Military Construction Appropriations Act, 2004

Mr. President, I thank the Senator from Florida for his remarks and say to him and the Presiding Officer and Senator Carper how much I appreciate the opportunity to work with them on this issue. They have been leaders in our country, in our States, among the best Governors we have had over the last number of years, and I welcome the chance to work with them. I thank Senators Allen and Wyden for their hard work on this issue. They have been working at it for a long time. I respect that and appreciate it. I thank Senator McCain for his congeniality and his efforts to move things along. He and the majority leader, last week, agreed to give us an opportunity, as they have done tonight, and for tomorrow, to make our case, state our issues, have votes that we want to have, and I am grateful for that during a busy season. It would have been easier to just let this go by. There are a lot of issues before the Senate, but there are a bipartisan group of us who think this is very important as well. Each of you have stated tonight--and I don't need to restate it--why that is so.

I think it is a part of the tradition of the Senate that it be the saucer in which the coffee cools. What we have found over the last several days is, as our colleagues on both sides of the aisle have looked at this unfunded Federal mandate that affects internet access, they have more questions about it. There are more people who are deeply concerned about the proposal of the distinguished Senators from Virginia and Oregon.

So I am appealing tonight, and will be doing so tomorrow, especially to those Members of the Senate who have been mayors and Governors, who have been legislators, city council men and women, to look at this and the issues of Federalism. In sort of a reverse partisanship, I want to appeal to my colleagues on this side of the aisle, for whom the idea of unfunded Federal mandates has been a central part of our beliefs. It was the center of our Republican resurgence in 1994, the heart of the Contract With America. S. 1, the No. 1 Senate bill that the new Republican majority leader, Bob Dole, introduced in 1995, was the Unfunded Mandates Reform Act. So this is important stuff for the Republican Party.

In listening, though, to the issues that are being discussed tonight, let me see if I can summarize some of what I believe I have heard and discuss for a moment the amendment that I will be sending to the desk, or have already forwarded to the desk, on behalf of several of us.

The question tonight is whether and to what extent we will allow State and local governments to tax Internet access. That is the issue. There are really

two arguments among those of us who are arguing. The first one is--and I may be alone in this, but I don't think so--I don't like any unfunded Federal mandate. I supported the idea of a moratorium on State and local taxation of access to the Internet when it all began. Most of us did. That was in the mid-nineties. It is hard to think back that far. The Internet was an infant in a crib then and none of us wanted it to be squashed in its infancy.

Then after 3 years, along came various advocates who said: Let's give it another 2 years. That very narrow ban on Internet access, which didn't cost very much money--probably so little money during that time it didn't qualify under the Unfunded Mandates Reform Act as an unfunded Federal mandate--so it was extended 2 years.

Now the advocates of the other position are coming along and saying: We want to make this ban permanent, and we want to broaden the definition of what we mean by ``Internet access,'' so what we have here is not such a complex issue. We have really two questions: Do we want a permanent ban, or do we want a 2-year ban? The second is, Do we want to extend the same definition of ``Internet access'' we now have with a minor change, or do we want a broad definition of ``Internet access'' that might cost State and local governments billions of dollars? That is really the issue that will be presented when we vote most likely tomorrow.

I send to the desk, but do not call up, an amendment on behalf of myself, Mr. Carper, Mr. Hollings, Mr. Stevens, Mr. Voinovich, Mr. Graham, Mr. Dorgan, Mrs. Feinstein, Mr. Lautenberg, and ask that it be filed.

I wish to discuss three issues. One is the strange case of amnesia that seems to have set in, especially on my side of the aisle, about unfunded Federal mandates. The Presiding Officer made an eloquent discussion of that issue. So did other speakers.

The second is, I would like to discuss specifically why this is an unfunded Federal mandate under the specific terms of the budget law which was amended in 1995.

Finally, I want to say a word about the amendment which we will offer, which we believe is a better extension of the ban on Internet access than that proposed by Senator Allen and Senator Wyden.

I very well remember 1994 and 1995. Senator Voinovich remembered he was in Williamsburg, VA, when the Governors met. I remember that Senator Voinovich, then a Governor, was the acknowledged leader of State and local forces who were deeply concerned about the practice of Washington politicians passing laws claiming credit and then sending the bills to mayors and Governors. Nothing really made us Governors much madder than that, people getting elected to Congress and presuming they had suddenly arrived here in Washington, that they had a great idea about children with disabilities, and they would order us to do it and then order us to pay for it, or at least pay for half of it.

We cared about children with disabilities, too, and we felt as if we were elected to make those decisions. We found nothing in our laws and constitutions about how the Federal Government ought to define for us what our tax base ought to be or ought to be telling us all of these things.

I vividly remember the new Republican majority leader of the Senate, Bob Dole, coming to Williamsburg that very meeting Senator Voinovich mentioned. Governor Allen, now Senator, was presiding. Thirty Republican Governors were there. Speaker Gingrich and Majority Leader Bob Dole came. Speaker Gingrich talked about the Contract With America. We Republicans can remember that--300 Republican candidates standing on the steps of this U.S. Capitol saying: Here is our 10-point plan; elect us, and if we break our promise, throw us out. That is what we said. That is what we Republicans said. What was our promise? The heart of that promise was no unfunded Federal mandates.

Senator Dole knew that. It wasn't just a matter of the House of Representatives. He came to Williamsburg, VA. He pulled out a copy of the Constitution. He must have done it 100 times in the next year because I was with him 100 times in the next year when he did it. We were both campaigning in Presidential primaries, and he would read the tenth amendment. He would read:

The powers not delegated to the United States by the

Constitution, nor prohibited by it to the States, are

reserved to the States respectively, or to the people.

That was Bob Dole in 1994 and 1995. He was good to his word.

We have a practice of the Senate. The majority leader will pick the most important bill and make it his bill and call it S. 1. S. 1 that year for Senator Dole, the new Republican majority leader, was the Unfunded Mandates Reform Act of 1995. As Senator Voinovich said earlier, it passed 91 to 9. Sixty-three of the Senators who voted for it then are serving in this body today. Twelve of them were House Members then.

There was a lot of steam in that argument then. I would like to read just a paragraph from a backgrounder put out by the Heritage Foundation in December of 1994. This is just a little while after the Governors met. This paragraph says:

Throughout much of American history, especially since the

New Deal--

This is how they were looking at it--

the Federal Government increasingly has encroached upon the

fiscal and constitutional prerogatives of State and local

government. Today this imbalance has reached a crisis point,

and the States are fighting back. Through a variety of

initiatives, they are demanding that Federal mandates be

funded and, in many cases, even are challenging the authority

of the Federal Government to impose these mandates, whether

funded or not. With the new more State friendly Congress--

That is us, the Republican Congress--

States and localities have a historic opportunity not only to

effect mandate relief, but also to restore balance in State-

Federal relations.

Then they begin to list in this Heritage Foundation document some of the ways States and localities that seemed to have reached their limit are fighting back. They are publicizing the costs of unfunded mandates. They are holding their Congressmen accountable. They are challenging Congress's authority to impose the mandates. They are suing the Government for the violation of the tenth amendment. They are lobbying Congress to pass mandate relief legislation--no-money, no-mandate constitutional amendments.

They are considering a collective action to challenge the Federal Government's right to pass laws that impose duties on States without paying the bill.

This was the mood in 1994 and 1995, and this was a major reason why the Republican majority was elected. I hope we don't forget that. I know at the time a great many of our colleagues remember it because they talked about it eloquently in their speeches when the Unfunded Mandates Reform Act was enacted in 1995.

Senator Lott said:

It is things like unfunded mandates that drive good people

out of office.

Senator Thomas said: I served in the Wyoming Legislature and a good deal of our budget was committed, before we ever got to Cheyenne, to unfunded mandates.

Senator Feinstein, a cosponsor of our amendment, said: I was president of the board of supervisors. I was mayor. I saw the development of these unfunded mandates firsthand and in doing so I probably speak for the mayors and local officials all across the Nation.

Senator Nickles, chairman of the Budget Committee, said: I used to serve in the State legislature and we really resented the idea that the Federal Government would come in and mandate how we would spend our resources.

I am reading speeches from the Congressional Record of Members of this body in 1995, who voted to ban unfunded Federal mandates.

Senator Hutchison of Texas said: Almost one-third of the increase in the Texas State budget over the past 3 years has been the result of unfunded Federal mandates--one-third, she underlined.

Senator Burns talked about the impact of unfunded mandates.

Senator Bennett told a beautiful story about encountering a mayor during a campaign in his State in Utah, and he ended up with the mayor saying, well, if I had a U.S. Senator in front of me with his undivided attention, the one thing I would say to him is stop the unfunded mandates.

That is just a few of the things that were said. So the question now then is,

is this really an unfunded Federal mandate? Well, that is not too hard to figure out. Some of my colleagues seemed surprised when I suggested this might be, so I have put a letter on every Senator's desk.

I ask unanimous consent that the letter be printed in the Record.

U.S. Congress,

Congressional Budget Office,

Washington, DC, November 5, 2003.

Hon. Lamar Alexander,

U.S. Senate, Washington, DC.

Dear Senator: This letter responds to the three questions

you posed in your letter of November 4, 2003, regarding S.

150, the Internet Tax Nondiscrimination Act.

1. How much revenue is being collected by state and local

governments from taxes on DSL?

CBO estimates that state and local governments currently

collect at least $40 million per year in taxes on DSL service

(Digital Subscriber Line--a high-speed data transmission over

regular telephone wires). They are likely to collect revenues

totaling more than $80 million per year by 2008 due to growth

in the use of high-speed Internet access. These collections

are primarily sales and use taxes on DSL service.

2. What would be the revenue loss to state and local

governments under the managers' amendment to S. 150?

Based on the version of the proposed amendment CBO

received late this afternoon (S150MGR.6), CBO has determined

that the bill would create intergovernmental mandates as

defined in the Unfunded Mandates Reform Act. We estimate that

those mandates would impose costs on state and local

governments in at least one of the next five years that would

exceed the threshold established in that act ($60 million in

2004, increasing to $66 million in 2008). We have identified

three major impacts, each of which would, by itself, exceed

the threshold:

Revenue losses of $80 million to $120 million per year,

starting in 2007, to state and local governments that are

already taxing Internet access and were covered by the

``grandfather clause'' contained in the Internet Tax Freedom

Act. Some of these are taxes on DSL services. We have no

information to suggest that other states will impose taxes on

Internet access in the near term.

Other states are currently imposing taxes on charges for

the portions of DSL services they do not consider Internet

access. Those states would lose at least $40 million in sales

and use taxes on DSL services in 2004, and at least $75

million by 2008. The preemption of DSL taxes would stem from

section 2(c) of the amendment, which defines ``Internet

access.''

Substantial revenue losses that could result from:

(a) The inability of state and local governments to collect

transactions taxes (including sales and use taxes and gross

receipts taxes) on certain types of telecommunications

services. For example, if technological change shifts

traditional telecommunications services to the Internet,

those services--for example local and long distance phone

calls--could be included, for free, when a customer purchases

Internet access;

(b) The free inclusion of content (movies, music, and

written works) with Internet access in response to the tax

exemption provided by this bill. Such content is subject to

sales and use taxes under current law but might increasingly

be available at no charge as part of an Internet access

package.

CBO does not have sufficient information to estimate these

revenue losses, but we believe they could grow to be large.

There is some question, however, as to what types of

transactions could not be taxed under the bill; under some

interpretations, these revenue losses could remain quite

small. The issue might ultimately have to be resolved in the

courts.

3. How much tax revenues do state and local governments

collect on telecommunication services?

Based on information from industry representatives, state

and local governments, and federal statistical sources, CBO

estimates that state and local governments currently collect

more than $20 billion annually from taxes on

telecommunications services. Such taxes generally fall into

two categories: transactions taxes and business taxes.

Transactions taxes (for example, gross receipts taxes, sales

taxes on consumers, and taxes on 911 service) account for

about two-thirds of the total.

In arriving at this estimate, CBO took into account the

fact that some companies are challenging the applicability of

taxes to their services, and thus may not be collecting such

taxes, even though states and local governments feel they are

obligated to do so. Such potential liabilities are not

included in the estimate.

If you would like further details on the information

provided in this letter, we would be pleased to provide it.

The staff contacts for this legislation are Sarah Puro and

Theresa Gullo.

Sincerely,

Robert A. Sunshine

(For Douglas-Holtz-Eakin, Director).

There is a letter that I received yesterday from the Congressional Budget Office on every Senator's desk. It describes the three ways in which the proposed ban on State and local Internet access taxes by Senator Allen and Senator Wyden violate the Federal Budget Act--specifically, the amendments of the Unfunded Mandates Reform Act of 1995.

These are the three ways: One, there is a revenue loss of $80 million to $120 million per year to State and local governments already taxing Internet access. There are 11 such States.

Second, there are losses of $40 million to $75 million of taxes on DSL services that States now collect. That is the second violation of an unfunded mandate.

Third, and this makes the point it is not only an unfunded mandate, it is potentially a great big unfunded mandate. The Congressional Budget Office says in its letter that the third way this proposal violates the Budget Act is ``substantial revenue losses that could occur'' when technological change shifts traditional communication services to the Internet--for example, local and long distance phone calls--or when content, music, movies, written works is provided free with Internet access.

This may sound complicated but it is not so complicated. Basically, what this says is it already is happening, that your telephone company or your cable TV company will provide your Internet access. CBO says that State and local governments today now collect more than $20 billion annually from transaction sales and use taxes on telecommunications services.

What this letter further says is that the Allen-Wyden proposal will take an undetermined amount of this $20 billion and ban the ability of State and local governments to include that as part of their tax base. It is enough, according to the CBO letter, to define it as an unfunded Federal mandate. But they say they cannot tell the exact amount of the $20 billion that might be exempt from State and local taxation.

The Multistate Tax Commission said it could tell. It estimated $4 billion to $5 billion. That is an awful lot of money. The Senator from Ohio, the Presiding Officer, in his argument read a list of what State revenue officers have told him, and what they estimate it might take.

The problem is the broader definition of Internet access, which is contained in the bill of the distinguished Senators from Virginia and Oregon, raises the likelihood that some--maybe a lot--of the $20 billion that is now used by State and local governments to pay for schools, State parks and to keep other taxes down, would be taken away from their tax base.

What do we then do about it? Well, we think we have a suggestion which we hope tomorrow our colleagues in the Senate, if we are able to vote on it, then will agree with us. Our suggestion is an extension of the current ban on Internet access for 2 years, with the same narrow definition that we now have, with the exception that we would make sure that in 23 States which do not now tax DSL, that is telephone service that delivers broadband, they would not be allowed to do that.

So in taking the issues that I heard from the distinguished Senators from Virginia and Oregon, I would summarize them this way: They argue that the Internet is so valuable that we need to override this law we have against unfunded Federal mandates. I agree it is valuable but it is not an infant. It is a pretty big boy. It is out there in the world. We know what it is and it should stand on its own now.

The telephone is also a magnificent invention. We do not exempt it from taxation. The television is a magnificent invention. We do not exempt it from taxation.

If we really think in the Congress that the Internet deserves to be completely exempt from State and local taxation, then why do we not pay for it? Why do we not pass a law that we might call the Unfunded Federal Mandate Reimbursement Act and just let every mayor and every Governor send us a bill every year and we will send them a check. If it turns out to be $20 billion, we will send them $20 billion. If it turns out to be $4 billion, we will send them $4 billion because we will have said the Internet is so important that we in Congress think it ought to be subsidized, that there should be relief from taxation, and so we are going to pay for it. That would be the honest thing to do, rather than just to say we think it is important but you pay for it.

That is what we said with how we helped disabled children. That is what

we said with stormwater runoff. That is what we said with clean water. We think it is a great idea, you pay for it. That is why we are in Washington. We print money. You balance budgets. We think it is a good idea, you pay for it. That is what the fuss is about.

The second thing I have heard is it is in interstate commerce and we could not touch it. Telephones are in interstate commerce. We do not keep States and local governments from taxing telephones. Televisions are in interstate commerce. Buses are in interstate commerce. Planes are in interstate commerce. Catalog sales are in interstate commerce. Severance taxes are in interstate commerce. A great big part of every State and local government's budget is made up of a tax base that included items that are in interstate commerce. So that argument does not wash at all.

Taxing broadband, that is a good point. Broadband is coming fast. We do not want to interfere with that so our conclusion is, let us stop it in the 23 States that do not now tax broadband. Let us put DSL and cable--that is the broadband is delivered--on an equal playing field. In the States that do tax DSL, they can continue that for the 2 years of the ban.

Multiple taxation, that was raised by the Senator from Virginia. Well, we are extending the current language and it bans multiple taxation. Discriminatory taxation, we propose to extend the current language, and that bans discriminatory taxation.

State and local taxation on Internet access, we would propose to extend the ban on Internet access taxation for 2 years so we can think this through. So we have taken care of that as well. Tomorrow, when hopefully we will be voting on this, we will have this choice: Do you want a permanent ban on Internet access taxation, or do you want a 2- year ban? Do you want a broad definition of what we mean by Internet access, a definition that could cost States a significant share of their State or local tax base, or do you want a narrow definition, virtually the same one we have today?

I believe the prudent thing for us to do is to take the law that we have today, slightly modify it to put DSL and cable on an equal playing field, extend it for 2 years, and let us continue the debate we are having about how to define the two words ``Internet access.'' That is really the problem. I agree with the Senator from Oregon. He has worked long and hard on this. There have been many meetings. We just don't agree on what the definition of Internet access is.

But until we can agree, we should not put this potentially huge unfunded Federal mandate into the law. So tomorrow I hope to bring up this amendment I have filed tonight. I hope our colleagues will compare it with the proposal of the Senator from Virginia and Oregon, and I hope they will adopt ours.

I also have a point of order I could raise, which would cause the Senate to consider whether the Allen-Wyden amendment is an unfunded Federal mandate. If there is a motion to waive the point of order, which I believe would be sustained by the Chair, then Senators would have an opportunity to cast a vote for or against an unfunded Federal mandate. But I am going to reserve that option and hope that sometime tomorrow we can have a clear up-or-down vote on the amendment which I offer with a number of other Senators.

I look forward to the debate tomorrow.

I object.

I object.

Mr. President, I thank my colleague from Delaware, my colleague from the State of Tennessee, and my colleague from the State of Florida for standing up--all of us former Governors--to deal with a matter that will have great impact on our respective citizens for many years ahead. We want to make sure that whatever we do makes sense.

Before I begin, I would like to set the record straight that this debate is about federalism, unfunded mandates, and protecting States' ability to collect taxes. It has nothing to do with taxing e-mail.

I have made the issue of unfunded Federal mandates a top priority during my 36 years of public service. At every level of government--as a State representative, county auditor, county commissioner, lieutenant governor, mayor of the City of Cleveland, Governor of Ohio for 8 years--I have seen firsthand how the relationship of the Federal Government with its State and local counterparts affects our citizens and the communities in which they live. My background has fueled my passion for the issue of federalism and the need to balance the Federal Government's power with powers that our Founding Fathers envisioned to the States.

This very body was created, in part, to guarantee that States had adequate, equal means to assert their interest before the Federal Government. Our forefathers provided that each State has two Senators to protect States rights and federalism, and prior to 1913 those Senators were elected by their legislatures to guarantee that they would protect federalism. I believe strongly that the relationship between the Federal Government and State and local governments should be one of partnership. That is why I vowed when I was elected to the Senate, I would work to find ways in which the Federal Government can improve the way it works with these levels of government to serve the American people.

I have also been concerned about the tendency of the Federal Government to preempt the functions of State and local governments and force on them new responsibilities, particularly without also providing the funding to pay for these new responsibilities.

Seventeen years ago, in 1986, I spoke to the Volunteers of the National Archives regarding the relationship of the Constitution to America's cities and the revolution of federalism. I brought to the attention of the audience my observation, since my early days in government, regarding the course American government has been taking:

We have seen the expansion of the federal government into

new, non-traditional domestic policy areas. We have

experienced a

tremendous increase in the proclivity of Washington both to

preempt state and local authority and to mandate actions on

state and local governments. The cumulative effect of a

series of actions by the Congress, the Executive Branch and

the U.S. Supreme Court have caused some legal scholars to

observe that while constitutional federalism is alive in

scholarly treatises, it has expired as a practical political

reality.

In 1991, I started a long crusade when I became a member of the National Governors Association, working with the State and Local Government Coalition to do something about unfunded mandates. In fact, as Governor of Ohio, I requested that a study be done to examine unfunded mandates. It was the first of its kind in any State. It captured just how bad the mandate problem was in real dollars. Between 1992 and 1995, Ohio had unfunded mandates of almost $2 billion. These efforts were strongly supported by Senator Kempthorne, Senator Roth, Senator Glenn, Congressmen Robert Portman, Tom Davis, and Bill Clinger and culminated with the passage of the unfunded mandates legislation in the Senate on March 15, 1995.

As a matter of fact, for the first time in my life I set foot in the Senate when the Senate passed that Unfunded Mandate Relief Act. I was in the Rose Garden representing State and local government when President Clinton signed the legislation on March 22, 1995. In fact, I have that pen proudly displayed in my Senate office.

This milestone concluded a lengthy and coordinated effort by State and local government officials and their congressional allies to reduce the economic burden of Federal unfunded mandates and the adverse impact they have on State and local services.

By the way, this was the second plank in the Contract With America that was developed in 1994. I will never forget when we were in Williamsburg and committed ourselves to the Contract With America. The Senator from Virginia was present at that time in the capacity of Governor of Virginia.

I believed then and I believe today that mandates forced us to cut vital services and cut taxes. Mandates also rob our citizens and elected officials of perhaps the most fundamental responsibility of government, prioritizing government services. The Unfunded Mandates Reform Act does not prohibit unfunded mandates, but it does slow down the process of enacting a mandate and forces each Senator and House Member to go on record that we want to mandate or prevent action by State or local governments without providing the resources with which to pay for it. It ensures that Congress is informed and accountable when considering an unfunded mandate for pending legislation. The law was designed specifically to ensure an up-or-down vote on whether to impose a mandate.

The mandate we are debating is exactly what the Unfunded Mandates Reform Act was designed to address. This is the first time this Act has been used on the Senate floor since it was enacted in 1995. When this legislation passed the Senate in March of 1995, the vote was an overwhelming 91-to-9 vote. Of the 91 Senators supporting the bill, 50 are still here today, and of the 9 nays, 7 Senators are still in office. In addition, 14 Members of the House--voting in favor of unfunded mandates reform--have moved over to the Senate. So we have 64 Senators today who voted for this bill in 1995 in their respective Chambers.

The bill currently under consideration, the Internet Tax Nondiscrimination Act of 2003, sponsored by my good friend from Virginia, Senator Allen, and Senator Wyden and Senator McCain, has included unfunded mandates by the Congressional Budget Office.

In fact, I want to quote from the Commerce Committee's report dated September 29, 2003, in which CBO said:

By extending and expanding the moratorium on certain types

of state and local taxes, S. 150 would impose an

intergovernmental mandate as defined in the Unfunded Mandates

Reform Act. CBO estimates that the mandate would cause state

and local governments to lose revenue beginning in October

2006; those losses would exceed the threshold established in

[the unfunded mandates relief legislation]. While there is

some uncertainty about the number of states affected, CBO

estimates that the direct costs to states and local

governments would probably total between $80 and $120 million

annually. . . .

Furthermore, they went on to say:

Depending on how the language altering the definition of

what telecommunications services are taxable is interpreted,

that language also could result in substantial revenue losses

for states and local governments. It is possible that states

could lose revenue if services that are currently taxed are

redefined as Internet access under the definition of S. 150.

Finally, the report states that CBO cannot estimate the magnitude of these losses.

Mr. President, let me reiterate, CBO said: Depending on how the definition is interpreted, the loss of revenue to the States and local governments could be substantial.

If CBO cannot calculate the potential loss of revenue to the States, why in the world would we change the definition of Internet access? And why in the world would we make the new definition permanent?

Even FCC Commissioner Michael Powell said the telecommunications industry is in flux and that few industry experts could agree on a definition in view of the rapid changes in technology.

Senator Wyden, in his presentation earlier this evening, made the allegation that no State will lose money under this proposal. We asked the National Governors Association to contact the tax commissioners from various States and here are some of the findings: Kentucky will lose $265 million; Iowa, $45 to $50 million; Maine, $35 million; Michigan, $360 million; New Jersey, $600 million; Ohio, $55 million; Oklahoma, $159 million; Tennessee, $358 million; Utah, $92 million; Washington, $33 million.

That is a lot of money--a lot of money--and States will lose tax revenue under this proposal.

In my own State, I spent a lot of time with our Ohio Tax Commissioners Office and the Office of Budget and Management. According to the Department of Taxation in Ohio, we will be losing about $700 million over our 2-year biannual budget period.

Last week, my staff was on a conference call with SBC Communications, Bell South, Sprint, the Tennessee Revenue Director, and the Ohio Tax Commissioner's Office. The telecommunications companies did not dispute the Ohio Tax Department's estimates.

So let's be honest about it. If this permanent moratorium goes through with the current definition, there is no question in the world that States are going to lose money.

At the end of that conversation, by the way, the only thing we got out of it was that there was uncertainty, confusion, and speculation regarding what this all meant.

In addition, we are going to be losing $350 million, at least, as a result of this proposal today.

If we pass S. 150, Congress will, in effect, force States to raise taxes or cut services in order to make up the difference. In other words, all 50 States will be forced to debate whether to raise taxes, cut services, or come to Congress for more money. Mr. President, unlike Congress, by law all states must balance their budgets. They don't have the option of printing more money like the federal government.

States have to balance their budgets and if they don't spend within their means, they are forced to make a choice to either cut services or raise taxes. Of course, that is something we have not done. And I mention, that some of my colleagues say States are not fiscally responsible. I would like to say that most of the States in the United States of America are much more fiscally responsible than this body, in which we have increased spending and added to our burgeoning deficit.

Mr. President, the newspapers in Ohio get it. The Cincinnati Enquirer, one of the most conservative papers in Ohio, understands:

One reason governors, mayors and county officials oppose

expanding the Internet tax ban is that telecom companies are

racing as fast as they can to convert most services to the

Internet. If just about everything gets tax-exempt under a

broader ``Internet access'' definition, states and localities

would take a huge tax revenue hit.

The development of DSL, broadband and cable Internet

service were just the sort of new access technology that

Voinovich and others hoped would result from the tax

moratorium, but they don't want it expanded to kill existing

tax revenues.

The Akron Beacon-Journal also understands:

In short, critical programs would be put in jeopardy, from

mental health care to public schools.

Even the Washington Post understands:

What's driving this legislation is that telecommunications

companies and Internet service providers see an opportunity

not only to make the tax moratorium permanent--in itself a

bad idea--but to save what could amount to billions in

additional taxes. The law frees service providers from having

to pay taxes on telephone service they use to provide

Internet access. And as the Internet becomes a more effective

medium for providing phone service and delivering products

such as downloaded movies, software and music, the

legislation could sweep such offerings within the ambit of

services that states are prohibited from taxing.

The Internet shouldn't be subject to conflicting taxes, but

that's no reason to argue that it shouldn't be taxed at all.

There should be a level playing field for taxing Internet

access, whether it comes through ordinary dial-up, cable

modems or high-speed telephone lines.

The last thing Congress should do now to cash-strapped

states is pass a law that would not only permanently put

Internet access off limits for taxation but also deprive them

of revenue that they now collect.

And they go on--I will finish the quote--

Proponents of the law are busy demagoguing the issue,

suggesting, as Senate sponsor Ron Wyden (D-OR) put it the

other day, that users ``could be taxed every time they read

their local newspaper online or check the score of a football

game.'' Congress should step back from the brink, temporarily

extend the moratorium and sort this all out in a way that

doesn't intrude on state prerogatives.

Mr. President, I ask unanimous consent that these articles be printed in the Record.

Mr. President, I have made the point that I have strong concerns with the pending legislation because it is an unfunded mandate. At the same time, I think it would be wrong for Congress to do nothing and allow taxes on Internet access.

As I have said emphatically, I am against taxes on e-mail and the Internet. It is no secret that my interest in the current moratorium dates back to my time as Governor. During my tenure as Governor, I was also chairman of the National Governors Association. As chairman, I asked Governor Mike Leavitt to be the lead Governor on the Internet economy and its effects on State government and federalism. The NGA efforts on this important topic led to the current moratorium on Internet taxes which was signed into law in 1998, and then again in 2001.

Our goal then is the same as my goal today: to encourage the growth of the Internet as a driving force in our economy.

Let's look at the facts.

Under the original 3-year moratorium from 1998 to 2001, the Internet rapidly expanded to all corners of our country. The point I am trying to make is that with the current moratorium that we have, we have seen unbelievable expansion in the Internet. That is what we wanted to have. That is why we put the moratorium in effect.

In February 2002, the National Telecommunications and Information Administration at the Department of Commerce issued a report entitled ``a Nation Online: How Americans Are Expanding Their Use of the Internet.'' It is just unbelievable what has happened during that period of time. My point is, the Internet flourished in all segments of society during the original moratorium, and I think it is safe to assume that Internet usage continues to increase every day.

The question is, how do we continue to support the growth of the Internet and bring parity for all Internet service providers without causing undue harm to our State and local governments that have been experiencing serious budget shortfalls?

S. 150 would, for the first time since 1998, change the definition of Internet access and, without a clear understanding of the definition's impact, rush to make it permanent.

The fact is, Internet technologies are changing more rapidly than ever. Companies are moving quickly to provide multiple services over a single line, including Internet access, voice communication, data service, and entertainment service. It does not make sense to change and make permanent the definition of Internet access when the technologies and the different ways Internet services are being offered is changing so rapidly.

My colleagues, Senators Alexander, Graham, and Carper, and I will introduce an amendment that simply keeps current law in place and offers language to level the playing field for DSL, wireless, cable, and satellite Internet services. Basically, what we are offering will be a 2-year moratorium. We will amend the current definition of the Internet tax moratorium to preclude the taxing of DSL.

Many States today, under the grandfather clause of the tax moratorium, have been collecting taxes on DSL. Several other States, because of a loophole in the definition, have started collecting taxes on DSL connections. What we are proposing--and it is very fair--is that in consideration of this body extending this moratorium for only 2 years, States such as Ohio and others that are now collecting Internet taxes will give them up at the end of a 2-year period. This gives them adequate time to prepare, in terms of their budget, for the loss of the revenues.

Clearly, the States are willing to give up taxes that they are now collecting on the Internet in consideration of not going forward with a permanent moratorium with the definition that is now contained in the bill before us. In other words, the fear of what could happen under the definition of the bill that is before us today in the managers' amendment is so large that they are saying: We will give up that money just so it lasts for 2 years. During this time, we can work on a definition that will make sense.

I believe that is a very fair proposal. It means we will be reducing taxes on the Internet in many of our States that are now collecting taxes.

Last but not least, on October 29, the Wall Street Journal wrote an editorial entitled ``Taxing Your E-Mail.'' The Journal claimed that a few Republicans have decided to dress up as tax-and-spend Democrats for Halloween. The fact is, the Wall Street Journal article completely misstated what we are trying to do here tonight. The reference to taxing e-mail is nonsense.

In fact the Cincinnati Enquirer followed up the Wall Street Journal by saying on October 31, quote:

Anti-tax groups making Voinovich out to be the devil

incarnate are roasting the wrong guy. Voinovich favors

keeping the tax moratorium on Internet access. He helped

negotiate the Internet Tax Freedom Act of 1998, supported its

renewal in 2001 and opposes new taxes on telecommunication

services. And yes, he strongly opposes a tax on e-mail.

In fact, I am going to be introducing an amendment tomorrow that is a Sense of the Senate to make it very clear that this is not about taxing e-mail. I think it is important my colleagues understand that. This is not what this legislation is about.

I am hoping tomorrow we will have an opportunity to vote on this bill and this amendment. I hope my colleagues will be fair enough to understand how serious this matter is to the future of our States and to federalism. I hope we are successful tomorrow with our amendment.

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 227: H. Res. 159. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable vote on rollcall No. 228: H. Res. 195. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 229: H.R. 1465. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 230: S. 222. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 231: S. 273. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 232: S. 763. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 233: H. Amdt. to H. J. Res. 4. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 234: Final passage of H. J. Res. 4. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 235: Motion to suspend the rules and pass H. Res. 231. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 236: on agreeing to H. Res. 257. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 237: Motion to suspend the rules and pass H. Res. 177. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 238: Motion to suspend the rules and pass H. Res. 201. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 239: H.R. 1954. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 240: H. Amdt. 154 to H.R. 760. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 241: Motion to Recommit to H.R. 760. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 242: final passage of H.R. 760. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 243: On Ordering the Previous Question for H. Res. 256. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 244: H. Res. 258. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 245: H. Res. 258. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 246: on passage of H.R. 1474. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 247: S. 222. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 248: S. 273. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 249: H.R. 1610. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 250: H. Con Res. 162. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 251: S. 763. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 252: H. Res. 263 to H.R. 2143. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 253: H. Res. 263 to H.R. 2143. Had I been present, I would have voted ``No.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 254: H. Amdt. 159 to H.R. 2143. Had I been present, I would have voted ``No.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 255: Passage of H.R 2143. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 256: H. Res. 252: Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 257: On ordering the previous question for H.R. 2115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 258: On agreeing to the rule for H.R. 2115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 259: On passage of H. Con. Res. 110. Had I been present I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 260: On passage of H.R. 1320. Had I been present I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 261: H.R. 2350. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 262: H. Amdt. 5 to H.R. 2115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 263: H. Amdt. 4 to H.R. 2115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 264: On passage of H.R. 2115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 265: H. Res. 269 to H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 266: H. Res. 269 to H.R. 1115. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 268: H. Amdt.

168 to H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 269: H. Amdt. 169 to H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 270: H. Amdt. 170 to H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 271: Motion to Recommit to H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 272: Passage of H.R. 1115. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 273: H. Res. 270 to H.R 1308. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 274: Rule for H.R. 1308. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 275: Motion to Instruct Conferees H.R. 1308. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 276: H.R. 2254. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 277: H. Con. Res. 220. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 278: S. 703. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 279: H. Res. 276. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 280: H. Res. 171. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 281: Passage of H.R. 658. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 282: S. 342. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 283: Passage of S. Con. Res. 43. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 284: Previous Question to H. Res. 281. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on rollcall No. 285: H. Res. 281 to H.R 8. Had I been present, I would have voted ``no.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 286: Approving the Journal. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 287: H. Amdt. 171 to H.R. 8. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 288: Passage of H.R. 8. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 289: H. Res. 283 to H.R. 660. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 290: H. Res. 283 to H.R. 660. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 291: H. Amdt. 172 to H.R. 1528. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 292: Motion to Recommit H.R. 1528. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 293: Passage of H.R. 1528. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 294: Kind amendment to H.R. 660. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 295: On motion to recommit with instructions to H.R. 660. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 296: On final passage to H.R. 660. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 297: H. Res. 264. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 298: H. Res. 177. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 299: H. Con. Res. 209. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 300: Passage of H.R. 2465. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 301: Previous Question to H. Res. 293. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 302: Agreeing to H. Res. 293. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 303: Passage of H.R. 923. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 304: H.R. 1460. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 305: On sustaining the ruling of the chair on H.R. 2555. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 306: Sustain ruling of the chair on H.R. 2555. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 307: H. Amdt. 176 to H.R. 2555. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 308: H. Amdt. 183 to H.R. 2555. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 309: H. Amdt. 188 to H.R. 2555. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 310: Passage of H.R. 2555. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 311: Passage to H.R. 1416. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 312: S. 858. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 313: H.R. 2474. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 314: H. J. Res. 49. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 315: H. Con. Res. 49. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 316: H. Res. 199. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 317: H. Res. 294. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 318: On the Hastings amendment to H.R. 2417. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 319: On the Kucinich amendment to H.R. 2417. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 320: On the Lee amendment to H.R. 2417. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 321: H. Res. 299 to H.R. 1 and H.R. 2596. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 322: H. Res. 299 to H.R. 1 and H.R. 2596. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 323: H. Res. 297 to H.R. 1 and H.R. 2596. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 324: Ordering the previous question on H. Res. 298. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 325: Passage of H.R. 2559. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 326: Passage of H. Res. 277. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 327: On approval of the Journal. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 328: H.R. 2596. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 330: H. Amdt.

197 to H.R. 1. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 331: Motion to recommit with instructions to H.R. 1. Had I been present, I would have voted ``yes.''

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 332: Final passage of H.R. 1. Had I been present, I would have voted ``no''.

Mr. Speaker, due to family reasons, I was unable to vote on Rollcall No. 333: On passage of H.R. 2417. Had I been present, I would have voted ``yes.''

Mr. President, I rise this evening to ask my colleagues to support S. 150, the Internet Tax Nondiscrimination Act, and the substitute or managers' amendment that has recently been adopted.

I thank our chairman of the Commerce Committee, John McCain, our commodore, on his great navigational skills as we worked through this measure. I also thank my colleague from Oregon, Senator Wyden, for his great leadership, assistance, and true partnership in trying to get this measure through for greater opportunity for Americans.

I also thank others who are on this amendment, Senators Grassley, Hatch, Sununu, Leahy, Baucus, Boxer, Lincoln, Smith, the high-tech task force chairman, Senator John Ensign, Senator Warner of Virginia, Senator Burns, who is chairman of the Internet Caucus, and the Senator who is in the chair right now, Mr. Chambliss. All have helped work on this reasonable compromise.

There have been a number of concerns to this measure raised by our opponents. We have had several months of negotiations. I am confident the bill as it is presented to us on the Senate floor strikes an appropriate balance between protecting every American from harmful regressive taxes on Internet access while ensuring that necessary protections are in place for State and local governments to maintain their existing revenue base.

The fundamental principle driving this legislation is very simple and clear, and that is the Internet must remain as accessible as possible to all people in all parts of America forever. This was a principle established in the 1998 legislation when Congress passed the Internet Tax Freedom Act and it is the principle I ask all Senators to keep

in mind as we consider this legislation this evening and tomorrow.

My colleagues have heard me say on many occasions that I believe we ought to be promoting freedom and opportunities for all Americans. We need to be advancing ideas, concepts, and policies that help create more jobs and prosperity rather than more taxes and burdens.

The Internet itself is one of our country's greatest tools and symbols of innovation and individual empowerment. In my view, the Internet is the greatest invention for the dissemination of ideas and thoughts since the Gutenberg press. When Martin Luther nailed his 95 theses to the church at Wittenberg, if it were not for the Gutenberg press no one would have read those documents and those thoughts.

So today, we have the Internet for the dissemination of ideas. It is an individualized empowerment zone where individuals are able to access information, communicate, get knowledge, information, as well as engage in commerce. It is a tool for education. It is a tool for information and commerce. And when we are looking at that, I ask, why would there be some who would want to burden that? I think we ought to be trusting free people and free enterprise. We ought to be on the side of freedom, because that is what has allowed the Internet to flourish, rather than the side of those who would want to make this advancement in technology easier to tax for tax collectors.

Some people ask, why is the Federal Government involved in this? Well, heck, if there is anything that is in interstate commerce by its architecture, by its design, by its structure, it is the Internet. One of the great things about the Internet is that it is not confined to boundaries of States or even countries for that matter. For those of us who thought opening up to China was a question that we needed to broach, I thought the fact that the Internet was available and to the extent that the Chinese people could get more ideas from outside of China and not filtered through their government, that was a reason to hopefully open up China for greater prosperity and freedom.

This legislation provides and promotes equal access to the Internet for all Americans. It obviously is designed to protect Americans from harmful and regressive taxes on Internet access services, as well as preventing duplicative and predatory taxes on Internet transactions. Specifically, as this measure is before us now, it does several things.

First, it extends permanently the current Federal prohibition of State and local taxation of Internet access service.

Second, it makes permanent the ban on all multiple and discriminatory taxes relating to electronic commerce. It ensures that several jurisdictions, for example, cannot tax the same transaction simply because the transaction happens to occur over the Internet.

Third, our legislation repeals the so-called grandfathering provision over a 3-year period.

Fourth, we make clear the original intent of the Internet Tax Freedom Act by updating the definition of Internet access to ensure that the moratorium applies consistently to all consumers.

If we are going to exempt Internet access services from taxation permanently, then I believe it makes sense to do so in a manner that applies to all methods of Internet access, regardless of how a consumer chooses to access the Internet, whether by digital subscriber line, otherwise known as DSL connections, by wireless connection, cable modem service, satellite, or dial-up service.

Fifth, and lastly, this legislation makes very clear that nothing in this measure prevents the collection or remittance of State and Federal universal service fees. The Internet tax moratorium that has been in place for 5 years has contributed to the extending of Internet access to over 127 million citizens, about 45 percent of the population of America. Unfortunately, that did expire Friday. Every day that it lapses, there is the opportunity for consumers to be susceptible to pestering new taxes on Internet access services as well as taxes on e- mail, instant messages, spam filters, and even Web searches. For every dollar in taxation added to the cost of Internet access, we can expect to see the loss of utilization of the Internet by thousands of American families, especially lower income families.

According to the Pew Internet and American Life Project, 30 percent of non-internet users say cost is a major reason they remain offline. Additionally, another 43 percent of non-internet users agreed with the statement that the Internet is too expensive.

So, for about half the country who are still not on line, keeping access affordable is vital, and that means keeping access free from State, local, and Federal taxation. The guiding principle is clear, of course: To keep it accessible to all people in all parts of the country forever. This is the position I have held since 1997, since my days as Governor in Virginia when I was one of only four Governors with this position.

I cannot ever envision a time where we believe it desirable for any government, State, local, or Federal, to tax access to the Internet. I cannot envision any time in our future where it will make sense to have multiple taxes on the Internet. Nor can I imagine any time in the future where there ought to be discriminatory taxes or predatory taxes on the Internet.

Yet if the Senate fails to take action or vote for this legislation, such Members of this body will be permitting and in effect advocating taxing the Internet.

There are more people empowered by the Internet today because the Federal policy of the United States has consciously allowed Internet innovators, investors, entrepreneurs, and consumers to remain free from onerous taxation of access to the Internet.

As many of you know, when this was first enacted there were dozens of States and local taxing commissars who were, back then, right in the beginning, imposing disparate taxes on a consumer's ability to surf the Internet. Since the last expiration of the Internet Tax Freedom Act in 2001, some States have begun taxing the high-speed component of broadband Internet access services. They are asserting that certain portions of high-speed broadband Internet access are telecommunications services rather than Internet access and the States are thereby circumventing the original intentions of the law.

Working with Chairman McCain and Senator Wyden and Senator Sununu in the Commerce Committee, we updated the definition of Internet access to assure that all access services, regardless of the technology used to deliver the service, are covered by the moratorium and therefore exempt from State and local taxation.

There have been some misleading statements, some clever hyperbole, and some statements that are just flat-out wrong. I want to set the record straight.

They have raised a number of concerns, the proponents of higher taxes, with this legislation, indicating that we have expanded the moratorium on Internet access to include all telecommunications services making tax free even traditional services like local and long distance telephone communications.

They have also raised a question of whether or not this bill would prohibit States from imposing property taxes, income taxes, or corporate taxes on telecommunications carriers and Internet service providers.

I want Members of this body to understand and be clear on the facts and the truth about this legislation. This bill does not affect traditional voice or long distance telephone services or any other communications service that is not directly used to provide Internet access. This bill, S. 150, does not affect a State's ability to collect income taxes, property taxes, or other corporate taxes, such as franchising fees, that are unrelated to Internet access.

The facts are, S. 150 does not unnecessarily expand the moratorium on Internet access; rather, the legislation clarifies and updates the original intentions of the Internet Tax Freedom Act to include high- speed Internet access services. Only because some States and localities have attempted, and in fact are circumventing the original law by taxing portions of high-speed Internet access, did the definition of Internet access need to be updated.

The impact of broadband and efforts to stop broadband from being deployed by this taxing approach that is going

on, that we are trying to cure, will have a very significant impact on small towns and rural areas. Our colleague, Conrad Burns of Montana, likes to talk about how you have to get broadband out in the country, and he would say there is a lot of dirt you have to dig through just to get from one light bulb to another. The same applies to getting broadband out into the communities and out into the country. If you have higher costs imposed on Internet access and then on top of it all you are putting higher costs on the investment for the transport, that means fewer people in a less populated area will be able to afford broadband, thereby denying them opportunities that one would have, whether it is for information, for education, for knowledge, or for commerce, for small businesses and people who live in rural areas.

Another fact: In this bill it only makes permanent the tax moratorium on Internet access services, which is simply the ability to get access to the Internet. Once a consumer has accessed the Internet, the moratorium does not affect the services that are purchased, used, or sold over the Internet that would otherwise be taxable, even if such services are bundled together with Internet access services.

So, in summary, the fact is, by allowing this moratorium to expire, the Senate has opened the door for States and localities to begin imposing regressive taxes on Internet access services. By taxing Internet access, States and localities are actually contributing, and would be contributing, to the economic digital divide. The more expensive we allow the State and local tax commissars to make Internet access, the less likely people are going to be able to buy these advanced services, such as high-speed broadband connections, Internet protocol software, wireless or WiFi devices, and many other multimedia applications.

At a time when technology, as my friend Senator Wyden has said, and the Internet are growing and improving almost every aspect of our daily lives, where access to the Internet is not a nicety but a necessity for Americans, imposing new taxes on access or levying taxes that discriminate against the Internet as a form of commerce will never be sound policy for America. As a tool, the Internet breaks down economic and educational barriers, leveling the playing field for millions of Americans.

There are those who say it shouldn't be permanent; let's make it shorter. When you talk to business investors--and let's go back to rural and small town areas. When someone is making a business investment they want to have some credibility and stability and predictability as to making these millions of dollars of investment to get into a smaller market. What is going to be our rate of return? When are we going to recoup the tens of millions of dollars it takes to get into these areas?

We just heard an argument on the Agriculture bill about loans to get broadband. It is a lifeline for folks out in the country, in rural areas. There are all sorts of incentives that people are for.

Businesses making those investments have to figure out when are they going to get a return on the investment. If you tax a transport or make it for a short duration of time, they are going to say: Gosh, there are going to be taxes on it in a few years so there will be fewer customers. We just can't risk that investment to get out into those areas.

So, more than ever, I really do believe we ought to listen to good, sound business reasoning, common sense and logic. In fact, most economists and technology experts agree that we need to be encouraging the deployment of the next generation broadband Internet connections and bring our communications infrastructure into the 21st century.

Economists at the Brookings Institution estimate that widespread high-speed broadband access would increase our national gross domestic product by $500 billion annually by 2006.

Failure to pass this legislation with a permanent moratorium and with an updated and clear definition of Internet access like the one this amendment provides, will leave broadband Internet access susceptible and open to harmful taxation. In many States and localities, those taxes could go up as high as 25 percent.

Any additional tax burdens on the Internet will mean additional costs many Americans cannot afford, forcing the poor in our society to reduce or even forego their use of the Internet as a tool for exploration, information, education, and individual opportunity.

More than ever before, when our economy is finally moving forward in the right direction, the people of this country need security with regard to their financial future. Businesses need certainty that prices for Internet access will remain affordable to consumers if they are expected to build out high-speed networks to rural and small-town communities. In a society, indeed a world, where the quality of life and economic power is directly proportionate to one's access to knowledge, we must close the economic digital divide rather than exacerbate it with State and local taxes.

I call on my colleagues to join with the chairman, our commodore, Senator McCain, Senator Wyden, and all of us in supporting the Internet Tax Nondiscrimination Act and permanently extending the Internet moratorium on tax access and multiple and discriminatory taxes. As we vote on amendments to what would be this Internet access tax issue--and there will be amendments--I respectfully ask my colleagues as we look at these amendments to be leaders who stand strong for freedom and opportunity for all Americans.

I thank the Chair.

Madam President, I am very pleased to join with my ranking member of the Military Construction Appropriations Subcommittee, Senator Feinstein of California, in bringing forward for the Senate's consideration the fiscal year 2004 military construction appropriations bill. This is a bipartisan bill which received the unanimous approval of the Committee on Appropriations.

I want to take a moment to say Senator Feinstein is in the Judiciary markup. She is the best ranking member a chairman could ever have. We have a great relationship. We work together well. We see things the same way. And our priorities are the same. So this is very much our bill together, and it would not have been nearly as easy without her wonderful cooperation.

This is a bill that does focus on quality of life for our troops because both Senator Feinstein and I believe it is very important at a time like this, when we are asking so much from our troops, that we do right by them. This bill provides $9.196 billion for military construction, military family housing, and base realignment and closure costs.

This bill is $79 million above the President's budget request, but $1.5 billion below the amount appropriated last year. The budget constraints under which we all are laboring this year did force us to make difficult choices about our spending priorities, but I believe we have crafted a bill that attends both to the President's most pressing requirements and the concerns of Senators.

The bill provides $4.6 billion for military construction, $3.95 billion for military family housing, and $370 million for base realignment and closure.

Our military forces have been severely strained by the extraordinary burdens they have been asked to shoulder in the last several years. They have undertaken nearly 2 years of continuous combat operations in harsh conditions, endured long deployments and reserve activations. They have had to deal with severe disruptions to family life resulting from lengthy separations.

We have asked much of our service personnel and their families; and, for that reason, we have paid special attention in this bill to military construction projects that promote our troops' quality of life.

For example, the bill provides $1.1 billion for 40 new, modern barracks projects; $166 million for the design and construction of new hospital and medical facilities; and $16 million for child development centers to serve our military families.

The intense demands of the past few years have extended well beyond our Active-Duty forces, and no component has borne a heavier burden in that time than our Guard and Reserve Forces who have met the call to duty with a high degree of professionalism.

Unfortunately, military construction for the Guard and Reserve continues to be severely underfunded. The administration's fiscal year budget request for Reserve components was $370 million, a little more than half of what was appropriated last year. This is just inadequate for the task we are asking these components to perform. As a result, this bill increases funding for the Guard and Reserve by 87 percent to $691 million.

This bill differs from the administration's request in only one significant way, and that is in the area of military construction overseas. The budget request included over $1 billion for military construction at U.S. installations outside the United States, much of it destined for facilities constructed for the cold war. For several years, Congress has expressed its concern that our overseas basing structure has not been updated to reflect the realities of the post- cold-war world. Our Nation is dealing with new threats, new strategies, new force structure, new deployment concepts, and new geopolitical realities. Yet a basing structure designed for the cold war endures.

We have questioned the wisdom of continuing to expend taxpayer dollars on overseas facilities that may not be appropriate to the Nation's future military needs. The Defense Department continues to study this issue and has under way an overseas basing and presence study that will lead to, among

other things, recommendations for a major overhaul of the U.S. overseas basing structure. That study is not yet complete. But in testimony before the Military Construction Subcommittee in April, two of the combatant commanders, General James Jones, Supreme Allied Commander Europe, commander of U.S. European Command, and General Leon LaPorte, commander of U.S. Forces Korea, presented their visions for military basing in their respective areas of responsibility. General Jones described a concept for Europe that features fewer large bases, several smaller, more austere bases in forward locations, and greater use of rotational forces in and out of these facilities rather than permanent stationing of large forces with the attendant support infrastructure.

General LaPorte described a vision for Korea in which U.S. forces are consolidated at a greatly reduced number of facilities located further south on the Korean peninsula than at present.

We have been impressed by the combatant commanders' boldness and creativity in reassessing basing needs, and we believe their respective visions hold great promise for a more efficient and effective basing structure that will enhance the ability of the United States to meet new threats.

When fully developed, this vision will provide a sound basis on which Congress and the administration will be able to determine the future of our overseas basing structure. However, at this point the vision has not yet been developed into a comprehensive plan on which decisions to pursue new construction initiatives can prudently be based.

The overseas basing and presence study involves far more than military facilities. According to public statements of Defense Department officials, it will result in a dramatic change in the disposition of U.S. forces abroad, including where they are based, how they operate, how they move to and from their theaters of operation, and even the number of forces deployed in specific theaters.

In various press accounts, administration officials have acknowledged considering new bases in Australia; Navy ships ported in Vietnam; increased U.S. presence in Malaysia and Singapore; bases in Algeria, Morocco, and Tunisia, as well as Senegal, Ghana, Mali, and Kenya; bases on territory of the former Soviet Union; a rotational model for deploying forces overseas; significant reductions to force levels in Germany; a major relocation and possible reformation of forces in the Republic of Korea. Summarizing the extent of the changes under consideration, the Under Secretary of Defense for policy, Douglas Feith, stated:

Everything is going to move everywhere.

If the sweeping changes under consideration are to be implemented, they will require extensive diplomatic efforts both in the nations in which the United States seeks a new presence and in those where it will reduce or reshape its presence. Because a comprehensive plan is not yet developed, we are unwilling to recommend undertaking extensive new military construction projects that would begin the implementation of a plan without a thorough and deliberate review by Congress. We have been particularly concerned about proposed projects in Europe and Korea.

For example, the budget request includes a number of projects in areas in Germany that, according to public statements of the Army and other Department of Defense officials, are likely to see significant force level reductions.

In a June 23 letter updating the status of planning Europe, General Jones said:

We have made considerable progress in determining the

installations required to support theater goals and the force

structure needed to implement our strategy. It is an arduous

process but a necessary one. While I realize fully the

importance of our progress on these matters, the timeliness,

and the effect these decisions will ultimately have on our

fiscal year 2004 military construction projects, I must tell

you candidly that we have not reached the end point of this

process. The changes we are proposing represent the most

significant undertaking to realign forces and basis in

theater in the past 50 years. The decisions made in the

coming weeks will have broad and far-reaching implications;

therefore, it is imperative that we get it right.

General Jones is absolutely right. I appreciate his candor. His statements underscore our concern that we are not yet ready to begin implementing the restructuring of our overseas bases in Europe. We have similar concerns about proceeding too fast in Korea.

In the budget amendment received May 1, the administration proposed moving some $213 million in military construction projects to a single base, Camp Humphreys. However, nearly half of that construction is to occur on land that the United States does not yet control. Although the Korean National Defense Minister has pledged to try to buy the land for our use, he is far from clear that this can occur for these projects to be fully executed in fiscal year 2004. According to a July 7 article in the Korea Times, there is fierce local opposition to the expansion of U.S. presence at Camp Humphreys.

The budget amendment also asked to move a $40 million barracks project from an airfield to Camp Humphreys, but then that was reversed.

There are other examples, but I think this is making it clear that we don't really have a fully thought out and reviewed plan from which we can base the needs in Korea. Evaluated against a backdrop of uncertainty about fundamental aspects of a revised overseas basing structure which the department has not yet proposed, the Defense Department's overseas basing and presence plan is not yet sufficiently mature to enable the Senate to commit to extensive new construction. The failure to fund these projects at this time does not indicate dissatisfaction with the general direction in which the Department is headed. We support the direction. But we do believe that Congress should know the extent of the restructuring and the price tag before we determine our Nation's priorities. It would be premature to begin new construction at this time in these areas. We look forward to receiving and evaluating the Department's full recommendations once they become available and taking the time to consider these changes.

Reflecting our continuing concern about this issue, our bill includes a provision establishing an independent commission to thoroughly study the structure of our overseas military facilities and advise Congress on its conclusions. This commission, proposed by Senator Feinstein and myself, would provide Congress with an independent view of the Nation's overseas basing requirements to help inform our decisions about the restructuring of our facilities.

The report accompanying this bill also directs the Defense Department to submit several reports that will aid Congress in its oversight role, including a report on the feasibility of privatization and the use of commercial building practices in barracks construction, a study of the impact of privatized housing on local school districts, and a report on the Department's activities related to perchlorate, a chemical used in solid rocket propellant that has been found in drinking water supplies in 29 States. Senator Feinstein has more to say on perchlorate, but I want to say, this is a concern of mine as well.

While a national standard for perchlorate levels has not yet been established, it is important that the Department of Defense be prepared to deal with this containment at defense installations once a standard is agreed upon.

All of the projects added to the bill have been carefully vetted by the military services. All are top priority for installation commanders, and all are included in the services' future years defense plan.

Madam President, the bill before the Senate is a bipartisan product that was approved by the Appropriations Committee on a vote of 29 to 0. I am pleased to offer it for the Senate's consideration.

Madam President, I thank the kinder and gentler Senator from Arizona. I am very pleased that he looked at our bill and found that we did meet the criteria because that is exactly what we intended to do.

The kennel is for dogs at an Air Force base. The dogs are security dogs, and they do need a place to stay.

At Elmendorf Air Force Base. I think the Senator knows that is in Alaska. Dogs in Alaska need a place to stay, too. Maybe it is cold up there and they need shelter. I think it is certainly legitimate.

With that, we did work hard to make the priorities that we thought were right for our military personnel. No one deserves better treatment right now than the military personnel of our country. I thank the Senator from Arizona for his continuing interest in assuring that our military personnel have a quality of life. That has been his hallmark here.

I thank, once again, the chairman of the committee, Senator Stevens, and Senator Inouye, the ranking member, Senator Byrd, Senator Feinstein, my ranking member, and our respective staffs. I am very proud of the work we did on the bill, and I do hope our military personnel do see better health care facilities, better barracks, better living quarters, and from this legislation I think they will.

Madam President, to clarify the record, and before the Senator from Arizona turns into the ``Incredible Hulk,'' there was no managers' amendment.

Madam President, before we move off this bill, I so appreciate the chairman's remarks. We could not have done it without our excellent staff work. On the majority staff, Dennis Ward has done an incredible job of research. He is the most thorough person we could have on the committee. I appreciate him very much.

Also, Christina Evans and B.G. Wright on Senator Feinstein's staff, without their working relationship being so good, we could not have done so well. I wanted to add that to the record before we moved away from the bill.