National Defense Authorization Act for Fiscal Year 2009 - Continued

Floor Speech

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009--Continued -- (Senate - September 16, 2008)

THE ECONOMY

Mr. SANDERS. Mr. President, this week we have learned that Lehman Brothers, one of the oldest financial institutions in our country, an investment bank that has survived two world wars and a Great Depression, has proven that even it could not survive 8 long years of deregulation and lax oversight by the administration of George W. Bush. It is going bankrupt.

Yesterday we also learned that the beleaguered Merrill Lynch, the largest brokerage firm in this country, will be bought out by Bank of America, the largest financial depository institution in this country. Now we are also learning that AIG, the largest insurance company in the United States, and Washington Mutual, the largest savings and loan association in this country, are also in deep financial trouble. The list of troubled banks that the FDIC maintains is growing larger and larger.

In addition, last week, to avert a complete mortgage meltdown, we saw the Bush administration bail out Fannie Mae and Freddie Mac, putting tens, if not hundreds, of billions of dollars of taxpayer dollars at risk. Earlier this year, we saw the Federal Reserve orchestrate the takeover of Bear Stearns, a deal backed by $30 billion in taxpayer dollars.

At the same time, Americans are still paying outrageously high prices at the gas pump. Prices are still over $3.50 a gallon, even though the price of oil is now down to almost $90 a barrel. Every little hiccup to send gas prices up or down with virtually no connection to real supply and demand indicators.

Up to this point, the Republicans in the Senate have prevented us from taking any real action to rein in those volatile energy markets, so oil could be down this week, but any kind of rumor or instability, whether man made or natural, could send those same prices soaring again.

I think it is important the American people understand why we got to where we are today; why we are in a situation where millions of workers are fearful about being able to heat their homes in the wintertime while workers all over this country are finding it very difficult to fill their gas tanks. Is what occurred simply bad luck? Are we at the bottom of the so-called business cycle? How do these happenings occur to what was once the strongest economy in the world with the greatest middle class?

If we take a deep look at what is going on in terms of the financial crisis we are suffering through today and the volatile energy prices we are suffering through today, we can understand that both are the result of deliberate policy decisions made by the Congress and the administrative negligence on the part of the Bush administration. These deliberate policies were the result, to a significant degree, of the power and influence of corporate lobbyists--who also make huge campaign contributions--representing some of the most powerful special interests in the world, whether it is big oil, big coal or whether it is the largest financial institutions in the world.

What these lobbyists fought for and secured was selling deregulation snake oil, deregulation snake oil backed with millions in campaign contributions. That is what I think is the overlying issue as we look at the financial crisis facing Wall Street and the soaring and volatile prices in terms of oil.

All too often when bad things happen because of failures here in Washington, both parties generically blame it on the other and no one stands up and tries to point out what, where, why and, most importantly, who is behind these bad policies. As an Independent, I think that breeds a cynicism and an anger and a frustration on the part of the American people about the political system of our country.

Well, in this case, I think the American people deserve a little more of an explanation. It has been their hard-earned dollars that have been needlessly spent on $4 a gallon gasoline. It is their retirement savings and, my God, I wonder all over this country the kind of frustration that exists today with the volatility in the stock market going down 500 points yesterday and what people are worried about, whether their 401(k)s are going to be worth very much in the future. These are very frustrating times for the American people.

In the case of both of these current crises, the financial services and energy crisis, one of the major actors and perhaps the main actor in creating what we have seen today is a former Senator from Texas named Phil Gramm. In terms of our financial crisis, one of the reasons we are in the mess we are in today is because of the enactment of the Gramm-Leach-Bliley Act in 1999. As you may recall, this legislation was responsible for deregulating the financial services industry by completely repealing the Glass-Steagall Act.

Now, I was a Member in the House of Representatives at the time. I was a member of the House Banking Committee when this legislation was being debated. I remember that debate very well because I was in the middle of it. Let me tell you, I do not mean to be patting myself on the back, but I think it is important to take a little bit of a look at recent history.

This is 1999 during the debate. This is what I said as a member of the House Banking Committee:

I believe this legislation will do more harm than good. It will lead to fewer banks and financial service providers, increased charges and fees for individuals, consumers and small businesses, diminished credit for rural America, and taxpayer exposure to potential losses should a financial conglomerate fail. It will lead to more mega mergers and a small number of corporations dominating the financial service industry and a further concentration of economic power in our country.

Unfortunately, that is exactly what is happening today, and I would much prefer to have been wrong than right. But on the other hand, former Senator Phil Gramm--who I should mention to you has been Senator McCain's top economic adviser--at that time had a very different opinion of the legislation which bears his name. Senator Gramm at that time said something very interesting about that piece of legislation. This is what he said:

Ultimately the final judge of the bill is history. Ultimately, as you look at the bill, you have to ask yourself, will people in the future be trying to repeal it? I think the answer will be no.

Well, put me down as a Senator who believes we need to repeal Gramm-Leach-Bliley. Put me down as a Senator who believes we need to restore strong Government oversight of the banking industry. Put me down as someone who believes we need to have firewalls in the financial services sector so that we do not have the domino effect we are seeing right now.

There was a reason Congress enacted reforms of the banking industry in the 1930s, and that was because we did not want to repeat the mistakes that caused the Great Depression. Failing to have learned from our mistakes, it looks as if we are doomed to repeat them.

The lesson here is that left to their own devices, company executives will make poor decisions and put their investors' capital at risk. The important lesson here is that poorly regulated financial markets invariably endanger the health of the entire economy and, of course, as this world becomes more and more interlocked, in fact, the economy of the entire world.

In that context, the extreme economic ideology of people such as former Senator Gramm, and for that matter Senator McCain, says that the people of this country should simply stand back and allow executives in Wall Street boardrooms to make decisions with no public oversight that have the potential of wrecking our economy. In other words, deregulate them, let them do whatever they want in order to improve their bottom line, and the Government does not have to watch to see what the implications of their decisions are for our country or for our taxpayers.

I disagree with Senator Gramm's perspective. People who want to gamble their own money are certainly welcome to do that. But when your actions have the ability to dry up credit for businesses all over our country, when your actions can dry up mortgages for people who desperately want to buy a home or stay in their home, when your actions depress the value of Americans' savings, we need public oversight, and it should be strong oversight with the primary mission being to protect the American public from the reckless greed that has brought us to where we are today.

In former Senator Gramm's world view, when it comes to protecting the American consumer and the safety and soundness of our financial institutions, Government is not the answer, Government is the enemy, Government is terrible. But when banks fail, all of a sudden, guess what happens. The Government has no choice but to intervene to prevent the entire economy from collapsing. The Gramm-McCain version is one where profits are private, going to the very wealthiest people in this country, but risk is public, being assumed, by and large, by the middle-class and working people of this country. It is socialism for the very rich, and free enterprise for everyone else.

Unfortunately, former Senator Gramm was not satisfied by having set up the dominos in 1999 that made our current financial crisis possible. In 2000, he decided his loot-and-burn economics had to be applied to the energy markets as well now. This is an achievement. First you go after deregulating the financial markets, and then you move to energy. And out of his efforts in energy, of course, the so-called Enron loophole was born. Senator Gramm, who was then Chairman of the Banking Committee, was one, if not the main proponent of the provision deregulating the electronic energy market that we now know as the Enron loophole.

Was this done through a deliberative process with debate and hearings? Actually, no, it was not. This very important provision was slipped into a massive unrelated bill with no discussion and no hearings, and the American people today are paying the price for that.

The Federal agency that oversees those energy markets was the Commodity Futures Trading Commission, the CFTC. Conveniently, the head of that agency at the time was a Wendy Gramm. Yes, you guessed it, it was his wife. And Wendy Gramm had become head of the CFTC after being on the board of directors of, well, you guessed it, the Enron Corporation. Even Hollywood could not come up with a plot quite so transparent.

The result of this deregulation of the energy markets has, according to many experts who have testified before Congress, allowed speculators on unregulated markets to artificially drive the cost of a barrel of oil up to over $147 a barrel.

My colleagues, including Senator Dorgan and Senator Cantwell and many others, have laid out the way that speculators have driven up oil prises in many well-researched presentations here on the floor and a number of Senate committees. I applaud them for their leadership. But all of this speculation and all of the millions and billions of dollars that Americans have spent on exorbitantly priced gasoline would not have happened if it had not been for the efforts of Senator Gramm pushing through the so-called Enron loophole.

As central as Senator Gramm was in creating the financing and energy disasters we are currently facing, he was aided and abetted by the Bush administration's willingness to simply look the other way. Even with all of the harm that has been done to the economy, President Bush still refuses to acknowledge it. One wonders what world he is living in.

And, shockingly, Senator McCain is singing from the same song sheet. On September 15, Senator McCain said:

The fundamentals of our economy are strong.

Does that sound familiar? Well, it should. Since 2001, President Bush and members of his administration have repeatedly described the economy as strong and getting stronger: Thriving, robust, solid, booming, healthy, powerful, fantastic, exciting, amazing, the envy of the world.

Those are the adjectives used by the President and members of his administration over the last 8 years. What economy are they looking at? The fact is, when it comes to the economy, Senator McCain and President Bush do not get it. Is it a surprise to anyone that Senator Gramm, who, until fairly recently, was Senator McCain's major economic adviser on his campaign, described Americans as ``a nation of whiners'' who are suffering through a ``mental recession''?

Was it a surprise? What is surprising is that Senator McCain is trying to pass himself off as a maverick when he looks to the same people, people such as Senator Gramm, who laid the groundwork for our current economic problems.

While Senator McCain and President Bush think the fundamentals of our economy are strong, while they talk about how robust things are, the reality is the middle class in this country is collapsing. And if we do not make the kind of bold changes we need to make, for the first time in the modern history of America our children will have a lower standard of living than we do.

We are looking at the American dream as an American nightmare. We are moving in the wrong direction economically as well as in so many other areas.

Since President Bush has been in office, nearly 6 million Americans have slipped out of the middle class and into poverty. How do you think the fundamentals are strong when 6 million more Americans enter the ranks of the poor? Since Bush has been in office, over 7 million Americans have lost their health insurance. Now well over 46 million Americans are without any health insurance at all, and even more are underinsured. Does that sound like the fundamentals of the economy are strong?

Since President Bush has been in office, over 3 million manufacturing jobs have been lost, total consumer debt has more than doubled, median income for working-age Americans has gone down over $2,000 after adjusting for inflation. They do not get or do not care that prices on almost everything we consume are going up and up and up.

Today the typical American family is paying over $1,700 more on their mortgages, $2,100 more for gasoline, $1,500 more for childcare, $1,000 more for a college education, $350 more on their health insurance, and $200 a year more for food than before President Bush was in office.

In addition, home foreclosures are the highest on record, turning the American dream of home ownership into the American nightmare. The unemployment rate has skyrocketed. Since January of this year, we have lost over 600,000 jobs. Adding insult to injury, the national debt has increased by over $3 trillion, and we are spending $10 billion a month on the war in Iraq, making it harder and harder to do anything to help the struggling middle class.

Is it any wonder that Rick Davis, Senator McCain's campaign manager, recently said: ``This election is not about issues''? If my economic policies were to follow President Bush's and the economy was in a state of near recession and unemployment was up and median family income went down and more people were losing health insurance and more and more people were in debt, the foreclosure rate at the highest rate in American history, if all those things were happening, I would certainly also run on a campaign not having anything to do with issues whatsoever. That is what I would do. I would run away from all of those issues. That is certainly John McCain's strategy. Who can blame him?

John McCain claims to be offering change. But on issue after issue, he is offering more of the same--more tax breaks for the very rich, more unfettered free-trade agreements that will cost our country millions of good-paying manufacturing jobs, more tax breaks to big oil companies ripping off the American consumer at the gas pump; in other words, more of George Bush's failed policies that have led to a collapse of the middle class, an increase in poverty, and a wider gap between the very rich and everyone else.

John McCain and George Bush may be right in one respect: If they are talking about the wealthiest people and the most profitable corporations, the economy is fundamentally strong. Things could not be better for those people, that small segment of our society. In fact, one can make the case--and economists have--that the wealthiest people have not had it so good since the robber baron days of the 1920s.

Right now--this is really quite an astounding fact--the top one-tenth of 1 percent of income earners earn more income than the bottom 50 percent. That gap between the people on top, who are busy trying to build recordbreaking yachts and all kinds of homes, busy buying jewelry that is unbelievably expensive--one-tenth of 1 percent earn more income than the bottom 50 percent--that gap is growing wider. Also the top 1 percent own more wealth than the bottom 90 percent. We as a nation have the dubious distinction of having the most unfair distribution of wealth and income of any major country on Earth.

The wealthiest 400 people have not only seen their incomes double, their net worth has increased by $640 billion since President Bush has been in office. Can we believe that? The wealthiest 400 Americans have seen their net worth increase by $640 billion since George Bush has been in office. Today, the richest 400 Americans are now worth over $1.5 trillion. At the same time, we have the highest rate of childhood poverty; 20 percent of our children live in poverty. We have working families lining up at food banks because they don't earn enough to pay for food.

Apparently, all of that is not good enough for Senator McCain and for President Bush. They insist that those tax breaks be made permanent. In George Bush's and John McCain's world, those are the Americans who are struggling. The wealthiest 400 Americans just can't make it on $214 million a year. It must be pretty hard to scrape through and get the food and shelter a family needs, so obviously those are the guys who need a tax break.

We have had almost 8 years of President Bush's economic policies. They follow, of course, 8 years of the policies of President Clinton. I think it is important to say a word to compare what happened during those two administrations.

I happened, as a Member of the House, to have disagreed with President Clinton on a number of issues. But I think when we look at his overall economic record and contrast it to the overall economic record of President Bush and the policies Senator McCain would like to follow, the record speaks for itself.

Take a look at job creation, how many new jobs have been created. Under President Clinton, almost 23 million new jobs were created. That is a pretty good record. Did every one of those jobs pay the kind of wages we would like? No. But nonetheless, almost 23 million new jobs were created in Clinton's 8-year term. Under President Bush, less than 6 million jobs have been created.

Under President Clinton, more than 6 million Americans were lifted out of poverty and into the middle class. Under President Bush, the exact opposite has occurred. Nearly 6 million people who were in the middle class have been forced into poverty. Under President Clinton, median family income went up by nearly $6,000. That is a lot of money. Under President Bush, median family income is going down.

The Republican Party for years has told us they are the party of fiscal responsibility above all. Yet, under President Bush, the national debt has increased by more than $3 trillion. Under President Clinton, we had Federal surpluses as far as the eye could see. Under President Bush, we have had Federal deficits as far as the eye can see.

There is a clear choice to be made this year. That choice is, does Government work for all of the people, for the middle class, for working families, for people who are struggling, or do we continue to develop policies which represent the people on the top who, in fact, have never had it so good since the 1920s?

The future of our country is at stake. I personally believe we cannot afford 4 more years of President Bush's policies.

I yield the floor.

BREAK IN TRANSCRIPT

Source