me if i'm the director of the bureau. we also are subject to oversight, you asked, by the courts. the d.c. circuit court of appeals recently rendered a pretty, i would say, tough decision on rulemaking by federal agencies in terms of making sure that the agencies do a careful cost-benefit assessment of any rule, and that they not simply reject inclusion and then rationalize it after the fact. that's something we will take you hard in the work we do at the agency. there are a number of checks that are similar to those of other agencies, and there are some checks on the bureau that were imposed in the law that are in addition or new compared to other agencies, but we will live with them all. our job is to carry out the laws enacted by congress and we intend to do that to the letter. >> senator. >> thank you, mr. chairman, and thank you, mr. cordray.

as you may know, my interest in this agency, i was one of the original sponsors, came about after 10 years of trying to get very simple legislation, credit card disclosure legislation, or get the fed actually to require that they be disclosure of what credit card interest rates are. and i just got basic, they're busy with other things. kind of thing. that's what i feel this agency is necessary. none of the other agencies put the consumer at the top of the list. it's not their mission. fed is safety and soundness. and so independent agency had a great deal of appeal to me. and that's what i was a strong advocate of it. it's an agency designed to finally put consumers first. it's under attack, even before it is fully on its feet. and i don't want to go back to the old days were to go to the fed or some other agency and said the consumer needs this

reasonable protection, what i was asked what credit card. we've gone beyond that now, simple disclosure. no one knew what the interest rates were when they signed up for credit cards and the fed interest was to put it kindly, sporadic. and so, and i like the fed in general but not on this area. they weren't very good. and so here we have, and attack that is sort of not any ordinary. it's extraordinary we are two sites make their arguments, seek support from the colleagues and politically vote. that's the ordinary. we fought those battles last year. consumers one i think of our because many people experience what i did. that now that the consumer, that the consumer protection has become the law of the land with its own agency to guard it, some of our colleagues want to reopen last year's debate because they couldn't win it to the ordinary legislative process. they promised to block this

nomination, or any nomination, intel they get their way. it is hijacking the legislative process. you have a legislative battle, you lose and then you say i'm not going to appoint anybody because i lost the legislative battle. that's not how things should work around here. so let's ask this question which is a fair question. if this nominee loses, who wins? consumers don't win. many of the abuses we saw leading up to the financial crisis will be allowed to continue and the new cop on the beat for consumers will be forced to stand down. seniors don't win. they will remain vulnerable to predatory reverse mortgages and the cfpb will have to fight with one hand tied behind its back to protect them. service members don't win. they will remain at the mercy of private lenders, debt collectors in the cpb will not be there to help. and banks that play by the rules don't win. they will be forced to compete with unscrupulous lenders, unregulated mortgage services, all kinds of people who created

a good part of this financial crisis because they were unprecedented will remain unregulated, while many other banking institutions that are regulated will still be a biting by the rules. no doubt that's why the ohio bankers supports your confirmation. so in short without a director, the cpb has the least authority where it needs it the most. we should not relitigate existence of the cfpb. we should be here to debate the qualifications of mr. cordray to leave the cpb, a question i think would be answered easily in the affirmative. am going to ask you a few quick questions. first, now senator shelby has met with you. he has said that, and that's to his credit. but how many of the other 43 who signed the letter saying they blocked her nomination actually met with you or ask you questions before they sent the letter? >> well, senator, i was not a nominee at the times i don't know that they would have known

to seek me out to ask me any questions than. >> how about subsequent to, anybody? >> since i was nominated we made an effort to meet with each member of the banking committee. i've not reached extensively beyond the banking committee at this point although i hope to do so in the near future. >> how many meetings did you get? >> i got a number of meetings. >> thanks, okay. i read a little bit about your background this point, learned you got your first job at mcdonald's. what did you do and how much did you earn? >> i was a hamburger flipper, although it seemed like the manager always nominate me to clean the parking lot whenever it rained. [laughter] spent hope to use different tools for each job. [laughter] >> and how did a kid from grove city, ohio, who worked at mcdonald's end up earning scholarships to michigan state, oxford university and the university of chicago law school? >> i worked hard in school but i

had some really terrific teachers, and i think i was fortunate. >> and finally, last question, what does it make you that mike dewine who defeated you for attorney general last year in the election, support you? >> we have retained a friendly relationship in the aftermath of what was a tough election. i think that's to his credit i hope it is to my credit. and i appreciate what he is had to say about me very much. >> let me conclude because my time is up, mr. chairman. in my opinion mr. cordray's background and experience show he is the at the top of a public servant. and it will not only be bad for consumers if this nomination is hijacked, it will be bad for the country if he continues to be treated as a pawn in a cynical washington game so i hope your ear and out my colleagues will change their mind having met you in seeing the quality that you show as a nominee. >> thank you, mr. chairman. >> senator menendez. >> thank you, mr. chairman.

mr. attorney general, my estimation you seem to have a strong record, on consumer protection issues, and you've been endorsed by several consumer advocates but you've also been endorsed by a ohio businesses and bankers as well, is that not there to stay? >> i have been, yes. >> mr. michael van buskirk, i hope i'm pronouncing his name well, who is a ceo of the ohio bankers league wrote a letter of endorsement on your behalf saying quote, while i retained reservations about the cfpb structure, i believe mr. cordray would be an able director. i know him to be very bright, ethical, committed to it publicly. while he and i have different on different policy decision you should know the consistency in his process to reach those decisions. is welcoming competing ideas have more often systematically reached out to encourage a steady flow of information that might bring him better insight, end quote. so in other words, while mr. van

buskirk may have reservations about the agency, and may even disagree with you on some policy matters, he has still recognize your qualification to lead the cfpb, is that not correct? >> i don't want to speak for anyone else but i will say as my relationship with a high bankers league i've always been open to hearing from them about their concerns, and i think that listening to those concerned made me do a better job as state treasurer and state attorney general. >> i appreciate your modesty but couldn't you deduct from that letter that, in fact, there is an endorsement of your capability to do the job, even if there may be disagreement about what the agency is about? >> i think that they have come to respect my public service and understand that i try to be honest and straightforward and do the right thing, sometimes it's difficult to know what the right thing is, but by getting broad advice and input from a lot of sources, including the bankers and businesses that i work with, i have found that

makes for better decision-making. >> let me ask you this. have any of my college on the other side of the aisle, to your knowledge, called into question your qualifications of this position? >> i don't know of that, senator. >> in your meetings with my colleagues on the other side of the aisle has anyone called into question your qualification? >> we've had good cordial meetings in which people, we had a frank exchange of views and i try to listen carefully to what was said to all the senators. and i hope i will always have that, developed a reputation, and i think it would make my job easier and make my work better if i'm listing close he do what you will have to say. >> let me again. did it was a you, mr. cordray, i have problems with your qualifications to do this job? >> they have not. >> thank you. so, let me ask you, i understand

my colleague, senator brown, has gone through all the checks and balances that somebody don't exist but, in fact, there is a large number of them. but let me ask you this. isn't it true, or maybe you can enlighten me if i'm wrong about this, that without a director the consumer financial protection bureau does have supervisory authority over large banks and the ability to enforce existing banking laws, but it will not have supervisory authority for non-bank financial service providers such as payday lenders? >> it's one of the unfortunate difficulties of the current situation that without a confirmed director of the bureau, it's widely agreed has inherited full powers over the large banks but they're sensible difficulty about what powers we have over some of the nonbank entities after competing in the same market with them. i'm haunted by the conversation i mentioned earlier with an

ohioan committee bank in 2007 for what it meant that only part of the mark was being regulated and they were consistently losing market share to the unscrupulous unlicensed, unregulated who did not play by the same rules, didn't be the same standards. that's something i would hope we would not repeat. >> so in other words, go beyond and even unbalanced playing field where community banks have to abide by those but their competitors like private student loan lenders and payday lenders will not have to? >> that's the unfortunate difficulty of the current situation. we are hampered spent and services to the community banks think about as highly unfair. furthermore, without a director, the bureau cannot protect students from exploitative the student loans, protect seniors from deeply financial, from perceptive financial markets and protect our troops from deceptive products by non-bank lenders. how is that therefore those banks that play by the rules? and yet could lose business to

competitors who do not have to play by the same set of rules? >> i think it's not there and it's not wise as a regulatory approach but i talked to my opening statement about law enforcement that is evenhanded, fair and reasonable by putting people under the same rules they can then compete. and the good consumer facing businesses that base their business on customer service and customer delivery, like a good community banks and credit unions i think will prosper. >> thank you, mr. chairman. >> thank you, mr. cordray, for your testimony today, and for your willingness to serve our nation. i ask that all members of the committee submit any questions for the record by close of business on friday, september 9. and mr. cordray, please promptly submit your answers to these questions in order for the committee for your nomination. this hearing is adjourned.

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> have no health care, the most expensive single element making

the cost, have no environmental control, no pollution controls and a retirement. and you don't care about anything but making money. there will be a giant sucking sound going south. >> ross perot spoke out about trade issues during the 1992 presidential debate. the billionaire businessman made two attempts for the presidency. the first time getting over 19 million votes, more popular votes than any third party candidate in american history. although he lost he's had a lasting influence on american politics. he is our final candidate for c-span 14 week series the contenders, live friday at 8 p.m. eastern. to rea be the other video and te all the programs from our series go to c-span.org/thecontenders. >> you're watching c-span2 with politics and public affairs weekdays featuring live coverage of the u.s. senate. on weeknights watch key public policy fans. and every week in the latest

nonfiction authors and books on book tv. you can see past programs and get our schedules at a website, and you can join in on the conversation on social media sites. >> which today is considering the nomination of richard cordray, to head the consumer financial protection bureau. we just finished showing you his confirmation hearing from last september. you will find that hearing online. a procedural vote in the senate on mr. cordray's nomination is scheduled for one hour from now at 10:30 a.m. eastern but after that vote the senate is expected to move to the payroll tax cut that expires at the end of the year. senate democrats want to extend the tax cut on social security withholding and they pay for it with a surtax on people who earn over a million dollars a year. now to live coverage of the u.s. senate here on c-span2.

the presiding officer: the senate will come to order. the chaplain dr. barry black will lead the senate in prayer. the chaplain: let us pray.

king and judge of the universe, you rule with righteousness and govern with justice. you have been good to us, restoring our strength and directing our footsteps. today, guide our senators in their labors. in these difficult days, empower them to produce dividends of character and grace. we pray not for tasks fitted to their strength but for strength which fits them for their tasks. in the hard decisions of this day,

guide them by your word and spirit. we pray in your loving name. amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c., december 8, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable jon tester, a senator from the state of montana, to perform the duties of the chair.

signed: daniel k. inouye, president pro tempore. the presiding officer: under the previous order, leadership time is reserved. the majority leader. mr. reid: that was a quick prayer. i missed that. mr. president, following leader remarks, the senate will be in executive session to consider the nomination of richard cordray to be director of the consumer financial protection bureau. at 10:30, there will be a cloture vote on the cordray nomination. if cloture is not invoked, the senate will resume consideration of the motion to proceed to the middle-class tax cut. as a reminder to all senators, cloture has been filed on the motion to proceed to s. 1944.

unless an agreement is reached, that vote will be tomorrow morning. mr. president, shortly the senate will vote in the confirmation of richard cordray to lead the consumer financial protection bureau. again, consumer financial protection bureau. i stress consumer. by now, we all know my republican colleagues will filibuster mr. cordray's nomination. they have said they will. this is not an up-or-down vote, but republicans' effort to not allow a vote. they are stopping a vote on this very, very qualified man. they're not blocking this nomination because of any fault, real or perceived, in this candidate. he has bipartisan support and is eminently qualified. he has a long history of protecting consumers against unfair practice by financial predators. he currently serves as chief of enforcement at the bureau. before that, mr. cordray served

as ohio's attorney general. a very important scrob in a very, very heavily populated state. while there, he recovered billions of dollars from pension funds on behalf of retirees, investors and others, and he took action against fraudulent foreclosures and predatory lending. he is qualified. he is a man of diligence. senate republicans know that he's qualified. they are blocking his nomination, not allowing a vote because they don't like the federal agency he would lead, an agency that has been established by law. this is the first time in senate history a party has blocked a qualified candidate solely because they disagree with the existence of the agency that's being created by law. republicans are doing this to undermine the system of law we have in our country. democrats fought to pass rawlt reform last year to protect against the greed of big banks. without a director, the consumer

financial protection bureau doesn't have the tools it needs to get the job done, and it's shocking that despite the economic crash in our rearview mirror, it's easy to look back and see what happened because of wall street greed. republicans in spite of that would leave consumers without a watchdog to guard against the greed of wall street. that's unfortunate. would the chair announce the business of the day? the presiding officer: under the previous order, the senate will proceed to executive session to consider the following nomination which the clerk will report. the clerk: nomination, bureau of consumer financial protection, richard cordray to be director of bureau of consumer financial protection. the presiding officer: under the previous order, the time until 10:30 a.m. will be equally divided and controlled between the two leaders or their designees. mr. reid: i ask that a quorum be called and that the time be equally divided between the two sides. the presiding officer: without objection. the clerk will call the roll.

quorum call:

mr. mcconnell: mr. president. the presiding officer: the republican leader. mr. mcconnell: are we in a quorum call? the presiding officer: yes, we are. mr. mcconnell: i ask that further proceedings under the quorum call be dispensed with. this morning, the senate will vote on whether the consumer financial protection bureau should be able to put a director in place before concerns about its accountability to the american people are addressed. let me just stress at the outset that that's all today's vote is about. all today's vote is about is accountability and transparency. it's a debate about whether we think americans need more oversight over washington or less. republicans made our position clear more than seven months ago when 44 of us signed a letter saying we won't support a nominee for this bureau no matter who the president is until three commonsense conditions are met that would bring some transparency and accountability to the cfpb.

that letter now has 45 signators. the president knew about these concerns months ago and he chose to dismiss them, and now he is suddenly making a push to confirm his nominee because it fits into some picture he wants to paint about who the good guys are and who the bad guys are here in washington. so once again, democrats are using the senate floor this week to stage a little political theater. they are setting up a vote they know will fail so they can act shocked about it later. this is what passes for leadership at the white house right now. the president has made his choice about how to deal with this issue, and we have made ours, and what we said is that until this or any other president addresses these legitimate concerns, we cannot and will not support a nominee. here's what we said in that letter seven months ago. first, replace the single

director with a board of directors that would oversee the bureau. second, subject the bureau to the congressional appropriations process. third, allow other financial regulators to provide a check on cfpb rules so they don't imperil the health of financial institutions and lead to unnecessary bank failures. look, everybody supports strong and effective oversight, but that has to include the overseers as well. unelected bureaucrats must be held accountable to the american people, and that's exactly what our proposal would do. so really, it's up to the president. republicans have outlined our concerns, they are well known, we're not going to let the president put another unelected czar in place, unaccountable to the american people, and frankly, his refusal to work with us on this only deepens our

concerns. the cfpb requires reforms before any, any nominee can be confirmed. it's time the president takes these concerns seriously. so i look forward to hearing from the president on this issue so we can put in place the kind of oversight and accountability the american people expect in an agency of this size and this scope. until then, i'll vote against this nominee for the cfpb and any others, this or any other president sends until he works to fix the problems, until he brings transparency to this bureaucracy, and accountability to the american people. mr. president, i 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 alabama. mr. shelby: i ask the quorum call be dispensed with, i ask unanimous consent. the presiding officer: without objection. mr. shelby: mr. president, i rise today in opposition to the motion to invoke cloture on the nomination of richard cordray to be the director of the bureau of consumer financial protection. earlier this year, i and 44 of my colleagues sent a letter to the president expressing our concerns with the unaccountable structure of the bureau. it is now, mr. president, seven months later, and the president has yet to respond. the majority has called for a vote that they know will fail today. it is evident that the white house and the majority have decided to place politics ahead of good policy. they have chosen to fabricate a political issue rather than do what is in the best interest of

consumers. nonetheless, they claim that this debate is about consumer protection. mr. president, there's no disagreement, however, that consumer protection is -- as the senator knows, needs to be enhanced. the only real point of contention is whether the new bureau of consumer financial protection will be accountable to the american people. if you believe regulators never fail, then the current structure of the bureau is just fine. yet we all know that regulators do fail, and that their failures harm consumers. members of the majority i believe have repeatedly made this point, where their criticism of the fed's failure to regulate some prime mortgages and the o.c.c.'s preemption of state consumer protection laws.

mr. president, i strongly agree with our majority that our regulators failed to do their job in the lead-up to the financial crisis. but the lesson we should learn from the financial crisis is not that we need more unaccountable regulators. instead, mr. president, all of our financial regulators need to be held more accountable. just as banks should be held accountable for their failures, regulators should also be held accountable for theirs. after all, if regulators know that congress can hold them accountable, they will have a far stronger incentive to do their jobs, and that will be good as we all know, for consumers. that is why if the bureau is reformed, the bigs winners will be the american consumers. today, mr. president, however, the majority will show that they're now more concerned with

insulating bureaucrats from accountability and rewarding political allies than looking out for consumers. the administration and the majority will try to argue here that the bureau already is accountable. indeed, they will say it's more accountable than any other financial regulator. but let's look at the facts. the facts tell a different story. first, it is necessary to appreciate the amount of power placed in the hands of the director of this bureau. no bureaucrat will have more power over the daily economic lives of americans than this director. the director in effect will decide which americans can access credit to buy homes, purchase cars, and pay for college. the director will regulate not only financial companies but also tens of thousands of main

street businesses. and also the director will unilaterally decide how the bureau spends its up to $600 million budget. mr. president, despite the vast power vested in the hands of the director, there are no effective checks on the director's authority. and to truly understand just how unusual the structure of the bureau is, one need only compare it to other independent agencies. unlike the chairman of the s.e.c., the cftc and the federal reserve, the director of the bureau does not have to obtain the agreement of other board members or other government officials before acting. unlike other consumer protection agencies, the bureau is not subject to the congressional appropriations process. indeed, other consumer

protection agencies such as the federal trade commission, securities and exchange commission, are both subject to appropriations and are governed by five-member boards. to further ensure against one-party domination, the ftc and the s.e.c. can have no more than three members from the same political party. mr. president, another important comparison is with the consumer product safety commission. this agency actually served as the template for professor warren when she first advocated for the creation of a consumer protection agency in an article several years ago. and how is the consumer product safety commission structured? it is first funded through appropriations, and there is a five-member commission. opponents of accountability have sought to justify, mr. president, this bureau, the structure of the bureau by

pointing to the office of the comptroller of the currency and the federal housing finance agency. once again the facts refute their argument. first the comptroller can be removed at any time by the president for any reason. in contrast, the president can remove the director of the bureau only for limited grounds of -- quote -- "inefficiency, neglect of duty, or malfeasance." this means that the director of the bureau cannot be removed even if the director pursues policies that are harmful to the american people. how is that good for consumers? as far as the federal housing finance agency, its director is far, far less powerful than the director of the bureau. the director of the federal housing finance agency oversees the regulation of only 14 financial institutions. he does not have sweeping powers

over all consumers and tens of thousands of main street businesses like the director of the bureau would have here. it should be common sense, mr. president, that the more power an agency has, the more accountable it needs to be. moreover, rather thannen attempting to point to other regulators to justify the structure of the bureau, a more responsible approach would be to make all of our financial regulators more accountable. we should begin right here with the bureau. to make the bureau more accountable we have proposed three commonsense reforms. first, the bureau should be led by a board of directors, as i've said. this is such a commonsense measure that the president and the democrat controlled house originally called for the consumer agency to be structured as a commission. second, the bureau's funding should be subject to

congressional appropriations. currently the federal reserve is required to transfer up to $600 million to the bureau each year. these are funds that could otherwise be remitted to the treasury and used for deficit reduction or other things. diverting this money to fund an unaccountable federal agency sets a dangerous precedent of using the federal reserve as an off-budget mechanism for funding programs. it hasn't happened before. in addition, funding the bureau through the fed removes any check on runaway spending. the fiscally responsible way i believe to fund the bureau is through the congressional appropriations process, just like every other consumer protection agency is funded. our third reform proposal is to create an effective safety and soundness check for the prudential bank regulators here. some have said that the bureau

already has a check under the so-called financial stability oversight counsel veto. but this veto was designed so that it would never actually constrain the bureau. the council can only overturn a rule if an extremely rare case. the rule must put at risk the safety and soundness of the entire u.s. banking system or the stability of the u.s. financial system. and under this construct, a rule could cause the ail you're of multiple banks but the council still would not have standing to alter the rule. additionally, the procedure here is rigged to prevent the council from acting. it takes an affirmative vote, mr. president, of at least two-thirds of the council members to set aside one of the bureau's rules and the bureau's director is a voting member of the council. in addition, only three of the

council's ten members are actually bank prudential regulators. this veto that we propose is not a check on the powers of the bureau. it's a sham that they have today. we need to change that. recent history shows that taxpayers are ultimately on the hook for bank failures. for this reason, consumer protection needs to be carefully coordinated with bank regulations to prevent unnecessary bank failures. and as presently structured, the bureau can ignore any advice offered by banking regulators, even if it undermines the safety and soundness of banks. unless this structural flaw is remedied, a real possibility exists, mr. president, that the consumer bureau will one day cause bank failures and end up harming consumers, taxpayers, and our economy. in light of the reasonable reform proposals that we've

requested, the question remains, why are the administration and the majority so insistent that the bureau be unaccountable? clearly, they want to use the bureau as a political issue. a second reason is that they believe nonbank financial institutions are not currently regulated. but this is false. the federal trade commission, the states' attorneys general and financial regulators all have authority over nonbanks. a more likely reason for today's vote is the bureau will provide funding to key liberal activists like acorn. other agencies must return to the treasury funds they receive from enforcement actions. this consumer bureau is now structured -- as now structured is allowed to dole out money it collects from fines and penalties to liberal consumer groups. this reveals why the administration and the majority want so desperately for the bureau to be unaccountable.

they want the bureau to be a permanent funding machine for their political allies. finally, mr. president, we're going to hear that our methods to achieve reform are unprecedented here in the history of the senate. it's been said never before has the consideration of a nominee been conditioned on a change in the law. this, of course, is be ridiculous on its face. nominees are held routinely by both parties for any number of reasons including the desire to make changes in existing law. the only thing different in this particular case is that it's completely, here, transparent. no secret back-room deals. we're right here in the open. mr. president, after all the harm caused to consumers by financial regulators, it time that the majority stop using protection as a political football and start taking

actions that actually help consumers. we can take the first step by reforming the bureau to make it accountable to the very consumers that it purports to protect. until that time, however, mr. president, we cannot, we should not, and we will not move forward on the nomination of the director to lead this massive and unaccountable bureaucracy. i -- i urge my democratic colleagues to stop obstructing reform and join with us to move forward on real consumer protection. i yield the floor. a senator: mr. president. the presiding officer: the senator from rhode island. mr. reed: i will ask unanimous consent to be recognized for five minutes at the conclusion of senator johnson's remarks. the presiding officer: is there objection? without objection, so ordered. mr. reed: thank you. mr. johnson: mr. president. the presiding officer: the senator from south dakota. mr. johnson: mr. president, two months ago, the senate banking committee voted along party

lines to send to the full senate the nomination of richard cordray to be the first director of the consumer financial protection bureau. due to an unprecedented and irresponsible display of political gamesmanship, mr. cordray's nomination and strong protections for the american consumers are being held hostage. before any candidate was put forth, senate republicans pledged to block the nomination, and their objections had nothing to do with mr. cordray's qualifications as politics -- his politics or his character. republican senators have admitted as much. with a public pledge to block any nominee for the new consumer agency until a list of legislative demands which would

greatly weaken the agency are met. that those demands were debated and rejected by a partisan congress last year is beside the point. the minority party is distorting the senate confirmation process mandated by the constitution to rewrite a law against the wishes of the american people. what do senate republicans remain opposed to consumer protection despite national surveys shown by three or four partisan orders support the new agency's creation. whatever the motivation, it appears to outweigh any concerns about protecting families buying homes, students borrowing for college and service members or older americans falling prey to financial scams.

this vocal minority opposed to a strong conservative protection -- consumer protection and helped by special interest have drummed up misleading claims to hide behind. they claim the cfpb director will put the economy at risk, ignoring the effects of the foreclosure crisis which was fueled by irresponsible and predatory lending. they claim that the agency lacks accountability, and knowing the fact that it is bound by accountability majors comparable to or exceeding that of other independent financial regulators. and they claim restrictions on abusive financial products will hurt lenders, families and consumers tricked into sending unfair contracts filled with hidden fees and penalties.

in reality, the cfpb was graded as an accountable yet independent regulators in bipartisan negotiations last year. its mission is to protect consumers by cracking down on predatory lenders and disclosures so that families can make better informed financial choices, but until it has a confirmed director in place, the cfpb's authority or nonbank financial institutions like private student lenders and mortgage brokers will be stifled. every day, richard cordray -- every day richard cordray's confirmation is blocked, vital protections are delayed and millions of americans, including service members, vets and older americans, are left vulnerable, and the nation's community banks

and credit unions remain at a disadvantage to their less regulated competitors. the question we consider today should not be whether the minority party can hijack this constitutional process and demand as ransom legislative changes that would hamstring the consumer agency. the caution should be whether mr. cordray is qualified for the job -- the question should be whether mr. cordray is qualified for the job. i believe that mr. cordray is an outstanding candidate. for years, richard cordray has worked tirelessly as a public servant. as ohio's attorney general, he aggressively pursued financial crimes by banks and mortgage firms and won more than $2 billion in settlements for the state, and as the highest first solicitor, -- as ohio's

first solicitor, he argued cases for the supreme court to protect consumers and enhance the quality of our financial markets. american families paid a steep price for their financial crisis by layoffs and foreclosures, yet incredibly, many of the bad actors that contributed to the crisis remain poorly regulated and continue to lobby against tougher regulation. congress created the cfpb to protect consumers and clean up the marketplace, but it needs a director. richard cordray has proven himself capable for the job, and there is no legitimate reason to block his confirmation. i urge my colleagues to reconsider their political game playing and do the right thing. stop blocking richard cordray's nomination and allow him to have an up-or-down vote.

i yield the floor to my colleague from rhode island. the presiding officer: the senator from rhode island. mr. reed: thank you very much, and i want to thank the chairman for his leadership on this important issue and so many other issues in the banking committee. since september, 2008, we have learned many lessons, hard lessons about the facts that contributed to our financial crisis, and to address these systemic risks, to fix the system, we passed the dodd-frank wall street reform and consumer protection act. one of the most important reforms we made in that legislation was the creation of the consumer financial protection bureau or the cfpb. the cfpb is charged with stopping abusive mortgage originators, stopping abusive credit card companies, stopping abusive private student loan. in a sense, protecting the consumers. for years, we have had organizations whose purpose was

to protect the banking system and indirectly consumers. we need to provide a balance. and frankly, if we had this balance in place in -- prior to 2008, we might have avoided some of the incredible costs we have seen, not only to consumers but to the banking system as a result of predatory behavior by many different financial institutions. unfortunately, many of my republican colleagues are trying not to correct deficiencies in the dodd-frank act or improve it. they want to gut it. and one of the things they want to take out is consumer protection, and they want to do that by denying a nominee to head this important agency. it certainly is a prerogative of my colleagues to work on improvement to any piece of legislation, but effectively we say we will not let legislation that has passed this body by 60 votes, that has ample precedent in the law to take effect because we won't put a person in

charge is, i think, abusing the process. we have worked on this issue, and we know that consumers need these types of protections. we know that daily there are scams targeting the elderly, there are unscrupulous mortgage lenders, there are abusive payday lenders. not all. in fact, these individuals probably represent a very small minority of the financial community, but they are abusive predators, particularly to the most vulnerable people in our society. there has been a lot of discussion about the 1% and the 99%. well, guess what? the 99% are consumers and the 1%, they are probably those people that are running some of these major institutions, some of them with -- we want to protect consumers in this country, all of us, certainly the 99%. but because of republican opposition to this nominee, we're running into a real problem. if we do not have a head then of

this organization, then it cannot effectively implement the regulations effectively -- and effectively enforce the laws it has been given the task to do. we have to have rules that apply across the country that gets at the shadow banking system, that provides the kind of protections that consumers can rely upon, and, in fact, improves the operation of the marketplace. again, i think there are -- some of the people who regret what happened the most of the 2007, 2008, 2009 time period are financial leaders looking around and saying why wasn't anyone checking the behavior of some of these financial companies out there that have ruined my marketplace and ruined my reputation? well, we have to do that. and the longer this person is blocked, richard cordray, who is entirely qualified. former treasurer of the state of ohio, knows the financial business, worked closely with banks as the treasurer, former attorney general of ohio, worked

to protect consumers, someone who has the intellect and the character to do an outstanding job, we have to get him in place. and who is suffering if we don't do this? well, among those who are suffering are military personnel. i had the privilege of commanding a pair trooper company in the 82nd airborne division in the 1970's, i was an executive officer, and i handled all the complaints, all the letters that were coming in from my soldiers. and it's gotten worse. holly petraeus testified before the committee. she talked about internet lenders who cater, who target military personnel, vulnerable soldiers and their families who are about to deploy, who just came back from afghanistan. they will give you a loan of 40% of your pay. of course, the interest rate can be as high as 584% a.p.r. and we can't stop that until we get somebody like richard

cordray in charge of this organization. she also talked about the dunning calls, 20 times a day, threatening them. we'll go to your commander, we'll have you court-martialed, we'll take away your security clearance, we'll ruin your career. we have got to stop that. this is about real people, real consumers. we have to confirm richard cordray. with that, i yield the floor. a senator: mr. president. the presiding officer: the senator from new jersey. mr. menendez: mr. president, i -- i understand i have five minutes. the presiding officer: there is no order. the senator may use five minutes. mr. menendez: thank you very much. let me first thank chairman johnson for his leadership in this regard and in so many other major issues before the banking committee. he has really exercised a lot of our oversight obligations in making sure that we implement wall street reform in a way that

protects all of us as taxpayers in the country but creates a system that still can let us economically flourish. this is one of those. mr. president, for too long, too many in washington protected wall street from commonsense regulations and let consumers fend for themselves, and for too long, republican economic policy when it should have protected the 99% of american consumers from the reckless financial games that led us to the brink of economic disaster in 2008 protected the 1% on wall street instead. now, banks played russian roulette with the future and economic security of middle-class families, and no one, no one was watching. backed up by too big to fail government guarantees, they wreaked havoc on our economy and on the jobs and retirement savings of families who played by the rules. we have lived through the unfortunate results of lax oversight, and now it's time to

work together to correct it. it's time to stop the political games and govern. it's time to act. it's time to work together to make sure middle-class families get the protection they deserve and the watchdog they need. this is really about whose side are you on. cordray and consumer protection are being blocked simply because republicans want to protect wall street. wall street already has a legion of lobbyists protecting its interests. we need someone who can protect main street's interests, and that's what richard cordray would do as a director of the consumer financial protection bureau. richard cordray is an unquestionably well-qualified nominee, and no one is disputing that fact, no one. i have not heard anyone dispute his qualifications for the job. we know the consumer financial protection bureau will be off to

a good start with richard cordray at the helm, despite efforts by special interests to derail the process. it will be a strong but fair agency under richard cordray to protect financial consumers who are tired of being tricked by the fine print, the gotcha paragraphs that no one but a bank lawyer would understand. despite hysterical claims by wall street, the bureau actually won wide widespread praise by the consumers and the industry for its first major initiative when it created new and greatly simplified "know before you owe" mortgage disclosure forms so consumers understand what kind of mortgage they're getting into before they take it. had we had that type of language early on maybe we wouldn't have had the crisis where consumers were led to bad mortgage products that had skyrocketing

interest rates. maybe we wouldn't be in the great predicament we have been since 2008. under wall street reform richard cordray will be there to prevent those families from being ripped off again and fixing our broken system was not easy and it's still not over. we're still fighting to keep the ground we've gained against special interests. mr. president, the longer this nomination is delayed, the more that consumers will suffer. without a director, the consumer financial protection bureau cannot carry out some of its most vital functions, including regulating payday lenders, pawnshops, private student loan companies, those who make unscrupulous and predatory loans on our military. you heard senator reed with his great experience talk about that. giving them an unfair advantage at the same time as they do that over community banks and credit

unions that are regulated and are good and play by the rules. now is the time to work together to make that happen. so, mr. president, i ask that my colleagues stop playing games, let us go to a final up-or-down vote on mr. cordray and i ask that my full statement be included in the record. the presiding officer: without objection. mr. vitter: mr. president. the presiding officer: the senator from louisiana. mr. vitter: thank you, mr. president. mr. president, there's been a lot of wild rhetoric quite frankly, hyperbole, exaggeration. i wanted to try to bring this discussion and this debate back to reality and to do that i wanted to remind folks that conservatives objecting to this nomination have from the very beginning laid out three very narrow, specific, concrete reforms that we are seeking. so this notion that we are against consumer protection, we're trying to cut cfpb -- gut

cfpb is just silly. let's get back to reality, back to what we have said from the very beginning, we want these three important reforms. first of all, we think it's very important for the single director, a new czar, quite frankly, a credit czar, to be replaced with a board to oversee this bureau. that's how other comparable agencies operate. the best example, the best comparison is the s.e.c. i think that's a critical check on the bureau's authority to have a board that can discuss and come up with a consensus, an single agency. secondly, related to that, there should be safety and soundness checks for the prudential financial regulators who oversee the safety and soundness of financial institutions. mr. president, one of the core reasons that we have the 2008 -- had the 2008 financial crisis, we had political

agendas run amok with regard to financial institutions with no safety and soundness check. we're putting that same problem on steroids in this new all-powerful bureaucracy. so again, point number two, very specific, very concrete, very commonsense reform that we have proposed from the beginning is safety and soundness check. and third and perhaps most importantly, the bureau should be subject to the congressional appropriation process so there is some oversight and accountability from the american people and their representatives. that's the norm. that sort of check and balance, that oversight and accountability is absolutely the norm. this is way outside the norm to have no oversight and accountability, because as it stands now, this new superbureaucracy has an unlimited check that it gets

from the federal reserve. never has to get an appropriation, never has to answer a single question from the people or their representatives. again, the cfpb as it stands now draws its budget directly from the revenue of the federal reserve. by the way, this revenue would otherwise be deposited into the treasury, paying down the debt. the cfpb is not just about mega institutions, mega banks, more high pesh olie thrown on the -- hyperbole thrown on the floor p. it's about anyone who offers fourer who more payment installments and ain installment plan. includes citibank, also includes your departmentist, your have it, your local electronics store. the cfpb is so unlimited in their authority they're able to limit or prohibit the terms of any such product or service,

has power over marketing of any such product or service in its jurisdiction with, again, the federal reserve as its basically unlimited piggy bank. so i think these concerns we have are pretty darn fundamental, and have a loft common sense in them. and again, we have three very specific, concrete reforms that we want advanced. not trying to gut the cfpb. those reforms would not gut it. not against consumer protection. those reforms would still have a sound, strong consumer protection agency in place. now, i think the american people deserve a more honest debate than quite frankly, they're getting in a lot of this. this notion that if you're against obamacare you're against all improvement of the health care system is silly, and i think americans get that, as

their health insurance premiums go up significantly now by every accounting, by every independent source, well beyond what they would have gone up otherwise. being against that isn't being against health care reform. you know, we heard it earlier, if you're against the stimulus plan, you're against economic recovery. that's just silly. i think americans know that, now that we're still stuck at very high unemployment. how is that recovery working out for you? i was against the stimulus because i was for economic recovery. and it's the same thing here. we need to advance the interests of the american people, certainly including consumers, but we don't need an all-powerful new czar in washington to do it which can hurt everyone, including consumers. and so we continue to advance three very specific, concrete,

commonsense reforms, and that's all we want. that doesn't gut cfpb. that isn't against consumer protection. it is against unbridled, really unprecedented authority. and the american people, agency after agency, issue after issue, have seen the effects of that sort of unbridled, virtually unlimited federal government authority in the last two years, and they don't like it. thank you, mr. president. i yield the floor. the presiding officer: the senator from ohio is recognized. mr. brown: thank you, mr. president. i -- it ceases -- never ceases to amaze me, mr. president, to hear my colleagues whose first loyalty is to wall street banks, who continue to make excuses for being against -- against putting a consumer cop

on the beat. they talk about budget -- this is an office that will be a few hundred million dollars office, this consumer protection -- this consumer cop on the beat but this -- this consumer cop on the beat has to look at trillions of dollars in mortgages, has to protect consumers when there are $30 billion in overdraft fees alone that banks are charging, when many times those overdraft fees are because consumers simply can't figure out the fine print and don't understand the terms of the agreement. in the end, again, people on this floor, their special interest friends in the congress, their wall street bank -- the friends of wall street banks, the friends of these interest groups that continue to fleece the american people, if we had had rich cordray or elizabeth warren for that matter, the consumer cop on the beat, would we have had these kind of foreclosures in places like cleveland and

dayton, these fly-by-night from ameriquest in new century and taking advantage? i'm not sure we would have. but my republican colleagues, my colleagues who always do the bidding -- not all of them but many of them always do the bidding of these special interest groups that have inflicted far too much damage on this economy. now, i hear all of this, if we just would make some changes in this agency. mr. president, i talked to the senate hiss stone. i've heard the arguments, if we changed the agency, i'd vote for it. i talk to the senate historian who said never in history has bun one political party tried to block the nomination of a presidential appointee based on wanting to change the agency. i know rich cordray better than anybody in this institution. he is from my state, he was the attorney general, the state treasury, county treasury. i've known rich over 20 years. i know that he's qualified.

my colleagues here on both sides say he's qualified but they say, well, we want to change the agency. well, the agency, we worked with republicans to change this agency as it went through the process dodd-frank. they keep shifting the goal posts. in order to accommodate republican concerns we mate the cfpb a bureau at the federal reserve. many of us thought it should be totally independent. we were willing to make that concession in order to get republican support. they then after we did that asked for regular g.a.o. audits of the books. they got them. and the g.a.o. said that the cfpb passed with flying colors. then they said we don't like elizabeth warren, give us somebody else. elizabeth warren withdraw, she was a -- withdrew, she would have been very good at this. we're ray re-placing her, the president is with richard cordray from ohio. he will do this job well. then after he's appointed they say, well, he's -- richard cord delay has support from banks and credit unions and consumer groups. that's still not good enough.

they asked the president not to recess appoint a director. we -- the president agreed to that. they're moving the goal posts. thawr you now they're saying they don't -- now they're saying they won't approve anyone as the director of the consumer bureau nals we change the are bureau -- unless we change the bureau. we're going to not allow a director to be in place unless we can weaken this agency. senator reed from rhode island said, would we not appoint a director of the food and drug administration in the future until we rolled back all food safety laws? are we not going to protect a consumer -- a consumer products bureau in the government, in the department of commerce until we roll back child toy safety laws? i mean that makes no sense. this was vote -- more than 60 votes, 61 or 62, if i recall, a supermajority in this congress, two years ago, we allowed all kinds of amendments, we -- we accepted

many changes that republicans want, but in the end, it's a choice. are we for consumers or are we for wall street? well, you know who it is. all we're asking, i'm not asking my colleagues to vote for him. i'm asking for my colleagues to let us have an up-or-down vote. just let us vote on it. don't filibuster, don't block the vote. understand that this is --this is a vote coming up that's to break a filibuster, to break a republican filibuster where republican senators, almost always are flaking for wall street and they do that, it never ceases to amaze me, mr. president. all we ask is an up-or-down vote. vote yes on cloture so we can have an up-or-down vote and for -- for attorney general cordray. i yield the floor and ask for a yes vote. the presiding officer: the senator's time has expired.

all time having been yielded back

the presiding officer: the clerk will report the motion to invoke cloture. the clerk: we, the undersigned senators, in accordance with the provisions of rule 22 of the standing rules of the senate, hereby move to bring to a close the debate on the nomination of richard cordray of ohio to be director of the consumer financial protection bureau, signed by 18 senators. the presiding officer: by unanimous consent, the mandatory quorum call has been waived. the question is is it the sense of the senate that debate on the motion to proceed to s. 1944, a bill to create jobs by providing

payroll tax relief for middle-class families and businesses and for other purposes shall be brought to a close. the yeas and nays are mandatory under the rule. the clerk will call the roll. vote:

vote:

vote:

the presiding officer: on this vote, the yeas are 53, the nays are 45. one senator responded present. 3/5 of the senators duly chosen and sworn not having voted in the affirmative, the motion is not agreed to. under the previous order, the senate will resume legislative session, and the motion to proceed to s. 1944, which the clerk will report. the clerk: motion to proceed to consider calendar number 251, s. 1944, a bill to create jobs by providing payroll tax relief for middle-class families and businesses, and for other purposes.

a senator: mr. president. the presiding officer: the senator from utah is recognized. mr. lee: i ask unanimous consent to enter into a colloquy with my republican colleagues for up to 30 minutes. the presiding officer: is there objection? without objection, so ordered. mr. lee: mr. president, i stand today to urge my colleagues to support efforts to bring forward a balanced budget amendment, one that can be passed out of both houses of congress and submitted to the states for ratification. article 5 of the constitution gives us the power to change the constitution from time to time, to modify our law of laws, that 224-year-old document that has fostered the development of the greatest civilization the world has ever known. we have done this 27 times. we have done it at times when in order to protect and preserve the nation that our ancestors fought so valiantly to create and later again to defend. we have to modify our

government, the manner in which we do business in order to preserve that system, in order to make it strong, in order to ensure that it will continue to be strong for future generations. we made it stronger when, for example, we added the bill of rights shortly after the ratification of the constitution. we made it stronger again when, for example, we added the so-called civil war amendments, the 13th, 14th, and 15th amendments, ending slavery and the baidges and incidents thereof. we made it stronger when we made it clear that women must always be given the right to vote. we made it stronger a number of times. the time to make it stronger has come yet again. it's time to modify the constitution to limit, to restrict congress' current power granted by article 1, section 8, clause 2 of the constitution, to borrow money on credit of the united states. the reason we need to do this is

because this power has been so severely abused over such a prolonged period of time that it's causing devastating consequences for our economy and for our ability to fund the operations of government. we have now accumulated over $15 trillion in debt as a country. that works out to about $50,000 for every man, woman and child in america. it works out, arguably, to about $120,000 to $150,000 for every taxpayer in america. this is a lot of money. it also represents about 90%, between 90% and 100% of our gross domestic product annually depending on whose statistics you follow. this is troubling given that once a country's debt to g.d.p. ratio crosses the significant 90% threshold -- which we have

now done -- economic growth tends to slow, tends to slow to a point that an economy as large as ours can expect to lose as many as a million jobs a year. we can't afford to lose jobs, especially when we know what one of the major causes is, our national debt. it's time that we change the way we do business. it's time to change the manner in which congress acquires new debt. this is no longer an issue that is either republican or democratic, that's either liberal or conservative. it is simply american. i remind my colleagues that whether you're most concerned on the one hand about preserving america's leading edge, its ability to fund its national defense program, or on the other hand if you're most concerned about funding or entitlement programs, you should want a balanced budget amendment because this is what we need to do, this is what we have to do in order to protect our ability to fund both of those things, and everything else that we do.

you see, because by the end of this decade, according to the white house's own numbers, we will be paying close to a trillion dollars every year just to pay the interest on our national debt, just the interest alone. we're currently spending a little over $200 billion a year on interest. still, a lot of money, but about $800 billion lower than what we're likely to be spending by the end of this decade. where will that additional $800 billion every single year come from? this isn't a discretionary sum. this is money that we have to pay. it's the first thing that we have to pay. where will that $800 billion difference be made up? at that point, we can't expect simply to raise taxes to make up that difference. i'm not aware of any tax increase plan that could bring in that much additional revenue every year without stagnating tower economy to the point that we might within a year or two bring in less revenue rather

than more, certainly not $800 billion more. nor am i aware of any plan whereby we could simply borrow an additional $800 billion just to pay that interest, because doing so, of course, would cause our interest rates to skyrocket, grow out of control, and our interest payments would be even more significant at that point, thus further impairing our ability to fund everything from defense to entitlements. so at that point, the only option on the table would be dramatic, severe, abrupt, even draconian cuts to everything from defense to entitlements and everything in between. we don't want this, there is a better way, and the better way forward consists of a severe, permanent structural spending reform that can be achieved only through a balanced budget amendment. now, let me explain what i mean by that. more importantly, let me explain what i don't mean by that. we have to beware of things that masquerade as balanced budget amendments, things that will actually do the job instead of

purporting to do the job, distracting the public's attention away from the need to do this, while in effect doing nothing. we need to be aware of what i sometimes call the trojan horse balanced budget amendment proposal. so there are a few hallmarks of what a real effective balanced budget amendment would accomplish. first and foremost, it has to apply to all spending in requiring congress to provide a supermajority vote for any borrowing authority. there are some that have suggested that we should have a balanced budget amendment that exempts certain categories of entitlement spending, but of course as we all know, it's entitlement spending that it continues to consume a larger and larger share of our national budget each and every year. it's entitlement spending that is anticipated to have shortfalls for sums that will have to be expended for people,

americans alive today could range anywhere from $50 trillion to $60 trillion to $110 trillion in unfunded entitlement liabilities. so simply exempting out entire categories of entitlements is one of these hallmarks of a trojan horse balanced budget amendment. we can't do that. we need it to apply to all federal outlays, all federal spending. second, an effective balanced budget amendment must cap spending at the average historical level of federal revenue. so over the last 40 years, our average take, our average income as a percentage of g.d.p. has been about, oh, 18% to 18.5% of our gross domestic product. so we need to make sure that we're not spending more than that, that congress can't without a supermajority vote spend more than 18% of g.d.p. in

any given year. otherwise, we run the risk that congress will find a way through tricky accounting schemes to circumvent the restrictions to make sure that it's not spending more than it takes in. third, the supermajority requirement must apply, must apply to the votes in both houses of congress every single time congress wants to spend more than it takes in. any balanced budget amendment proposal that allows for a supermajority to bring about an exception to these spending limitations is one that congress can and will use to circumvent the amendment entirely. let me explain what i mean. we have had in the past certain statutory legislative limitations on congress' spending and borrowing power. some of these have been known as the graham-rudman-hollings

legislation. also the paygo rules. but because congress makes those laws and because they haven't been reduced to a constitutional amendment, just as congress give th, congress taketh away and it sees fit to exempt itself out of those rules. a balanced budget amendment even while enshrined in our constitution becomes no more effective than those statutory or internal rules unless every time congress wants to get around those limitations, congress is required to cast a supermajority vote to justify that excess. finally, an effective balanced budget amendment must require that congress cast a supermajority vote any time we raise the debt limit. this will give us an additional guarantee that tricky accounting mechanisms won't be used to

circumvent some of these most important restrictions. without these restrictions, mr. president, congress will continue to spend out of control because members of congress tend to be rewarded when they spend and they tend to be criticized when they cut, and political pressures are such that i fear this spending will continue out of control in perpendicular duetty until that -- perpendicular duetty until that moment when we reach our natural mathematical borrowing limit, not our strategy limit, our mathematical lint. it's at that point, mr. president, when the most abrupt, painful, draconian cuts will have to be made. we can do this in a way that's sensitive to the needs of the most vulnerable americans, those who have become the most dependent upon our entitlement state, those that have become

dependent for their day-to-day existence on these very programs. those programs will have to be cut abruptly in a most painful manner unless we take the necessary steps right now. start moving on to a smooth glide path towards a balanced budget amendment. we may not be able to balance our budget overnight but we can do it over the course of a few years and that's exactly what this would allow us to do. i've worked closely with a number of my republican colleagues in supporting senate joint resolution 10, a balanced budget amendment proposal that has the support of all 47 republicans. one of my close allies in this endeavor has been my friend and colleague, the junior senator from kentucky. i'd like to ask him to share his perspective on why this is necessary and so i ask senator paul, why you think this is so important for us to have this amendment right now. mr. paul: well, i think congress

has failed. you know, we haven't passed a budget up here in two years, much less a balanced budget. we can't even pass a budget under the normal procedures and are showing no signs of being able to balance our own budget. they say that the american public when you ask them are you for a balanced budget, 70% to 75% of the people are for it, republicans, democrats, and independents. now, congress currently has about a 10% approval rating. my thought is maybe our approval rating is so low because we're not listening to what the people want. the people want to us balance our budget. they want us to do the responsible thing. but they also don't want to say, oh, social security we'll put it to the side. they want that social security fund to be sound, too. what are we doing right now? reducing the funding to social security. we're doing exactly the things that we shouldn't be doing up here. so i think it is important, as you said, that the balanced budget needs to include all of spending and we need to balance

our budget. mr. lee: if the congress which consists of the senate and house, and the members of the senate and house are elected representatives of the people, who stand for re-election at regular intervals and if the american voting public overwhelmingly supports a balanced budget amendment, why then haven't passed it and given the states the opportunity to ratify an amendment like this? mr. paul: the big driving force up here is entitlements. the interesting thing is if you look at the revenue coming into government, it's all being spent on entitlements and interest. 40% of every dollar is being borrowed but that means we're having to borrow all the money for national defense, for our roads, for all the rest of government, 40% of every dollar. $40,000 a second is being borrowed. why do we come to an agreement? i've been asking many people on the other side that and they say we will not fix entitlements until we have a trillion dollars tax increase. that's that's the starting point, we're never going to fix

entitlements. because many think raising taxes is a mistake in the middle of a recession and the more money left this the private sector would be better for jobs. we have this balanced budget debate but have to figure out how to reduce spending and that's in the entitlement programs because they consume 60% of the budget. but there is this unwillingness here and i think people would like us to find solutions. when i go home to my state, doesn't matter whether they're a republican, democrat, or independent, they want us to fix the entitlement programs but don't want it to be dependent on increasing taxes on everyone, also. mr. lee: what's your sense as to how the various state legislatures are likely to respond to a constitutional amendment proposed by both houses of congress? you think they'd likely -- ratify such an am by the necessary 3 quarters margin? mr. paul: i spoke to the legislature and there was overwhelming support for a balanced budget amendment and i

think there is a movement out there if we don't do it. there is so much feeling among the public this enormous debt is hurting us. when i go home and talk to people, i say look, the debt, the people that the debt hurt the worst are those on fixed incomes, senior citizens and those in the working class. those are the people being hurt by this debt because it causes rising prices as we print the new money, those people hurt every time they buy gas at the pump, every time they go 0 to the grossing store. the rising prices are hurting senior citizens and the working class. the only way we're going to fix it is to have rules that must be obeyed. mr. lee: so they're paying for washington's fiscal irresponsibility in the form of job losses, in the form of increased prices for goods and for services, and in the form of inflation. it's likewise my experience with my state legislature, that they seem to be very supportive of it. in fact, i have a document here signed by the legislative leaders of my state, by

governor gary herbert, by utah house of representatives speaker rebecca lockhart and by utah state senate president michael wattups. they say -- quote -- "we urge the united states senate and house of representatives to pass a balanced budget amendment and send it to the states for ratification. additionally, we urge congress to make utah's concurrent resolution part of the congressional record." they also proceed to explain why they feel so strongly about this. they say not only for our own sake but for future generations as well, the states must now combine in an unwavering resolve with convincing action to put the nation's financial house in order. passage of your own state's resolution urging the support for a balanced budget amendment dan help make this happen. please join with utah and call upon congress immediately to pass a balanced budget amendment. we respectfully encourage you and urge your congressional delegation to act in your behalf.

they're calling not only on congress but also on their fellow state legislators throughout the country to urge this same action from congress. and in the same breath they also adopted and they supported whole heartedly the specific balanced budget amendment found in senate joint resolution 10. i thank them for doing that and i think they reflect views of so many of our state legislatures which balance their budgets every single year. most of them do. it's not news when they do it. it's not news because it's what's expected. it's what's expected because that's what they do. i look forward to the day and age when it's no longer news, when congress balances its budget. senator paul, i'd like to ask you another question. why is it that so many are fond of saying as our president has recently said, we don't need a balanced budget amendment, what we need is for congress to just do its job. why isn't that enough to carry the day? mr. paul: the problem is, is in the past we have had rules as

you mentioned, gramm-rudman-hollings, pay as you go. i think pay as you go was broken 700 times. there doesn't seem to be the spine or the will power to say no up here. everybody wants something from government, but they don't realize that by getting things from government that we don't pay for, that the debt has ramifications. admiral mullens said last year the biggest threat to our national security is our debt. erskine bowles the head of the debt commission said the that the most predictable crisis in our history that's coming is going to be a debt crisis. for those who will oppose a balanced budget amendment budget on the other side they will need to explain to the american people when chaotic situations come and we're having trouble paying for those things that come from government, when the value of the money is destroyed and when prices are rising dramatically, they will have to explain to the american people why they thought it wasn't necessary to balance the budget. and i've seen no will power to

attack entitlements, i've seen -- there are simple ways. we could gradually raise the age of the entitlement eligibility and means test the benefits. we could fix social security tomorrow. we could fix medicare tomorrow. but the other side is unwilling to talk about entitlement reform unless they feel like they are owed some obligation of raising taxes by a trillion dollars, that would be a disaster for the economy, and it's beyond me why the other side will not say let's fix social security, what would it take to fix social security, what would it take to fix medicare? i think we could fix all of these problems but i don't think the dialogue is there. i've been trying to ask questions from the other side for months now and we aren't getting anywhere. mr. lee: i think most members of congress would acknowledge their constituents want the federal budget balanced. why isn't it enough for us just to tell members of congress please balance it? we don't want to have to restrict your authority, we

don't want to have to take the keys away from the irresponsible driver, we just want you to be responsible. why doesn't that work? mr. paul: i think it's because so much of government spending is considered to be mandatory and so it keeps enlarging and expanding. and also because people have great big hearts and they want to help everyone but they don't realize the ramifications of -- of accumulating such a massive debt. as you accumulate debt there are ramifications. there are higher prices and the threat of an economic collapse. there is the threat of an entire country, greece is going under. italy is behind them. portugal, spain. they're struggling under this burden of debt. they say when a country's debt equals its economy, when the debt is about 100% of gross domestic product, you're losing a million jobs a year. our debt is stealing american jobs, making us weaker as a country, making us vulnerable, making our national security vulnerable but we have to do

something and there's no evidence -- we can't even in this body pass a budget, much less a balanced budget. so i think everything about this body shows a failure to be fiscally responsible and that we need stronger rules. mr. lee: perhaps it is inherent in the institution itself, in the forces at play, that have made congress uniquely vulnerable to this kind of massive deficit spending. but whatever the reason, we know that congress isn't willing, isn't able or at least in recent years has not been inclined except in rare, unusual circumstances to balance its own budget. that being the case, we can't assume that congress will all of a sudden start doing its job as those who have used this argument have insisted. part of congress' job as congress has come to perceive it is to engage in deficit spending. one of congress' powers as members of congress who read the constitution will point out, is to borrow money on credit of the united states.

and so it isn't enough simply to say congress, do your job, because it has regarded this kind of massive deficit as consistent with that mandate, consistent with that injunction. meanwhile, congress continues to occupy a larger and larger share of the american economy. we have to remember that for the first 150 years or so of our republic's existence, at the federal level we were spending between 1% and 4% of gross domestic product at the federal, national level with only two brief exception, once during the civil yar and one in the immediate aftermath of world war i. but that all started to change in the 1930's when we broke into double digits for the first time ever during peace time. we've never really gone back, and now the federal government is spending about 25% of gun

annually -- g.d.p. annually. roughly a quarter of every dollar that moves through the american economy every year is taken out of the real economy by washington. it's absorbed within the federal morass that is our government. that's a problem. that needs to change. i fear, i suspect, i firmly believe that it will not change until we take this power away, until we at least impose severe restrictions on congress' borrowing power because it has become part of congress' nature to engage in this kind of out-of-control deficit spending. senator paul, i'd like to ask you another question. how do you think it would impact the lives of americans, of kentuckians, on a day-to-day basis if we were to pass an amendment like this and have it ratified by the states? mr. paul: you know, the people maintain that they're for jobs, they're for getting the economy growing again. if we were to pass a balanced budget amendment and send it to the states this year, it would

create more jobs and create a better psychology than we've had in this country in decades. i think you would see a rise in the stock market like you've never seen before if we said to wall street and we said to investors worldwide, we are going to balance our budget, we are not going to spend more than we take in. i think you'd see an economic recovery begin like you've never seen in this country, and i think you'd see millions of jobs created. that's why we have to do this. the american people want it and what amazes me about this debate, we're going to have this debate and have this vote and the vast majority of the other side said they will not volt for a balanced budget amendment. so i say take that home. tell your people at home you are opposed to balancing the budget and let's run on that and see who wins the elections in the future because our country's future depends on this, on balancing our budget, and controlling the debt, and i hope that we don't wake up when it's too late.

mr. lee: i couldn't agree more with that assessly. and i think it's important for us to remind our colleagues that because the american people overwhelmingly support this, by a margin of about 75%, according to a recent cnn poll, those who oppose it, those who are members of this body or of our sister body, the u.s. house of representatives just down the hall, who choose not to support it will do so, will cast their "no" vote at their own political peril. because the american people are standing up and they are demanding more. they understand that in the words of benjamin franklin, he'll cheat without scruple who can without fear. when congress is free to spend more than it takes in every single year without political consequence, bad things happen. congress starts to manipulate more and more of the economy and that is something that the american people understand is hurtful rather than helpful to them, to the people on the

ground, to the person who's unemployed and looking for a job, for the person who's underemployed or underpaid for the work that he does. or the single mother who's just worried about taking care of their children. for the grandparents who are worried about the future of their grandchildren, worried about the fact that for the first time in american history, americans fear that their posterity will enjoy a lower standard of living than what they have enjoyed. all of this is due to the fact that congress has known no real boundaries to its authority and recognized no real limits on its ability to spend your hard-earned money. this has real consequences. but we can forestall those negative consequences right now if we will act to restrict on a permanent and structural basis congress's ability to engage in deficit spending. accept no imtaitionz. imtaitionz. beware of the trojan horse

balanced budget amendment, the one that can be circumvented easy by a simple majority vote. beware of the balanced budget amendment that doesn't limit as a percentage of g.d.p. congress's ability to spend money. look out for these principles. we get this balanced budget amendment passed, submit it to the states for ratification, they will ratify it and we will find that our best days as americans are yet ahead of us. i urge my colleagues to cast a vote in favor of senate joint resolution 10. thank you, mr. president. mr. grassley: mr. president? the presiding officer: the senior senator from iowa is recognized. mr. grassley: thank you, mr. president. the supreme court in a few months will be addressing four issues in connection with the constitutionality of the obama health care law. previously, i spoke about the unconstitutionality of the

individual mandate. today i want to discuss the second issue of four issues: how much of the law must be struck down if the court finds the individual mandate to be unconstitutional? this legal question is called severallability. when a court rules that a law is unconstitutional, it can strike down only those parts that it considers unconstitutional, it can strike down the parts that are intertwined with the unconstitutional provision, or it can strike down the whole l law. its action will depend -- will depend upon whether the remainder of the law can function as congress intended when it passed it. there are rules governing

severalability. normally when only parts of the law are held to be unconstitutional, only those parts of the law are struck down by the court. but when a statute's unconstitutional provisions are severed, the whole law falls when congress would not have passed the constitutional provisions without the unconstitutional ones being in it as well. it is not enough that some of the remaining provisions are constitutional. the supreme court has asked whether the remaining provisions -- quote -- "would function in a manner consistent with the original legislative bargain." the lower courts have reached four different conclusions concerning the health care reform law. first, that the individual mandate can be severed from the rest of the bill.

second, that the individual mandate can be severed but only if the law's related provisions that require mandatory issue and community ratings are also severed. third, the opposite position, that the mandate and the related provisions are not severable. and, finally, that the mandate is not severable and that the whole law must fall. one of my judiciary committee colleagues has stated that for the democrats -- quote -- "worst-case scenario, the mandate falls." but even the obama administration does not take that view. the administration argues that if the mandate falls, the guaranteed issue and community rating provisions must also be struck down.

the president's administration says health insurance markets will not function if all americans are not forced to buy health insurance. and insurance companies must nonetheless insure everyone who seeks coverage at prices that do not reflect their health risk. mr. president, if the mandate falls, keeping any of this law would violate the original legislative bargain. and i would like to remind my colleagues of that original legislative bargain. the health care law passed because the majority party in its own partisan way was going to pass this bill by any means necessary. and the individual mandate was very critical to the ability to pass this law and to particularly pass it only

bipartisan considerations. we considered an amendment in the finance committee that would have granted exemptions from the individual mandate to everybody who asked for that exemption. my good friend, the chairman -- and that's senator balk, a bauce all know -- correctly stated -- quote -- "the system won't work if this amendment passes." he further called it -- quote -- "an amendment which guts and kills health reform." he commented that -- quote -- "if we're serious about making sure that the americans have health insurance, we all have to participate." so the bill's sponsors knew the whole operation of the law depended upon this very

important provision that the courtcourt's now considering, wr the -- on the individual mandate and whether or not that issue is constitutional. so let me repeat that. the people promoting this legislation that passed on a partisan vote knew that the whole operation of the law depended upon the compulsion of the individual mandate. the legislative bargain also showed that this law would not have passed if a single comma had been changed. congress could not have enacted any part of this law without the individual mandate or any other provision. and that situation comes about from the fact that the bill passed the senate by one vote, and individual senators were able to extract specific

provisions that benefited their state in return for agreeing to provide their deciding vote for the bill. and i think we all under -- know the outrage that came from the grass-roots of america over some of those very special provisions. and we also know that the american people were disgusted by these deals. but without those arrangements and deals, none of the law would have passed. those deals were one of the reasons why the democrats lost their 60-vote majority in the last election. so when the other body could pass a bill only by accepting the senate bill, they blocked any amendments that would have changed so much as a comma. had anything changed, the new 59-vote senate majority would

have prevented passage. the bill was offered on a take-it-or-leave-it basis, an all-or-nothing. if the individual mandate is struck down, then the whole law must fall. and although it is not conclusive, it is certainly relevant that the law does not contain a severability clause. this is one more indication that congress thought that the law was a unified whole. it is simply not reasonable to argue that the law should survive without the mandate. the most important political accomplishment of the law is the additional coverage. it is not certainly the lower costs that we were promised. without the mandate, coverage under the law evaporates. does anyone really believe that without the coverage in the law,

congress could have passed the massive medicaid expansion? does anyone really believe that without the coverage in the law, congress could have passed the draconian cuts in medicare? does anyone really believe that without the coverage in the law, congress could have passed hundreds of billions of dollars in new taxes? of course not. it is simply not a legitimate argument that the rest of the bill could have ever stood on its own without the individual mandate enabling additional coverage. so i am pleased that the supreme court has granted oral arguments devoted on the severability question all by itself. in the past, the supreme court has issued very activist severability rulings in which it rewrote a statute in a way that

congress never would have passed it. for instance, it completely rewrote the campaign finance laws in the 1976 buckley v. valeo decision in a way that produced an unworkable system that no member of congress would have ever voted for. and in the booker case, the supreme court rewrote the sentencing laws in a way that produced a very unworkable system that no member of congress would have voted for. this time the supreme court should not use severability doctrine to rewrite the health care law into something that congress never would have passed in the first place. it should strike down the entirety of the law in keeping with the law on this subject. such a ruling would give us the chance to do what we did not do

before: work in a truly bipartisan way to address these issues. i yield the floor. mr. reid: mr. president? the presiding officer: the majority leader is recognized. mr. reid: i'm saddened to have learned this morning that five people were killed late yesterday in a terrible helicopter crash just a few miles outside of las vegas. my sympathies are with the families of those who died, including pilot landon neil and four passengers. my thoughts are with them as recovery efforts continue this morning as they lay their lost loved ones to rest. reports indicate the aircraft at was on a tour of the hoover dam just a few miles from las vegas. mr. president, this is -- i have taken those helicopter tours.

it's an exciting, exciting trip. i mean, we're just -- people don't realize this, we're just a few miles from grand canyon there in las vegas and it takes just a short time to get there and travel up that beautiful canyon to see where millions of people go every year to see grand canyon. hundreds of thousands come from las vegas to see it. i'm truly grateful forests of the park service rangers, the metropolitan police department search and rescue team and the clark henderson fire and rescue departments that responded to the accident. the federal aviation administration, the national transportation safety board are investigating this accident as we speak. i'll continue to monitor the investigation as it progresses. hundreds of thousands of tourists enjoy these helicopter tours each year. i'm sorry that innocent people lost their lubes in such a rare tragedy.

nevada puts great stock in protecting the safety of their tourists. whether flying over the grand gd canyon or walking down the las vegas strip. again, my heart goes out to the families as they mourn this awful tragedy. i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: the presiding officer: the senior senator from iowa is recognized. mr. grassley: i ask that the calling of the quorumming dispensed with. officer without objection, so ordered. mr. grassley: if the democrats aren't going to take their time, i had a like to take five or six minutes for remarks on another subject. i ask unanimous consent -- the presiding officer: without objection, so ordered. mr. grassley: thank you. i come to the floor today to commend secretary of defense

leon panetta for personally focusing top-level attention to what's been a festering problem, and i think it's fair for me to say a festering problem of decades. i'm talking about the defense department's broken accounting system and lack of financial accountability. secretary panetta has grabbed the bull by the horns and told the military services to get on the stick and move out smartly. he wants them to fix the problem now, not later. secretary panetta's bold initiative is laid out in a department-wide memorandum dated october 11 this year. in this document, he calls for an all-hands-on-deck priority effort to accelerate plans to create a modern, fully

integrated finance and accounting system. such a system, if it ever comes to be, would be designed to generate reliable, accurate, and complete financial information. such a system could be capable of producing credible financial statements that can earn clean opinions from independent auditors. if that happens, the department will achieve what is called full audit readiness. but now i want to warn secretary panetta things that happened to so many well-intentioned secretaries of defense. that could be a big "if." under the chief financial officers act of 1990, all government agencies were supposed to reach full audit readiness 15 years ago. as i understand it, the defense

department is now the only delinquent agencies. after the passage of so much time, how is it then that the pentagon cannot provide an accurate accounting of all the money it spends? doing it is a constitutional responsibility. not doing it is unacceptable. why are the military services dragging their feet like they have? what is the problem? are all of the petty fiv fiefdos causing the problem? is it because they do not want to surrender control of the money to a centralized financial authority? this is a festering problem that secretary panetta has tackled. as a former chairman of the

house budget committee and director of the office and management and budget, he has the necessary knowledge and the necessary experience to get this job done. the magic date for achieving full audit readiness at defense was set in concrete two years ago. unfortunately, this goal has a long and elusive history, and that long and elusive history is best characterized by relentless slippage. it is a rolling target date. and most experts believe that the 2017 deadline is unattainable. now, i'm sure our tax-paying public doesn't understand why the federal government wouldn't have the best accounting system in the world. but they don't, particularly in the defense department. under secretary panetta's

leadership, i hope all the slippage comes to a screeching halt and all the bureaucratic roadblocks are torn down. he has definitely turned up the heat and turned up the pressure. he has drawn a line in the sand. he wants to see results and see results now. he is calling for a revised plan for achieving audit readiness. it's due on his desk december 13. so army, navy, air force, marines, coast guard, everybody else -- well, coast guard is not involved -- but, everybody else, get on the stick, because that's next week. he has set a near-term goal. he wants the department to produce partial financial statements by 2014. as a first step, secretary panetta has called for production of statements of

budgetary resources by 2014. a statement of budgetary resources is just one component of a financial statement, but it represents a big, important chunk of the whole. if credible statements of budgetary resources can be produced three years ahead of schedule, then maybe the full audit readiness by 2017 is indeed possible. i also understand that secretary panetta's near-term goal is being incorporated in legislation working its way through congress right now. that should help to move the ball further down the field. secretary panetta's decision to set a preliminary goal of 2014 will be a good gauge, a good test of what is and is not possible. can the defense department

achieve full audit readiness by 2017? we won't have to wait six years to find that out under the process secretary panetta has instituted. if problems surface early on, we in congress can help the department take corrective action to keep this effort on track and moving in the right direction. a willingness and a commitment on the part of the secretary of defense to take on this problem goes way beyond the production of credible financial statements required by the chief financial officers act of the late-1970's. it goes right to the heart of a much larger constitutional issue, and that is whether or not the department of defense is going to be held accountable. the department must be able to provide a full and accurate accounting of all the money it spends. under article 1, section 9, of

the constitution, such an accounting must be published from time to time. taxpayers expect and deserve nothing less than that. today d.o.d. can't do that. the status quo is unacceptable. while i began conducting oversight of the defense department financial management issues more than 20 years ago, i did not come to fully appreciate the true understanding of the root cause of the issue until three years ago. after receiving a series of unanimous letters alleging misconduct and mismanagement within the inspector general's audit office, i initiatived an in-depth review of audit reporting. early on in the review, there was a startling revelation. one all-important central element was adversely affecting

every facet of the inspector general's audit effort, and that was the department's broken accounting system. this dysfunctional system is a -- is driving the audit freight train. the success or failure of an audit turns on the quality of the financial data available. that data being available for audit by competent examiners. and the record clearly shows that the quality of financial data presented for audit by the department should be rated "poor" or maybe i ought to say even worse than poor. now, this is what i call the no-audit-trail scenario. it is frequently encountered by auditors trying to examine department of defense books accounts.

that is the exact problem that secretary panetta is attempting to address. all my audit oversight work tells me that fixing the accounting machinery is the first step to audit readiness. once a modern, fully integrated system is up and running, it should be a simple matter of punching the right computer buttons and credible financial statements will roll off of the printer. doing routine oversight audits should be a piece of cake. today's labor-inten saifnedz time-consume designee -- today's labor-intensive and time-consuming audit trail which awedders now endure in the absence of reliable accounting records will be a thing of the past. botch and mosand most importante internal controls will be in place to protect the taxpayers' 0 money against fraud, theft,

and waste. what i am saying to my colleagues is this: secretary panetta is on the right track. he is trying to take us to a place where we need to go and go soon. and i want to help him lead us there. so i'm here today to encourage and support this courageous effort to clean up the books. i admire and respect his personal commitment to such a noble cause. i'm also here to reinforce the work of encouragement contained in a letter my friend from oklahoma, dr. coburn, and i penned to secretary panetta on november 17. we -- meaning senator coburn and i -- want to work with him to achieve this most worthy goal. and in the process of this remarks to the senate, i hope

other members of the senate, particularly those that are on the armed services committee, will also give secretary panetta encouraging words of support and thanks. i yield the floor. mr. durbin: mr. president? the presiding officer: the assistant majority leader is recognized. mr. durbin: on behalf of the leader, i ask unanimous consent that the time until 2:30 p.m. be equally divided between the two leaders or their designees for debate on the reid motion to proceed to calendar number 251, s. 1944, that at 2:30 p.m., the senate vote son the motion to proceed to s. 1944, that upon disposition of the reid notion proceed be in order for the republican leader or his designee to move to proceed to calendar number 244, s. 1931, that thereby two minutes debate equally divided between the two leaders or their designees prior to the vote, that both motions to proceed be subject to a 60 affirmative vote pleasure tholed, finally, the motion to proceed to s. 1944 be vitiated.

the presiding officer: without objection. mr. durbin: i have 10 unanimous consent request for committees to meet during today's session of the senate. they have approval of the majority and minority leaders. i ask unanimous consent that these be agreed to and printed in the record. the presiding officer: without objection, so ordered. mr. durbin: mr. president, a little earlier today the senator -- junior senator from utah, senator lee, came to the floor to discuss the balanced budget amendment. under the budget agreement agreed to in congress, both the house and senate were required to vote on a constitutional raiment to balance the budget before -- a constitutional amendment to balance the budget before the end of the calendar year. the house has already taken the vote. the measure faismed the senate still has the responsibility to take it up, which we will do in the closing hours of the session this calendar year. there are at least two proposals before us for a constitutional amendment. and my committee, the constitution subcommittee of the judiciary, held a hearing last week asking questions about these approaches to the constitution. the leading approach on the republican side comes from both senators hatch