[Pages S1360-S1367]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. BENNETT:
S. 3096. A bill to prevent an economic disaster by providing budget
reform; to the Committee on the Budget.
Mr. BENNETT. Mr. President, as I move around the State of Utah to
talk to my constituents, I find, with all of the other specifics they
are concerned about, the one thing just about everybody is concerned
about is our long-term fiscal situation. They are worried about debt.
They are worried about the deficit in this year that is adding to the
debt. They say to me: What can we do about it? They listen to the
pundits who talk on the air about this particular project or that
particular project that sounds outrageous. Many times the projects are,
in fact, legitimate, but they make good copy.
I say, if you add up all of these projects together--the good ones
and the bad ones--and eliminated them all, you would reduce the Federal
deficit by less than 1 percent. Let's talk about where the money lies.
Let's talk about where the challenge is. So I present to my
constituents a series of charts that I will present here that outline
where the challenge is.
One of the things that becomes clear, as we go into this debate, is
it is not just our financial situation that is in trouble. The
pressures created by our debt are crossing over into the area of
national security. We cannot maintain our military or our diplomatic
initiatives with the kinds of pressures continually increasing.
So a little bit of history, which I share with my constituents and
that I share here as the background for the bill I am introducing
today.
This is a very simple pie chart that shows the components of Federal
spending back in 1966. I ask my constituents: Why do I pick 1966 as the
year to start? Some of them know the answer; some of them do not. But
in 1966, mandatory spending constituted 26 percent of the budget, and
interest on the national debt another 7 percent. You have to pay the
interest on the bonds, so that is mandatory spending as well. So the
government is committed for a third of the budget before the Congress
ever gets around to appropriating any money.
In 1966, the biggest portion of mandatory spending was Social
Security. The combination of Social Security and other mandatory
programs, and the interest cost, was one-third of the budget. The other
two-thirds was available to the Congress. Of that spending, defense
spending was 44 percent of the total. Defense spending, obviously,
dominated nondefense discretionary spending.
Where are we today? What has happened in the years since 1966 and
today? Here are the components of Federal spending in fiscal 2008. I
picked that year, before the tsunami hit us--the financial tsunami that
caused the meltdown and all of the problems--as

[[Page S1361]]

perhaps a demonstration of what is happening structurally within the
budget, not affected by any particular emergency.
Mandatory spending has now grown to 54 percent. Interest costs are
from 7 to 8 percent. So the two of them constitute roughly two-thirds
of the budget. From 1966 to 2008, mandatory spending now is twice as
big in its proportion of the budget than it used to be. Defense
spending has shrunk to a half of what it was back in the 1960s, and
nondefense discretionary spending is about the same.
All right. Now back to the question: Why did I pick 1966 as the year
to start with? Because that is the year the Federal Government got into
the medical business and enacted Medicare. Since then, we have added
Medicaid. So today, when you talk about mandatory spending, Social
Security is no longer the dominant factor. It is a combination of
Social Security, Medicare, and Medicaid.
I will leave aside the issue of the value of those programs. I am
just talking about the money we are spending here. Today, as we argue
over congressional spending, we only have a third of the budget to talk
about, and half of that, roughly, is defense spending.
Let's go to fiscal year 2009. Mandatory spending has grown to 59
percent. The interest cost is 5 percent. Defense will have shrunk,
nondefense will have shrunk. The reason the interest costs are
shrinking is because we are borrowing money at a lower rate by virtue
of the things that have happened with the financial tsunami.
But now let's go out 10 years to 2020 and see where we will be. In 10
years, mandatory spending will have grown to 58 percent. The interest
costs will have grown to 13 percent, and defense and nondefense
together will constitute only 30 percent. If defense is shrunk to 15
percent of the budget, it begins to bite very seriously into America's
role in national security around the world.
One author I have looked at who has talked about America's role in
the world in a very thoughtful way looks ahead to this, and he says the
greatest threat to America's position in the world is not China, it is
not India, it is not North Korea. It is Medicare. The greatest threat
to America's ability to sustain itself and its national security is
coming from the growth of mandatory spending.
If we spend all of our time arguing over those tiny things that make
good copy in newspapers and on television and do not address this
inexorable growth, we will discover that the Congress has become
irrelevant. Three-fourths of the budget of Congress will already be
spent before the Congress even meets, and only one-fourth will be left
for us to talk about, and that one-fourth will have to include our
spending for national security, and you will see how everything else
will get squeezed out.
I had that hit me directly as we had the debate last year on the
budget resolution for fiscal year 2010. Standing at this very place, I
looked down at the bill that was presented and sitting here on a
podium, and it projected Federal revenues for fiscal year 2010 at $2.2
trillion--down because of the challenges we had with the economic
meltdown. Then on the next page it said: mandatory spending, $2.2
trillion. That meant everything we do in government in fiscal year
2010, other than mandatory spending--the Defense Department, the war in
Afghanistan, the FAA which controls the airplanes, the national parks,
our embassies overseas, the FBI, all of our law enforcement, the border
security--everything, every single dime we spend in government, other
than mandatory spending, in fiscal year 2010 had to be borrowed. We did
not have a single dime of tax revenue available to pay for anything in
government because it was all taken up in mandatory spending.
All right. What does this do to us long term as a nation?
People keep talking about the national debt and how it is growing and
growing and growing. Actually, the national debt has not been growing
and growing and growing over the years. Here is a chart that shows the
national debt measured in the way it should be measured, as a
percentage of the gross domestic product, the size of the national debt
with respect to the size of the economy.
To illustrate why this is the way to do it--I have often used this
example on the Senate floor--I ran a company before I came here. When I
became the CEO of that company it was very small. It had a debt of
$75,000. When I stepped down to retire prior to running for the Senate,
the debt was $7.5 million. One might say: Well, Bob Bennett, you are
not a very good manager if you ran the debt up from $75,000 to $7.5
million. Then you look at the debt the way you should look at it.
At the time I became the CEO of that company, they were doing under
$300,000 a year in total revenue. They had no margin at all. Every dime
they took in, in revenue, was eaten up with costs, and they could not
make the payments on the $75,000 debt. The $75,000 debt threatened the
survival of the company. When we had a $7.5 million debt, the company
was doing over $80 million in business, and we had a 15-percent margin
on sales. We were earning more per year than the whole debt we had, and
the only reason we didn't pay it off is because we had some prepayment
penalties built into the mortgages we had established. So I wasn't such
a bad steward after all, if you make the measure totally on the basis
of the size of the debt. I was a good steward if you make it on the
measure of the debt in relationship to the size of the enterprise.
That is what this chart shows: the national debt as a percentage of
the size of the enterprise, to use business terms; in this case, the
size of the economy.
We see that just after the Second World War our national debt was
well over 100 percent of GDP, and in the two decades after the Second
World War, we come from 1945 to 1965, the debt had shrunk from over 100
percent of GDP to close to 30 percent of GDP. Even though it was going
up in nominal dollars, it was coming down as a percentage because the
economy was growing so rapidly. Then, once again, we add to our
entitlement spending, we add Medicare, and we see this is the trough.
It begins to grow and it begins to grow.
When we get to the end of the Cold War, it turns down again because
of two things: No. 1, our defense spending goes down and the economy
booms. We get tremendous growth as a result of the end of the Cold War.
It was at 46.9 percent when Medicare and Medicaid got started, and not
much different in 1989 by the end of the Cold War, 53.1 percent. This
shows the historic level it has been.
OK. Now, this is the history, and the blue line shows the projections
that the Obama administration has given us as to what will happen under
their spending plan. One thing we know about projections is that they
are always wrong. We don't know whether they are wrong on the high side
or the low side, but we know they are always wrong. What usually
happens is that the projections are always optimistic and circumstances
come in with a result that is less than we had hoped for.
So if we take this as an optimistic projection, we are saying when we
get to 2020, which is only a decade away--only 10 years away--the
national debt will be back up very close to what it was at the end of
the Second World War. That is unacceptable. Everyone in this Chamber
knows that entitlement spending is the driving force behind all of
this. Everyone in this Chamber knows shaving back a little on this
program or cutting out a particular grant on another program will have
no real impact on this if we don't have the courage to deal with
entitlement spending.
So today I am introducing a bill to deal with entitlement spending. I
have no illusions that it is going to pass in this Congress, but I wish
to lay it down so we at least have a marker from which to begin. I have
already done that with Social Security.
Several years ago, when I was chairman of the Joint Economic
Committee, I held a series of hearings on Social Security and
discovered that we can indeed solve the Social Security problem. We can
move numbers around a little and say to everyone who is currently
drawing Social Security: You will continue to draw Social Security
throughout your lifetime, adjusted for inflation. Nothing will happen
to it. Furthermore, your children can draw the same level of Social
Security benefits that you draw adjusted for inflation through their
lifetimes without any

[[Page S1362]]

danger to it, and their children can draw Social Security throughout
their lifetimes at exactly the same level adjusted for inflation,
without a tax increase.
How is that possible? The way it is possible is to say we are only
going to allow Social Security benefits to grow as rapidly as inflation
grows. We already have built into the program that we are going to pay
Social Security plus inflation, plus a nice little kicker along the
way. That nice little kicker along the way over 10 years, and then 20
years, then 30 years pretty soon gets us into the kind of trouble I
have described. If we say, no, we will allow it to grow with respect to
inflation, but we will not allow it to grow any more rapidly than that,
then the kind of thing that happened here can happen again. As the
economy grows more rapidly than the inflation rate, we will see the
national debt begin to come down, we will see the pressure on national
security begin to ease, and we will see the great concern that
Americans have about the financial situation begin to be addressed in
the way it was addressed in the years after the Second World War.
I am not saying we abolish entitlement programs. There are some of my
constituents who say that is the thing to do: just abolish Medicare;
abolish Social Security. I say, yes, we want to abolish these things
but keep the taxes because that is what we would have to do if we are
going to get the financial circumstance we like. No, over time, we can
do this without abolishing these programs, but we have to see to it
they do not grow.
So here is what my bill will do. It will control the growth of
entitlement spending by reinstating spending limits and saying
entitlement programs cannot grow at a rate faster than the inflation
rate. That will mean to the future Congresses, if they adopt this bill:
OK, we can still spend for Medicare, we can still spend for Medicaid,
we can still do Social Security, but we can't add things to it in such
a way that will cause it to grow more rapidly than inflation, No. 1.
No. 2, do the same thing with all nondefense discretionary spending. We
will allow it to grow each year in accordance with the inflation rate,
but we will not allow increases in nondefense discretionary spending
more rapidly than the inflation rate. Then, No. 3, enforce the spending
caps with automatic spending reductions and budget points of order, the
details of the kind of thing we get into around here all the time.
The bill is very simple, very straightforward, but it gives the kind
of direction that many of the solutions that have been proposed around
here don't do. Many of the solutions we have around here sound great,
and they are very complicated--this point of order lies here, and that
situation there--but, overall, we are turning our backs on two-thirds
of the Federal spending. We say we would not address them because these
programs are popular, and we don't want to offend the voters by saying
something has to be done with the most popular programs in America.
I find the voters are saying we have to deal with this. We have to
have the courage to deal with it, which means we have to have the
courage to deal with entitlement spending and not just focus on
nondefense discretionary spending.
The final thing my bill will do is to prohibit the creation of any
new mandatory spending programs, which is, again, part of the problem
we have had.
I close by repeating a question I ask my constituents as I am making
this presentation to them. I say: How many of you know who Willie
Sutton was? Most of my audience is young enough not to know the answer
to that question, but there are a few who say Willie Sutton was a bank
robber, and that is true. He wasn't a very good bank robber because he
kept getting caught. Each time he would serve his sentence and then he
would go out after he had been released from prison and he would rob
another bank.
Finally, somebody said to him--and this is why we remember Willie
Sutton, not for being a bad bank robber but for the comment he made.
Somebody said: Willie, why do you keep robbing banks?
He said: Because that is where the money is.
We look at the national debt, we look at the problems we face, and we
ask the question: Where is the money? We have to rein in the
entitlement spending because that is where the money is. It is two-
thirds of the budget now, three-fourths of the budget within 10 years.
If we continue to ignore the growth of entitlement spending and focus
entirely on the rest of it, that makes good press but not good policy.
We will find our financial situation is up here, our national debt will
be as high as it was with the percentage of GDP as it was after the
Second World War, and our national security will be threatened to the
point that our entire posture around the world will be changed, simply
because we would not be able to afford it.
It is for that reason that I send to the desk an act that may be
cited as the Economic Disaster Prevention Act of 2010 that deals with
spending limits on entitlement programs as well as spending limits on
discretionary spending, and the prohibition of any new mandatory
spending programs.
______

By Mr. MERKLEY (for himself, Mr. Levin, Mr. Kaufman, Mr. Brown of
Ohio, and Mrs. Shaheen):
S. 3098. A bill to prohibit proprietary trading and certain
relationships with hedge funds and private equity funds, to address
conflicts of interest with respect to certain securitizations, and for
other purposes; to the Committee on Banking, Housing, and Urban
Affairs.
Mr. LEVIN. Mr. President, I would like to relay a story that says a
great deal about how the worst financial crisis since the Great
Depression came to be.
In 2006, a bond trader at Lehman Brothers struck up a conversation
with one of the firm's college interns. When the trader asked this
intern, who had not yet begun his senior year, what he was doing on his
winter vacation, the young man replied that he would be trading
derivatives for Lehman. That was a surprise, but the shock came when
the intern said the firm had given him $150 million of its own money
for this college student to bet on risky derivatives.
Now, one college junior and his $150 million trading account did not
bring the entire financial system close to collapse. But it is just
this brand of recklessness that led to the need for multibillion-dollar
bailouts and to the worst recession in decades, one that has left
millions of Americans without a job.
The losses that Lehman and other large financial firms racked up,
trading on their own account and not on the behalf of investors, helped
build the bonfire that nearly engulfed our entire financial system.
That is why I have joined Senators Merkley, Kaufman, Sherrod Brown,
and Shaheen to introduce the Protect our Recovery Through Oversight of
Proprietary Trading Act, or PROP Trading Act. With this legislation, we
attempt to rein in some of the reckless practices that led to economic
catastrophe, the proprietary trading and hedge-fund operations that
lost billions of dollars, caused the collapse of some of our biggest
financial institutions, and pushed other major financial firms to the
brink of collapse.
This legislation would accomplish several important goals to ensure
that the abuses of recent years don't lead to another crisis. It would
ban taxpayer insured banks, and their affiliates and subsidiaries, from
engaging in proprietary trading that is, trading on their own behalf
and not that of their customers. It would ban taxpayer insured banks
from investing in or sponsoring hedge funds or private equity funds.
Nonbank institutions that are critically important to the systemic
health of the financial system, i.e., those that have been deemed ``too
big to fail,'' would be subject to new capital requirements and limits
on their ability to trade on their own behalf or invest in hedge funds
or private equity funds. Federal regulators would set those
requirements and limits. And our legislation would prohibit
underwriters of asset-backed securities from engaging in transactions
that create a conflict of interest with respect to the securities they
package and sell.
The reaction of Wall Street has been swift. Proprietary trading, they
tell us, was not a large factor in creating the financial crisis. And
restrictions on proprietary trading would have no effect in preventing
the next crisis.
On both points, they are wrong. Here is why.

[[Page S1363]]

While Wall Street claims that proprietary trading was a tiny part of
its operations before the crisis, their financial reports during the
boom years tell a different story. Firms such as Goldman Sachs and
Lehman Brothers earned as much as half their revenue on proprietary
trades when markets were booming. Bank of America reported in a 2008
regulatory filing that losses in ``large proprietary trading and
investment positions'' had ``a direct and large negative impact on our
earnings.'' JP Morgan Chase warned in its 10K filing for 2008 that it
held large ``positions in securities in markets that lack pricing
transparency or liquidity,'' presumably proprietary positions.
Likewise, Goldman Sachs told regulators that the collapse of
proprietary asset values ``have had a direct and large negative
impact'' on its earnings.
What these firms are saying in the dry, lawyerly language of SEC
filings is that they had been betting big, and losing big, and those
failed bets had done them serious harm.
How much harm? By August of 2008, according to one estimate, the
nation's largest financial firms had suffered $230 billion in losses
from proprietary trading. Only a Wall Street trader could dismiss such
losses as immaterial; in fact, that total is about one-third the size
of the Wall Street rescue package we were forced to approve. Nearly
every major financial institution suffered major losses in proprietary
trades. Lehman Brothers, whose bankruptcy was a major contributor to
the financial crisis, in 2006 derived more than half its revenue from
proprietary trades. By 2007, its proprietary holdings totaled $313
billion. But the firm lost $32 billion on such trades in 2007 and 2008,
nearly double the value of the firm's common equity. Bear Stearns
collapsed and was bought by JP Morgan Chase with federal aid in large
part because of the collapse of its hedge funds. Morgan Stanley, JP
Morgan Chase, Merrill Lynch, Goldman Sachs, each suffered major losses
as a result of the risky bets they placed on securities that plummeted
in value.
There also is a need to prevent financial institutions that create
asset-backed securities from engaging in transactions connected to
those securities that present a conflict of interest. As has been
widely reported, some institutions at the height of the boom in asset-
backed securities were creating these securities, selling them to
investors, and then placing bets that their product would fail. Phil
Angelides, the chairman of the Financial Crisis Inquiry Commission, has
likened this practice to selling customers a car with faulty brakes,
and then buying life insurance on the driver. It is an abusive
practice, it should stop, and our legislation would stop it.
It would be irresponsible of us to allow such risk and abuse to
remain present in our financial system, lying dormant until the day we
are once again on the brink of financial catastrophe, and once again
the need to rescue financial firms who refuse to prudently manage their
risks. This legislation is urgently important, and I urge my colleagues
to carefully consider the consequences of failing to act.
______

By Mr. MERKLEY (for himself, Mrs. Shaheen, Mr. Johnson, Mr.
Lugar, Mr. Bennet, and Mr. Graham):
S. 3102. A bill to amend the miscellaneous rural development
provisions of the Farm Security and Rural Investment Act of 2002 to
authorize the Secretary of Agriculture to make loans to certain
entities that will use the funds to make loans to consumers to
implement energy efficiency measures involving structural improvements
and investments in cost-effective, commercial off-the-shelf
technologies to reduce home energy use; to the Committee on
Agriculture, Nutrition, and Forestry.
Mr. MERKLEY. Mr. President, I rise today to introduce legislation
that will create jobs and lower energy bills for families and small
businesses in rural communities by promoting energy-saving home
renovations.
I am honored to be joined in this effort by a bipartisan group of
colleagues that includes Senator Shaheen, Senator Lugar, Senator
Graham, Senator Johnson, and Senator Bennet of Colorado. Our colleagues
in the other chamber are introducing companion legislation sponsored by
Representatives Clyburn, Perriello, Whitfield, and Spratt.
Our proposed Rural Energy Savings Program would assist rural electric
co-operatives in offering ``on-bill'' financing to their customers.
This concept offers two clear and important benefits for consumers,
including homeowners and owners of commercial or industrial property.
First, it addresses the challenge of the up-front cost of building
renovations. Energy efficiency measures almost always make business
sense in the long term, because they lower the energy bill for the
family or business. But often, the family or business cannot afford the
upfront cost of the renovation. By offering low-cost financing, we can
let families and businesses pay for the cost of the renovation on the
same time frame that they are getting savings on their energy bill.
Second, we avoid complicating consumers' lives with another loan
payment by offering a very simple repayment mechanism: under ``on-
bill'' financing, the consumer repays the loan through a charge on
their electric bill.
This bill offers these benefits to Americans across the country by
using existing structures in place to provide federal assistance to
rural electric co-operatives. Specifically, the Rural Utilities Service
will offer loans at zero percent interest to rural co-operatives, who
can then offer on-bill financing to their customers at no more than
three percent interest. The difference can be used to pay the local
nonprofit cooperatives' overhead expenses or to establish a loan loss
reserve. There are more than 900 electric co-operatives serving 42
million Americans, so we expect this program to create jobs and help
lower energy bills in rural communities all over the country.
For our rural communities to recover and thrive in the wake of the
economic crisis, we need to put people back to work and lower families'
expenses, and the Rural Energy Savings Program does both.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 3102

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Rural Energy Savings Program
Act''.

SEC. 2. RURAL ENERGY SAVINGS PROGRAM.

Title VI of the Farm Security and Rural Investment Act of
2002 (7 U.S.C. 7901 note et seq.) is amended by adding the
following new section:

``SEC. 6407. RURAL ENERGY SAVINGS PROGRAM.

``(a) Purpose.--The purpose of this section is to create
and save jobs by providing loans to qualified consumers that
will use the loan proceeds to implement energy efficiency
measures to achieve significant reductions in energy costs,
energy consumption, or carbon emissions.
``(b) Definitions.--In this section:
``(1) Eligible entity.--The term `eligible entity' means--
``(A) any public power district, public utility district,
or similar entity, or any electric cooperative described in
sections 501(c)(12) or 1381(a)(2)(C) of the Internal Revenue
Code of 1986, that borrowed and repaid, prepaid, or is paying
an electric loan made or guaranteed by the Rural Utilities
Service (or any predecessor agency); or
``(B) any entity primarily owned or controlled by an entity
or entities described in subparagraph (A).
``(2) Energy efficiency measures.--The term `energy
efficiency measures' means, for or at property served by an
eligible entity, structural improvements and investments in
cost-effective, commercial off-the-shelf technologies to
reduce home energy use.
``(3) Qualified consumer.--The term `qualified consumer'
means a consumer served by an eligible entity that has the
ability to repay a loan made under subsection (d), as
determined by an eligible entity.
``(4) Qualified entity.--The term `qualified entity' means
a non-governmental, not-for-profit organization that the
Secretary determines has significant experience, on a
national basis, in providing eligible entities with--
``(A) energy, environmental, energy efficiency, and
information research and technology;
``(B) training, education, and consulting;
``(C) guidance in energy and operational issues and rural
community and economic development;
``(D) advice in legal and regulatory matters affecting
electric service and the environment; and
``(E) other relevant assistance.
``(5) Secretary.--The term `Secretary' means the Secretary
of Agriculture, acting through the Rural Utilities Service.

[[Page S1364]]

``(c) Loans and Grants to Eligible Entities.--
``(1) Loans authorized.--Subject to paragraph (2), the
Secretary shall make loans to eligible entities that agree to
use the loan funds to make loans to qualified consumers as
described in subsection (d) for the purpose of implementing
energy efficiency measures.
``(2) List, plan, and measurement and verification
required.--
``(A) In general.--As a condition to receiving a loan or
grant under this subsection, an eligible entity shall--
``(i) establish a list of energy efficiency measures that
is expected to decrease energy use or costs of qualified
consumers;
``(ii) prepare an implementation plan for use of the loan
funds; and
``(iii) provide for appropriate measurement and
verification to ensure the effectiveness of the energy
efficiency loans made by the eligible entity and that there
is no conflict of interest in the carrying out of this
section.
``(B) Revision of list of energy efficiency measures.--An
eligible entity may update the list required under
subparagraph (A)(i) to account for newly available efficiency
technologies, subject to the approval of the Secretary.
``(C) Existing energy efficiency programs.--An eligible
entity that, on or before the date of the enactment of this
section or within 60 days after such date, has already
established an energy efficiency program for qualified
consumers may use an existing list of energy efficiency
measures, implementation plan, or measurement and
verification system of that program to satisfy the
requirements of subparagraph (A) if the Secretary determines
the list, plans, or systems are consistent with the purposes
of this section.
``(3) No interest.--A loan under this subsection shall bear
no interest.
``(4) Repayment.--A loan under this subsection shall be
repaid not more than 10 years from the date on which an
advance on the loan is first made to the eligible entity.
``(5) Loan fund advances.--The Secretary shall provide
eligible entities with a schedule of not more than ten years
for advances of loan funds, except that any advance of loan
funds to an eligible entity in any single year shall not
exceed 50 percent of the approved loan amount.
``(6) Jump-start grants.--The Secretary shall make grants
available to eligible entities selected to receive a loan
under this subsection in order to assist an eligible entity
to defray costs, including costs of contractors for equipment
and labor, except that no eligible entity may receive a grant
amount that is greater than four percent of the loan amount.
``(d) Loans to Qualified Consumers.--
``(1) Terms of loans.--Loans made by an eligible entity to
qualified consumers using loan funds provided by the
Secretary under subsection (c)--
``(A) may bear interest, not to exceed three percent, to be
used for purposes that include establishing a loan loss
reserve and to offset personnel and program costs of eligible
entities to provide the loans;
``(B) shall finance energy efficiency measures for the
purpose of decreasing energy usage or costs of the qualified
consumer by an amount such that a loan term of not more than
ten years will not pose an undue financial burden on the
qualified consumer, as determined by the eligible entity;
``(C) shall not be used to fund energy efficiency measures
made to personal property unless the personal property--
``(i) is or becomes attached to real property as a fixture;
or
``(ii) is a manufactured home;
``(D) shall be repaid through charges added to the electric
bill of the qualified consumer; and
``(E) shall require an energy audit by an eligible entity
to determine the impact of proposed energy efficiency
measures on the energy costs and consumption of the qualified
consumer.
``(2) Contractors.--In addition to any other qualified
general contractor, eligible entities may serve as general
contractors.
``(e) Contract for Measurement and Verification, Training,
and Technical Assistance.--
``(1) Contract required.--Not later than 60 days after the
date of enactment of this section, the Secretary shall enter
into one or more contracts with a qualified entity for the
purposes of--
``(A) providing measurement and verification activities,
including--
``(i) developing and completing a recommended protocol for
measurement and verification for the Rural Utilities Service;
``(ii) establishing a national measurement and verification
committee consisting of representatives of eligible entities
to assist the contractor in carrying out this section;
``(iii) providing measurement and verification consulting
services to eligible entities that receive loans under this
section; and
``(iv) providing training in measurement and verification;
and
``(B) developing a program to provide technical assistance
and training to the employees of eligible entities to carry
out this section.
``(2) Use of subcontractors authorized.--A qualified entity
that enters into a contract under paragraph (1) may use
subcontractors to assist the qualified entity in performing
the contract.
``(f) Fast Start Demonstration Projects.--
``(1) Demonstration projects required.--The Secretary shall
enter into agreements with eligible entities (or groups of
eligible entities) that have energy efficiency programs
described in subsection (c)(2)(C) to establish an energy
efficiency loan demonstration projects consistent with the
purposes of this section that--
``(A) implement approaches to energy audits and investments
in energy efficiency measures that yield measurable and
predictable savings;
``(B) use measurement and verification processes to
determine the effectiveness of energy efficiency loans made
by eligible entities;
``(C) include training for employees of eligible entities,
including any contractors of such entities, to implement or
oversee the activities described in subparagraphs (A) and
(B);
``(D) provide for the participation of a majority of
eligible entities in a State;
``(E) reduce the need for generating capacity;
``(F) provide efficiency loans to--
``(i) not fewer than 20,000 consumers, in the case of a
single eligible entity; or
``(ii) not fewer than 80,000 consumers, in the case of a
group of eligible entities; and
``(G) serve areas where a large percentage of consumers
reside--
``(i) in manufactured homes; or
``(ii) in housing units that are more than 50 years old.
``(2) Deadline for implementation.--The agreements required
by paragraph (1) shall be entered into not later than 90 days
after the date of enactment of this section.
``(3) Effect on availability of loans nationally.--Nothing
in this subsection shall delay the availability of loans to
eligible entities on a national basis beginning not later
than 180 days after the date of enactment of this section.
``(4) Additional demonstration project authority.--The
Secretary may conduct demonstration projects in addition to
the project required by paragraph (1). The additional
demonstration projects may be carried out without regard to
subparagraphs (D), (F), or (G) of paragraph (1).
``(g) Additional Authority.--The authority provided in this
section is in addition to any authority of the Secretary to
offer loans or grants under any other law.
``(h) Authorization of Appropriations.--
``(1) In general.--There is authorized to be appropriated
to the Secretary in fiscal year 2010 $993,000,000 to carry
out this section. Notwithstanding paragraph (2), amounts
appropriated pursuant to this authorization of appropriations
shall remain available until expended.
``(2) Amounts for loans, grants, staffing.--Of the amounts
appropriated pursuant to the authorization of appropriations
in paragraph (1), the Secretary shall make available--
``(A) $755,000,000 for the purpose of covering the cost of
direct loans to eligible entities under subsection (c) to
subsidize gross obligations in the principal amount of not to
exceed $4,900,000,000;
``(B) $25,000,000 for measurement and verification
activities under subsection (e)(1)(A);
``(C) $2,000,000 for the contract for training and
technical assistance authorized by subsection (e)(1)(B);
``(D) $200,000,000 for jump-start grants authorized by
subsection (c)(6); and
``(E) $1,100,000 for each of fiscal years 2010 through 2019
for ten additional employees of the Rural Utilities Service
to carry out this section.
``(i) Effective Period.--Subject to subsection (h)(1) and
except as otherwise provided in this section, the loans,
grants, and other expenditures required to be made under this
section are authorized to be made during each of fiscal years
2010 through 2014.
``(j) Regulations.--
``(1) In general.--Except as otherwise provided in this
subsection, not later than 180 days after the date of
enactment of this section, the Secretary shall promulgate
such regulations as are necessary to implement this section.
``(2) Procedure.--The promulgation of the regulations and
administration of this section shall be made without regard
to--
``(A) chapter 35 of title 44, United States Code (commonly
known as the `Paperwork Reduction Act'); and
``(B) the Statement of Policy of the Secretary of
Agriculture effective July 24, 1971 (36 Fed. Reg. 13804),
relating to notices of proposed rulemaking and public
participation in rulemaking.
``(3) Congressional review of agency rulemaking.--In
carrying out this section, the Secretary shall use the
authority provided under section 808 of title 5, United
States Code.
``(4) Interim regulations.--Notwithstanding paragraphs (1)
and (2), to the extent regulations are necessary to carry out
any provision of this section, the Secretary shall implement
such regulations through the promulgation of an interim
rule.''.
______

By Ms. SNOWE:
S. 3103. A bill to help small businesses create new jobs and drive
our Nation's economic recovery; to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise this evening to speak to the urgent
imperative of job creation in our country

[[Page S1365]]

and impress upon my colleagues that if we are serious about assisting
our Nation's small businesses--the very catalysts that will lead us out
of the longest and deepest recession since World War II--we cannot
devolve once again into more delays. To that end, I filed an amendment
to the tax extenders legislation before this Chamber which included a
package of six bipartisan, achievable policy reforms designed to
facilitate an entrepreneurial environment under which our Nation's
almost 30 million small business firms can create new jobs. I had hoped
to offer this amendment, which I am introducing today as a freestanding
bill called the Small Business Job Creation Act, but after talking with
the majority leader at length last week, I decided to forgo that
opportunity, as the leader indicated to me personally--and to the
entire Senate--that he, too, is anxious to address a small business
jobs bill in the coming weeks.
Now that we have cleared the tax extenders package today and are
taking up the long overdue Federal Aviation Administration
reauthorization legislation, I hope the Senate as well will consider
the jobs package that will include small business initiatives that are
so vital and imperative to the well-being of small businesses
throughout the country and that we can address this issue before the
Easter recess.
As ranking member of the Senate Small Business Committee, I want to
begin by taking a moment to tout the work our committee has
accomplished in this Congress.
As one of the most bipartisan panels in the Congress, I appreciate
the chair, Senator Landrieu, who has built on the foundation of 22
hearings and roundtables and reported out a series of bipartisan bills
on topics ranging from access to capital, to exporting, and, just last
week, small business contracting reform. I truly appreciate Chair
Landrieu's approach in building a collaboration in the committee on
these key issues. Most of the provisions I am championing here tonight
originated from the work we have accomplished together in the committee
as well.
When it comes to this jobs agenda, I would have preferred a different
approach to advancing it--one that was more comprehensive and robust,
frankly. This kind of piecemeal strategy is not one I would embrace. It
is not one the New York Times approves of, either, for that matter. In
fact, an editorial of theirs this week contained the following
observation:

[T]he danger is that with stopgap measures boosting the
headline job numbers, Congress and the Administration will
avoid the heavy lifting that is required to clear away the
wreckage of the recession.

So it is not enough to say jobs, jobs, jobs are the new mantra. They
must be the new singular mission of this Congress that deserves
rigorous action, not just in dribs and drabs but as the full-tilt
agenda of this institution.
Make no mistake, time is of the essence if we are to assist our
Nation's small businesses. Nowhere is the test of meeting that
challenge more immediate than with our Nation's small businesses, which
at each turn and in every sector are having to struggle, not only at
their own expense but at the expense of job creation and reversing our
dire economic downturn.
Based on what I have heard firsthand from numerous small business
forums in Maine that I have held, not only this year but last year,
throughout the entire year of 2009, business owners are desperate for
relief, and they want answers to the pervasive uncertainty they are
confronted with on so many levels.
For example, as indicated on this chart, in an economic climate
devoid of continuity on tax policy, skyrocketing health care costs,
onerous regulations, or volatile energy prices, how can small
businesses expect to hire a new employee, buy additional equipment,
expand operations, or accurately forecast their operating costs? The
regrettable fact is, they cannot as long as they remain not just unsure
but understandably anxious about whether or when Washington will exact
another tax, levy a new mandate, promulgate another regulation, or
create more bureaucracy.
A solid foundational starting point would be enacting the provisions
in the amendment I filed, many of which I underscored in a letter I
sent to both the majority leader and the Republican leader. Frankly,
there is such wide agreement on so many of these ideas. In fact, the
Small Business Committee has approved many of these provisions
unanimously, and the President has called for them to be included in a
jobs package. So I think most people would be shocked to learn that
they are not already enacted into law.
Getting back to the original proposition, it is the fact that there
is uncertainty with respect to the policies that are emanating from
Washington that creates a lot of anxiety and disenchantment about the
direction we are taking but more importantly anxiety about their cost
of doing business. What is it going to do to increase the cost of doing
business, whether or not they are prepared to hire a new employee or
make investments in capital and equipment, if they do not know the
certainty of the propositions that come from Washington that could add
to their costs of doing business? For example, if the centerpiece of
any jobs agenda is assisting the best known job creators we have--our
small businesses--then bringing some certitude to the expensing
provisions in the Tax Code is unquestionably the place to begin.
I know the Senate has already enacted this legislation, extending
what had been part of the stimulus plan to increase expensing
immediately for small businesses to write off up to $250,000. That
expired at the end of last year, and we have extended that proposition
for the remaining 10 months in this year. But then again, it will
expire. So at that point, in 2011, then small businesses will only be
able to write off up to $25,000. So that is a $225,000 decline. Exactly
how does that contribute to greater confidence for small business
owners? How are they supposed to look to the future in the face of a
Draconian measure of that magnitude? So, really, it is important to
extend the small business expensing level of $250,000 not just for 10
months but at least for 5 years.
As we see in this chart I am showing in the Chamber this evening,
between Republicans and Democrats and the administration, they support
extending small business expensing, they support enacting a zero-
percent capital gains rate for small businesses. So we have bipartisan
solutions across the board with respect to these initiatives.
It is also important to make sure there is continuity in these
policies, which is really the troubling point because it is so
important to make sure they can look down the road. They might not be
making a decision within the next 5 or 6 months or 10 months, but it is
important for them to be able to see down the road beyond the 10 months
that there is certitude with respect to the policies we are enacting,
especially regarding tax relief and tax policy--the types of
initiatives that, frankly, are going to be instrumental in making a
difference in job creation.
So we have two initiatives here; that is, extending the small
business expensing and enacting a zero-percent capital gains rate for
small businesses, of which I joined with Senator Kerry in introducing
that legislation. So it is true we can reach an agreement on some
issues. That is important. And we are moving forward. But we have to
give more longevity to these tax policies given the severity of the
downturn, given the severity of the economic situation we face today,
that it is a jobless recovery. We need to create jobs. If we are going
to create jobs, then we have to create more permanent tax relief.
We have seen that with the credit crisis. Why can we not join forces
and address this stifling credit crunch that is placing a perilous
choke hold on our economy across the country? Why can we not agree on
doing something viable and bold to confront such a universally
acknowledged problem? It remains an unmitigated outrage, frankly, that
the Federal Reserve's January Senior Loan Officer Opinion Survey found
the percentage of banks easing credit terms for small businesses was an
astonishing zero percent--zero percent. The same was true in October,
the last time they conducted the survey.

So if you wanted not just to freeze credit but fossilize it, that
would be the way to do it. This is not a recipe for recovery. After
all, lending is critical. It is a lifeline to our economy, it is the
lifeblood, and it is certainly a

[[Page S1366]]

lifeline for small businesses if they are going to be able to have
jobs, to preserve jobs, or to make investments in the future.
But here again is another area where we could take immediate action
right here and now, where we can turn this deplorable trend around
beginning with boosting the SBA's access to credit. My provisions
include key lending provisions from the bill I introduced in the Small
Business Committee with Chair Landrieu which was reported out of our
committee with a vote of 17 to 1--overwhelmingly bipartisan--to
increase the maximum limits for the SBA 7(a) program and the 504 loan
program from $2 million to $5 million, raising the maximum microloan
limit from $35,000 to $50,000, and allowing for the refinancing of
conventional small business loans through the SBA 504 program. Now, if
fully utilized, the loan limit increases would create and retain up to
an estimated 211,000 jobs.
I would note that enhancing SBA loans has already paid tremendous
dividends, as in the stimulus bill, because we included these
provisions which have been credited with increasing loan volumes by a
remarkable 86 percent nationwide and in my own State of Maine, 227
percent. That is all as a result of what we included in the stimulus
package last year in increasing and expanding the loan volumes under
these programs. So it obviously is indicative of what can be
accomplished.
So with numbers such as these, not to mention the endorsement of 80
business organizations, it is essential that we give these critical
programs the ability to grow more small businesses.
Just as there is much we can do right away domestically, how about
finally taking action to help our small businesses compete globally?
Given that fewer than 1 percent of our small businesses export, it is
all the more vital that we take advantage of this untapped market and
help those enterprises sell their goods and services to 95 percent of
the world's customers who live outside our borders.
In the State of the Union Address, President Obama made clear that we
must double our exports over the next 5 years, and small businesses are
a critical component of the administration's strategy and our national
competitiveness. For this reason, my provisions were included in the
small business exporting legislation I introduced with Chair Landrieu.
As this chart reveals, the provisions in the bill--larger SBA export
loan limits, expanded export technical assistance, and enhanced
assistance for trade promotion--had bipartisan support. They were
reported unanimously by our panel and passed unanimously last
December--unanimously. They have the administration's support. They
have been endorsed by the U.S. Chamber of Commerce. So we have
solidarity on this initiative, and for good reason, because it could
create roughly 36,000 new American jobs in the year after enactment and
170,000 jobs over the next 5 years. So there is no reason on Earth why
we cannot move on this bill today.
Whether we are debating trade or health care, a jobs bill or climate
change, whatever the issue, it is also time we retool our thinking so
that in every matter before us we are striving to create a climate in
which our job creators cannot only survive but thrive. For example, for
years we have had environmental impact statements. Well, in 2010, it is
high time we require job impact statements. Consider that in 2009
alone, there were close to 70,000 pages in the Federal Register, and
the annual cost of Federal regulations now totals more than $1.1
trillion, with small firms bearing the brunt.
There are enough built-in impediments to starting a small business,
not to mention sustaining one, without the Federal Government
compounding the problem. That is why I have included language in my
legislation I introduced last month with Senator Pryor requiring the
Congressional Budget Office to provide such job impact statements for
every single major initiative before Congress to evaluate its effect,
positive and negative, on job creation, job losses, job preservation.
We didn't stop there. Our bill would also require Federal agencies to
fully analyze the cost of regulations on small businesses which too
often undermine and usurp the entrepreneurial spirit that has defined
every generation of Americans.
Our bill is strongly supported by groups including the NFIB, the U.S.
Chamber of Commerce, and the National Small Business Association.
My provisions include $50 million in funding for the Small Business
Development Centers which, again, provide critical technical assistance
and counseling to small businesses at over 1,000 locations nationwide.
The SBDC program has a proven track record of job creation, and
according to an annual report by Dr. James Chrisman of Mississippi
State University, between 2007 and 2008, employment levels of SBDC
clients have increased 10 percent more than for businesses in general.
As a result of the additional funding I am pressing for, Dr. Chrisman
estimates that over 20,000 new jobs would be created, while tens of
thousands more will be saved.
Finally, while it is paramount that we move forward with the
initiatives I have just described, we must simultaneously be mindful of
their cost. I have also included an offset for this legislation. I do
happen to think it is important that we provide offsets. I think we
have to reexamine the stimulus package we enacted last year, much of
which has been meritorious, much of which has worked, but there are
other parts of it that have yet to be implemented or expended, and I
think that is the point.
The fact is, with a projected $1.6 trillion deficit this year alone,
it is essential that we look at ways in which we can pay for
legislation, especially targeted toward job creation, that can be
accomplished immediately. That is why I am proposing to fully offset
the cost of my provision with unspent, unobligated funds that we
appropriated as part of the stimulus.
I understand some of my colleagues oppose using unobligated stimulus
funds as an offset, citing Congressional Budget Office data that the
Recovery Act has added up to 2.1 million jobs and has preserved many
jobs across this country. At the same time, I also believe it is our
obligation to continually assess and reassess whether the Recovery Act
is working because, after all, stimulus is supposed to be timely,
targeted, and temporary. In two of the three instances it has not met
those goals. In fact, as we have noted in this following chart, just
$288 billion of the $787 billion that was enacted last February--only
37 percent of the total--has actually been spent. When you consider
just the $275 billion of the stimulus's appropriated funding for
expenditures such as contracts, grants, and loans, just $81.6 billion,
or 30 percent, has been paid out.
That is where I think we need to reassess the three critical criteria
of timely, targeted, and temporary. Obviously, for timeliness and being
targeted, we have not met those goals. That is why I think we should
redirect some of these stimulus funds to other purposes that are more
effective, more immediate to do the job.
That is where our small businesses enter the equation, with these
initiatives I have identified that are absolutely paramount to helping
small businesses to create jobs across this country. After all, we are
depending on small businesses to lead us out of this economic downturn.
They have been the job generators in the past. They have created two-
thirds of all the net new jobs in America.
We need to create millions and millions of jobs. We have 100,000 new
entrants in the market every month, so we have to move expeditiously.
That is the point here tonight.
I have an array of initiatives that are very critical and vital to
small business and job generation. One, we have to do it immediately.
Two, we have to be focused and we have to provide continuity of policy
and certainty so that small businesses can look down the road and see
what types of policies are emanating from Washington, DC.
As I said to the Secretary of the Treasury recently, would you take a
risk in making investments today? Would you take a risk knowing what
you are hearing in Washington? Since we will see more costs as a result
of potential health care legislation, adding more costs to small
businesses--and there is no question that with the Medicare payroll tax
that is embedded in that legislation, that really is another hidden
tax, just as the alternative minimum tax. It will raise taxes

[[Page S1367]]

62 percent, and it is not indexed for inflation. So we know what the
exponential growth in that tax will become for small businesses. That
is an example. Ten months does not make a policy of certainty with
respect to tax relief.
We need to provide continuity of that policy with respect to tax
relief, and small business expensing is certainly part of it. We can
expand the loan limits under the SBA's programs, and 7(a) and 504
already demonstrated they can work. They did work in the year in which
we expanded those programs. It has been demonstrated nationwide and
certainly conclusively in my State. So why not move expeditiously to
address those issues?
Finally, we can pay for it. We can redirect the stimulus. I think
that is the most conservative, effective approach to paying for this
legislation because, after all, if we have only spent 30 percent of the
appropriated funds under stimulus and only 37 percent overall of the
stimulus, we may not even spend $600 billion at the end of this year;
we need to spend it now. That is the point, is spending it now. What
are we waiting for?
There is no question that there is a sense of despair across the
landscape in looking at the unemployment numbers. We are not creating
jobs; we are losing jobs every month. Albeit it has improved in terms
of the number of jobs lost, the fact is, we need to create millions and
millions of jobs in addition to offsetting the new entrants into the
market every month. We have a 9.7-percent unemployment rate. That means
we have to get to work, and the only way we can do that is helping
small businesses, and the only way we can do that is to put these
initiatives to work before the Easter recess. Let's not delay and
defer. We have time to do it now. It has broad unanimous support in the
Small Business Committee. There is no reason we cannot accomplish this
goal now.
I appreciate the majority leader's indication and commitment that he
will bring a small business package to the floor. I urge the leader and
I urge all Members of the Senate to support doing that before the
Easter recess because we need to adopt it now, not months from now,
because people depend on these jobs. There is uncertainty, and people
are looking on their Main Streets in their communities, and what are
they seeing is trouble. They are wondering whether the hardware store
is going to stay open, or the barbershop. That creates either certainty
or uncertainty; that is what creates either despair or hope.
So I hope we would move and that we would move with a sense of
urgency with respect to small businesses. If we are depending on them,
then we have to get to work now. There is no reason, no rationale, no
excuse for not taking action in this Chamber in this Congress that can
be signed by the President and that we can move forward on. So we
should strive with every fiber of our beings to help these longtime
beacons of our economy, which is going to give hope to all Americans.
What they deserve is to see action that will create the kind of
certainty, give them the kinds of resources that they deserve, and do
it in a fiscally responsible manner.

____________________