[Congressional Record Volume 152, Number 86 (Wednesday, June 28, 2006)]
[Senate]
[Pages S6615-S6624]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
EXECUTIVE SESSION
______
NOMINATION OF HENRY M. PAULSON, JR., TO BE SECRETARY OF THE TREASURY
The PRESIDING OFFICER. Under the previous order, the Senate will now
proceed to executive session to consider the following nomination,
which the clerk will report.
The assistant legislative clerk read the nomination of Henry M.
Paulson, Jr., of New York, to be Secretary of the Treasury.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I hope before the day is out that we are
able to help a very good American citizen by the name of Henry Paulson
to be the next Secretary of the Treasury. Mr. Paulson had his hearing
yesterday. That was before the Finance Committee that I chair. He was
reported out on a unanimous voice vote this very morning in the Finance
Committee.
Since the Treasury Secretary is the top economic policy official in
the administration, and the Treasury Department implements so many of
our Nation's laws--be it tax, trade, or commerce--we have a tradition
in the Senate of moving with all deliberate speed on nominations to
fill that post.
That tradition has held no matter which party controlled the White
House or the Congress. I have moved aggressively on this nomination,
but the timeline is consistent with past Treasury Secretary
nominations.
Just as an example, everybody remembers Secretary Rubin in the
Clinton administration. That timeline is something like: The Senate
receives his nomination January 4, 1995. That was the first day of the
session that year. The official ethics-related paperwork was received
on January 5 of 1995. The Finance Committee staff expedited review of
the complicated financial details of Secretary Rubin, also a senior
official at Goldman Sachs--Henry Paulson being the CEO of that same
firm. The Finance Committee held a hearing 5 days later, on January 10,
1995. On that same day, the committee reported Secretary Rubin's
nomination. On that same day, the full Senate confirmed Mr. Rubin, and
he was sworn in as Treasury Secretary.
So we are moving with a similarly aggressive schedule. I appreciate
the cooperation of Members on what I will acknowledge is relatively
short notice.
[[Page S6616]]
I thank the committee tax staff on both sides, especially the joint
committee staffer Gray Fontenot, and the hard work that not only he
did, but a lot of others, and it took a lot of long hours to process
these papers over just a period of a few days prior to today.
My staff examined Mr. Paulson's complicated financial records, his
tax return, and the activities of his firm, Goldman Sachs. We do this
most often in the area of tax planning. We have received very good
cooperation. Then, of course, after the review, we have high confidence
in his qualifications for this position.
Mr. Paulson brings to the table an enviable set of assets, meaning
qualifications to do a good job as Secretary of the Treasury, although
I presume he brings a lot of other assets to the table as well. Mr.
Paulson spent a good amount of his youth--would you believe it--in the
cornfields of Illinois. As a bright young man with excellent academic
credentials, he served in the Pentagon and in the White House.
After Government service, Mr. Paulson joined Goldman Sachs and rose
through the ranks to the highest position of chief executive officer.
When you look at Mr. Paulson's story, you come away with a view that
this is a guy who gets the best results at whatever he tackles, and
that is just the sort of a person we need as Secretary of the Treasury
because we have a very good economy, measured by long-term standard
measures of the economy--creating 5.3 million jobs in the last less
than 3 years, having 4.6 percent unemployment, having growth on average
that we had during the 1990s; lots of measurements of the economy that
are very good.
I am not picking out things that are never used to measure the
economy. I am talking about things that have been used to measure the
economy over the last 60 or 70 years. Those measurements say it is
good. But if we don't have the right people setting the right policy
for carrying out those policies that Congress might set, it could be in
jeopardy.
That is why we need a person of Paulson's background--a person who
comes out on the right end of almost everything he tackles--to be the
chief economic voice for our country and to be the voice for this
administration. But his work is the administration's work, his work is
the country's work, and I think he is up to doing the country's work.
The impression I have and gave you about Mr. Paulson is reinforced
when you have a personal meeting with him. I think it is fair to say
that after yesterday's hearing, Members on both sides of the aisle came
away very impressed with Mr. Paulson as a thoughtful and intelligent
nominee who appreciates the concerns raised by Senators and will work
with Senators on trying to solve those concerns.
I will touch briefly on one matter that came up at the hearing, and
which I know is of concern to some Members. It is well known that Mr.
Paulson is active in environmental issues. He is an avid bird watcher
and is chairman of the board of the Nature Conservancy. I share the
worry that Mr. Paulson knows his job is to be Secretary of the Treasury
and not head of EPA. Mr. Paulson's response on this concern to about
three of us on the committee who brought this up was this. He said:
The President of the United States has nominated me to be
Secretary of the Treasury, he hasn't nominated me to be
Secretary of Interior, he hasn't nominated me to be head of
the Environmental Protection Agency, that really big focus I
have is going to be dealing with so many of the issues that
we've been talking about today, the economic issues that are
the core of our agenda . . .
Considering his sincerity--and I don't think he is a person capable
of misleading--I think he is very transparent. I came away with the
confidence that Mr. Paulson knows where his focus needs to be and where
his responsibilities lie.
I did kid him the other day. There is a superintendent of that
building you call the Treasury Department down there that is trying to
get his favor. So they are probably right now building a bird-watching
station for him outside of the Treasury building someplace because he
is known very much for that.
But I think he is going to tend to business and not get over into
other areas of the Government.
I also note that Mr. Paulson is here at just the right time. He is
here to deal with tax reform, China currency, and with other major
economic issues facing America.
I am pleased that Mr. Paulson has answered the call to return to
public service.
I encourage Members to vote in favor of a highly qualified nominee to
be Secretary of the Treasury.
For the public at large that does not quite follow everything every
day in Washington, DC, I hope you understand that there are some people
in America who are willing to give up the multimillion dollar salaries
as CEOs of Wall Street firms to serve the public good, to serve as
Secretary of the Treasury and a lot of other positions in Government
and make less than $200,000 a year compared to the tens of millions of
dollars that they make. Most people who like to make big money like to
keep on making big money. But there are some people, such as Mr.
Paulson, who are willing to serve the American public, to do what is
right for our country and do it willingly and selfishly.
I urge my colleagues to vote for a very good citizen, a person who I
believe will be a very good Secretary of the Treasury.
I yield the floor.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, I thank my good friend, Chairman Chuck
Grassley, for the way in which he has moved this nomination. It is the
right thing to do. I commend him for it.
Mr. President, I also support Hank Paulson, this administration's
nominee for Secretary of the Treasury.
Throughout its history, the Department of the Treasury has required
enormous innovation, vision, and perseverance. Our Nation's first
Treasury Secretary, Alexander Hamilton, laid the foundation principles
of America's public economy, its credit, its industrial development,
and commercial activity.
In 1790, Hamilton presented to Congress his plan for public credit,
assuming the States' war debts, implementing import duties and excise
taxes to repay these debts, and establishing a national bank. The next
year, he laid out a plan for an American manufacturing economy, so far
ahead of its time that it resonated well into the 20th century.
Henry Morgenthau Jr. steered the Treasury for over a decade in peace
and in wartime. He defended the dollar against speculation through the
1930s, financed the war effort with war bonds, and ushered in a new
system of international financial stability after the Second World War.
Secretary James Baker embraced new challenges, including the Latin
American banking crisis and the Plaza Accords.
The Asian financial turmoil of the 1990s met the able and wise
leadership of Secretaries Robert Rubin and Lawrence Summers. They
steered the world economy through crises. And they managed our
economy's remarkable growth and return to fiscal discipline.
Today, leadership and vision are as imperative as during our Nation's
founding and in the two centuries since. The challenges are different.
The world economy is more complex. China and India are economic powers
on the rise. Speculative investments have grown. Twelve European
nations are bound by a common currency. Financial markets are deeper,
more liquid, and more integrated than ever before. But global economic
growth and international trade are fundamentally out of balance.
Faced with these challenges, I welcome this administration's
nomination of Henry Paulson to become Secretary of the Treasury. I have
known Hank for many years. I believe that he is an outstanding choice
for this demanding position. Hank has demonstrated his knowledge of
financial markets and helped guide them through three decades of
transformation. He rose to the helm of Goldman Sachs with our former
colleague Governor Jon Corzine, and as sole CEO, presided over some of
the most successful years of that company.
Hank is broadly respected by his colleagues. He has earned a
reputation as a man of boundless energy and a relentless work ethic.
Hank proved himself an innovative and prescient thinker, able to
consider economic and financial challenges before they are upon
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us. Today he has nobly answered the call to public service. And he will
bring much-needed credibility to our economic message to hard-working
Americans, and to the world.
Hank Paulson understands that our economy's strength is rooted in the
entrepreneurial spirit and the competitive zeal of the American people.
He understands just as well that our strength is not a given. That we
cannot take our economic preeminence for granted. In the Rose Garden
last week, he rightly declared that ``We must take steps to maintain
our competitive edge in the world.''
I welcome Hank's determination to take steps to boost our economic
competitiveness. I am convinced that economic competitiveness is one of
the greatest challenges facing this administration, this Congress, and
our Nation.
The competitiveness challenge comes from a rising China. China has
tripled its share of global trade in 4 years. China has become the
world's top information technology exporter. And China has drawn much
of the world's investment.
The challenge comes from India. India's IT sector has grown 50
percent a year since 1993. India's universities are top-notch. And
India's research capabilities attract billions of dollars in
investment.
The challenge comes from countless smaller economic dynamos in Asia
and Europe. These emerging markets have transformed their economies to
embrace globalization.
Yet our competitiveness challenge also comes from within. America too
often looks back at what we have achieved. Rather, we should prepare
for tomorrow's challenge.
Our broadband infrastructure ranks 16th in the world. Our research
and development spending ranks behind Sweden, Finland, Israel, Japan,
and South Korea. Three out of 10 Americans do not graduate high school.
One-quarter of Americans read below basic levels. And our national
savings are negative.
These challenges are at our doorstep. We must act. That is why I urge
Treasury Secretary Paulson, once confirmed, to lead this
administration's engagement with Congress on economic competitiveness.
As I have said in several dozen statements on competitiveness over the
past months, we can wait no longer to implement a real competitiveness
agenda. We in Congress are ready.
I have spent much of the past year developing a comprehensive
economic competitiveness agenda. This agenda focuses on education as
the foundation of a successful economy.
In the coming weeks I will introduce legislation that would provide
scholarships and create tax incentives for early education, science,
math, and engineering teachers. It would provide matching funds to
offer universal early education, lower barriers to higher education,
and double the number of advanced placement courses in our high
schools. My education competitiveness legislation would support
afterschool and mentoring programs. It would restore our commitment to
Native American education. It would direct grants to outstanding young
scientists. And it would encourage companies to get involved in making
our schools the world's finest.
Upon this foundation of education must stand strong pillars of a
competitive economy. One such pillar is energy, which fuels a
successful economy. My energy competitiveness legislation would look to
the future. It would create the new Advanced Research Projects Agency--
Energy to conduct transformative research and create alternative energy
solutions. While this research would look for tomorrow's energy
alternative, my legislation would also encourage today's alternative
energies, like coal gasification technology, wind, and other
alternative fuels.
A second pillar of my agenda is the Research Competitiveness Act,
which boosts what America does best--innovate. My legislation would
simplify and make permanent the research and experimentation tax credit
for innovators looking for tomorrow's next big thing. My legislation
would provide access to start-up capital for small, research-intensive
businesses. And my legislation would encourage support of basic
university research.
The trade competitiveness initiative is the third pillar of my
agenda. Trade is vital to American ranchers, farmers, and businessmen.
But they must have a level global playing field.
Legislation I have introduced would create a Senate-confirmed trade
enforcement official who would be dedicated to guaranteeing that our
trading partners play by the rules. It would also give the Treasury
Department the tools to keep countries from unfairly manipulating their
currencies to keep their exports cheap.
A fourth pillar of my agenda is the Savings Competitiveness Act. It
would underscore savings as critical to households and vital to a
healthy economy. It would make the Saver's Credit into a refundable
matching credit. It would make enrollment in 401(k) plans automatic. It
would offer savings plans for small business employees. And it would
create Young Saver's Accounts for parents' contributions to their
children's savings.
Friends warned Alexander Hamilton against accepting a position as
Treasury Secretary. They said the position was too difficult, too
controversial. He replied simply: It is the situation in which I can do
the most good.
I believe Hank Paulson can also do much good. I hope my colleagues
will join me in welcoming this nomination. I hope we can work together
to implement a comprehensive agenda to improve America's economic
competitiveness.
I yield the floor.
The PRESIDING OFFICER (Mr. Martinez). The Senator from Oregon.
Mr. WYDEN. Mr. President, I commend Chairman Grassley and Senator
Baucus for moving quickly to have the Senate consider the nomination of
Henry Paulson. I am convinced he is the right man at the right time. It
is my intent to strongly support his nomination and vote for him later
in the course of this afternoon.
My hope, in particular, as Henry Paulson moves to this vital
position, is that he will move quickly to set in place a strategy for
reforming our Tax Code. Suffice it to say, a lot has happened to our
tax system since 1986, the last time the Tax Code was overhauled.
For example, since 1986, there have been more than 14,000 changes to
the Tax Code. It comes to three changes for every working day for the
last 20 years.
There are substantial questions with respect to fairness in the Tax
Code. I am one who feels it is critically important that every American
have the chance to build and accumulate wealth. That is pretty hard to
do, given some of this country's tax policies.
For example, this spring, Warren Buffett, who is the second
wealthiest person in the United States, told me he was going to be
paying a lower tax rate than his receptionist. That is not right. I am
not interested in soaking anybody. I am not interested in any kind of
class warfare. But I want middle-class people to be able to get ahead
as well.
For the first time in decades, we have seen corporate profits go up.
We are glad to see that. We have seen productivity go up. We are glad
to see that. But middle-class people are not seeing much growth in
their wages. They are living paycheck to paycheck.
As Hank Paulson goes to the Treasury Department, I know he is
interested in coming up with a fresh approach to the Tax Code, an
approach that can allow us to simplify it, get a fair shake for middle-
class folks and all Americans. I particularly commend our ranking
minority member, Senator Baucus, because I think Senator Baucus, in
talking about global competitiveness and what it is going to take to
create high-skill, high-wage jobs for Americans in the global economy,
has done some of the heavy lifting on this key issue by spending a lot
of time over the last few years looking at these issues, talking to
people on both sides of the aisle, with business leaders and the like.
I commend Senator Baucus because he has laid some of the key groundwork
to discuss tax reform as a result of his focus on global
competitiveness.
I also thank Chairman Grassley for his discussions with me and with
the committee. We have begun to look at corporate issues in this area.
Senator Grassley, as he begins the effort to look at tax reform,
particularly because of the bipartisan way in which he has led our
committee, is a person ideally suited to work with Senators
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on both sides of the aisle and the administration, for us to build a
strategy with a new Secretary of the Treasury, Mr. Paulson, to get this
job done.
Suffice it to say there will be some very tough issues. Look, for
example, at the issue of State and local jurisdictions and the
differing tax treatment we have for these jurisdictions. A State that
may have high taxes, such as New York, looks at this differently than a
part of the country that does not have the same dependence on revenues
from that source.
With the leadership of Chairman Grassley and Senator Baucus and a new
Secretary of the Treasury who is going to look to bring people
together, look at how we can modernize the Tax Code so we can make the
kind of decisions that are necessary to give our citizens a better
quality of life in a global economy. We are up to it.
We do not have a lot of time. The next 6 months, particularly the
time between now and January, is key. That is why I have been so
pleased Chairman Grassley and Senator Baucus have been interested in
looking at these issues. As a result of their examination of these
topics, we can lay the groundwork so the administration next January
could work with Senators on both sides of the aisle, work with the
other body and work with the Senate, and we can enact comprehensive tax
reform.
There will be a host of other issues we will have to look at.
Obviously, health care, the fastest rising expense in the American
economy, is dramatically affected by the Tax Code. I happen to think
there are some good ideas on both sides of the aisle with respect to
tax treatment of health care expenditures in our economy. We are
spending over $150 billion through the Tax Code on American health
care. I don't think we are getting our money's worth. In too many
instances, we are subsidizing inefficiency. This is certainly going to
be a controversial area.
Democrats and Republicans, under the leadership of Chairman Grassley
and Senator Baucus, and the new Secretary of the Treasury can dig into
that issue.
The last point I mention, in the Commission that was set up that was
chaired by Senator Mack and Senator Breaux, there are some good ideas
the Congress can pick up on, working with the administration.
Certainly, I don't agree with all the Commission has proposed, but let
me give a couple of examples.
In legislation I have authored, the Fair Flat Tax Act, I have made it
clear I want a Tax Code that is simpler, fairer and flatter. If you
look at what the President's Commission has come in with, there is some
opportunity for common ground. For example, in my Fair Flat Tax Act,
there is a 1-page 1040 form, something a typical person can fill out in
about half an hour. The administration's version, the one that came out
with the advisory committee, is probably six, seven lines longer. I
have a 30-line, 1040 form; theirs is six or seven lines longer. Big
deal. For purposes of Government work, we can find common ground in a
hurry in order to have a simpler Tax Code. That alone would be a real
contribution for the American people.
On the question of making the Tax Code flatter, there are six
brackets today in our Tax Code as it relates to the individual side of
the code. My proposal involves three brackets. It is a progressive
structure. Essentially, it is the same one that Ronald Reagan started
with when he looked at tax reform. The President's advisory commission
comes in with four brackets. Once again, big deal. We can find common
ground as it relates to making the Tax Code flatter.
There are differences of opinion, certainly, in other areas. I have
mentioned trying to get a fair shake for middle-class folks. We all
understand what Henry Ford said about capitalism. Henry Ford was an
industrialist. He said he wanted to do well, but for him to do well,
his people had to have enough money to be able to buy cars.
Middle-class folks are getting hammered in a way today that makes it
hard for them to make a lot of these purchases that are essential to
them, which is why they wrack up so much debt. I think both political
parties can find common ground on this tax issue.
For example, Henry Paulson yesterday talked about the value of low
rates. I certainly agree with his interest there. Marginal rates are
particularly important. It was something Ronald Reagan recognized in
1986. Senators on our side of the aisle, including Bill Bradley, said
exactly the same thing. We can get the rates down. We can ensure
fairness for middle-class folks.
What we are going to need is leadership. We are going to need it in a
hurry. Chairman Grassley and Senator Baucus are going to do everything
they can to find common ground on this issue. I am very pleased that
Henry Paulson, who could certainly find other things to do in his life
besides public service, is willing to step up and take on this effort.
He will have to move very quickly to drive this tax reform debate. As I
pledged to him in my private meeting and said again yesterday, I am
interested in working with him and the administration in a bipartisan
way. There is a lot of good faith and a lot of interest in this issue.
It is a key consideration in how we are going to create high-skill,
high-wage jobs for Americans in the future and enhance the quality of
life for middle-class folks.
Henry Paulson is the right person at the right time. He is going to
have a lot to do, and he is going to have to do it in a hurry. I intend
to work with Chairman Grassley and Senator Baucus to ensure we have an
opportunity, on a bipartisan basis, to tackle these big economic issues
in the right way. Right at the top is tax reform.
I urge colleagues today to indicate their strong support for Henry
Paulson, head of the Treasury Department.
I yield the floor.
Mr. BAUCUS. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. BOND. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BOND. Mr. President, I rise in support of the nomination of Henry
M. Paulson to be Secretary of the Treasury. If confirmed by the Senate,
he would be the Nation's 74th Secretary of the Treasury.
From what I know about him from reputation, from his work on Wall
Street, and from what I have learned in my discussions with him, I
believe Hank Paulson will bring a kind of strong leadership, unique
expertise, and knowledge of global financial markets and will be fully
capable of keeping our country competitive in a global economy.
Mr. Paulson is a strong choice for Treasury Secretary for many
reasons. Most people know of his talents, the intimate knowledge he has
of the financial markets, and his ability to handle crises. He is
considered a hard worker who is dedicated to his job and who
understands the importance of strong and capable management to run a
large organization.
Today I spoke about the SWIFT program, the very important Treasury
terrorism finance tracking measure that was regrettably blown by the
newspapers last week. When I talked to him, he obviously did not know
about it. I did not know it was going to become an item of news. But as
he seeks to repair our relations with banks across the world, his
experience in dealing with international financial matters will be a
great benefit.
He has a string of very important challenges facing him. We have the
deficit, which is running out of control by reason of unsustainable
entitlement spending. The value of the dollar is falling. How much of a
problem is that? How do we deal with it? There is a tax gap in the IRS
of roughly 15 percent of the money that is owed or some $345 billion
that is not collected. He needs to work through the IRS to cure that.
We have a Tax Code that is so complicated, even professional tax
preparers disagree on what the implications of many normal transactions
are. He will have to fight terrorism financing. He is going to have to
confront the issues of dealing with rogue nations such as Iran, and
others, through economic sanctions and getting others in the world
community to join with him.
As of yesterday, as the chairman of the appropriations subcommittee
that handles the Treasury, IRS, and other agencies, I have found that
they have
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water in their basement and they have extremely mundane problems like
that, to the global issues that face any Treasury Secretary. I think
even the media understands that this is a man who has experience and
whose is held in high respect by major world financial leaders, as well
as American financial leaders, and he will serve us well.
As chairman of the Transportation, Treasury, the Judiciary, HUD, and
Related Agencies Appropriations Subcommittee, and as a member of the
Senate Intelligence Committee, I look forward to working with Mr.
Paulson in meeting these challenges.
Even though he is a sophisticated Wall Street financier, I was
pleased to find out that he is basically a Midwest farm boy at heart.
We had a very useful and productive discussion about growing native
grasses such as big and little blue stem and Indian grass and how to
burn them in the spring to make sure the crops come back without weeds
or other non-natives. So he has a strong foot in reality, a Midwest
farming background, but he also has a very strong background and
expertise in financial matters, and he has respect on Wall Street.
I urge my colleagues to support the nomination of Hank Paulson. This
is a time when we have many serious issues, and having him confirmed by
this body will be a great asset to us in dealing with everything from
international negotiations, terrorism financing, and the other
significant economic challenges the world presents today.
I yield the floor.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. REED. Mr. President, as we consider the nomination of Henry
Paulson to be Secretary of the Treasury, I think it is important to
bring a reality check to some of the claims about the current state of
the economy--those claims made by the administration.
My colleague, Senator Bennett, pointed out that yesterday we had a
hearing in the Joint Economic Committee, and appearing as a witness was
Edward Lazear, chairman of the Council of Economic Advisers. We had
also two outside experts who were economists testifying on the state of
the economy. Many of the Bush supporters are claiming that the economy
is strong and everyone is benefiting, but I doubt that many working
Americans would see it as strong as they do and see it as benefiting
them as much as it is claimed by the administration.
It is true that the economy is experiencing a business cycle recovery
after the 2001 recession and after going through the most prolonged job
slump since the 1930s. The President pointed out that the economy has
done better since 2003 than it did in 2001 and 2002, but they don't
talk about how this recovery has not been particularly strong by the
standards of previous recoveries.
This first chart shows the percentage change in payroll employment.
The curve here is the average of seven previous recession recovery
cycles. If you look back, historically, it is a much more robust
increase over time than this lower line, which is the March 2001 to May
2006 statistics, the recovery in the last several years. In fact, this
recovery is much less than the recovery was after the 1990
recession. That recovery was called the ``jobless recovery'' because
job generation was so slow.
So what you are seeing is that job losses continued for much longer
in this period of time, 2001 to 2006, than had been typical. This
recovery has been much weaker than those in the past. At this point in
the recovery, from the 1990 to 1991 recession, the economy had created
5 million jobs.
That is this delta right here--5 million more jobs than have been
created in this recovery. So the difference between job generation at
the same point in March 2001 to 2006, and comparing it to the 1990s, is
plus 5 million jobs.
This situation is similar with respect to business investment. It
took much longer for the recovery to start with respect to business
investment, and the level of investment lagged behind what has been
typical in past recoveries. Each year of depressed investment means
less capacity to produce goods and services in the future.
Defenders of the President's economic record cannot deny that
workers' wages have not been keeping up with inflation. Part of that is
a result of many factors but, one, looking back at the investment, it
has been a relatively small recovery in terms of business investment.
Here is the average of seven previous recoveries and here is the 1991
recovery business investment and here is the current recovery. It is
not as robust as it has been in previous recoveries.
As I suggested a moment ago, there is another very palpable impact of
this bad economic news, and that is that wages have not been keeping up
with inflation. This will be, no doubt, no surprise to working families
as they work to get their paychecks each week. Some have suggested that
this is a result of the fact that wages are held down but benefits are
growing, and that compensation is growing at historic rates. This is
not the case.
This is a chart that shows productivity, the output per hour, and
real compensation per hour. What you generally see is that productivity
increases will be closely tracking compensation increases except over
the last several years where productivity is going up at a significant
pace, but real compensation, wages plus benefits, is lagging far
behind. This is what the average American is confronting today when
they are looking at increased gasoline prices, soaring health care
prices, and they are not seeing either in their paycheck or, in many
cases, even benefit packages the same kinds of increases that are so
necessary to keep up with an increase in inflation. Growth in
compensation has lagged behind. Wages have grown more slowly than total
compensation, but that is not because workers are negotiating better
deals from their employers, it is because employers are facing higher
costs for health insurance and are squeezing workers' wages as a
result.
Increased health care prices, particularly in the area of small
business, is causing many businesses to forego increases they would
like to give to workers, in terms of wages, just to keep up with
increased health care costs. This doesn't mean a better health care
package for workers, and in some cases workers are being dropped,
unfortunately, from health care protection because of the expense.
What we are seeing is that compensation is not keeping up with
productivity and, typically, compensation does keep up with
productivity. There is another issue, too, with respect to the
situation for many American workers, and that is the fact that pension
arrears have to be made up. Many companies now are putting money into
pensions just to make them actuarially sound, where in the past they
might have devoted that to wages. By and large, the situation, when it
looks at the working men and women, is that we are not seeing the
robust increases in wages or compensation that is important.
These points were made by one of the witnesses yesterday at the JEC
hearing, chief economist of the Bank of America, Dr. Mickey Levy, who
testified that:
Wage and compensation increases have been somewhat
disappointing. Real wages have been suppressed by higher
energy costs and have not kept pace with labor productivity
gains. . . .Wages may be constrained by higher employer costs
for workers' health care, along with the heightened
international competition related to low cost production
overseas. . . .
Wage and compensation increases have indeed been disappointing,
especially for the majority of workers who are not getting them. Gains
in average earnings or income do not tell the real story when they hide
growing inequality. When you look at one level, you see increases, but
when you look at how the increases are distributed across the working
population, it is another story altogether.
The red bars on this chart show that workers in the middle and bottom
have experienced a decline in real earnings, while those at the top
have experienced gains. This is in sharp contrast to the experience of
the time from 1995 to 2000. Here in blue, in the data for gains in
terms of earnings, broken down by the lowest 10th percentile, 25th,
median, 75th, and 90th, at the upper level in the 1990s you saw
increases, but they were almost comparable at the very lowest level of
income. You saw the proverbial picket fence, where there were positive
gains at every percentile. What we are seeing today is quite the
reverse of that--losses in real terms of earnings at the lowest levels
through
[[Page S6620]]
the middle levels, and only at the upper income levels are you seeing
real gains in earnings.
So the distribution of the economic progress that is being made over
the last several years is not being shared fairly. Those at the upper
income levels are seeing gains but, frankly, not the same robust gains
of the nineties. At the bottom-income and middle-income level, there is
a loss in real earnings.
That is not an example of an economy that is working for all
Americans. That is an economy that is working for the very affluent
Americans. The answer of the Bush administration to these economic
trends is basically to ignore them, try to gloss over them or redefine
them or explain them away. They proposed tax cuts, which will do very
little to help this distribution of earnings. In fact, what it does,
essentially, is protect more of the earnings at the upper income
levels. If we continue along the present course, we will be undermining
the economy's longrun capacity for growth and undermining future living
standards.
Another aspect here, too, that is not dwelt upon by the
administration is the fact that we are virtually zero in national
savings. Without national savings, there is not the pool of investment
capital necessary to provide for the new technology, new capital of the
future. We are borrowing huge amounts of money overseas to fund our
deficit. This is investments made in our country. But in terms of
national savings of this country, it is close to zero. In some cases,
it is negative.
These are the real problems that confront this country. These are the
real questions that Mr. Paulson has to address. How do we create an
economy that performs as well as it did in the 1990s, where earnings
gains are shared virtually equally across the spectrum of income, where
low-income Americans don't see a loss of earnings but actually a gain?
How do we ensure that wages and compensation keep up with productivity
gains? How do we ensure essentially and fundamentally that the working
families in this country cannot only get by but get ahead? That is the
question that Mr. Paulson has to answer as Secretary of the Treasury.
I think it begins with looking hard at the deficit and the policies
of the administration with respect to taxes. I don't subscribe to the
theory that our deficit is caused by runaway entitlement programs. We
have an issue with entitlement programs, but we also have an issue with
tax programs that take away revenue and are targeted to the wealthiest
Americans. We have problems with expenditures that we cannot avoid with
respect to supporting our forces in the field. We cannot stop providing
equipment and materiel for our forces fighting the wars today, and we
have to take care of them in the future. But there are significant
issues with which we have to deal. I hope Mr. Paulson will be a strong
voice in this administration to look at the facts and propose realistic
solutions that benefit not just the few who are wealthy but the vast
majority of Americans.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, I thank my colleague from Rhode Island.
Senator Jack Reed is our voice on the Joint Economic Committee. It is a
committee that takes a look at the overall economy and reports to our
caucus regularly. Senator Reed has brought us economic indicators from
time to time that give us at least some insight as to how we are doing
in most general terms in America.
Everybody measures the economy by their own lives, their own family,
maybe their own town, but when it comes to the appointment of a
Secretary of the Treasury, we take a step back and look at the overall
economy in America.
A good Secretary of the Treasury can make a big difference. When Bob
Rubin became Secretary of the Treasury under President Bill Clinton, he
faced enormous challenges with huge deficits as far as the eye could
see and an economy moving ever so slowly. He put in place those
policies on an economic, fiscal, and monetary basis that made a big
difference.
Our Nation went from a deficit in our budget to a surplus. We
actually put the indebtedness behind us for the first time in decades.
The good news is we did it while the wealth of America was expanding
dramatically. That period during the Clinton years saw people with
their own savings accounts growing, more pension plans expanding, folks
buying homes and starting businesses. It was a time of great economic
expansion.
No one person deserves the credit or the blame for our economy, but
Secretary of the Treasury Bob Rubin was the right person at the right
time to speak sense to the President about what needed to be done to
make America strong for years to come. I have the same confidence that
Henry Paulson is going to do that as well, and we need him now more
than ever.
I come to this with some prejudice because Mr. Paulson is a son of
Illinois. He still calls Illinois his home. He spent his adult years--
at least recently--commuting back and forth between Illinois and New
York and places around the world in his capacity as an investment
banker.
We had a terrific meeting in my office a week or two ago and talked
about his life in Illinois, the experiences he had, about his family,
and his commitment to our State. I readily concede I come to this
nomination with some bias. But I think Mr. Henry Paulson is the right
man for the job of Secretary of the Treasury at this moment in history.
He came up through the ranks of Goldman Sachs, starting in their
Chicago office many years ago and eventually becoming the CEO of that
important investment bank. I don't think a person can rise to that high
level without understanding how business works and how the economy
works. Since even a corner grocer knows that an organization cannot run
up endless debt forever without paying a stiff price, I think Mr.
Paulson understands that as well. I think his business experience may
help to start balancing the books in the Washington, DC, situation,
which has been far from balanced for a long time. It is not a moment
too soon for someone with Mr. Paulson's business background to tackle
this challenge.
Consider these realities Mr. Paulson will face when he becomes
Secretary of the Treasury:
This Bush-Cheney administration has accumulated more foreign-held
debt in the past 6 years they have been in office than all of the 42
Presidents before President George W. Bush. In other words, our
indebtedness to foreign governments, such as Japan, China, Korea, and
the OPEC nations, that, in fact, bankroll the debt of America, hold
America's mortgage, has grown in dramatic terms over the last 6 years.
That is not the policy President Bush inherited from the Clinton
administration, which was generating a surplus. It is an approach he
has taken which, sadly, has left us deeply in debt. The Bush
administration came to office with a national debt of less than $6
trillion--$6 trillion--and in just a 6-year period of time, it is
almost $9 trillion, almost a 50-percent increase in America's mortgage,
America's national debt in the short 6-year period of time.
During this period, all but for a few months, the President has had a
Congress of his own political party. The Republicans have controlled
the House and the Senate, and the President has yet to veto the first
spending bill in the time he has served as President. Not once has he
said ``no'' to a spending bill that has come from Congress,
particularly from his Republican Congress, and in the meantime his tax
policies and spending policies have driven us into the highest level of
national debt in the history of the United States. Our indebtedness is
held by mortgagers such as China and Japan who expect in return to have
a piece of the American economy.
Secretary of Treasury Paulson will, I am sure, understand this, that
as we become more indebted to these foreign nations, it is no wonder
they take a claim on our economy. Why did we have to debate a Dubai
Ports deal? Because Dubai happened to hold enough American dollars to
have clout in our economy, and that is the reality.
As these foreign entities become more powerful in our economy,
sucking good-paying jobs out of the United States, it is a serious
challenge for any new Secretary of the Treasury.
The President has called for more tax cuts, which means deeper
deficits,
[[Page S6621]]
more debt. It is estimated now that the indebtedness of the United
States is a burden on every single man, woman, and child in America to
the tune of $30,000 and growing. So in addition to a home mortgage and
a student loan, we are unfortunately the victims of policies in
Washington that increase the indebtedness of future generations.
This has to stop. This is a disaster in the making. We have to
balance the books and do it quickly. I hope Mr. Paulson has the vision
and the strength to convey that message effectively within this
administration.
I hope he will take a very close look at our trade policies as well.
My colleague, Senator Schumer, will speak after I finish. He has been
one of the leaders in the Senate talking about the inequities in our
trade policy with China.
I believe globalization is as inevitable as gravity. We know we are
in a shrinking planet. We do more business with one another than ever
before. But when we enter into trade agreements with countries such as
China, we say we are establishing rules of conduct, fair trade.
Unfortunately, particularly in the case of China, many countries ignore
those rules. They violate those rules.
The Secretary of the Treasury has to be a strong voice to stand up
for the American economy, American businesses, and American workers to
demand that the countries with which we trade play by the rules. I
think free trade is good for the future of our world, certainly good
for the future of America. We are a land of opportunity. We have risen
to every challenge, but we need to be involved in a fair fight where
both sides play by the rules.
The Bush administration has not fought hard enough for these trade
agreements and understandings. When we create a trade agreement, we
need to ensure that there are proper labor protections in place. We are
about to consider a trade agreement with Oman, a very small country in
the Middle East. There are good reasons for us to enter into that trade
agreement. But when Members of the Senate suggested to the Bush
administration that we put a prohibition in the trade agreement with
Oman that they could not use slave labor--slave labor--to produce goods
and services sold to the United States, the administration said: No, we
are going to remove that, we don't think we should go that far.
Slave labor? We should have basic understandings of what the labor
standards will be. We know many countries will underbid us when it
comes to the cost of labor, but there ought to be fundamental
standards.
The same is true when it comes to environmental protections. U.S.
businesses operate under laws which restrict them in terms of their
conduct, whether it is a burden or some sort of a problem with our
environment, whether it is water pollution or air pollution or similar
things. What we should insist on for the good of this planet we call
home is that the countries engaged in trade with the United States also
have respect for the environment of the world. Whether it is global
warming or toxic release, we are literally all in this together.
After we create these good trade agreements, the Secretary of the
Treasury has to make sure there is proper enforcement so we don't just
give our speeches on the Senate floor and then ignore the trade
agreement afterward.
I hope Mr. Paulson will fight harder than his predecessors to promote
trade that is aggressive and fair. I also hope he will push for a
tougher and more proactive stance when it comes to China. I am sure my
colleague will speak to that further.
He has traveled to China more than 70 times. He understands the
importance of this critical relationship with this growing giant in the
world economy. When we spoke in my office, I asked him specifically to
deal with currency manipulation, intellectual property rights
infringement, and trade violations.
He also has to be very strong when it comes to China's labor records
and their record on the environment and human rights. While he did not
have any specific suggestions--I didn't expect them--I believe he was
responsive, he understands the challenge, and I think he can rise to
that challenge. That is why I am supporting his nomination.
Finally, I hope Mr. Paulson's sensibility about the environment will
become a source of real leadership in this administration. I know Mr.
Paulson reiterated at his confirmation hearing that he is not running
to be head of the EPA or Interior but Secretary of the Treasury. Still,
Henry Paulson is a former chairman of the board of the Nature
Conservancy. That is a group with which I have worked in Illinois that
has great respect for our natural resources and has done a lot to
reclaim them for future generations.
I hope he can push the Bush administration to take a forward look at
the issue of global warming. This is an issue which is real, and this
administration must start immediately working with Congress to move on
international agreements that deal with global warming. Mr. Paulson's
voice at the Cabinet table could make a difference, and I am hoping
that his deeply held personal beliefs will lead him to be that voice.
I support the nomination of Hank Paulson to become Secretary of the
Treasury. I think he will work as hard for farmers in the heartland as
he does for bankers in New York. I look forward to working with him to
strengthen America's economy and put the Federal Government's finances
back in order.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. COBURN. Mr. President, I am going to take a few minutes. I am
very happy with the support of the Senator from Illinois for the
nomination of Mr. Paulson, but I challenge what was just said.
There is no question we have deficits. There is also no question that
on 9/11, we experienced a great economic shock and we had a recession
that was big. The tax cuts have led to the highest revenues this
Federal Government has ever had.
On the spending side, I find it somewhat curious, the Senator from
Illinois ranks No. 6 in the most spending voted for in the Senate last
year. He ranks No. 8 in the cosponsorship of the most new spending
outside the appropriations bills. You can't have it both ways. You
can't complain that we are in deficits and we are in debt and never
vote to lower the spending, never vote for amendments that trim
wasteful spending, and then complain that somebody else made you do it.
If we look at the voting record on appropriations bills, there are
not very many noes coming from that vote. The way we control spending--
and we have proven it on our committee, the Federal management
oversight committee--we identified over $200 billion worth of waste. If
we want to balance the budget, let's have everybody on both sides of
the aisle voting to trim the waste, fraud, and abuse out of the Federal
Government, rather than when we go to a conference or a meeting with
the President when there is excess money and demanding more spending,
not less.
The numbers are fairly revealing. Last year, Senator Durbin sponsored
$93 billion in new spending--new spending, outside of what we did on
appropriations. He put his name to spend $93 billion, and he put his
name to trim $100 million. That is the problem we have. It is not
taxes, it is wasteful spending and the idea that the only way we can
accomplish something is to spend more money.
I am for the same priorities. We need to help the people who need
help in this country. But we will never be able to afford it in the
future without stealing from our kids if we don't do the hard work to
get rid of the waste now, and that means voting against appropriations
bills, not voting for them. The President signed what the Senator from
Illinois voted for.
I thank the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. SCHUMER. Mr. President, I rise to speak in enthusiastic support
of the nomination of Henry Hank Paulson to be the 74th Treasury
Secretary.
I have known Hank Paulson for 15 years. I recommend him to my
colleagues wholeheartedly and without reservation. He is one of those
great New Yorkers who come from somewhere else--in this case, the
heartland of America--come to our city and become part of its life and
a vital part of
[[Page S6622]]
this country and actually this world's economy.
Mr. President, Hank is an extraordinary leader, a great financial
thinker, a businessman, a father, and, as I said, an adopted son of New
York. Hank has excelled in every area of life--from the classroom to
the football field to the boardroom and everywhere in between.
One of the things I like best about Hank is he is a straight shooter.
He gives you direct answers to direct questions. We sure need somebody
like that now.
He graduated from Dartmouth in 1968 and received his MBA from
Harvard. He worked at the Defense Department, the Nixon White House,
and then found his true calling at Goldman Sachs where he worked for 32
years. He became chairman and chief executive officer of Goldman in
1999, and should he be confirmed, he will continue a long history, a
great tradition of leaders from Goldman serving in the Government,
including Bob Rubin, one of the great Treasury Secretaries, and Jon
Corzine, our former colleague, now Governor of New Jersey, and John
Whitehead, who served honorably and well as Deputy Secretary of State
under Ronald Reagan.
But the issue Hank really goes off the charts about, I say to my
colleagues--particularly my colleagues on this side of the aisle will
be happy to know--is the environment. Sometimes he would call me up and
I would be sure he was talking to me about swaps or banking or some
esoteric financial issue, and he would be talking to me about an
environmental policy. I don't think he ever gets more enthusiastic than
when he is talking about some rare bird that he saw on one of his bird-
watching jaunts. He is an avid environmentalist and lover of all things
in nature. I hope a few of my colleagues on the other side of the aisle
will not hold that against him.
He is also one of those unique, good people who could fill any number
of Cabinet posts. For instance, given his environmental proclivities,
he would be a great Secretary of the Interior. But financial issues and
the health of the global economy are his passions, that is mostly where
he is needed, and I am glad the President has nominated him for this
post.
In the world of finance and international markets, there is simply no
equal to Hank. At this critical point in our economy's history, we need
Hank's expertise and experience to lead the way.
The bottom line, Mr. President--you know it because we traveled to
China together--we are at an amazing time economically. The world
economy is becoming integrated, closer and closer every year. There is
almost a one world labor market. Capital flows freely to every corner
of the world. These circumstances present tremendous challenges for our
Nation, in our desire to remain the world's economic leader, and for
the world as we try to integrate this system. One of the great
challenges we face is we are converging into one economic system, but
we don't have one political system, and the bumps and grinds which that
causes are large.
So we need someone who understands markets. We need someone who has
great experience traveling the world and knowing how the rest of the
world's economic system works. Hank Paulson has all of those qualities.
I am particularly glad that he knows a whole lot about China--I think
he has been there over 70 times--because I believe the most important
bilateral economic relationship in the next decade or two will be the
American-Chinese relationship. Hank has the ability to understand the
economies of both countries and figure out how we can work together.
I have been very concerned about China playing by the rules. I have
been very concerned that China doesn't simply seek the advantages of
free trade but not the responsibilities. I have related these concerns
to Hank Paulson.
On currency, Senator Graham and I have worked closely with his
predecessor, and you, Mr. President, have been involved in those issues
as well as we traveled to China together. And we have worked to push
and prod China to allow its currency to float based on international
market forces. We have made some progress, but the progress since July
has been too little, particularly in light of the fact that the Chinese
assured us they know they have to get to a place where their currency
floats.
Hank's extensive experience in China, his personal relationships with
both the Government and business side--where, incidentally, there is
quite a dichotomy. Most of the businesspeople and people even on the
economic side of Government understand the need for free markets. That
is in China's interests--not just America's--that China open up its
markets. But a lot of people on the Government side are afraid of that.
They don't like change. They don't like giving up control.
I think Hank Paulson is the right man at the right place at the right
time to tackle the issue of persuading China to open up its markets
more quickly. I believe that he is going to be able to show the Chinese
that it is not only in our interest but in their interest as well to
allow the yuan to float freely and to open up China's vast economic
markets to American financial firms.
On financial services liberalization, I know Hank will work closely
with Ambassador Schwab, who was just confirmed, to make sure that China
lives up to its WTO commitments. This is going to be very important in
the next few months because on December 11 of this year, many of the
current restrictions faced by American financial firms that want to do
business in China, such as purchase Chinese companies or open up
branches in China, will be lifted. Hank is the perfect person to
monitor China's progress and, more importantly, to prod the Chinese to
go further than they have already promised.
In short, Mr. President, Henry Paulson is a thoughtful, dedicated,
and renowned financial leader. I think this country will greatly
benefit from his leadership. I am not at all shy about criticizing the
President's nominees when I don't think they measure up to the job. I
have done that in the judicial area repeatedly. But when the President
nominates a sterling person, that person deserves praise and credit
and, in my judgment, unanimous support in this body, and I believe that
Hank Paulson is such a person.
I will be proud to vote aye when his name is offered on this floor in
a few hours.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. FRIST. Mr. President, I ask unanimous consent that the order for
the quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. THOMAS. Mr. President, I wish to address the nomination of Henry
Paulson to be Secretary of the Treasury. I believe there is no question
that Mr. Paulson is more than qualified to be Secretary of the
Treasury, and it is to his credit that he is willing to give up the
helm of Goldman-Sachs to serve his country in such a significant way. I
am pleased that we have a nominee of this caliber.
However, I have raised concerns stemming from Mr. Paulson's well-
known personal views on conservation and affiliations with groups such
as the Nature Conservancy. Representing a State where about half of the
land is already federally owned, and much more is otherwise federally
restricted as to use, private property rights a very big concern.
Similarly, our vast energy resources in the State of Wyoming are
essential to our country's national energy policy, and we struggle to
maintain a balance between development of those resources and the
quality of life we enjoy in Wyoming.
I submitted several written questions to Mr. Paulson after our
Committee on Finance hearing, and we have had good follow-up discussion
on these issues. He has assured me that he is a strong advocate for
personal property rights and has committed to working with me and the
Senate to pursue a sensible policy.
I am pleased to be able to lend my support to Mr. Paulson, and I look
forward to working with him.
Mr. DOMENICI. Mr. President, I rise today to express my support for
the nomination of Henry M. Paulson, Jr., to be Secretary of the
Department of the Treasury. Mr. President, American
[[Page S6623]]
economy has changed dramatically in the past decade. International
economic policy now has a direct effect on our domestic economy. The
information age has transformed America's economic future. This new
economy requires a new kind of Treasury Secretary. It requires someone
who is experienced and knowledgeable in both the domestic and the
international marketplace. It requires someone who has demonstrated
exemplary leadership in both government and private enterprise. Henry
Paulson will bring these vital skills to the Department of Treasury.
Mr. Paulson's outstanding career in both the public and private
sectors has clearly demonstrated his ability to serve as our Nation's
next Treasury Secretary. Prior to joining The Goldman Sachs Group Inc.,
Mr. Paulson served the public as White House domestic Council staff
assistant to the President from 1972 to 1973 and as staff assistant to
the Assistant Secretary of Defense at the Pentagon from 1970 to 1972.
In 1974, Henry Paulson decided to enter the private sector. He joined
The Goldman Sachs Group, Inc., in Chicago. Mr. Paulson worked his way
up through the ranks of Goldman Sachs and is currently serving as
chairman and chief executive officer. Clearly, Henry Paulson has had a
very distinguished 32 year career in the private business sector.
Our Nation will be fortunate to have a Treasury Secretary with such
broad and varied expertise, and these experiences will prove vital in
leading a progressively diverse economy. I believe Henry Paulson will
be an exemplary Treasury Secretary. He has already spoken of his keen
appreciation for the role capital markets play in driving growth and
efficiency, the globalization of finance and interdependence of major
world economies, and ensuring that America's industries can compete in
the new global economy. I am confident Henry Paulson will seek to
strengthen and advance the competitive edge of our economy. I am
certain his experience and leadership will be great assets in achieving
these important goals.
Mr. President, it is my great honor to support Henry Paulson to head
the Department of the Treasury.
Mr. HATCH. Mr. President, I wish to express my support for the
nomination of Henry Paulson for Treasury Secretary. I believe we are
quite fortunate to have someone of Mr. Paulson's caliber nominated to
this vitally important position. Mr. Paulson has quite ably served in
Government before in several positions before embarking on his
impressive career on Wall Street, which culminated in his becoming CEO
and chairman of Goldman Sachs. I am hard-pressed to think of many
others in this country who might be more qualified for this position
than Mr. Paulson.
Henry Paulson is joining the Bush administration at a very important
time. Our Federal Government is in a precarious position as it stares
down the abyss of ever-increasing entitlement obligations that threaten
to swallow more and more Government revenue and, along with it, other
vitally needed programs. As our Nation's baby boomers enter their
retirement years, we will have fewer people working per retiree to
support them while the cost of providing them benefits inexorably
increases. It is a trend that cannot continue without bankrupting the
country. Despite the highly partisan environment in which we find
ourselves, it is at precisely this moment in history when our economy
is strong and Government revenues are increasing sharply that we need
strong leadership both from Congress and the administration. I believe
that strong leadership and some bipartisan cooperation we will be able
to successfully address these growing problems and come up with a
lasting solution.
Now is also a propitious time to consider how to address the
difficult problems facing our tax system. We need an Internal Revenue
Code that is simpler, that promotes savings and economic growth, and
that allows American businesses to compete fairly in the global
marketplace. The Tax Code should serve the interests of the many, not
the few, and one that is worthy of this great Nation.
Mr. Paulson is uniquely qualified to address the issues facing our
country today. I view the expediency by which we have acted on his
nomination as a confirmation both of Mr. Paulson's fitness for the job
as well as of the importance of the position of Treasury Secretary. I
urge my colleagues to vote to confirm him as our next Treasury
Secretary.
Mr. REID. Mr. President, I rise in support of the nomination of Henry
Paulson to be the next Secretary of the Treasury. I had the pleasure of
meeting with Mr. Paulson, and we talked about a range of issues.
I was most impressed with his commitment to protecting our
environment and his record as a conservationist. I believe this
administration needs someone committed to protecting our natural
resources--even if he is at Treasury.
I found Mr. Paulson to be an engaging and thoughtful person. These
are qualities we need in our next Secretary of the Treasury, because he
will have his work cut out for him. He faces an impending crisis not of
his making, and for which courage and persistence will be needed to
even begin the process of righting the ship.
From the kitchen table to the national debt trade imbalance, our
economy continues to move in the wrong direction. The middle-class is
being squeezed like never before. Under the policies of this
administration, families are forced to work harder and harder to make
ends meet.
In Nevada, families, farmers, and businesses are on track to pay
approximately $3 billion for gasoline this year. That is over $1.5
billion more than was spent in our State in 2001. The cost of college
tuition in Nevada has increased 2 percent, while Federal student aid
has failed to keep pace.
But this is not just a Nevada story. It is an American story.
Nationwide, since President Bush took office, energy prices have
increased nearly 100 percent, health premiums have increased by 71
percent, college tuition has increased nearly 60 percent, and the price
of housing has risen dramatically, all while wages have been stagnant
despite growing productivity.
Instead of focusing on the needs of middle-class families, the Bush
administration has ignored their problems. The President argues that
the economy is doing great--he thinks middle-class families are in fine
shape. Meanwhile, he is pursuing policies that would only make matters
worse.
The twin trade and budget deficits accumulated under President Bush
have put the United States in a precarious situation. To fund our
record trade deficits--which have more than doubled under President
Bush--we have had to sell U.S. assets to foreigners. In 2005 alone, the
United States sold to foreign governments and investors a portion of
the U.S. economy that was larger than the combined economies of Nevada,
Arizona, Ohio, Montana, Rhode Island, Wyoming, and North Dakota. Take a
moment to absorb that fact.
And, the problem is just getting worse. If current trends continue,
in 20 years, we will have sold the entire wealth of America to foreign
countries and foreign investors. It turns out that when President Bush
talks about an ``ownership society'' he means that under his policies,
all of our assets will eventually be owned by foreigners.
Our trade deficit has been driven in part by unfair practices
overseas, like currency manipulation in China. A number of people have
raised concerns about Mr. Paulson's extensive ties to China while
working for Goldman Sachs. I hope that those ties will give him the
credibility and the negotiating toughness to make much needed progress
with the Chinese Government. The Bush administration has talked a good
game on getting China to end its unfair currency manipulation, but it
has not delivered. To date, the Bush administration's policy has been
rhetoric, not action, and on occasion, its excuses for its failures
have sounded like the administration was an apologist for China's
practice of currency manipulation. Mr. Paulson has to finally get this
problem under control.
Mr. Paulson will also need to address the enormous Federal budget
deficits and the growing Federal debt. The Bush administration turned a
record surplus generated during the Clinton administration into a
string of record deficits. President Bush inherited a unified budget
surplus of $236 billion from President Clinton, the largest
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surplus in American history. Budget surpluses were expected to continue
for another 10 years when President Bush took office in January 2001.
By 2002, however, President Bush's policies had helped return the
unified Federal budget to a deficit of $158 billion. The budget deficit
has since reached historic highs. This year, the budget deficit is
expected to exceed $300 billion. Of course, after this President's
fiscal nightmare, that is not even a record. President Bush owns them
all--$412 billion in 2004, $378 billion in 2003 and $319 billion in
2005.
Our fiscal problems will only grow worse in coming years as the baby
boom generation retires.
In the last 5 years, the gross Federal debt has grown by almost $3
trillion. And it will exceed $11.8 trillion by 2011 if we don't do
something to change course. And more and more of that debt is owed to
people outside the United States. The United States has had to borrow
more money from overseas during President Bush's 5 years in office than
we borrowed during all previous Presidents combined. By contrast,
during the last 3 years of the Clinton administration, the United
States paid off more than $200 billion in debt to foreigners.
History is clear that these rising Federal budget deficits will
ultimately cause long-term interest rates to increase. These costs are
a hidden tax and will appear in the form of higher interest rates on
home mortgages, auto loans, credit cards, and other types of consumer
debt. As Mr. Paulson stated in his confirmation hearing, the longer we
wait to deal with these fiscal challenges, the more expensive it will
be to solve them. At the end of the day, it is hard-working families
and our grandchildren who will pay the price for the Republicans'
fiscal recklessness.
Unfortunately, the majority's fiscal policy, like its policy in Iraq,
is more of the same--more of the same tax breaks targeted at
multimillionaires, more of the same huge deficits, more of the same
rising debt.
We can't just go on this way, placing greater and greater burdens on
our children and grandchildren. I hope that the new Secretary of the
Treasury will be aggressive in forcing the administration to confront
these pressing economic challenges head on, because more of the same
just won't cut it.
We need a new direction.
Mr. FRIST. Mr. President, it is my great pleasure to come to the
Chamber to express my strong support for the nomination of my good
friend, Hank Paulson, someone I admire tremendously, to lead the
Department of Treasury. He is an outstanding choice to be the Nation's
top economic policy official.
With 32 years of experience in finance, the last 8 of which he has
served as president and CEO of Goldman Sachs, which, as we all know, is
one of the Nation's largest financial institutions in the world, Hank
Paulson is eminently qualified to craft and carry out the President's
economic policies. Former Treasury Secretary Bob Rubin, who was also
Hank's boss at Goldman Sachs, agrees that he is ``smart, he's bright,
he's thoughtful, and he's intense. He's a very good choice.''
Hank will lead with drive, with passion, and a deep understanding of
how Government policies affect the capital markets throughout the world
as well as America's economic growth. With his detailed and intimate
knowledge of global finance and his ability to thrive under pressure,
America's economic leadership will be in very capable hands.
Hank Paulson is extraordinarily talented, smart, and hard working. He
also happens to be a man of sterling character. Known for his candor
and his down-to-earth demeanor, Senator Schumer calls Hank a ``straight
shooter.'' He has led a life of impeccable integrity.
He grew up on a farm in Illinois. His high marks led him to
Dartmouth, where he became a member of Phi Beta Kappa and a football
star. He was named All Ivy, All East, and earned an honorable-mention
All American. After earning an MBA from Harvard Business School, Hank
went into public service as a staff assistant to the Secretary of
Defense. In 1974, he joined the Chicago office of Goldman Sachs, where
over the next three decades he rose to president and CEO.
Hank understands the macropicture, the global picture, as well as the
micropicture, the more intimate, more defined microlevel. He
understands the concerns of America's hard-working families and how big
decisions here in Washington affect individual lives in a very personal
way and in intimate ways and affect those individual opportunities.
He inherits a thriving economy--as cited again and again, a 5.3-
percent gross domestic product growth in the first quarter,
unemployment at historic lows, 5.3 million new jobs after 33
consecutive months of job gains, and home ownership at historic highs.
He understands that Americans are feeling those challenges in their
everyday lives, those challenges of high gas prices, of escalating
costs that seem to be skyrocketing out of the average person's reach.
He shares the Republican Party's conviction that we need to continue
those progrowth, low-tax policies in order to continue to create jobs
and to foster more innovation.
I am confident that under his leadership, America will continue to
grow, to thrive, and expand. I look forward to voting to confirm Hank
Paulson in a few moments as Secretary of the Treasury and to working
with him to keep America moving forward.
At this time, I know of no others who desire to speak on the Paulson
nomination, and I urge the Senate to vote.
The PRESIDING OFFICER. If there is no further debate, the question
is, Will the Senate advise and consent to the nomination of Henry M.
Paulson, Jr., of New York, to be Secretary of the Treasury?
The nomination was confirmed.
Mr. FRIST. Mr. President, as our colleagues know, there will be no
further votes today and no rollcall votes today. We will be in session
a bit longer as we finish the business over the course of the next
little bit. When I close, I will have more to say about the schedule
for tomorrow and Friday as well.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. FRIST. Mr. President, I ask unanimous consent that the order for
the quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FRIST. Mr. President, I ask unanimous consent that the President
be immediately notified of the Senate's action.
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