Minerals Management Service

Floor Speech

MINERALS MANAGEMENT SERVICE -- (Senate - September 12, 2008)

Mr. DORGAN. Mr. President, we are on the Defense authorization bill, so I wanted to make a couple of comments, not about an amendment, but about two issues that I hope those at the Pentagon will take note of. Sometimes things don't change very quickly and sometimes they don't change at all with respect to the way things are done at the Pentagon.

When I came to Congress, I joined a military reform caucus to try to reform the way things are done at the Pentagon, but some folks there still believe there is an inexhaustible amount of money in pursuit of their desires. An example of that is the unmanned aerial vehicles, or UAVs--airplanes without pilots. It is a growing part of a number of services. But what is happening in both the Army and the Air Force is that both services are building and buying unmanned aerial vehicles in what I think are duplicative programs. One calls their airplane the Predator. The other calls it the Warrior. The folks over at the Pentagon can't determine who should be the executive agency that oversees the unmanned aerial vehicles. So you have two services doing essentially the same thing.

Who wants to fly at 12,000 or 20,000 feet above the battlefield with an unmanned aerial vehicle? Well, the Air Force does, but the Army would like to as well. So one builds a plane called the Predator and one builds a plane called the Warrior. They both have missions that appear to me to be duplicative. You have duplicate spending on research and development, duplicate spending on the airplanes themselves, duplicate spending on the missions inside the Pentagon. Who pays the cost? The American taxpayer. This is not new, but the competition inside the Pentagon shouldn't cause the American taxpayer to have to pay for inefficiency and duplication.

We have had discussions about this at hearings. It appears nothing is happening to describe what ought to happen. In this case it ought to be the Air Force who has the executive agency for UAVs. Former chief of the Air Force, Buzz Moseley, who I think was an extraordinary Air Force chief of staff, tried to resolve this and could not because he ran into the competition inside the Pentagon on this issue. My hope is the American taxpayer will not have to continue to pay for duplication of effort inside the Pentagon.

We all support this mission because it greatly helps our soldiers, but I don't support the kind of spending that unnecessarily duplicates efforts between the services. That certainly has been the case with respect to unmanned aerial vehicles.

I understand the Army wants to have--and should have--unmanned aerial vehicles above the battlefield at 1,000 feet to 2,000 feet. But if they are flying unmanned aerial vehicles at 12,000 and 20,000 feet with sensors, it seems to me that this is an Air Force mission. Yet we now have two branches of the service duplicating the effort and the American taxpayer pays the bill. I hope they will get this straight at the Pentagon so that we begin to avoid some of these duplicative costs.

One other issue I might mention is the issue of privatizing housing on our military bases. This started in the Clinton administration and continues through the Bush administration. The proposition is to take housing inside a military base that already exists and turn it over to a private contractor and say to the private contractor: We will give you this free of charge. You can own all of this housing. You sign a contract with us saying that you will maintain these houses for 50 years. Then we will pay soldiers a monthly housing allowance, they in turn will pay that to the private contractor, and everybody is happy.

The question is: What does this cost the American taxpayer? The military says: Well, it gets housing built more quickly because they will not only turn over existing housing stock free of charge to a contractor, but they will have the contractor build new housing and then fund it through the monthly housing allowances that soldiers hand over to the independent contractor.

It is interesting to me that we now have some foreign companies that own military housing on American military bases, and they get it by signing a contract saying we promise to maintain this housing for 50 years. Two of North Dakota's bases are now in a contract that presumably may get done next year.

I have raised a lot of questions about it because the way the Pentagon has calculated this, they say it is better for the Pentagon. What about the taxpayer? Is it better for the American taxpayer? How is it that we decide to turn over housing stock--much of which is almost brand-new--free of charge with a contract to a private company in exchange for a signature that they will maintain it for the next 50 years? It seems to me as though there are a lot of questions that have been unanswered, going back to the Clinton administration and through the Bush administration, that the American taxpayers ought to have answered. There ought to be a fundamental review of what is the total cost here, including depreciation taken by the private contractor and others. What is the total cost of this privatization of housing on our military bases? What is the total cost to the taxpayer?

I wanted to mention that in the context of the Defense authorization bill, because I think these are a couple of things that ought to be considered.

THE ECONOMY

Mr. President, the presentation the Presiding Officer just gave on the floor of the Senate reminded me that--I believe it was yesterday, or perhaps the day before--when it was announced that our trade deficit for the month was, I think, $62 billion, and nearly $25 billion of that was with the country of China. My colleague who just spoke is from Ohio. I was thinking about the continued growth of exports from China into our country, building up a very large trade deficit that we have with the rest of the world and especially with China. The State of Ohio has been especially hard hit. That is where they used to make Huffy bicycles and don't anymore because all of those Huffy bicycles are now made in China. All the Ohio workers were fired because they made $11 an hour plus benefits and that is way too much money, the company thought, to pay people working in a factory to make bicycles. So they all got fired. These bicycles are now made in China by people who work 12 hours a day, 7 days a week, for 30 cents, 40 cents an hour. By the way, I have described many times for my colleagues the last day of work with those Ohio workers after they were fired. On their last day of work they put a pair of shoes in the parking space where their car used to sit. So as they drove away, all that was left was a pair of shoes, and it was their plaintive way to say to that company: You can move our jobs to China, but you are not going to fill our shoes.

Many workers across this country are discovering the same fate. I have described--I won't today--but Fig Newton cookies. Apparently it costs too much to have people shovel fig paste in New Jersey, so now when you buy them, you are buying Mexican food because it is made in Monterey, Mexico. Why? You can hire people for a whole lot less money in Mexico than you have to pay for workers in New Jersey. The list goes on and on and on. The unbelievable part of this is we actually, as a country--and this Congress, yes, provided a tax break to a company that says: I am going to fire my American workers and move the jobs overseas.

I have tried, I believe, four times on the floor of the Senate to offer amendments and get votes on amendments that would shut down the tax break for shipping jobs overseas. On each occasion, we have lost that vote. It is unbelievable to me. I mean, it is not as if I have colleagues who will stand up and say: Count me in for wanting to ship American jobs overseas, but that is exactly their position when they vote to continue tax incentives for companies who fire their American workers and go in search of 10-cent-an-hour labor. And yes, that exists. Yes, it exists, that workers in Ohio and elsewhere are told: If you can't compete with 12-year-olds who work 12 hours a day and get 12 cents an hour, tough luck, you are out of a job.

This country has not yet come to grips with the question of whether that is what we spent 100 years creating a competitive, international environment to compete with. Does that make sense, that we should ask American workers to compete with that standard? I don't think so. But I was reminded of it by my colleague from Ohio discussing what is happening.

Just this week, again, we see the unbelievable trade deficit for one single month, over $60 billion again, and that is money that has to be repaid. That is money that has to be repaid from our country and our taxpayers to a foreign government. It is one part of a whole series of things that reflect a very urgent situation for this economy.

You wake up this morning and you see another major investment bank is going to be sold. The prices for its stock have collapsed. You wake up last weekend and you hear the Treasury Secretary is preparing to take over, effectively, Freddie Mac and Fannie Mae. A couple of weeks ago, Bear Stearns goes belly up. The largest mortgage banks go belly up. We see the largest trade deficits in history, the largest budget deficits in history, and a fiscal policy that is completely off the rail. We have a Presidential campaign, and we wake up every single day and we see these unbelievable attacks: Lipstick on a pig. Who are you offending? It is unbelievable to me.

Ours is a country that I think is being threatened to lose its dominance in the world on critical issues, including trade, fiscal policy, energy, and a whole series of issues. Yet, somehow, if you want to speak seriously about policy, you get interrupted by a bunch of shysters who have decided that they want to hijack the political system to talk about irrelevancies. It is unbelievable to me.

I came from a forum that we are holding on energy. Energy is a very important issue, and it appears to me the tipping point was finally $4 a gallon for a gallon of gasoline. It ran up double in a year, from July to July. The price of oil and gas doubled in a year. There is no visible way for anyone to take a look at the numbers on supply and demand and say: Oh, that was justified. We understand why the price doubled in a year. That evidence doesn't exist, by the way. There is no one who can come to the floor of the Senate and say: Well, I know why the price of oil doubled in a year and the price of gasoline doubled in a year; because nothing happened in that year with respect to supply and demand that justified it.

What I think happened is what has happened in so many years of our Government. Regulators who are brain dead, flat out asleep like Rip Van Winkle, while everything is happening around them, decided we are not going to watch, so speculators took over the oil market and drove it straight up. Recently it has come back down because some of that same speculative money, just like a hurricane, came right back out of it.

It is not only in this area. It is in the subprime mortgage area. Regulators--again, completely brain dead--and I am sure they watched television in the morning, perhaps while they ate some Grape Nuts at the kitchen table, and they saw some advertisements by the mortgage bankers and others that said: Hey, have you been bankrupt? Do you have bad credit? You can't pay your bills? Come to us, we have a mortgage for you. We have all seen those ads over and over and over again. Guess what. Those ads were a reflection of what was going on in an industry, right under the noses of regulators who didn't seem to care, in which they built an unbelievable system of bad mortgages and paired them with some decent mortgages, slicing them up into securities. It is like when they used to pack sawdust into sausage and then sliced and diced them, and then, by the way, because they had this carnival going on, they securitize all of these mortgages, move them up the line into hedge funds all over the world, and then somebody decided one day: You know what? These are bad mortgages. We don't even know who has them. We don't know where they are in these securities.

Why were they bad mortgages? Well, because regulators didn't seem to care and there were advertised mortgages that said: If you have bad credit, come to us. By the way, here is the mortgage we will give you. We will give you a mortgage where you don't have to pay any principal for a long time; just pay interest only. You may not want that. We will give you a better mortgage than that. We will give you a mortgage where you don't have to pay any principal and you don't have to pay all of the interest. You can put the principal and some of the interest on the back side of your loan. In fact, if that doesn't satisfy you, to get a mortgage from us at a teaser rate where you don't have to pay any principal and you don't have to pay all of the interest, we have even a better deal for you. You can get what we call a no documentation loan. We won't require that you document income. Or, you can get a partial doc--no doc, partial doc--no interest, no principal. In fact, one company said: You know what? You don't have to pay any principal or any interest. We will make the first 12 payments for you.

Now, is it surprising that an industry that was built on a foundation of greed, by brokers making big fees, putting mortgages in the hands of people with teaser rates who could not possibly afford to make the payments 3 years later when the interest rates were reset--is it surprising that the tent collapsed when mortgages began to reset and people couldn't possibly afford to make the payments? We have people walking around here scratching their head in this town wondering what on Earth happened. Where were the smartest guys in the room on Wall Street? Where were the smartest guys in the room who were securitizing these securities and sending them up the road so everybody could make money on the way, understanding that even as they locked in these mortgages with no documentation, no principal payments, perhaps no interest payments, or at least only partial interest payments, the little key on the bottom of the contract was: Prepayment penalties. Sign this line and you can't get out of it. Then, when the interest rates reset to triple or quadruple what they were and you can't make the payment, we are sorry, you can't get out of it.

That is what allowed the big shots to price these mortgages with respect to their expectation of future income in the way they did. But is it a surprise that this whole thing collapsed? That is just one more example, and it has happened in energy with speculation and in virtually every area with regulators who decided they have no interest in regulating. Now we bear the cost of an economy that almost seems, to some, in free fall.

We have massive problems with a trade policy that doesn't work. It continues to ship jobs overseas and to load the American people with massive quantities of debt that must be repaid. We have a fiscal policy that the President says is only about $400 billion, $450 billion offtrack. But, of course, that is not true. He knows that.

The question is, How much do you have to borrow in the coming fiscal year? That is closer to $700 billion. So you have a total of over 10 percent of the country's GDP that represents red ink for this year alone, trade and fiscal policy debt. We can add to that the massive problem in energy. I will talk about that for a moment.

I have talked about speculation and the role of the speculators and of the regulators who didn't want to watch. Now we are having summit meetings and substantial angst about what we do to put this back on track. My interest is in doing a lot of everything. In my judgment, we should drill, and drill more. I have had a bill introduced for a year and a half that opens the eastern gulf to drilling. In fact, all the gangs and the folks who are talking about these things on the Senate floor don't want to open that. As you can see on this chart, this is water off of Cuba that will be leased. There are 500,000 barrels of oil a day in this water off Cuba that is being leased. The Canadians are leasing, Spain is leasing, and we cannot lease because our oil companies cannot do anything in this area because of the embargo against Cuba.

That is absolutely absurd. We ought to drill. We ought to conserve. We ought to take everything we use every day--appliances and lights--and we ought to make them all efficient. We are moving quickly in that area.

Finally, we have to move dramatically in the area of renewable energy. Every 15 years, it ought not be a surprise that we huff and puff and thumb our suspenders and bloviate about what we are going to do next, about where we are going to drill next. How about something that is game changing? How about we change it so in 15 years from now we are not saying the same things and that we are moving toward hydrogen fuel cell vehicles? Seventy percent of the oil we use is in our vehicles. It is a huge part of our consumption of oil.

To back up just a moment, we suck 85 million barrels a day out of this planet, and one-fourth of it is used in the United States. We have an appetite for one-fourth of the oil produced every day. Sixty-five percent of the oil comes from off of our shores, from Saudi Arabia, Kuwait, Venezuela, Iraq, and elsewhere. The fact is, we have to find a way to be less dependent upon foreign oil. We are always going to use oil and coal. We have to use it differently, in my judgment.

But the question for us is, what do we do that is truly game changing? How about hydrogen fuel cell vehicles, and before that perhaps electric drive vehicles. Hydrogen is everywhere. You can take energy from the wind and produce electricity and use electricity in the process of electrolysis and generate hydrogen from water and use hydrogen for vehicle fuel. You will get twice the effective power to wheel and put water vapor out of the tailpipe. Wouldn't that be wonderful?

We are not going to have game-changing strategies if every 15 years the next effort on energy is to figure out where we drill next. Let's drill next, but let's do something that makes us less dependent on the need for this oil, particularly oil coming from outside of our country.

It is, I expect, pretty depressing for the American people who have the miracle in our Constitution of every second year, every even-numbered year, being able to grab the American steering wheel and decide which way to nudge America.

All the power in this country is in the power of one--one person casting one vote on one day. It must be pretty disappointing to them to take a look at the quality of the debate in our political system at a time when the economy of this country is at risk, when there is so much to do and an urgent need to make strong, good decisions, and see the irrelevancy come out every single morning, particularly from one campaign. This country deserves much better.

I hope between now and this election we will begin to see the attack dogs that we saw at work in 2000 and 2004, which defined a new low in American politics. In 2004, one of our colleagues who earned three Purple Hearts in Vietnam, went to Vietnam and served his country, was defined by the attack dogs as someone who was less than patriotic. That was unbelievable. But that same effort is at work in this campaign. This country deserves a political system and campaigns that give them answers. Where would you take America? Where would you want to lead this country?

I must say we only have less than 2 months remaining, and the long-term future of this country depends on us making good, right decisions about energy, fiscal policy, health care, and education, and about so many different issues, including trade policy, which is the discussion I started with.

Mr. President, I started by speaking of Ohio and trade policy because my colleague, Senator Brown from Ohio, has written a book about trade, and we talked a great bit about it. It is but one of a series of very serious challenges that he, I, and others should expect will be discussed in some detail in this campaign. So I hope in the next 60 days we will begin to see some of that.

I suggest the absence of a quorum.

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