Internet Tax Ban Extension and Improvement Act

Madam President, I would like to address my remarks for the next few minutes on the discussion that we have been having for the last 6 months in this body on the question of how to deal with the phenomenon of high-speed Internet access. It is the fastest growing new technology in America, according to a New York Times article last week. We have some differences of opinion about how to proceed in terms of the taxation and regulation of this phenomenon, not only what it should be but whether the Federal Government, the State government, or local government should do it.

The leader has asked all of us who have different opinions to work together. We have tried that. We have worked hard. Senator McCain, chairman of the Commerce Committee, has been especially involved. I am grateful to him for that. Senator Allen and Senator Wyden, who have principled positions on this discussion, have worked hard to try to compromise on the issues, as have I and my colleagues, but we simply have a difference of opinion.

Now, today, we begin debating a motion to proceed and to move down a track in the Senate that, I believe, is the wrong track. I welcome this opportunity and I thank the leader for giving us a chance to have a full debate, which we will be having this week. I am confident that by the time we are finished the Senators who have had a chance to spend more time on this, and that the citizens of the country who have had a chance to understand more clearly what we are talking about, and the State and local officials who will see exactly what we are doing which might affect the future of State and local governments in America will suddenly say there is a little more to this than meets the eye and that we will come to a good conclusion.

I believe it was President Harry Truman who had on his desk a sign that said, ``The buck stops here.'' What we are about to do today and later this week with the consideration of S. 150 is to begin a series of votes about passing the buck. I looked on the Truman Presidential library Web site to see why Harry Truman, who was noted for plain speaking, liked the phrase ``The buck stops here.'' Here is what the Truman Web site says:

The saying ``the buck stops here'' derives from the slang

expression ``pass the buck'' which means passing the

responsibility on to someone else. The latter expression is

said to have originated with the game of poker, in which a

marker or a counter, frequently in frontier days a knife with

a buckhorn handle, was used to indicate the person whose turn

it was to deal. If the player wishes to deal, he could pass

the responsibility by passing the buck, as the counter

came to be called, on to the next player.

That would be my text today, if I were preaching a sermon, because we are about to vote about passing the buck. By passing the buck, if we were to do this, we would create permanent confusion about how to regulate and tax the fastest growing new technology in America--high- speed Internet access. We would create a permanent tax loophole for the high-speed Internet access industry and the telecommunications industry, and the high-speed Internet access industry, so far as I can tell, must already be the most heavily subsidized in America by Federal, State, and local laws. We would be voting for higher taxes, not lower taxes, because if you order taxes to be lowered on telecommunications or high-speed Internet access, you are raising taxes on local property taxes or local sales taxes on food or local corporation taxes on manufacturing companies that might be struggling to keep from moving their jobs overseas.

It is a big trick to say this is a bill that lowers taxes. It does create a tax loophole for one industry. But what cost does that mean? That just means everybody else pays higher taxes.

Aren't a lot of people going to be surprised if this should be enacted and suddenly they find their mayor and their Governor raising local property taxes, raising local sales taxes on food and imposing a car tax again? That is what happens. You lower this tax and you raise that tax.

Then the worst thing to me as a former Governor--and there are many in this body who have been Governors, who have been State tax commissioners, who have been mayors, who have been State treasurers, who have been local officials--the worst thing to me is we are breaking our promise about doing no harm to State and local governments, particularly on my side of the aisle, the Republican side of the aisle.

We were elected promising to do no harm to State and local governments. I will be talking a lot about that this week because I believe in that. I heard it. It wasn't just from me.

In 1994, the Republican revolution began to occur. In 1995 and 1996, we had Presidential elections. When the Republican Party gained control of Congress in 1995, the first thing it did in this body was pass S. 1.

The Presiding Officer very well knows the distinguished Senator who was the majority leader at that time. His name was Senator Bob Dole of Kansas. He carried around in his pocket the tenth amendment. He said S. 1 means no more unfunded mandates.

If we vote to put into motion S. 150 and the companion measure that passed the House, we will be imposing a massive unfunded mandate on State and local governments. We will be breaking our promise.

It is rare that the Senate has had an opportunity to do so much harm with one vote. It is very difficult to find a situation where you can cast one vote and create permanent confusion about the fastest growing technology and a permanent tax loophole for the most subsidized technology I can find. With that one vote, you could also impose higher taxes, local property taxes, car taxes, taxes on food, and sales taxes, and break your promise to State and local governments to do no harm.

There is a better way to go about this. I believe that I and my colleagues have suggested that. Senator Carper and I and a group of nine other Senators of both parties have said: Wait a minute. Let us do this a different way. There is a way we can vote to ban new taxes on Internet access for 2 years. We can provide the Senate time to consider what to do about this phenomenon of high-speed Internet access growth, and we can keep our promise to State and local governments.

Rarely has there been a chance to do so much good with one vote, and that would be to pass the Alexander-Carper compromise, or take the original moratorium of 1998 and enact it for 2 more years. That would be a vote for no taxes, it would be a vote for no unfunded mandates, and it would be a vote for time to study it. That would be the wise and prudent course. That will be the argument we will be making today.

Today, we begin a series of procedural motions--that is the way the Senate works--designed to give us a full opportunity to consider and discuss these issues.

Senators Allen and Wyden have offered S. 150 which will be coming up this afternoon. I am under no illusions about the fact we will be getting to it even though I think it is moving us in the wrong direction and along the wrong track. Senator Carper and I, and nine others, have offered the compromise I just suggested. I believe that would be the best way to go--a 2-year extension of the current ban on State and local taxing of international access. We did it in 1998. Congress did it in 2000. Congress can do it again in 2004.

By voting to extend the original moratorium on taxation for 2 more years, Members of Congress will be casting a vote against taxing Internet access--casting a vote for allowing time to consider what the best long-term solution is and casting a vote for doing no harm to State and local governments. I believe, if the House were to agree with us, we could get the legislative action we desire in this session.

I am prepared to move ahead, as I have been all year, and I have suggested for 2 years ways we could move ahead. I am for banning taxation for the next 2 years. I am willing to support that. I am for no unfunded mandates and I am for time to study. Prospects for legislative action might have been different this year, if the House of Representatives had sent to the Senate a different piece of legislation to begin with instead of sending legislation to extend the current moratorium.

Moratorium means a temporary timeout. That was the idea in 1998. Everybody said we have this new thing, the Internet. In 1998, when the moratorium was passed, I would wager that almost no one in the Congress had ever heard of high-speed Internet access. The only kind of Internet access we were using was AOL which hooks up to your dial telephone. But we said--and I agreed with this and I supported this--that we don't really understand what this is. This is new. Let us just put in a temporary timeout. Then we will decide what to do. The assumption, in my mind at least, was that as the Internet industry grew and became mature, it would pay the same taxes as everyone else. We don't say the Senator from North Carolina and the Senator from Tennessee will pay taxes which the Senator from Wyoming will not pay. We have to have an awfully good reason for that. We believe in the fair and equitable distribution of taxes.

We are talking about whether the Internet industry should pay the same sales taxes and the same kind of business taxes that everybody else is paying or whether we should lower their taxes permanently and create a great big loophole for them, subsidize them some more, and then have higher taxes for everybody else.

The House didn't send us another temporary timeout which would have been the third on State and local taxation of Internet access. The House sent over a permanent ban. But it was more than that. Instead of banning State and local taxation of Internet access--which would mean my relationship to the Internet service provider, the same as my relationship to a telephone company or a cable company or a satellite TV company--they broadened the definition of Internet access.

Whether intentionally or unintentionally, this train got on the wrong track, running completely out of control. Maybe it was because this is a very complex subject, we have a lot going on here, and not many people were paying close attention, but it got out of control.

Basically, what started out as a modest benefit to consumers, a temporary timeout while we could see what was happening, the House turned it into a permanent big tax loophole for the Internet access industry, the telecommunications industry. Then, on top of that, they turn around and send the bill to State and local governments. We do not do that much. We debate taxes all the time. We reduce taxes. Sometimes they go up, but we do it ourselves. I did not know you could do this.

I ran for the Senate the same year as the Presiding Officer the Senator from North Carolina. If I knew the Senate could do this, I might have run for the Senate promising to make a Federal law abolishing local property taxes as my way of encouraging home ownership, or I might have run for the Senate promising to pass a Federal law to abolish State car taxes as a way of encouraging transportation to work, or I might have run for the Senate promising to pass a Federal law abolishing State taxes on food because there are a lot of hungry people. But that would have been a trick on the voters. The voters would have caught up with me and said, Wait a minute, Lamar, who are you trying to fool? You cut our sales taxes, and now we will have an income tax in Tennessee. Because if sales taxes go down, this must go up.

I suppose one could say we will close a few schools, raise tuition, and cut the cost of Government. But it means lower taxes for one group of taxpayers and it means higher taxes for another. That is what we have over here.

Sometimes it has been said these figures that have been used are not accurate, so I have some detailed information for the Congressional Record. For example, the bill sent to the Senate from the House of Representatives in the name of a simple, permanent ban on the little connection we make to the Internet access would do this: One, it would put at risk $10 billion collected annually in telephone transaction taxes in the State and local governments. State and local governments collect more than $10 billion annually in taxes on telephones. If we tell them they cannot do that, what do they do? Senator Feinstein has said, and I am sure she will say later this week, she has 125 cities and counties in California that say this might interrupt 5 to 10 percent of their local budgets. We cut one tax and they raise the property tax. That is not what we are supposed to do. We promised not to do that in 1995.

There are 62 Senators serving here today who in 1995 voted to pass the Unfunded Mandates Act which said no money, no mandate. If we break our promise, throw us out. I want to keep the promise.

The first problem with the House bill is $10 billion in telephone taxes. The second problem is $7 billion annually in business taxes currently collected. I have a source from each one of these. The first is the Congressional Budget Office. The source for the $7 billion is in the Multistate Tax Commission memoranda and a letter from the Congressional Budget Office. The third unfunded mandate in the House bill, half a billion annually in business taxes currently collected on the Internet backbone. We will hear more about that this week. The backbone is the infrastructure of the Internet. The same kind of business taxes on the backbone is like business taxes on any other business. Nobody likes to pay taxes, but are we going to exempt them and make everybody else pay? Four, cost to State and local governments was $80 to $120 million. On grandfathered States--that means 11 States were permitted after the 1998 temporary timeout moratorium; there are about 16 States already taxing dial-up Internet service so they are permitted to keep doing that--that is $80 to $120 million out the window, and another $40 to $75 million in 27 States where they are taxing the part of the Internet access provided by the telephone companies, DSL.

Finally, the language of H.R. 49, the bill that came over from the House, would hurt universal service fund fees and September 11 service fees. That is very important in Alaska, rural North Carolina, and Tennessee. If there is less money in the fund, there is less money for September 11 and universal service.

This bill came to the Senate like a freight train. Nobody voted against it. It passed by consent order. What did it do? It came over wearing a dress that said, ``I am Ms. Internet Access Tax Ban.'' But it actually was $10 billion in telephone taxes, $7 billion more in business taxes, half a billion in business taxes, sales taxes of a couple hundred million a year, universal service fund fees, September 11 fees, all of that which is the responsibility of State and local governments. We say, here, you cannot collect. That is an unfunded Federal mandate of the worst sort.

Now after some discussion, the bill has gotten a little better. Senator Allard, to his great credit, has worked hard. There may be no better-humored Member of the Senate.

He and I joined in a debate at the Heritage Foundation on a minority of principle. We had a good debate and discussed the issues. He improved the bill some. There are fewer unfunded mandates.

I will be asking unanimous consent at the end of my speech to have printed

in the Congressional Record the unfunded Federal mandates in his bill, S. 150. Still, as far as I know, his bill threatens $3 to $10 billion in telephone taxes currently collected. He and I have said to each other we do not intend to do that. However, that was several weeks ago and we have been working hard to write language we agreed on that expressed our mutual intention. We have failed so far.

No. 2, his legislation continues to say to State and local governments, you cannot collect half a billion a year in business taxes that are currently collected on the Internet backbone.

No. 3, his legislation would phase out the sales taxes State and local governments are currently collecting on Internet access. So S. 150 continues down the wrong track. It continues to provide a big subsidy to the fastest growing technology already heavily subsidized.

How much does it cost the Federal taxpayer? Not a penny. Not a penny. We will send the bill to Governors and mayors and local governments and let them raise property taxes, let them raise sales taxes on food, let them worry with all the other unfunded mandates and add this right on top of it. That is what we are doing. We are passing the buck.

I ask unanimous consent at the end of my remarks I be allowed to have printed in the Record the unfunded Federal mandates on H.R. 49 first, and unfunded Federal mandates on S. 150 next.

Madam President, there is no doubt this is an unfunded Federal mandate. We can talk about that more this week. Some of my colleagues on my side have come up and said that does not sound like an unfunded mandate. I thought an unfunded mandate was when we told you you had to do something and pay for it. But if I tell you you have to stop doing something, that you cannot collect that tax, that is a cost I have imposed on you. If I and the Congress say to Governor Alexander, in Tennessee, ``Stop collecting property taxes, stop collecting sales taxes,'' then I have to go think of some other tax--lower taxes here; higher taxes there. Nothing makes local officials madder than some Member of the U.S. Senate or Congress to come up here and have some big idea and pass a law, and take credit for it--lower taxes on the Internet--and then send the bill home to them and then that same Member of Congress or Senator is usually down to the district the next weekend making a big speech about local control. Nothing gets the blood up in a Senator or Governor or mayor or county commissioner more than that, and that is exactly what we are doing.

If the Congress wants to create a big, additional tax break for high- speed Internet access, then Congress should pay for it and not send the bill to State and local governments. I think we, as Members of Congress, ought to do as Paul Harvey says, and tell the rest of the story: If we lower your taxes on Internet access, we are going to raise your property taxes or your car taxes. Sure as the world, it is going to be our responsibility. We can call this the Raising the Local Property Tax Act of 2004 or the Car Tag Act of 2004 or the Sales Tax on Food Act of 2004 or the Raise the Corporate Tax on Manufacturing and Send the Jobs to China Act of 2004. That is what we will be doing.

One of the other issues I hope we talk about this week is whether there needs to be an additional Government subsidy for high-speed Internet access on top of the billions already provided by Federal, State, and local governments.

According to the Congressional Research Service, there is already at least $4 billion in Federal tax subsidies to encourage the use of high- speed Internet access. I have a report from the Alliance for Public Technology. I will not inflict its length on the Congressional Record today, but it is filled with State and local programs to encourage the growth of high-speed Internet access--dozens and dozens of State and local subsidies, in addition to the Federal subsidy to encourage the spread of high-speed Internet access.

Why is there a need for more subsidy at all when the New York Times reported, last week, that high-speed Internet access is the fastest growing new technology in America? It is growing at an astonishing rate. According to a Congressional Budget Office report in February, the United States has the highest number of broadband subscribers-- ``broadband'' is another name for high-speed Internet access--at 19.8 million. It is probably a lot higher today.

An April 19 story from the Associated Press tells us that a new study by the Pew Internet and American Life Project has found that almost one-quarter of all Americans--more than 48 million people--have high- speed Internet access at home. This is two out of every five Web users who have it at home. The same study showed that more than half of Americans have it at work. CBO told us, last December, that 88 percent of all ZIP codes have at least one high-speed subscriber, and 29 percent have access to more than five.

In September of 2002, the U.S. Department of Commerce told us consumers are adopting broadband technologies at a faster pace than CD players, cell phones, color TVs, and VCRs during the same period in their development. CBO, the Congressional Budget Office, reported, in December of last year, that cellular phones took 6 years from their introduction to reach 7.5 million subscribers; high-speed Internet access reached 7.5 million subscribers in half that time.

Then, why do we need additional taxpayer subsidy? Why do we need to say to these folks: You pay less taxes and the rest of us will pay more? You can barley pick up a newspaper today without reading about some new initiative from the private sector offering high-speed Internet access.

According to CBO, from 1996 to 2001, the four largest telephone companies increased their investment in broadband technologies by 64 percent. Cable companies increased their investment by 68 percent in the same period.

Now, sometimes this discussion makes my head hurt because high-speed Internet access is a subject that is unfamiliar to most of us, and you almost have to warm up in order to be able to talk about it and understand the complexities of what is going on. But, in effect, it is very simple: It is just faster access to the Internet. It can be provided in lots of different ways. Your cable company will sell it to you. Your telephone company will sell it to you. There is a nice young woman who comes on your direct satellite television and she will sell you high-speed Internet access.

There is another way we might get it. There may be more. Things are changing. But your electric company may sell it to you over electric wires. There is a lot of talk about how we need to create more and more subsidy so we can reach more and more Americans, that we will have people left out. Well, thanks to the expansion of the rural electrification system in America during World War II, almost every American has an electric wire somewhere near them. Electric companies have begun to offer high-speed Internet access service.

Madam President, I have an article from the Washington Times of April 5, 2004. I ask unanimous consent that this article be printed in the Record, in the proper sequence, following my remarks.

According to this article--and we will be talking about this more this week--according to the Federal Communications Office of Engineering and Technology, having another major player--the power companies--has helped to bridge the digital divide. The power companies have the infrastructure to make broadband available nationally.

There are a lot of utilities out there that really, really

want to do this, [says the head of another firm].

It is being offered today in Manassas, VA. The city of

Manassas offers high-speed Internet access through their

electric company for $26.95 a month.

Customers typically pay $30 to $40 a month for DSL service

and $40 to $50 a month for Internet access over cable.

If we are really talking about taxes on Internet access, we are only talking about $1 to $3 a month, for most Americans, that they would save if we Senators and our fellow Members of Congress go home and say: Look at us. We just banned State and local taxation of

Internet access. Well, that will save you $1 to $3 a month. That is not what they are doing, though. They are exempting a whole industry from taxation that most industries pay. But for those who worry about whether high-speed Internet access is going to be available to every single American, it will be available from your electric company soon.

Now, there is another phenomenon we should talk about in terms of whether we need to have a subsidy. All this growth is happening, just as it should. We have a promarket economy. Traditionally, we do not pick economic winners and losers. That is what they do in Japan. They do it a lot more than we do. Our economy is stronger and better than theirs because the Government does not do as good a job, we believe, at picking winners and losers as the free market does. That is, at least, what a great many of us over here on the Republican side traditionally say, that we do not like industrial policy. We do not like picking and choosing winners and losers.

So we asked the Congressional Budget Office, Congress did, last year, about this. CBO reported to us, Congress:

[T]he broadband market is booming. . . . [N]othing in the

performance of the residential broadband market suggests that

federal subsidies for it will produce any economic gains.

Yet here we are, getting ready to spend a whole week sending billions of dollars more in subsidies to the high-speed Internet access market. Why are we doing this? To even encourage broader use of it? Well, I am not sure it will have that effect.

This is an example from the Atlanta Constitution Journal of September of a couple years ago. It is a little old, but it is good information.

In LaGrange, GA, they give away high-speed Internet access for free. So we can ban taxation. We can keep Gwinnett County from imposing a dollar tax on your high-speed Internet access in Georgia, but we won't be able to do that because they give it away for free. And what has happened? Despite the fact they give it away for free, only half the city has subscribed a year later. A lot of people didn't want it. This story tells why.

I ask unanimous consent this article from the Atlanta Constitution be printed in the Record following my remarks.

It is an interesting article. It is like a lot of other things. Just because we in Washington think everybody in America ought to have high-speed Internet access tomorrow doesn't mean they will take it, even if we give it to them. So then why should we give the telecommunications industry another big subsidy to offer high-speed Internet access to people who are already getting it free and won't take it?

Finally, just in case Congress should, in its wisdom, decide to grant an additional subsidy to high-speed Internet access, the first thing we should do is make sure Congress pays for it and doesn't send the bill to State and local governments. The House bill and the Allen-Wyden bill, S. 150, which this motion to proceed is about, expressly violate the Budget Act which was amended in 1995 by the Republican majority, enthusiastically. And President Clinton signed it. Sixty-two Senators now serving in this body voted for it, and 300 Republicans stood on the Capitol steps in late September, early October, right before the election that produced the Contract with America and the first Republican Congress in a long time, and this is what we said: Our party, no money, no mandate. If we break our promise, throw us out.

This is about the Congress keeping its promise. I have a great many speeches that say in words more effectively than I how important avoiding an unfunded Federal mandate is. Most of them were made by Members of this body. There will be an opportunity to hear those speeches again this week because they were good in 1995, and they are good in 2004.

There is one way to provide a further subsidy to encourage the use of high-speed Internet access, if we think it is necessary, that would make a lot more sense than the various proposals that have been offered so far. That, interestingly, is the Texas plan. It was the plan authored by our President, George W. Bush, when he was Governor of Texas. It is very simple. It is aimed at consumers, not big companies. In 1999, Governor Bush signed a law exempting the Texas State sales tax on Internet access up to the $25 the consumer paid each month. In other words, there is no State tax in Texas on the first $25 you pay for Internet access.

We just heard that in Manassas, VA, it doesn't cost you more than $25 to get Internet access from your power company. So you don't pay any tax on Internet access in Texas. The Governor suggested to the Congress some time ago that if Congress were bound and determined to give another big subsidy to the telecommunications and high-speed Internet access industry, do it this way. Use Governor Bush's idea; use the Texas plan. Then I would say we ought to figure out what it cost State and local governments and reimburse them for it.

It is ironic that last year we stood here and cried about the condition of State and local governments and sent a $20 billion welfare check to the States. This year we are taking credit for lowering taxes on Internet access $1 a month and sending the bill to State and local governments. I suggest if we really want to consider a Federal law that affects State and local taxation of Internet access over the long term, we ought to look at President Bush's idea when he was Governor of Texas. Then I would argue it is up to us to decide what tax we are going to raise to pay the bill, or are we going to increase the deficit or are we going to cut services, because that is precisely what the mayors are going to have to do. That is what the Governors are going to have to do, and the county commissioners are going to have to do.

If everybody would go home 1 week and ask, How would you like one more unfunded mandate to deal with along with all the others, I think they would get an earful. At least I do when I go home.

I look forward to this week. I hope this is the beginning of a constructive debate. I hope the end result is that we reject the proposal we are moving to proceed on this afternoon. Those are proposals that would create permanent confusion in this complex area of trying to deal with the growth of high-speed Internet access that would create an unwarranted additional tax loophole for one of the most heavily subsidized industries in America, the high-speed Internet access industry; that would create higher taxes because when you order taxes lowered on some people, they are going up on others; and that would break a promise this Congress made to State and local governments 9 years ago that we would do no harm, that we would not pass any more unfunded Federal mandates.

What we should be doing is what we are doing in other parts of the Congress and in the courts and in the Federal Communications Commission. The chairman of the Commerce Committee, Senator McCain, has already held a hearing about high-speed Internet access, its regulation, and its taxation, and tried to sort out what to do about it since it was not envisioned by the Telecommunications Act of 1996. The Senator from Alaska, Mr. Stevens, has said several times that he thinks we need to revisit the Telecommunications Act and do this in a comprehensive way.

The Chairman of the Federal Communications Commission, Michael Powell, has talked about the importance of digital migration, high- speed Internet access. We will be able to carry to our homes movies, e- mail, all sorts of services. It is wonderful. But when it does that, it may have the effect of wiping out 5, 10, 15 percent of the State and local tax base. We should think about that before we do that.

Among all of the principles we need to discuss, one of those is federalism, the improper relationship of strong State and local governments to the Federal Government. We should not slam through like a freight train a permanent tax loophole for this industry without carefully considering the long-term consequences to State and local governments and the parks and the schools and the universities and the health care and other services they are expected to provide.

A vote for the legislation that came from the House and for S. 150 or anything like it is a vote for permanent

confusion, a vote for unwarranted tax loopholes, a vote for higher taxes, and a vote to break a promise.

A vote for the Alexander-Carper compromise is a vote to ban taxes for another 2 years, to extend the moratorium, extend the temporary timeout. It is a vote against taxes. It is a vote against unfunded mandates because it does no more harm to State and local governments. And it is a vote for a reasonable period of time, up to a couple of years, for us to thoughtfully consider what to do.

Madam President, I am new to this body, but I have watched it for a long time. I had my first opportunity to work in it when the Senator from North Carolina and I both came to Washington a few years ago. I have great respect for the wisdom here and for the rules of this body. They offer us a chance to deliberate a little longer than our friends in the House are able to, and sometimes that is important to do. I believe it is on this issue.

I am ready to move, ready to come to a conclusion. There are at least a couple of ideas out there that will get a legislative result this week if we would like to do it. But I am not ready to vote for permanent confusion, another big tax loophole, higher taxes, and I am not ready to break our promise to State and local governments about unfunded mandates.

I ask unanimous consent to have printed in sequence following my remarks the following articles:

One is a November 4, 2003, editorial from the Washington Post. The Senator from Ohio, Senator Voinovich, brought this to our attention at that time, saying this 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.

Madam President, I ask unanimous consent to have printed in the Record an editorial from the Dallas Morning News. ``Congress must get this right,'' it says in its last sentence, ``and a 2-year moratorium with all new Internet access fees will give Congress enough time to sort through the issue.''

Madam President, I ask unanimous consent to have printed in the Record a letter from Commissioner Loren Chumley from the Department of Revenue from the State of Tennessee. She points out Tennessee is now not taxing, not imposing a sales tax on Internet access because our State law doesn't permit it. In fact, the direction of things has been that States have repealed their taxes on Internet access. States do things like that. But this points out in very clear terms how important it is for our State, which doesn't have an income tax--how important it is for us here not to try to tell them what taxes to collect and what services to provide. Again, I ask unanimous consent that that be printed in the Record.

Finally, there are two articles which are a little long, but they are important. I know Senators and staff members will bring their attention to this subject, and we know we will be debating it for the next several days, and that truly we will be considering it for the next couple of years as the Commerce Committee wades through all of the issues surrounding digital migration and, hopefully, come to a comprehensive approach toward how we approach taxation and regulation--I hope minimal taxation and regulation, but appropriate taxation and regulation of high-speed Internet access, and how we divide that among the various governments. These are the best two articles I have found that help explain the history behind the Internet access tax moratorium bill and the issue before us.

The first is by the Center on Budget and Policy Priorities, dated March 15, 2004, entitled `` The Alexander-Carper Internet Access Tax Moratorium Bill, S. 2084: a True Compromise That Substantially Broadens the Original Moratorium.''

I point out that the leader asked us who are opposed to this to compromise, and we have. The Alexander-Carper legislation is broader than the original moratorium, and it levels the playing field so all providers of high-speed Internet access are treated the same--at least so far as the Congress is concerned--on the last mile between the user of high-speed Internet access and the provider.

I ask unanimous consent that the article's summary be printed in the Record in sequence following my remarks.

Finally, I want to offer another recent article by Harley Duncan and Matt Tomalis, from the Multistate Tax Commission, entitled ``The Forgotten First Sentence.''

The definition of Internet access is what is causing a lot of the problem here. We hear a lot about that from the Senator from Ohio and those on both sides of the issue. The problem is, the way the bill is written, it doesn't focus only on the consumer and provider of Internet access, it goes way back up the line and bans the State and local government from collecting taxes on the whole industry, and a whole variety of services that are now part of the State and local tax. Nobody wants to pay taxes on anything, but if we ban those taxes, we raise these taxes. This article helped us to clearly understand how the definition of Internet access is the problem here.

I see the Senator from Ohio, a former chairman of the National Governors Association before he was a Senator. He can speak with authority about what happened in 1994 and 1995 because he was a national leader in the movement to persuade Congress to stop unfunded Federal mandates and to pass the Unfunded Mandate Reform Act, which amended our Budget Act. He is a principled man and I am delighted to be working with him on this issue and on others.

Again, I thank the leader for setting in motion the series of procedural steps that will give us a chance to fully debate this issue this week. I thank Senator Allen and Senator Wyden for their courtesies and patience as we worked on an issue we disagree about. I look forward to a full discussion and, I hope, a temporary 2-year timeout to give us a chance to think about that which bans taxes for 2 more years, but keeps our promise and does no harm to State and local governments.

I yield the floor.

Exhibit 1

Unfunded Federal Mandates Created by H.R. 49

1. $10 billion annually in telephone transactions taxes

currently collected--under H.R. 49, the telecommunications

industry could be exempted from the collection of state and

local taxes on gross receipts taxes, sales an use taxes, and

other telecommunications transactions taxes. As the

telecommunications industry offers more and more of its

services over the Internet, more and more of the industry's

revenues could be tax exempt. Cost to state and local

governments: $10 billion annually. Source: Letter from

Congressional Budget Office, February 13, 2004.

2. $7 billion annually in business taxes currently

collected--The taxes preempted in H.R. 49 go beyond taxes on

access by customers to the Internet to include income,

property, and other business taxes levied on

telecommunications companies. Cost to state and local

governments: $7 billion annually. Source: Multistate Tax

Commission Memorandum, September 24, 2003; Letter from

Congressional Budget Office, February 13, 2004.

3. $500 million annually in business taxes currently

collected on the Internet ``backbone''--Under H.R. 49, states

could not continue to tax some business transactions such as

business-to-business transactions between Internet service

providers and telephone companies. Cost to state and local

governments: $500 million annually. Source: Federation of Tax

Administrators' Memorandum, November 10, 2003.

4. Sales taxes on Internet access currently collected--

Under H.R. 49, states that are now collecting taxes on

Internet access could not continue to do so immediately upon

the bill being signed into law. Cost to state and local

governments ``grandfathered'' by the original 1998 Act: $80-

120 million per year. Cost to state and local governments (27

states) imposing taxes on charges for the portion of DSL

Internet access services that they do not consider to be

``Internet access'': $40-75 million per year. Source: Letter

from Congressional Budget Office, November 5, 2003.

5. Universal Service Fund fees and 911 service fees--The

language of H.R. 49 would prohibit the federal government

and/or states from imposing or collecting fees on

telecommunications offered over the Internet. As telephone

service migrates to the Internet, universal service funding

and funding

for the provision of 911 and E911 service will be reduced as

traditional telephone sales revenue drops. Cost to state and

local governments: $3-4 billion. Source: Congressional

Research Service; Letter from Congressional Budget Office,

February 13, 2004.

Unfunded Federal Mandates on States (S. 150)

1. $3-$10 billion annually in telephone taxes currently

collected--Under the moratorium, states may not be able to

continue to tax telephone calls if they are made over the

Internet. Cost to state and local governments: within five

years losses in telecommunications revenues could rise to $3

billion per year; ultimately, state and local revenue loss

could be $10 billion per year. Source: Letter from

Congressional Budget Office, February 13, 2004.

2. $500 million annually in business taxes currently

collected on the Internet ``backbone''--Under S. 150, states

could not continue to tax some business transactions such as

business-to-business transactions between Internet service

providers and telephone companies. Cost to state and local

governments: $500 million annually. Source: Federation of Tax

Administrator's Memorandum, November 10, 2003.

3. Sales taxes on Internet access currently collected--

Under S. 150, states could not continue to collect sales

taxes on Internet access after the three-year grandfather

period. Cost to state and local governments ``grandfathered''

by the original 1998 Act; $80-120 million per year. Cost to

state and local governments imposing taxes on charges for the

portion of DSL Internet access services that they do not

consider to be ``Internet access'': $40 to $75 million per

year. Source: Letter from Congressional Budget Office,

November 5, 2003.

Exhibit 2

[From the Washington Times, Apr. 5, 2004]

Electric Companies Begin Offering Broadband Service

(By William Glanz)

Sean Porter's high-speed Internet connection doesn't come

through a cable-television cord, a telephone line or from a

satellite.

An electrical outlet powers the broadband connection at the

Manassas architect's firm.

``The greatest advantage is that we only need to have an

outlet to use it,'' Mr. Porter said.

Manassas is the second city in the nation, where broadband

service over power lines became commercially available. City

officials there began marketing the service in February.

Today, only about 300 U.S. consumers pay for high-speed

Internet access over power lines, but this new method of

delivering Web content could jolt the market for Internet

service.

Allentown, Pa., and Cincinnati are the only other U.S.

cities where residents are paying for the new high-speed

Internet service, but electric companies from North Carolina

to Hawaii are testing the service or plan to begin a pilot

project. Federal regulators hope broadband access over power

lines becomes widely available, especially in rural areas.

In Manassas, 60 homeowners and a handful of businesses have

Internet access through power lines. Another 1,200 homeowners

have asked to be hooked up. That's nearly 10 percent of the

city's 12,500 homes.

By the end of the year, broadband over power lines could be

available to all Manassas residents. It would be the first

U.S. city where the new technology is available to all

residents.

Internet access from power lines began to get attention

last year, when the Federal Communications Commission (FCC)

promoted it as a way to offer high-speed Internet services

for people in rural areas. The FCC also saw broadband access

from power lines as an alternative to high-speed access from

phone, cable and satellite companies that could lower

consumer prices.

Since the power grid is ubiquitous, broadband over power

lines could be available to nearly every U.S. home.

``Having another major player--the power companies--has to

help bridge the digital divide. The power companies have the

infrastructure to make broadband available nationally,'' said

Ed Thomas, chief of the FCC's Office of Engineering and

Technology.

The FCC in February proposed rules to govern broadband over

power lines. The rules aren't final, but a handful of cities,

utilities and technology companies are pushing forward.

Current Communications Group in Germantown, Md., is working

with Ohio utility Cinergy Corp. to market broadband service

over power lines in Cincinnati.

Current Communications also has a pilot project with Pepco

in Potomac to test the new Internet service.

``There are a lot of utilities out there that really,

really want to do this,'' said Jay Birnbaum, vice president

of Current Communications, a privately held firm founded four

years ago.

Main.net Powerline Communications in Reston is working with

Manassas, which owns its electric plant, to deliver Internet

content over the power lines.

Main.net and Current Communications are two of the primary

companies in a small cluster of firms that market technology

to send Internet data over power lines and make the modems

that subscribers plug into wall sockets.

Experts long have known power lines could accommodate

Internet data. Electricity travels at a lower frequency than

an Internet signal, so the two can share a power line.

Public works department employees in Manassas hook up new

Internet subscribers nearly every day.

``They're beating down our doors,'' said John Hewa,

assistant director of the city's electric utility.

That's because few people there have high-speed Internet

access, Mr. Hewa said.

``A lot of people are telling us they can't get high-speed

services where they live. There are a lot of areas where it's

not available, and they're using dial-up service,'' he said.

The FCC found in June 2003 that there were no high-speed

Internet subscribers in 9 percent of U.S. zip codes, where

about 1 percent of residents live. In another 16 percent of

U.S. zip codes, there was just one broadband provider.

The American Public Power Association, which represents

utilities, says 75 percent of its members serve communities

with fewer than 10,000 people, many of whom don't have high-

speed Internet access.

About 24 million people subscribe to broadband service,

according to Washington research firm Precursor Group.

But spokesmen for Verizon Communications Corp. and Comcast

Corp. both say they are equipped to deliver high-speed

service in Manassas.

The new broadband service in Manassas also might be popular

because the city charges $26.95 a month, less than digital

subscriber lines (DSL) or cable Internet providers. Current

Communications charges a basic rate of $29.95 a month in

Cincinnati. Customers typically pay $30 to $40 a month for

DSL service and $40 to $50 a month for Internet access over

cable.

Although the FCC is hopeful that broadband over power lines

helps lower prices and provides access to underserved areas,

Precursor Group analyst Pat Brogan isn't so sure the service

will take off because DSL and cable Internet services have

been around for years. Broadband over power lines simply

might be too late to catch up, he said.

But electric companies want to make money off their power

lines, and consumers who have been relegated to using low-

speed dial-up services are interested in subscribing to

broadband access over power lines, said Joseph Marsilii,

president and chief executive of Main.net.

``I firmly believe there is a huge market for this,'' he

said. ``I think we're on the cusp.''

Exhibit 3

[From the Atlanta Journal-Constitution, Sept. 2, 2004]

A Georgia City Decided To Provide Its Residents With; A Year of Free Internet Access. But Only Half Have Signed on. Why LaGrange Isn't More

``Wired''

(By Ernest Holsendolph)

LaGrange.--A delegation of 11 Japanese legislators came

calling on the city of LaGrange recently to learn more about

its efforts to connect every household in the city to the

Internet free of charge for a year.

The assemblymen for Gunma Prefecture were here ``to

understand the community strategy,'' said Kazuo Aikyama,

chairman of the delegation.

They aren't the first to come on such a quest.

A well-worn path to city hall on Ridley Street has seen

similar delegations from England, Canada and Bulgaria as well

as curious groups from cities and towns in the United States.

At the urging of City Manager Tom Hall and others, LaGrange

set out to provide easy access for residents to create a

``wired'' community able to interact with one another--and do

business more easily with City Hall, agencies and other

stopping points.

They would do it by connecting the homes, for free at

first, hopefully showing people how valuable the service was

and later get them to pay for subscriptions.

However, Dave McGee, a LaGrange native who is a glass

worker, was unaware of the program. ``I have heard things

about this Internet, but I don't know anything about it,''

said McGee, 47, as he walked along a side street off

Lafayette Square.

And Mable Abercrombie, who gave her age discreetly as

``over 65,'' said she had heard of the LaGrange project but

was keeping her distance from it.

``I am too busy in my garden; need to spend more time

there,'' she said over the counter of the Merle Norman

cosmetics display where she works.

McGee is an African-American, Abercrombie a senior citizen.

Each represents a group that has been a special challenge to

LaGrange's effort to bring all its residents online.

``We expected that with the service offered free of charge,

we would have big interest in communities where people had

been unable to afford Internet service,'' said Joe Maltese,

economic development director.

Instead, he said, there was an overall acceptance of nearly

50 percent--with no high interest in the southern city

communities where the black population is heaviest.

Interestingly, LaGrange recently was named one of the top

seven ``intelligent'' communities in the world by the

prestigious World Teleport Association.

In addition, LaGrange, about 65 miles southwest of downtown

Atlanta, has been cited as ``Intelligent City of the Year''

by the

association. And so, while gaining recognition for its

technological push, the distinction seems lost on a major

share of its 26,000 citizens.

Partly to keep plugging away with residents who remain

unexcited, city officials decided two weeks ago to extend the

free offer for another year.

``We have worked hard to make service relevant to people's

lives,'' said Hall, 40, the city manager of LaGrange since

1994.

Under Hall and Maltese, the city has pushed to get interest

and response, working with school officials and holding

rallies in public housing communities with U.S. Sen. Max

Cleland (D-Ga.) as a speaker. They also have advertised in

papers and on television and have mailed letters directly to

residences.

Subscribers can get the service either through cable modems

and personal computers, or they can access it via television

through the black set-top box.

Residents can use wireless keyboards, as with WebTV, to

connect to the Internet, or to special city networks where

they can learn about community activities, church events,

shopping opportunities, the weather and other information.

That's all the stuff tech-savvy people now take for granted

in the information age. But there's a problem, says Greg

Laudeman, a community information specialist with Georgia

Tech's economic development outreach program.

There is a gap, he said, between segments of society who

embrace computers and digital information, and other people.

``Early adopters (of new ideas and technology) and the

group that comes right behind them have different needs,

desires and interests than others,'' he said.

``And in a curious way, the technology companies, early

adopters start coming up with more and more that suits their

interests at the same time that others ignore it because they

do not need it, or immediately see the usefulness of it.''

Laudeman and others say the ``digital divide,'' when

examined this way may not be racial, or even economic

entirely, but more a different way people view developments.

``Many of us (early adopters) learn to value information

apart from what we do, or apart from the material or physical

things we own or use . . . we value it as a resource,''

Laudeman said, ``while other people value information only

as it relates to what they are doing.''

He added, ``It's like the world is divided between those

who enjoy talking and thinking about technology, and those

who simply use it.''

Hall and Maltese grapple with that dichotomy between groups

nearly every day.

``Some people say the service has no relevance to their

lives,'' said Hall, ``and others are just against it because

. . . well, because it is new and something they're not

accustomed to.''

Jabari Simama, who directed the establishment of community

technology centers in Atlanta, said his staff noticed also

that access alone is not enough to get response from

predominantly black, lower-income areas.

``Income may be a barrier, but it is not the only one,''

Simama said. ``Other factors that keep people from getting

involved in Internet technology include lack of reading

ability, and an absence of information they want or need.

``It's one thing to say you'll put up information about the

city or city services, but you need to put up things about

the neighborhoods and communities where people live--and that

means you must use the same focus-group approach cable TV and

others have used to reach those audiences.''

Simama's view is corroborated by a study of the Children's

Partnership, a Los Angeles-based nonprofit organization that

mostly focuses on the needs of young people. But it also

reached conclusions about reaching lower-income people.

Among the barriers to strong Internet interest in the hard-

to-reach communities, the study found, are literacy,

language, culture and lifestyle, and the ``lack of most

urgently needed local information.''

How specific might that information be? One respondent

said:

``Many of the people in the housing project where I work

want to find out about jobs they can do in the neighborhood.

If the neighborhood was more connected and mapped online,

this kind of information would really make a difference to

residents.''

The study projected that some 50 million Americans may be

inhibited by one or more of the barriers, with 41 million

specifically held back by lack of reading ability.

These are the kinds of extended considerations the leaders

in LaGrange will have to confront in the second year of

effort to get more residents involved in Internet

communication.

Among the barriers that must be scaled, are inertia among

people who see no ``need'' as well as others who are outright

suspicious.

Abercrombie, the gardener, when asked why she would not try

something that is free of charge, replied: ``Well, yes, but

what happens after the year when it's free?''

The LaGrange arrangement allows someone to try it, then to

decide what it's worth. ``But,'' she said, ``I am not sure I

want to be interested.''

She was given a computer by her son, who wanted her to

trade e-mail, but she has not done that, despite prompting by

grandchildren and others.

Patricia Graves, who works in the city cemetery office, has

been a subscriber to the Internet service for a year and

loves it.

Graves, who is black, said she enjoys e-mail, learning

about places to vacation, and just gathering information.

``I have not made a purchase yet, but I am thinking about

it,'' she said.

Asked why some of her friends had not shown the same

enthusiasm, she was candid. ``I just find many people are

just afraid of computers. And some people are suspicious of

the city and wonder why this interest in putting these

machines in their homes. Some even wonder if they are for

watching them.''

State Rep. Carl von Epps, a south LaGrange merchant, said

he does not subscribe to the city service.

``Don't get me wrong,'' he said. ``It is fine, and it is a

great way for people to get their foot in the door and learn

about the Internet, but it is not as fast as my service that

I've had for some time.''

Von Epps, who is black, said he was aware of some feelings

of suspicion and fear. ``But a lot of that will be overcome

by working more with churches and community organizations and

people the neighbors trust,'' he said. ``It's just a matter

of time.''

Madam President, I have already spoken, so if the Senators from Virginia or Delaware want to speak, I will certainly yield to them.

But I certainly congratulate the Senator from Ohio. He knows what he is talking about when it comes to State and local government. He has been a mayor. He rescued a major American city from bankruptcy. He chaired the National Governors Association. The people of Ohio know he works in a very principled way. He understands, as I believe I do, that this train is on the wrong track.

I say this to the Senators from Ohio and Delaware and then I will stop and yield to the Senator from Delaware: How much subsidy is enough subsidy? I notice, in this thick list of subsidies that States give high-speed Internet access, Texas is generating $1.5 billion of subsidy just to encourage the growth of high-speed Internet access. Then, in addition, it has already made exempt from taxation the first $25 you pay for high-speed Internet access. Now we are talking about giving further subsidies to the companies that provide that access. I don't see the sense of that.

I congratulate the Senator from Ohio, look forward to working with him, and now that I see the Senator from Delaware with whom I have enjoyed working, I yield the floor.

Madam President, I thank the assistant Democratic leader. I thank Senator McCain for his efforts over the weekend to develop a substitute amendment which we received this afternoon and which we are studying.

My hope is we have a constructive movement toward a result this week that does no harm to States, that bans State and local taxes for a short period of time, and that gives Congress time through the Commerce Committee to create a comprehensive approach.

The leadership has asked us to try to do this in an orderly way. I want to do that. I have two or three Senators to discuss that with in the next 30 minutes or hour. The Senator from California has remarks she would like to make, so I say to the assistant Democratic leader, within the next 30 minutes or hour I will have a response to him and the majority leader about how we would like to proceed.

Madam President, I congratulate the Senator from California. She represents a State that has 12 to 13 percent of all the people in our country with lots of cities and counties. She has been a leader as a mayor, as I have been a Governor. Once you get to the Senate, you are not supposed to forget what you learned as a mayor or a Governor, and what you know for sure is that if Congress comes along and says, You can't tax property in San Francisco, for example, then you are going to have to raise taxes on something else. Or, on the other hand, if they said, You can't tax automobiles in California, then you will have to raise taxes on something else.

When Congress comes along and says to California, to 118, 122, or however many, we are going to take $260 million potentially from Los Angeles, $32 million potentially from San Francisco, that is not lowering anybody's taxes. You just raise other taxes. If you say, Senator Alexander, we think you are special, you don't have to pay taxes, the Senator from California is going to have to make up what I have not paid, or someone is. If you say, We will just cut Government, we will cut services, good, maybe we should do that, but still I would be paying lower taxes and you would be paying higher taxes.

What we are talking about is a very simple idea: Should the Congress, in its wisdom, decide to give yet one more subsidy to the high-speed Internet access industry and then send the bill to mayors and Governors? I can see us having a big debate and getting all excited about high-speed Internet access. When the internal combustion engine was invented, somebody in the Senate got excited about it, or when the telephone was invented, somebody got excited about it, or when the railroad was invented, somebody got excited about it, but we did not say in order to encourage them, there may be no taxes by State and local governments on these great new inventions. Whenever we decide something is worth a subsidy, we do it ourselves, or we should do it ourselves. That is the great irony here.

Here we have one of the most subsidized technologies in America and the fastest growing technology in America. There is nothing to indicate anything is stopping it from growing. Yet we are piling on more subsidies and giving the bill to State and local governments.

I thank the Senator from California for her leadership, her directness, and her consistency. I look forward to working with her tomorrow.

I think we have achieved tonight some of what we had hoped. The Senate has rules that permit a small group of Senators to make a point. I think the point we made tonight by insisting on a cloture vote on a procedural motion, on the motion to proceed, was to speed along some new compromises.

I am glad to see the Senator from Arizona with a new compromise proposal. I have been working on one for 6 months with the Senator from Virginia.

We even made some progress, but not enough. Perhaps the proposal of the Senator from Arizona is even a step further. We received it this afternoon and I have not had a chance to analyze it, which is why we need time to do that. We will move toward that objective the leadership wants and we all want, which is to create a consensus in this body about what we should do for the time being about State and local taxation of Internet access.

What I believe and the Senator from California believes and many other Senators believe is these should be our principles: No. 1, we should take the time to give the Senate Commerce Committee and the House of Representatives time to think carefully about this new technology, high-speed Internet access, which has the potential to deliver to our homes and our offices so many services. We should think carefully about that and not deal with it in any piecemeal fashion. That is why a short-term extension of the ban on State and local taxation of Internet access is much wiser than anything permanent, and I am glad to see us moving away--not far enough yet, but away from the notion of permanent confusion, which is what would happen.

Why in the world, when the Commerce Committee, when Senator Stevens, Senator McCain, and others have said they want to look into this, would we short-circuit that by making a decision about a little bit of the growth of high-speed Internet access?

We ought to carefully look at whether there is a need for an additional subsidy to high-speed Internet access. I

will be talking about that some tomorrow. There is $4 billion of Federal subsidy already. I have a study by the Alliance for Public Technology about all of the State and local subsidies to high-speed Internet access. They may all be good things, but we should know they are there. I mentioned this earlier, that in 1995 the Texas telecommunications infrastructure fund put in motion raising taxes to generate $1.5 billion over 10 years, to basically put in high-speed Internet access everywhere. That is true in virtually every State.

I mentioned earlier today, in LaGrange, GA, they are giving it away for free and still only about half the people want it. We cannot force- feed it to people, and giving a big new subsidy to the high-speed Internet access companies is not going to make people who can get it for free in LaGrange, GA, use it if they do not want it.

While my distinguished colleagues, who have a different point of view, say it does not cost much, well, the House bill costs a lot. Up to $10 billion in State and local taxes on telephones are at risk. Up to $7 billion in business taxes the States collect today are at risk. Half a billion dollars in business taxes collected on the Internet backbone would be wiped out. Sales taxes on Internet access being collected now in 27 States, gone. Universal service fund fees and 9-1-1 service fees threatened. Now people may be listening to that and saying, great, no more taxes. That is the big trick. Do not let yourself be tricked by that, because if I run for the Senate and promise to abolish local property tax, do not people know the mayor and the Governor are going to have to raise sales tax on food to make up for it? Or if I run for the Senate and say I have this great idea, I am going to abolish the car tax in California, Virginia, Tennessee, and all around the country, hooray, that sounds good, does it not? But they are going to come up with another tax. They will raise sales tax on food or on business.

So this is real money we are talking about, and that is the second point we should be discussing in this compromise, that we do not need any more subsidy.

The third point is we should not break our promise to do no harm to State and local governments. That simply means this: If Congress in its wisdom concludes high-speed Internet access needs one more subsidy, then we ought to be big enough men and women to stand up and say, okay, we will pay for it. But what are we doing? We are sending the bill to State and local governments. At least that is the way the Governors, the mayors, and everyone I have talked to, who has carefully read the bill from that perspective, reads it.

Maybe the compromise of the Senator from Arizona moves in that direction. I hope it does. I am studying it tonight, and I will study it in the morning.

It is a great surprise to me to come to the Senate and find one of the first things we do in my first 2 years is break the promise the Republican Congress made in 1995, ``No money, no mandate. If we break our promise, throw us out.''

I would rather not be thrown out. I would rather we keep our promise. Everyone knows this is an unfunded mandate. To say we passed some unfunded mandates is like asking, why are you arresting me for this one? I robbed some other stores last week and you did not catch me.

We do enact unfunded mandates on occasion, but the Congress has done it a lot less since 1995, and it has had to stand up and be counted.

I want to make sure everyone knows what we are talking about this week is an unfunded Federal mandate and that every Democrat or Republican Senator who made a speech on the floor in 1995--and I have those speeches--or who goes back to a Lincoln Day dinner or a Jefferson-Jackson Day dinner and starts off by making a great big speech about local control is overlooking support for S. 150 because it is about adding a new cost on State and local governments and not paying the bill.

The Senator from California says it is 5 to 15 percent of the revenue base of many of her cities. The Governor of Tennessee told me it is up to 5 percent of the revenue base of Tennessee. In our State, if we take out 5 percent of the sales tax base, there will be an income tax. We do not have a State income tax because the people of Tennessee make a choice. We thought the Governor and the legislature were elected to decide what taxes we could impose.

Then finally, if we insist on this additional subsidy to encourage high-speed Internet access, why do we not follow President George W. Bush's example? Let's put in the Texas plan. It is very simple. It avoids all of this discussion we are having about definitions, all this argument we are having about whether it costs anything. What they did in Texas from 1999 when President Bush was Governor Bush was the following: They said you do not have to pay any State tax on the first $25 of your monthly bill for high-speed Internet access.

Twenty-five dollars is all one has to pay for high-speed Internet access in Manassas, VA, where they deliver it through the power company, and people can also get it through the phone company, the cable company, and from the sky through the satellite. It can be gotten from everywhere. One cannot walk down the street without somebody selling people high-speed Internet access. It is the fastest growing technology in America. The Congressional Budget Office and the Department of Commerce have told us we do not need to intervene. It does not need a subsidy. There is no economic benefit to paying more taxpayers' money for this one industry.

So why is it? Why are we suddenly running a railroad train through the Congress saying we are going to pick out this one industry? This is a country where we have had many great inventions before. This is not the first invention we have ever had, high-speed Internet access. It is a great thing. But so was the telephone. So was the railroad. So was the internal combustion engine. Now we are saying more subsidies--4 billion in Federal dollars is not enough. A whole book full of State and local subsidies is not enough. The fact that it is the fastest growing technology in America, that is not fast enough. We want to pour more money in here, and it is not really going to the consumers; it is going to the companies; it is going to the industries.

My friend from Virginia will say that is passed on to the consumer. Maybe it is. But if we are going to pass corporate taxes on to consumers, why not do it for all corporations? We have a lot of manufacturing companies getting ready to move jobs overseas. Let's lower their taxes. Let's lower everybody's taxes.

I am disappointed, to tell you the truth, that this bill is even being considered in this way. I am surprised. If I were still the Governor of Tennessee--which maybe some in the Senate wish I still were--I would be roaring and screaming about this. I would be calling my Governors on the telephone saying, What are these men and women in Washington, DC doing? If they want to decide what the taxes ought to be in Tennessee and California and Iowa, let them come home and run for Governor or mayor. If they want to give a subsidy to some company, let them pay for it; don't send the bill to us. Let them come down and figure how to keep State university tuitions from going up and how we keep from raising State and local property taxes to deal with a Federal law that requires more State aid to children with disabilities but doesn't fund it. That is what I would be doing.

I would have them on the phone tonight on a conference call and asking them to call every single Senator saying, What are you doing up there? We have a war in Iraq. We have a national economy. We have plenty of national issues without you trying to be the Governor of the home State at the same time, and if you want to be the mayor of Knoxville or Nashville or Memphis, come on home. We will share all our problems with you and you can decide what to spend and how high the property taxes ought to be.

When we take hundreds of millions and potentially billions of dollars out of State and local governments, we are raising local taxes, not cutting local taxes. We are creating permanent confusion, and we are breaking our promise.

So I am glad we had this vote tonight. I hope by coming in here and voting we encouraged some work over the weekend, and late last week. I

know Senator McCain was working, Senator Allen was working, Senators Carper and Feinstein and I were working, and I hope we have made some progress.

Tomorrow when we come in here after our lunch and begin to move to the bill at hand, I think we will have on our side--I mean those of us who oppose S. 150--that we will have upheld our part of the responsibility of keeping this Senate moving toward a conclusion. We want a result, but we want a good result.

May I say one more time what I believe a good result is. A good result is a 2-year ban on State and local taxation of Internet access so the U.S. Congress can think carefully about the migration of digital services to the Internet because of high-speed Internet access. So that is No. 1--2 years or less.

No. 2, no big subsidy to a heavily subsidized industry already.

No. 3, let's keep our promise and do no harm to State and local governments. Let's show the people of this country that when we make a promise, as we did in 1995 when we said no more unfunded Federal mandates, when 300 Republicans stood on the Capitol steps and said, If we break our promise throw us out, let's show that we mean that and not engage in rhetoric that tries to confuse the issue.

If we meet those three tests, then we can have a result. We can have one quickly tomorrow, or Wednesday, or Thursday. But if we insist on legislation here like the legislation that passed the House, that creates permanent confusion instead of careful study, an unwarranted expensive subsidy to a heavily subsidized fast-growing technology, and that does harm to State and local governments, which breaks our promises, then I am going to continue to oppose that and so are a great many of the Democrats and Republicans who joined us in the Alexander- Carper legislation.

I think this has been a successful day. I appreciate the time we have been given to debate the issue. I know Senator Enzi and others will be here tomorrow morning to continue that discussion, and I look forward to moving in an orderly way to the legislation at hand, S. 150, sometime tomorrow afternoon, based upon the decision of the leadership.

I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be dispensed with.

Mr. President, on behalf of the majority leader, I ask unanimous consent that when the Senate resumes the motion to proceed to S. 150, the Internet tax access bill, there be 2 hours and 40 minutes for debate remaining with 2 hours under the control of Senator Alexander or his designee, with 20 minutes under the control of the chairman of the committee and 20 minutes under the control of Senator Dorgan; provided further that at the use or yielding back of that time the motion to proceed be agreed to.

Mr. President, my colleague from Arizona talks about four issues. There are three of them we really ought to be able to reach agreement on reasonably soon, and the other one is a very difficult issue, there is no question about that. That is the definition. But on grandfathering and VOIP, for example, the length of time of a moratorium, frankly, I think we can reach an agreement on those three areas.

Frankly, if we are able to reach an agreement on the definition, I do not care much about the grandfathering. I know some of my colleagues do, but that is a lot less important to me. I would also say that the length of a moratorium on Internet taxation is of much less importance to me as well. I would be willing to lengthen it by a substantial number of years provided we have the right definition. So I think the thing that is going to be difficult for us but one that we should attempt to resolve is this definition.

I want to just make this point: If the purpose of those who are most insistent on moving this legislation--and there are several in the Chamber who have really worked on this a long time--would be, for example, to create a broad new exemption from taxation for certain services and certain parts of the backbone of the Internet and so on, then that is a problem. I do not support that. I do not think we ought to carve out things that are now being taxed by State and local governments and say, by the way, we are going to federally preempt that. If that is not the purpose, though, then we surely should be able to find common ground on a definition that works.

My hope is that as we proceed we will understand that all of us--I think I speak for all of us--believe we ought to have a moratorium on taxing the Internet, that is, the connection to the Internet. I support that. I believe virtually all of us in this Chamber would agree we ought not levy punitive or discriminatory taxes on the Internet. I believe we would all agree on the goal that we would want to encourage through public policy the build out of broadband and the use of the Internet and particularly advanced telecommunications services. All of those represent areas of broad, substantial agreement in the Senate Chamber.

As we work through this now, the one area where I think we have substantial difficulties is trying to understand what each side means with respect to the definition of Internet service. How far up the backbone of the Internet does it go? Is it a definition that, in fact, would prevent the taxation of certain services that are now taxed, and on which State and local governments rely for that revenue? If that is the case, we ought to know that and discuss that. If it is not the case, we should be able to reach an agreement on the definition.

Senator Allen, for example, and many others who have been at this, Senator Wyden and on the other side Senators Carper and Alexander and many others--we need to once again get our heads together and see if we can find agreement on this definition. But until that happens and unless that happens, it is my guess we are just going to be around here spinning our big old tractor wheels and nothing is going to happen. We are not going to pass legislation.

We are not going to agree to amendments. I am guessing the consensus wouldn't exist to do that. I wouldn't object to going to vote on some things, speaking for myself, but we have a lot of work to do to reach some sort of compromise. Let me say to my colleague Senator McCain, I recall being in meetings with him a year ago and beyond that, and the attempt was to try to figure out, how can we find common ground? How can we extend the moratorium that then existed? We never got to the point of reaching any kind of agreement, but it wasn't because of any lack of effort on the part of the chairman of the committee. I am here. I will be here during consideration of this, and I want to work with Senator McCain and others to see if we can find a way to make this work.

I yield the floor.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, the amendment that has been offered a few moments ago by my colleague Senator Daschle is not some mysterious amendment. It is not some amendment that was offered under some mysterious procedure. This is the way the

Senate allows amendments to be offered.

Senator Daschle has offered an amendment that deals with the subject of energy, and specifically renewable fuels. My colleague from Mississippi, Senator Lott, indicated that it is the way the Senate can do business. He is absolutely correct about that. The rules allow this amendment to be offered. However, I point out that the Senate really does not do business much anymore. We are not voting much. We are kind of at parade rest. If there was a ``gone fishing'' sign, it would long ago have been hung on all three doors of the Senate.

There is very little activity in the Senate. Very little is happening. I expect that is one of the reasons my colleague offered this amendment to this bill.

I will talk for a moment about the Energy bill. The Senator from Mississippi and the Senator from South Dakota both indicated that we ought to have an energy policy, and indeed we should. I was a conferee on the Energy bill. I signed the conference report, much to the consternation of some of my friends, because I thought on the whole it advanced our country's interest in energy.

It was not perfect. There were some things in it I did not like much, but the fact is, it came to the Senate floor and it lost by two votes. Everyone in this Chamber understands why it lost. It lost by two votes because the White House and the majority over in the House of Representatives decided to put in a retroactive waiver for liability of MTBE. They stubbornly persisted and demanded it be part of the bill even when they were told it was likely to kill the bill.

They preferred the bill die rather than take out that provision, the provision that was a favoritism provision for a few enterprises. So the bill died. Now they want to blame others for the death of that energy bill. It does not wash. That energy bill died on the Senate floor, lost by two votes, because there were some that stubbornly persisted in putting a favor in that bill for some of their friends and they would not back away from it. So they lost the bill. They were willing to let the bill go down because of that.

For example, that bill contained important provisions that I thought advanced the country's interests: production incentives, conservation, an efficiency title, a renewable fuels title. I will talk for a moment about the renewable fuels title because that is the subject of Senator Daschle's amendment.

I think the renewal fuels title is very important and advances this country's interests. I am a strong supporter of it. Incidentally, I will support this amendment, and I hope we get a vote on this amendment. It does not do damage to the underlying bill at all. We can, should, and will, in my judgment, have a vote on this amendment.

If we are not going to do a big energy bill, if instead of this week having energy on the Senate floor, which I would have preferred, we have the underlying Internet tax bill, if the priority is always going to be something other than an energy bill for the majority leader, then we have no choice but to take provisions of this energy bill that we think advances this country's interests, bring it to the Senate floor, and see if we can legislate on it.

I will now talk about the renewable fuels provision. The renewable fuels provision is pretty simple. Drive to the gas pump this afternoon and see what is going on. We used to see 55 percent of our oil came from off of our shores. It is now 60 percent. Sixty percent of the oil every single day that we use in this country comes from other parts of the world, much of it very troubled.

We are putting this country at great risk if we do not understand that endangers this country's economy, that endangers the opportunity for us to expand, grow, and promote opportunity in the future. Yet people seem oblivious to it. They say it is 60 percent coming from offshore, from Saudi Arabia, from Iraq, from Venezuela, from Kuwait, so what? Well, I think many of us understand the so what.

This country's economy, this country's well-being in the future, is held hostage by others, some of whom wish this country ill. In the new age of terrorism, we would be well advised to understand that this excessive and growing dependence on foreign sources of oil, foreign oil specifically, is very dangerous to this country.

My colleague offers an amendment that says at least one part of the Energy bill dealing with renewable fuels allows us to increase supply of energy in this country in a very significant way that is not only friendly to the environment but allows us to grow some energy in America's fields. It allows us to be innovative in creating new forms of energy to extend America's energy supply. Let me use ethanol as an example. Incidentally, let me say, for those who have heartburn over the offering of this amendment, 69 Senators have already voted for this amendment. This will not be a big problem if you just allow us to have the vote, put it on the bill. If the bill gets signed by the President, we have at least advanced this portion of the Energy bill.

But let me talk for a moment about ethanol. The ability to take the drop of ethanol from a kernel of corn and have the protein feedstock left and use that drop of alcohol to extend America's energy supply-- good for us. That is called renewable energy. It expands the supply of energy. It means we can grow our energy in our fields.

We have a prodigious appetite for energy in our country. As all of us know, when the price of energy goes way up, the price of gasoline at the pumps continues to increase relentlessly, and we know we have to do something. It ought to be a warning sign.

My colleague brings to the floor of the Senate a sensible, thoughtful provision that had wide bipartisan support in this Chamber. What he says is pretty simple. He says if it is the case that we didn't have energy on the floor last month, last week, this week, next month, or even this summer, if that is the case, if that is what the majority wishes to do, to not put the Energy bill back on the Senate floor and allow us to work on that to get a good energy bill, then at least let's take portions of the bill that we know had strong bipartisan support and move that because that will strengthen this country.

Once again, let me say to those who counsel let's wait, let's just wait, the question is, Wait for what? Wait for fall? Wait for October? Wait for September? Nobody else is waiting. The price of gasoline is not waiting. The threat to our supply of oil is not waiting.

Read yesterday's newspapers about terrorists who want to interrupt the supply of oil. They are not waiting. Why should we wait to construct a sensible energy policy for this country's future? Why should we wait, above all, to move forward a provision that has strong, broad bipartisan support in this Chamber?

This is not the time to wait. This is time for us to move forward and understand that our economy, our Nation is at peril with respect to an energy supply if we do not advance those portions of the Energy bill that strengthen this country.

I, for example, believe we ought to advance the conservation title and we ought to advance the efficiency title, both of which are very important. My colleague offers, I think, perhaps the easiest and perhaps the most important provision dealing with renewable fuels. The easiest why? Because almost three-fourths of the Senate agree with it. Yet the amendment gets offered and we will have people walking around here choking on it. Nobody ought to choke on this amendment. The Senate ought to agree that this amendment makes sense. This amendment has previously been agreed to. This amendment advances this country's energy interests. We ought to agree to this amendment. Not yesterday, not tomorrow--now. This is not heavy lifting.

The only thing that is difficult in this Senate these days is that we are not doing anything. We face some real serious challenges in this country. We have an economy in trouble. We have energy problems. We are involved in a war in Iraq and a war in Afghanistan. We are beset by the terrorist threat. The fact is, this place is at parade rest. So my colleague Senator Daschle comes to the Senate floor and offers something that says, let's move on this subject; let's step forward; let's do the right thing; let's vote; let's advance this country's energy supply by passing the renewable fuels section of the Energy bill.

I understand. I managed the bill on this side on the Internet tax issue. I

understand this is inconvenient, but inconvenience is a small price to pay, incidentally, for advancing that important portion of this energy bill. I commend Senator Daschle for offering this, and I will strongly support it and hope we can move it quickly.

Let me just say as one person who is managing this on the floor of the Senate--I can't speak for the majority, but let me speak for the minority managing this--this should not take much time at all. My guess is Senator Daschle would agree to a very short time limit on debate. We have already debated this particular issue and had votes on it, so this should not interrupt us more than 30 minutes or an hour, after which we will have expressed ourselves as a Senate to move a very important piece of this energy bill--the renewable fuels portion of the Energy bill--forward with this legislation.

My hope is that is what we will decide to do. There is a possibility, however, that what happens the minute someone offers an amendment like this is this place goes into some sort of apoplectic seizure; it shuts down; we go into a quorum call. Why? Because people want to gnash and wipe their brow and wring their hands and fret on what to do because they can't deal with this. The way to do it is to put it up for a vote, have about 70 Senators vote for it, and add it to this underlying legislation, so that in the end we will have this important piece of the Energy bill for the American people. That will be good for this country and good for the American people, and when we have done it, I will say good for the American Senate as well.

I yield the floor.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I know my colleague from Virginia wishes to speak on the bill, and perhaps the Senator from New Mexico does.

Let me say to my friend from Arizona, I understand his angst about this. But this is not a new procedure. The Senator from Arizona has employed the same procedure, as have I, as now does Senator Daschle today--that is, offering an amendment that does not relate to the underlying legislation.

There is a reason that happens. The reason that happens is the passion one has for legislating on a specific issue that doesn't get resolved because someone else won't allow you to bring it and debate it on the floor. So you offer an amendment under the rules of the Senate to another piece of legislation. That is what happened here. I say to my colleague, he has employed the same tactic, as have I.

I will be glad to recite them. I will not do it at this moment. There were line-item veto amendments, motor voter, and others. Senator Daschle has not offered an amendment for the purpose of a headline in South Dakota. I happen to support renewable fuels and ethanol, and have for a long while. I make no apology for that, nor would Senator Daschle, because I think it advances this country's energy interests.

The reason it has to be offered now, according to Senator Daschle-- and we all understand this--is we had an energy bill that failed here by two votes. I would have preferred we pass an entire energy bill in this Senate. I voted for it and I signed the conference report. I worked with the chairman of the Energy Committee. I would have preferred that to pass because it had titles in four areas I supported. I didn't agree with a colleague who said a few minutes ago he thought there were things that were unworthy and rendered it something we should not have passed. There were things in the Energy bill that were unworthy and I didn't support, but on balance I believed it would advance this country's interests. It failed by two votes in the Senate.

That bill contained production incentives, conservation efficiency, and renewable fuels. The issue of renewable fuels is not new. We have worked on this for a long time. If we cannot get the Energy bill, then we ought to get the renewable fuels piece at least. That has such wide, strong support here in the Senate. We have voted on it. I believe it was 69 votes in favor of that provision. We had bipartisan, strong support for that provision.

So if we cannot get the Energy bill, let's at least take that which will, in my judgment, be beneficial to this country's long-term economic and energy interests. That is what Senator Daschle offers this amendment for on this bill, because the other opportunities don't exist. If somebody said, well, let's bring an energy bill to the floor this week, rather than this bill, or bring it to the floor next week-- and I am guessing; I don't speak for Senator Daschle--he would have said let's do that, because he supports certain provisions of that bill, voted for it, was the author of the renewable fuels provision and ethanol provision. So my guess is he certainly would want that to happen. But because we are now told the Energy bill will take a back seat to this, that, and the other thing, and that it will now perhaps be fall before we talk about it on the floor of the Senate, Senator Daschle had every right--perhaps an obligation--to come here and say: I have a passion about this, let's advance this. This is an opportunity.

Again, let me say I will bet, if I do a bit of research, perhaps almost all of us on the floor, with the possible exception of the Senator from Virginia, because he has been here fewer years--

but I would find everybody now on the floor has offered an extraneous amendment to pending legislation. That is not unusual. It is called for in the Senate rules. We face it every time we bring up a bill. What would be counterproductive is if you offer an amendment that becomes like throwing a wrench into the crankcase; you strip all the gears and shut everything down. That is trouble.

That is not the case here. We have already voted on this. We know there is wide bipartisan support. This isn't throwing a wrench in the crankcase; this is advancing a part of the Energy bill that ought to advance.

I will repeat, you have to be completely oblivious to reality not to understand we have a serious energy problem. Part of it is going to be solved by enhanced production, part by conservation, and part by efficiency. But another part of it is going to be solved some way, someday, somehow by a renewable fuels title that represents an advancement in our ability to produce ethanol and other renewable fuels. We are going to do that. We can do it sooner or later. We can do it now or we can wait. But I submit to you this: Given what we face in this world, the threat of terrorism, cutting off an energy supply to our country, 60 percent of our oil coming from outside of our shores, much from troubled parts of the world, we had better get the entire Energy bill up and get it done. I pledge--and I think the Senator from New Mexico will recognize I was a constructive part of his deliberations and voted for it and signed the conference report--I will again be a constructive part of those deliberations.

But if we are not going to get an energy bill up here, my colleague has every right to come to the floor and try to advance this renewable fuels provision. I support that. It is an appropriate thing to do. I don't believe it should impede us in any way. We can do it in a half hour. We know it, we know what it is, and we know what it will do for this country. It cannot be suggested this somehow is going to slow down this bill; it will not and it need not. The only thing that will do that is if those who decide they don't want this piece of the Energy bill to advance decide to find a way to interrupt this amendment.

Having said all that, I will say again it is not about headlines for anybody. It is about the right of Senator Daschle to offer an amendment that is important, which has already been discussed in the Senate. I hope the Senate will have a vote on it and pass it and move on and deal with the underlying bill and pass it when we have solved the definition problem. I support a moratorium, and I believe since we have had a moratorium for 5 years previous, we can find a way to solve the definition problem and continue a moratorium with respect to Internet taxation.

I yield the floor.

I announce that the Senator from Florida (Mr. Graham) and the Senator from Massachusetts (Mr. Kerry) are necessarily absent.

Mr. President, I have the highest regard for the distinguished junior Senator from Mississippi, Senator Lott, but on this issue I disagree with him. I believe we have to move forward on energy legislation any way we can. If it is piecemeal, let's do that. The people of the State of Nevada are suffering from high gasoline prices. We have the second or third highest gas prices in all America.

For example, the bill we are going to take up next week, the FSC bill, in that bill I think very importantly the managers of that bill added to that some very important tax provisions that deal with energy. There are some short-term solutions I will speak to briefly, but there are some long-term solutions we must address.

Senators Baucus and Grassley in the FSC bill address that. What have they done? They have provided tax credits for alternative energy. The tax credit for wind has expired. They are going to add, if we pass that legislation, a tax credit for solar, a tax credit for geothermal. This is the solution to the energy problems we have in this country. It will happen. It is only a question of time, when it is to happen. We need not depend forever on the vagaries of what OPEC does. We have to depend on what we can do.

People come to this Senate floor and say we need to produce our way out of the problem we have. We cannot do that. The United States has, even counting ANWR, less than 3 percent of the entire oil reserves in the world. Ninety-seven percent-plus of the oil is someplace other than the United States. So it is common sense that we cannot produce our way out of the problems we have today. We can do some things with the oil that we do have. We can make it better. We can have some of our smaller producing wells produce a little more. We can do some with exploration. But the answer is not that. We cannot produce our way out of the problems we have with oil.

So what can we do? The one thing we can do is do something with alternative energy. The Nevada test site in the deserts of Nevada has been the site for almost 1,000 nuclear explosions, some above the ground, some below the ground. At the Nevada test site, if you put solar panels on the Nevada test site you could produce enough electricity to serve the entire United States. The Nevada test site with solar panels could produce enough electricity to satisfy all the needs of this country.

We know that wind energy is doing very well. In the Midwest there are some farmers making more money on their windmills producing electricity than they are from the crops they produce. We know that Nevada has been said to be the Saudi Arabia of geothermal. We have, not unlimited, but huge amounts of geothermal power in the State of Nevada. You can drive places in Nevada and see steam coming out of the ground naturally. It is because of geothermal. Some wells have been tapped. The problem with tapping the resources we have with geothermal is the people have no tax credits to do it like they had for wind. If we did that, there would be immediately, in Nevada, a tremendous surge in the production of electricity which would feed our state, California, and other parts of the West with badly needed electricity. There would not be any pollution. The same, of course, applies to solar. So we need to do that.

There are some other solutions to problems we have. Of course, among the long-term solutions I did mention is more fuel-efficient vehicles. We certainly need to do a better job in that regard.

In recent years, there have been two major releases of oil from the Strategic Petroleum Reserve--during the Clinton years and during the first Bush years. It was done because it brought down the price of oil.

For example, in January 16, 1991, there was a decision made to release oil from our petroleum reserve. The next day crude oil prices fell from $32 to $21 a barrel. Of course, it dropped. We have done it on two separate occasions--during the Clinton years and the first Bush years. It made a difference.

A second release occurred. After that second release, within a week of the time the Strategic Petroleum Reserve was being used, the price of oil dropped from $37 to $31 per barrel.

Right now the price of oil is near $40 a barrel. Why doesn't the President release this oil from the petroleum reserve? I don't know. I know one thing. It would certainly be a help if that happened. It would increase the supply in this country. As supply is increased, we would have a lessening of prices.

The other thing which I think is extremely important is that we recognize there are other ways of bringing down the cost of oil. One thing the President could do is use his bully pulpit and his influence, which we understand is significant with the Saudis. Bob Woodward just published a book that said they knew about the war before anybody in the Congress knew about it.

Also, of course, we have been told the President has been assured that in September they will start releasing more oil. That will also bring down the cost of oil. I suggest rather than waiting until this fall the President do something now to pressure the Saudis into releasing more oil. They have cut by 10 percent their production of oil which began on April 1.

These countries are supposed to be our friends. We have young Americans giving their lives in Iraq right now to make that part of the world safer and more stable. It doesn't seem right the Saudis and other OPEC nations are not recognizing what we are doing for them.

We also know there are other things that can happen. The bill that was defeated on the Senate floor last year had a lot of problems with it. Senator McCain referred to it as a ``hooters and polluters'' bill because of all of the ornaments that have been attached to the so- called ``Christmas tree.''

There are things which we need to do. People have said, Well, these things the President can do now do not matter. Getting the Saudis to increase the supply of oil would matter and, of course, having more oil come out of our strategic reserve would matter. The other thing the President could do is say let us stop buying oil to be put in the SPR right now. Some analysts suggest prices will only go down by 10 to 20 cents a gallon. That is significant.

In Nevada where the prices are approaching $2.50 a gallon, it seems to me that would be a help. Anything would help. As far as I am concerned, that is a good enough reason to do it.

Consumers need immediate relief. We are talking about as much as a million barrels of oil a week. That is about how much we put in the SPR which we are buying from the OPEC nations when they cranked up the price of oil. It doesn't make sense to do that. This isn't the huge supply of oil that comes into this country on a weekly base, but it still is a lot. It will make a difference.

The latest price spike in Nevada was caused, they say, by the shutting down of the refinery in northern California

which produces only 165,000 barrels of oil a day, or 1.5 million barrels a week. If that is the case, that is the same amount of oil we are buying from OPEC to put in the SPR. That logically would indicate the price should come down.

I think if we are going to do anything for energy in this country, we have to take it piecemeal: Do ethanol, and do what we are going to do next week with the legislation that has been crafted by Senators Grassley and Baucus to give tax credits to the people who will produce good, clean energy.

The President in his State of the Union message said he wanted to move to a hydrogen economy. If we are going to depend on a hydrogen economy, we have to do something about producing hydrogen and use something other than fossil fuel to produce it, which only compounds the pollution. The only way you can have a hydrogen economy is produce the hydrogen by using alternative energy--sun, wind, or geothermal.

I hope we can, as Senator Dorgan has indicated, move forward very quickly and dispose of this legislation. If people vote the way they did the last time, this should go away very quickly. For people who say, I voted for it once, I am not going to this time because it is different form and it is stand alone, it seems to me it should be easier to do it that way than when it was in the bill which had so many different problems.

I commend and applaud the Senator from South Dakota for moving this particular piece of legislation which will improve the energy needs of this country.

I hope we look long term and do things other than what we have been doing; that is, try to produce our way out of the situation that is so desperate for the people in Nevada who have the third or fourth highest gas prices in America.

I object.

Parliamentary inquiry, Mr. President.

Can the Chair give the Senator from Nevada an idea of how long it would take to read the amendment?

It is not in order?

Reserving the right to object.

I object. I don't know what ``temporary'' means.

Reserving the right to object, Mr. President, it is my understanding the Senator from New Mexico is asking that there be 10 minutes of debate equally divided; following that, the reading of the amendment will continue?

Mr. President, it goes without saying, but I will say it again, I have worked with Senator Domenici during my entire 18 years in the Senate. During more than half of that time, he and I have worked as the chairman or ranking member, as the majority of the Senate goes back and forth, on one of the most important subcommittees there is in the appropriation process, Energy and Water, so we have worked very closely together.

We are partners in that legislation, and he is my friend. However, on this energy bill let me say this: First, today of all days is a day when the Supreme Court of the United States was hearing a most important case, a case the Vice President of the United States has stalled for 3\1/2\ years. He had meetings during the transition period after President Bush and he were elected, meetings with people from the energy field, oil companies, automobile manufacturers, but we are not certain, people from the nuclear industry.

All the American people have asked for in 3\1/2\ years is tell us who they met with, what they talked about, and when the meetings took place. He has refused. Now this matter has gone to the Supreme Court, and that argument was held today. These were secret meetings, I guess is what they are, and if there was ever a time in the history of the country where we need to debate the energy crisis, as some refer to it openly, it is today. The first step to that would be to find out who the Vice President met with, why he met with them, what he talked about, and how long the meetings took place. He has refused to do that.

I also say that this country has arrived at a point in time where we are not going to be able to do major legislation. Let me give some examples with rare exception. Take, for example, the endangered species bill. The endangered species bill has caused problems in the State of North Dakota, and I know this because I have heard my two colleagues from North Dakota talk about the problems of the endangered species law in North Dakota. But it is not limited to North Dakota; the endangered species law is a problem for most States in the country. The State of Nevada ranks 34th in the number of listings for endangered species.

A number of years ago Senator Baucus, Senator Chafee, Senator Kempthorne and I tried to do a major revision of that bill. We could not do it. In that same Environment and Public Works Committee, there was a decision made that we needed to do something about Superfund. We could not. We have tried. Senator Smith, Senator Lautenberg, and others on that committee tried. They were at loggerheads. They could not come up with a major revision of that bill.

So the decision has been made by most legislators that the way to improve the Superfund law that now exists is to improve it by bits and pieces. The way to improve the endangered species law in this country is to do it by bits and pieces. The Energy bill is the same thing.

I say to my friend, we are not going to pass a bill that the Senator from Arizona referred to as the hooters and polluters bill. Why was it referred to as the hooters and polluters bill? Well, many of us think it did nothing to clear up the environment. Where did the hooters come in? One of the ornaments attached to the Christmas tree bill was to give a financial stipend to a Hooters operation some place in the southern part of this country. That is where it got its name.

We are not going to pass major legislation on energy in the near future. What we can do, though, is pass the part on which there is general bipartisan agreement. Ethanol is an example. More than two- thirds of the Senate voted for that legislation. It seems to me entirely logical that we should dispose of that matter. It would do some good to help the energy crisis we all acknowledge is in this country.

As I spoke about earlier today, I throw bouquets to Senators Baucus and Grassley for having done what they did in the recent FSC bill by including in that something that is extremely important--section 45, production tax credits for renewable resources--that expands and extends a credit for wind, geothermal, solar, and biomass. That is important. We should pass that measure next week. I think we are going to do that. We should do the ethanol bill now.

My friend from Arizona, the distinguished senior Senator from Arizona, asked, What is going on in the Senate?

I ask that the Senator from Nevada be given an extra 4 minutes and the Senator from New Mexico be given an equal amount of time.

It is possible. I will think about it after.

I ask unanimous consent that I be given 4 additional minutes, an extra 4 minutes be given to the Senator from New Mexico, and then we go back to reading the amendment when I finish.

Mr. President, what I was saying is the Senator from Arizona asked, What is going on in the Senate? I mean, can anyone imagine--and I am paraphrasing--they offered an amendment to energy on a bill that deals with the Internet tax?

My friend from Arizona, who is one of the most astute politicians this country has ever seen, knows what is going on. We are in the Senate. This has been going on for more than 200 years. We have the right to do that. In years past, no one ever considered it anything out of the ordinary.

The problem we have in the Senate today is we do not do anything. In the last 4 weeks, we have voted 11 times. Why? Because amendments are offered to important legislation like FSC and there is a desire to have a vote, for example, on overtime. How much time does Senator Harkin want to debate that? He will take 10 minutes and vote on it. We have not been given that privilege.

So what is going on in the Senate today is what has gone on for 200 years. The difference is, nothing is ever brought to conclusion because people do not want to vote. The majority has made a decision they do not want to vote, so we do not vote.

So I say to my friend from Arizona, we are doing what has been historically done in this body. Some may ask, Well, Senator Reid, why would you ask this amendment be read? Because I feel that offering this amendment of some 800 to 900 pages is only a message that says we are going to continue doing business in the Senate the way we have all year long and do nothing. Everybody knows that we are not going to pass this. It is the same as the endangered species. It is the same as Superfund. We are not going to pass a hooters and polluters bill.

We can take bits and pieces out of that legislation and do some good for this country. I repeat: To do the section 45 production tax credit would be a tremendous boon to this country. We would be able to start producing energy alternatively. It would help the capital markets. There would be construction jobs. I think it is the right way to go.

I am disappointed that my friend from New Mexico, who has worked hard--as my friend from North Dakota said, no one has worked harder on this energy bill than my friend from New Mexico, the distinguished senior Senator, but I say to him, someone I should not be giving advice to because he has far more experience than I have, this bill is not going to pass. I repeat for the third time, look at what we have tried to do with endangered species, look what we have tried to do with Superfund. Those are only two of the numerous other pieces of legislation we need to work on, but let's do them piece by piece. That will be my suggestion.

I will give some thought to taking away my objection to reading the amendment, but I am going to give some thought to that because I think offering this amendment is only a way of preventing our moving forward on this important legislation. I have spoken to the manager of this bill. He thinks that working with Senator McCain, the chairman of the Commerce Committee, that we can come up with a compromise in a reasonable period of time. It is totally appropriate that we dispose of Senator Daschle's amendment. People should vote it up or down. More than two-thirds of the Senate approved it at one time. Why should that change?

I would like an additional 1 minute on our side with the same rule in effect

Mr. President, the Senator from New Mexico has stated the bill he offered is not the so-called hooters and polluters bill, so named by the distinguished Senator from Arizona, but in fact it is a slimmed down version of that bill.

I ask through the Chair of my friend from New Mexico, is that, in fact, the case? Could you answer that yes or no? The bill that is now before the Senate is a slimmed down version of the so-called hooters and polluters bill?

Mr. President, I now withdraw the pending substitute amendment No. 2136.

Mr. President, I send a new substitute amendment to the desk.

Mr. President, this substitute, which I will describe in more detail in a minute, is, I hope, a fair and true compromise between the opposing sides in this debate. At least I hope it is viewed by a majority of the Senate as such.

I also understand there are very strongly held views on this issue. This is not the first time we have been to the Senate floor on this issue. This is the third time we have had debate and votes on it, and each time it becomes more difficult because we are talking about a lot more money, a lot more involvement, a lot more taxes and, of course, as technology evolves, of greater importance to America, whether it be economically, whether it be entertainment, or politically. The rise of the Internet in political campaigns in America today is one of the most recent phenomena.

I hope since we have, at least according to a letter I received from Senator Alexander, boiled down our differences to four major differences--I in no way understate the importance of those differences, but there are only four--perhaps we could propose amendments and vote on those four differences and, in the meantime, continue our dialog in trying to reach a reasonable compromise.

I would like to point out it does no one any good for us to leave this issue in limbo. If we are going to allow taxation of the Internet in a broad variety of ways, then the Senate should decide to do so. If we are going to adopt this compromise, then the Senate should do so. The House, as we know, long ago passed legislation.

This particular legislation, before I offered a substitute amendment, was reported out of the committee 10 months ago. I hope all will act together in good faith and try and resolve it.

By the way, those four major differences, as defined in the letter to me from Senator Alexander, are definition, voice over IP, duration, and grandfather clause. I hope we can address each of those either, as I said, in the form of negotiation or in the form of amendments which would be up or down.

I have been told the majority leader says we are going to complete action on this bill by Thursday night late. The Democrats have a retreat beginning on Friday which we all respect. I hope we can get a lot done so we do not find ourselves here at a very late hour on Thursday night.

Mr. President, I offer this amendment to the Internet Tax Nondiscrimination Act which offers, I believe, a true and fair compromise. On one end of the spectrum are those who do not believe the tax moratorium should be extended, and on the other end are those who want to make it permanent. This proposal, I believe, offers a middle- ground alternative to this debate and addresses the concerns State and local governments have expressed, while retaining some--many have said too few--aspects of the bill that was favorably reported by the Commerce Committee last year.

Before I summarize the substance of the amendment, I would like to spend a moment addressing a couple criticisms that have been raised about the compromise proposal.

First, I have heard a few Members talk about how consideration of S. 150 is moving too fast and that Members and their staffs have not had adequate opportunity to consider the substance of this matter.

With all due respect to my colleagues who believe this has been a less than deliberative process, I can think of few debates recently in which Members have had more time to prepare and negotiate. We voted the bill out of the Commerce Committee in July of last year. The Finance Committee, after requesting a sequential referral, discharged the bill without amending it.

Throughout this time, Members, including Senators Dorgan, Hollings, Allen, Wyden, Sununu, and many others who have spoken on this floor about this matter, continued to negotiate the substance of the legislation.

During that time, we heard from State and local groups such as the National Governors Association and the National Association of Counties. They had several opportunities, and did, to provide significant input.

We are here after almost 1 year of considering this matter, not because we have not discussed the issue thoroughly enough. Nor are we here because we have not properly defined Internet access or otherwise adequately dealt with the specifics of the Internet tax moratorium. We are debating this measure because the two opposing sides will not budge from their positions.

To be clear, the compromise amendment will not likely move those who are firmly on one side or the other. As Senator Voinovich said yesterday, for some Members the philosophical divide in this debate may be ``too deep to bridge.'' Its purpose is only to offer a compromise that other Members can vote for knowing that it strikes a reasonable balance between those who want a permanent and broad Internet access tax moratorium and those who want no moratorium at all.

Second, some Members who do not want to reinstate the Internet tax moratorium have expressed their view that the amendment is not a true compromise; that it does not go all the way to meeting their concerns about State and local revenues. I must respond to them by saying the amendment is a compromise precisely because it does not completely satisfy one side or the other. However, the amendment does protect a significant portion of the $20 billion in tax revenues from telecommunications services that States and localities claim they could lose as a result of S. 150.

In fact, even using the most aggressive revenue loss estimates available, it appears what is at stake is not more than 3.5 percent of total State and local tax revenues from telecommunications services. In my opinion, that is not just a compromise but a very generous concession to those who want to defeat the Internet tax moratorium. To criticize this proposal at this point as somehow not enough is just an empty exercise in moving the proverbial goalpost of this debate.

It seems to me the goalpost continues to move so much that it would not surprise me to hear at the end of this week that some Members actually support a Federal law requiring States to tax Internet access. I remind my colleagues that this debate is about striking a balance between S. 150, the Allen-Wyden bill, and S. 2084, the Alexander-Carper bill.

Clearly, this amendment goes a long way to compromising with the opponents of the Internet tax moratorium. Again, I have to repeat this because it is a crucial point: This body does not typically operate by capitulating 100 percent to one side or the other on a particular matter that is before it. In its normal course of business, the Senate compromises, and that is exactly what this amendment does.

Simply put, the amendment offered today is truly a reasonable compromise that addresses a host of concerns the States and localities have raised over the past 10 months. Throughout the negotiation process, State and local

groups have asked for a temporary extension to the Internet tax moratorium. Specifically, they have asked for a 2-year extension of the moratorium. The compromise amendment would extend the moratorium for 4 years.

Why 4 years? If we do it for 2 years, we would almost automatically be back revisiting the issue immediately when one looks at the process we have just been through. I think 4 years is a great deal less than permanent and not much more than 2 years, as the opponents of this legislation have alleged.

Another concern we have heard from State and local government is extending the Internet tax moratorium would somehow impact traditional telephone services. This amendment would ensure that State and local revenues from traditional phone service would not be impacted in any way, shape, or form. Again, the amendment would accommodate a concern raised by States and localities to the full satisfaction of State and local authorities.

State and local governments have also expressed concern that this bill would hamper their ability to tax voice services provided over the Internet. This amendment addresses that matter by setting forth a broad definition of services, including voice services that are provided over the Internet that would not be considered Internet access and therefore not be subject to the Internet tax moratorium. Once again, I believe this provision should fully address the concern of State and local governments.

The list of concessions made to State and local government interests in the amendment is extensive. For example, the compromise amendment would clarify that the Internet tax moratorium does not apply to nontransactional taxes such as taxes on net income, net worth, or property value. The amendment would clarify that otherwise taxable services would not become tax free solely because they are offered as a package with Internet access. The amendment would grandfather for 3 years, from November 1, 2003, the States that were taxing Internet access in October 1998. It would grandfather for 2 years, from November 1, 2003, the States that began to tax--according to many, improperly-- Internet access after October 1998. It would ensure that universal service would not be affected by the moratorium. It would ensure that 9-1-1 and e-9-1-1 services would not be affected by the moratorium. Finally, it would ensure that regulatory proceedings that do not relate to taxation would not be impacted by the Internet tax moratorium.

I want to point out again, there are really 10 compromises offered in this: the 4-year moratorium, the 3-year phaseout of the grandfather clause, the 2-year grandfather of taxes on DSL, and voice over IP carve-out. It clarifies taxes covered. It clarifies the House's language on DSL. It provides a clear and uniform accounting rule. The universal service fees are unaffected. As I mentioned, e-9-1-1 taxes are unaffected, and nontax regulatory powers are unaffected.

I hope we can move forward if there is not agreement. Meanwhile, we continue to discuss the issue.

Mr. President, this amendment excludes from the definition of tax on Internet access transactional taxes such as gross receipts or gross revenue fees, constitutes an end run around Internet tax freedom, and eviscerates the moratorium itself. If we allow this to exclude payments made for use of the public right-of-way, including access line fees, franchise fees, et cetera, this amendment should be rejected.

I move to table the amendment, and I ask for the yeas and nays.

Mr. President, I regret that I was not here at the time the Democratic leader offered his amendment. But, of course, it would not have mattered really much whether I was here.

I wonder, since we have seen a singular lack of progress in the last few months, particularly in the last few weeks--literally every piece of legislation, with the rarest exception, has been loaded up with extraneous amendments and has had to be brought down. Of course, I have only been here for 18 years. That is not a long time compared to some. But I have to say, I am unaccustomed to this kind of procedure where in good faith we brought this bill to the floor, in good faith we voted cloture on the motion to proceed, and then the Democratic leader stands up and proposes a totally, completely, absolutely extraneous amendment, an entire piece of legislation, the Energy bill, which has been hard fought in this body many times, as an amendment on the Internet tax moratorium bill, without warning, without saying what he was going to do, without having the courtesy to inform me as the chairman of the committee and the manager of the bill. If he had, I would have thought, well, maybe we ought to not bring it up. The temperature is 85 degrees in Phoenix today. It is not raining there like it is outside. Why don't we just go home? Why don't we go home, relax with our constituents and our families and friends, rather than go through this charade of telling Americans that we are legislating.

There was an old line in the cold war era. The Russians said: We pretend to work and they pretend to pay us. Well, we pretend to work and we are still getting paid. We are not working. We are not doing anything.

I say to my friend the minority leader and to my friend from Nevada-- and they are my friends--what is this all about? You know very well that if an Internet moratorium is passed, an energy bill will not be part of it. Now we are going to go through the parliamentary charade of having somebody offer a second-degree amendment and somebody else will do a substitute, and then somebody else will offer a second-degree amendment. What am I supposed to tell my constituents, the taxpayers, we are doing here in Washington?

If I had a townhall meeting and said, yes, we had an Internet tax moratorium bill, a bill that is vitally important to both sides as far as whether taxation is going to be imposed on transactions over the Internet, which some 70 or 80 percent of the American people engage in now--billions of dollars--we are going to decide in a parliamentary fashion whether those transactions should be taxed or not taxed, and if so, under what circumstances--this is the third time we have revisited this issue. Ten months ago we passed it.

The Senator from Tennessee will tell me how many hundreds of hours he has devoted to this issue. The Senator from Virginia will tell me how many hundreds of hours he has devoted to it. What do we do? We take up the bill. We have debated it for barely 2 days. And what do we have? The Energy bill as an amendment to the Internet tax moratorium bill.

What am I supposed to tell my constituents? I will tell you what they are going to say: We don't get it. That is what they are going to say: We don't get it. Yes, it is important to me, Senator, whether the State and local governments can tax the things I buy on the Internet. Some people say they should; some people say they should not. But can't you guys and women get together and make a decision on it so I will be relieved of this lack of knowledge as to what the future holds?

What about all those people who are starting businesses that do business over the Internet? What about them? I am sorry, sir, we can't address this issue because we have to take up the Energy bill.

I certainly wouldn't say it is all about ethanol. I certainly wouldn't say it is about a product that we have created a market for which has absolutely, under no circumstances, any value whatsoever except to corn producers and Archer Daniels Midland and other large agribusinesses.

Here we go now. Here we go. The Democrats have a retreat on Friday, so we are not going to be here on Friday. No, we are not going to work 5 days this week. Actually, 3, excuse me. And here we go, now we are going to spend late this afternoon jockeying back and forth.

I am sure there may be a headline in South Dakota that says: Senator Daschle fights for ethanol. I bet there will be a whole lot of press releases, too, and maybe even the distinguished Senator from North Dakota will be fighting for ethanol, too. Meanwhile, we are not addressing the issues that the American people care about.

Right now they care about whether we are going to tax the Internet. I urge my colleagues to tell us, all I want to know is, are we going to spend between now and when we go out of session at the beginning of October in this kind of back and forth?

My side is also guilty, I freely admit. Are we going to spend that time between now and the beginning of October, when we will break to take the electioneering from the floor of the Senate out to our respective States, and do this or are we going to seriously legislate as the American people sent us here to do?

Obviously, I am upset because this is a bill I have been working on for a long time, an issue I have been involved in for many years. Obviously, I am upset by it. I apologize if I have offended any of my colleagues. But at the same time, this has been going on now for months. This is not the first time we have done this. This is about the 50th time, again, on both sides of the aisle. So why don't we make a decision. We are going to attach the minimum wage or we are going to attach lawyers' fees or medical malpractice or one of these; we are going to attach them all back and forth. And we will be able to force votes on it, but unfortunately, we don't legislate.

Why don't we make a decision? Why don't the leaders and all 100 of us get together and decide what we are going to do and what we are not going to do. At least the taxpayers may find some comfort in the knowledge that at least we would tell them what we are doing.

I would imagine that as we speak we will have some amendment and then a second-degree amendment, and we will fill up the tree, which probably very few living Americans understand, including Members of this body, but we will consult the Parliamentarian as to how the mechanics work.

I suggest the absence of a quorum.

Never.

I would be happy to speak after the vote.

Madam President, we are not on the bill, is that correct?

Madam President, I rise to claim an hour under the motion to proceed to speak on the bill.

Before I do, I compliment the Senator from Florida on his comments on Venezuela. He may not know this, but I had the pleasure of spending some time in Venezuela when I was mayor, leading a delegation. We had a sister city relationship with Caracas. I saw the vibrancy of that democracy at that time. This was in the mid-1980s. All the progress that had been made in the Bolivar nations and the closeness that existed between Venezuela and our country, it was something very special to see. You could say, I think, that Venezuela led all the nations in terms of its relationship to us. So the deterioration of that relationship is very much regretted by me. I associate myself with the comments of the Senator from Florida and thank him very much for making them.

I wish to speak about a bill that I am not sure everybody understands very well, let alone exactly what it is. There are essentially three bills floating around. One of them is S. 150. This is a permanent measure. It includes a 3-year grandfather on Internet access if the taxes existed in 1998. That is the Allen-Wyden bill.

There is a McCain proposal that may be brought forward. And, as I understand it, in would last for 4 years. It includes a 3-year grandfather on Internet access taxes that existed in 1998 and a 2-year grandfather on Digital Subscriber Lines (DSL) taxes.

And there is the Alexander-Carper bill, of which I am a cosponsor. This is a 2 year temporary moratorium that includes a 2-year grandfather on Internet access taxes that were in place in 1998 and a 2-year grandfather on DSL service.

What all that means is very difficult. The last time this bill was on the floor was November 6 and 7 of last year. I remember coming to the floor and saying I had been approached by more than a hundred California cities to oppose the bill. It was a deluge. I had never had that kind of opposition from California cities before in my 12 years in the Senate. That deluge has only increased.

Interestingly enough, I have not received a single letter from a telephone company in support of any of these bills, which is very interesting.

The most dominant voice has been the League of California Cities, firefighters, labor. The League in particular represents over 470 California cities. These cities believe this bill, S. 150, will cost billions of dollars nationwide, and in California it will cost local jurisdictions as much as $836 million once it really gets started.

Cities and counties across the Nation are facing budget crises. These cuts only make the situation worse. There would be less money to pay for police officers, firefighters, libraries, and parks. Passing this bill, which essentially would end revenue streams which cities have counted on for years to fund vital services, is something I can't do. That is why you have Senator Carper, a Governor, Senator

Voinovich, a former mayor and Governor, Senator Alexander, a Governor, and myself, a mayor, all saying, please don't do this.

I support legislation sponsored by Senators Alexander and Carper which would extend the recently expired moratorium on Internet access by 2 years, and make the moratorium technology neutral.

The Allen-Wyden bill changes the definition of Internet access significantly. That is the problem. Simply put, the definition included in the bill before us is far too broad. The bill says that telecommunications are taxable, and then it adds this:

. . . except to the extent such services are used to provide

Internet access.

But what does the phrase ``to provide Internet access'' actually mean? Cities, counties, and States believe it means they won't be able to tax telecommunications services, which they currently can, to the tune of $2 to $9 billion annually all across the United States. So that is really what is at stake.

Let me read what the Center on Budget and Policy Priorities says about the definition contained in Allen-Wyden:

The ban on State and local taxation of telecommunications

services used to provide Internet access would effectively

eliminate billions of dollars' worth of taxes on voice

telephone service as the provision of that service is

migrated to the Internet, a process that is well underway.

Then it goes on and it says there will be substantial revenue losses for State and local governments. It points out that 11 States would lose between $80 million to $120 million: Colorado, Hawaii, New Hampshire, New Mexico, North Dakota, South Dakota, Ohio, Tennessee, Texas, Washington, and Wisconsin. It says 28 States and the District of Columbia would lose $70 million annually. Let me quickly mention which ones they are: Alabama, Alaska, Arizona, Colorado, Connecticut, DC, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Rhode Island, South Carolina, Tennessee, Texas, Washington, and Wisconsin.

A lot of States stand to lose. It goes on to say many more State and local governments would lose their ability to tax telecommunications services purchased by Internet access providers, such as the high-speed lines providers use to link to the backbone of the Internet.

A lot of States stand to lose. Now, you can talk to authors of the bill and they will say, oh, no, that really is not true. But the fact is that even CBO cannot give you a real estimate because companies don't maintain records; but cities, interestingly enough, have retained specialists to estimate for them.

Let me read from one of those specialists. His name is William T. Fujioka. He is the administrative officer for the city of Los Angeles. He points out that:

In California, the utility user tax has been applied to

telecommunications services on a technology-neutral basis for

over 30 years. With 150 cities receiving over $830 million--I

have been over that.

He goes on to say:

For the city of Los Angeles, our telecommunication's

utility user tax covers local exchange service, long

distance, and wireless, which total $260 million. S. 150

places all of these revenues in jeopardy. The loss would come

from: 1, the migration of traditional telephone services to

Internet-based telephone services, or Voice over Internet

Protocol; and 2, the application of S. 150 to local exchange

and wireless services that also provide voice and Internet

access (in the same manner as DSL and cable modem), which

would prevent the city of Los Angeles from taxing these

services.

He then goes on to point out:

The migration of telecommunication services to the Internet

is not just speculation. AT&T, SBC, Verizon, and Time-Warner

have all announced their intent to introduce Internet

telephone service in California this year.

It is important to note that currently, DSL and cable modem are not subject to the Federal excise tax, or UUT, utility user tax, because until recently these broadband communication services were not used for voice and were properly deemed private communication services.

Now, the Ninth Circuit Court of Appeals has changed even that and is essentially saying that both cable and DSL can be taxed. That just came out. I am told that it will take another 18 months to 2 years just to straighten that out and to see if there is an appeal on a writ of certiorari to the U.S. Supreme Court.

So this whole area is in flux and it could change dramatically. It makes no sense to do a permanent piece of legislation at this point in time, in my view, particularly with this Ninth Circuit case recently coming down.

If Allen-Wyden is approved, phone services, which are currently taxable, will become tax exempt. This means local jurisdictions will lose revenues they can collect today. In turn, this means less revenue to pay for local priorities.

I support making business and residential access to the Internet tax free. There are primarily three ways to access the Internet today: dial-up service; cable modem; and DSL, digital subscriber lines. Under the recently expired moratorium, two of these methods--dial-up service providers and cable modem--were exempted from taxation. The third, DSL, could be taxed, though many jurisdictions, including California, didn't tax that. But, as I have just told you the Ninth Circuit has just made a change by saying that you can now tax cable modem.

Alexander-Carper--the bill I support--would level the playing field and make DSL tax exempt, except in those jurisdictions which already taxed it. This grandfather would last for 2 years. And, it would grandfather access taxes in place in 1998--again for 2 years. It is hoped that this will ensure that the Internet could continue to mature.

I must say, also, it is my understanding that Senator Enzi is going to introduce a bill that will be a simple extension of the 2-year moratorium, which expired a few months ago. If the Alexander-Carper bill isn't successful, I will support this solution.

I really believe that is the solution--that we should simply extend it, let the Ninth Circuit case go up to the Supreme Court, and let the Supreme Court speak. Or we should add an amendment to S. 150 that says that all present taxes remain unaffected, so that cities, counties, and States, through your State, Madam President, and my State, as well as every other State, can know with certainty that the revenues they have counted on they can continue to count on.

If you ask people whether they want police and fire, the answer is yes. If you ask them whether they want local services, the answer is clearly yes. To pass a bill that ends the method of revenue collection and funds up to 15 percent of these local services in many jurisdictions, I think, is an unconscionable thing to do.

Much like the tax cuts, they explode in outer years. So while Members that vote for that may be popular for a short period of time, to be able to go home and say they are assuring their local jurisdiction that they are protecting their revenue sources, they cannot do that by voting for S. 150. Just too much is unknown.

Fifteen percent means layoffs, and it could mean major cuts in service. It could mean higher local taxes.

The cities that have contacted me, large and small, are like San Francisco, Los Angeles, Sacramento, LaVerne, San Leandro, and Santo Rosa.

Let me quote from the comptroller of the city of San Francisco, Ed Harrington. Again, this is a technical person writing:

For the city of San Francisco, our telecommunications UUT--

utility users tax--covers local exchange service, long

distance, and wireless, which totals $32 million a year. S.

150--that is Allen-Wyden--places all of these revenues in

jeopardy.

The loss would come, again, from the migration of

traditional telephone services to the Internet-based

telephone services or Voice Over Internet Protocol; and, 2,

the application of S. 150 to local exchange and wireless

services that also provide voice and Internet access, which

would prevent the city of San Francisco from taxing these

services.

That is the same as Los Angeles.

So you have two of the major cities in the State and their technical and financial people both saying the same thing.

The League of Cities, which represents all of California's 478 cities, its county administrators, its police officer associations, its firefighter associations, all oppose this bill.

In the city I served as mayor for 9 years, the current definition of telecom

services could lead to a loss of $32 million annually. This translates into 300 police and firefighters.

I want to also cite the city of Pasadena. Mayor Bill Bogarrd wrote my office to protest that his city would lose $11.4 million under Allen- Wyden, and he writes:

By using vague language to include broadband Internet under

the moratorium, we fear that the bill will allow telephone

and cable companies to use that protection to avoid paying

local franchise or utility fees.

Which is exactly what is going to happen.

He goes on to state:

It is our understanding that it was not the intent of the

bill sponsors to endanger local franchising authority, but

the legislation has yet to be changed to correct these

unintended consequences.

Virtually every technical person who looks at this bill--the Center for Budget and Policy Priorities, as well as every controller, technical professional employee of cities and counties--says the same thing: The definition is flawed, it is vague, and under that definition, any number of things can happen.

Madam President, 150 cities in my State levy a utility user tax. That includes telephone and cable television services. These taxes provide the contribution that I mentioned of approximately 15 percent in general purpose revenues. So they make a utility user's tax vital in helping fund critical city services.

I know why telephone companies do not want this. They do not want to be bothered by local taxes. But on the other hand, why not say that present taxes are excepted, present taxes would not be covered? Cities can continue those taxes where they are.

I believe that because of the determination that this bill is an unfunded mandate and other reasons, S. 150 is subject to a point of order when it is under consideration, and I fully expect that this point of order will be raised. For this Senate to pass a bill that further ties the hands of local government I think will be unfortunate just at a time when so many States face budget deficits and so many cities have the same situation.

In short, the problem with Allen-Wyden is that it changes the definition of Internet access in the recently expired Internet tax moratorium in such a way that cities lose billions nationally, that this escalates over time, and that this will lead to reduced preparedness of our cities, to fewer firefighters, and to fewer police officers.

Anyone who has ever done a city budget knows you cannot lose up to 15 percent of your revenue and keep services at the same level.

I am hopeful that as the days go on and as we consider amendments to the bill, there will be a straight amendment that will just simply extend a 2-year moratorium to give the Supreme Court case Brand X Internet Services v. the FCC the opportunity to go up on appeal, hopefully for the Supreme Court to take it up, or else to leave in place the appellate court opinion which makes very clear that States will be able to tax cable modem service since the 1996 act allows States to tax telecommunications services.

One of the most disturbing aspects about the bill is some people think that it imposes Internet sales taxes when this is not true at all. These taxes are all at the point where the Internet comes in to the home, and yet they reach back in the chain as various services come together substantially before the Internet reaches the house. I think if that currently taxable aspect of the service is made unavailable to local communities that have very few revenue sources, it is going to present a substantial hardship for the quality of life of the people we care about in our cities and in our States.

I will oppose S. 150. I will vote for the Alexander-Carper bill and will also vote for Senator Enzi's bill should he make that available.

I reserve the remainder of my time and yield the floor.