Safe and Fair Deposit Insurance Act of 2005

Mr. President, the subject under discussion is the matter before us entitled the ``Deficit Reduction Omnibus Reconciliation Act of 2005.'' Big words that are meant to communicate, but it reminds me a little of the old saying: You can't tell a book by its cover. If there was ever a case of that, this is it. You need to know that this is a book of many chapters. We need to read all of the chapters to know the conclusion. I can assure you the conclusion is not deficit reduction. No, this budget has nothing to do with deficit reduction. This budget is all about increasing the debt and increasing the deficits.

Describing this package as deficit reduction is a little like the blindfolded man describing an elephant by only touching its tail. The blindfolded man might describe the elephant by just holding its tail as small, long, and slick. Well, that is not the whole story. That is an accurate description as far as it goes, but it misses the larger truth. That is the case with describing this budget action as deficit reduction. It is only the first chapter. You have to read all of the chapters to get the full meaning. The truth is, this budget increases the deficit and explodes the debt. That is the larger truth.

The budget that was enacted earlier this year actually increases the deficit by $168 billion over the 5 years of its life. It does not reduce the deficit. It increases the deficit. We would have less of a deficit if we put the whole budget on cruise control, but that was not the choice the majority made. They made a choice, consciously, to

write a budget that, even in the face of record deficits and massive increases in debt, increases the deficits even further. I know it is hard to believe, but that is the fact of the matter. The budgets that have been written by our colleagues on the other side of the aisle increase the deficits.

Budget reconciliation is a part of the overall budget process. Budget reconciliation is special provisions, fast-track provisions that enjoy special protection under the rules of the Senate. But remember, what we are dealing with this week is the first chapter. The first chapter contains spending cuts of $39 billion. But that is only part of the package. The next chapter will have tax cuts of $70 billion. If you put those two chapters together, you don't have a reduction of the deficit, you have an increase in the deficit of over $30 billion.

Chapter 3 is the chapter our colleagues on the other side of the aisle hope you will not read. Chapter 3 increases the debt of the country by $781 billion. That is what this book is all about: increasing the debt of the country when we have already taken on record amounts of debt.

Back to chapter 1 and chapter 2. Chapter 1 cuts spending by $39 billion, but it is quickly followed by chapter 2 that cuts taxes $70 billion. The combined effect of chapters 1 and 2 is very clear. It is not deficit reduction, not what is on the cover of the book; it is a deficit increase, an increase in debt.

If we go back to what the President told us when he started us down this course, he told us in 2001:

[W]e can proceed with tax relief without fear of budget

deficits, even if the economy softens.

That is what he told us. Look at what has happened. Now we can look back and we can check the record and we can see whether the President was right or was he wrong.

Back at the time in 2001 that the President proposed these massive tax cuts, this was the outlook according to the Congressional Budget Office and the administration. This was their outlook going forward, a range of possible outcomes from a worst-case scenario to the best-case scenario. They adopted the midline that told us we were going to experience some $6 trillion of surpluses over the next 10 years.

But look what happened in the real world. Look what happened in actuality. We didn't get the worst possible outcome under the projections that were provided. We got way below the worst possible outcome. This red line is what actually happened compared to the projections, and instead of trillions of dollars of surpluses, what we have are trillions of dollars of debt.

I can remember when we were having that debate. My Republican colleagues told me when I warned them that you can't bet on this 10- year forecast, that it is highly unlikely to come true, many of my Republican colleagues told me: Kent, you are far too conservative. Don't you understand, when we have these big tax cuts, we are going to get even more revenue. We are not going to be at this midrange of forecasts of possible outcomes; we are going to be well above it because these tax cuts are going to generate much more revenue.

Again, now we can go back and check the record as to what actually happened. We did not get some great boost. Instead what we got was an ocean of red ink. Instead what we got were these massive deficits.

Previous Presidents have said that facts are stubborn things. Facts are stubborn things. And the facts are that this fiscal policy has taken us deep into the deficit ditch. Despite all of the President's promises that would not occur, he was simply wrong.

The next year the President told us:

. . . [O]ur budget will run a deficit that will be small and

short-term. . . .

We can go back and check the record on that as well. He said that in 2002. Look what has happened since. The deficits have exploded. In 2003, we had what was then the largest deficit ever. In 2004, the deficit got even bigger. In 2005, the deficit was the third largest we have ever had. So, again, the President was simply wrong in his prediction.

If we look at this from a historic vantage point and look back to 1980 and look at the outlays or spending of the United States and the revenues, we see some very interesting things. This is all expressed as a percentage of our gross domestic product, which is what economists say is the best way to make these comparisons because it takes out the effect of inflation and real growth. So we are comparing apples to apples here.

Look what has happened. This is the spending line of the United States. It was up over 23 percent of gross domestic product in the previous Bush administration. Then we got to the nineties, and the Democrats put in place a plan that led us to reduce spending, and each and every year spending came down as a share of GDP.

In 2000, we had a change of administration, and here is what has happened to spending. Spending has gone up. Spending has gone up, but it is still well below where we were in the eighties and nineties. These are facts.

Why did the spending go up? The spending went up largely for three reasons. One, national defense; two, homeland security; three, rebuilding New York and bailing out the airlines.

All of us supported on a bipartisan basis this increase in spending. This was in response, obviously, to 9/11 and a national emergency. So, yes, spending went up. Virtually all of it is accounted for by defense, homeland security, and rebuilding New York and aid to the airlines.

Now we are at a place where spending is at about 20 percent of gross domestic product. But look what happened on the revenue side of the equation. Again going back to the eighties, we were at about 19 percent of gross domestic product on revenue. We had a series of tax cuts then that opened up deficits as spending was not reduced to make up the difference. Then we got to the nineties and again we had a plan that was put in place. Revenue increased every year until we actually got to the circumstance in which we were running surpluses. For 2 years, we not only ran surpluses, but we stopped using Social Security money for other purposes.

Then in 2000, with the change of administration, a series of tax cuts was put in place, and we experienced an economic slowdown and the revenue side of the equation collapsed. Until last year, we had the lowest revenue as a share of gross domestic product since 1959. We have had an increase in this last year, but the forecasters are saying that will level out going forward as a share of gross domestic product, leaving us with this very large gap between spending and revenue and, hence, ongoing massive deficits. That is the reality we find ourselves in today.

The next year, in 2003, the President told us:

[O]ur budget gap is small by historical standards.

I think if you measure it fairly, what you find out is that is not the case either. What the President has been focusing on is only the deficit. The deficit this last year was $319 billion, but that isn't what got added to the debt. What got added to the debt of the country was not $319 billion, it was $551 billion. The largest part of the difference is Social Security because last year, under the President's plan, $173 billion of Social Security money was taken to pay for other programs. That all gets added to the debt, but it is not counted in the deficit calculation.

When you add in those items that were not counted in the deficit, what you find is that the increase in the debt was, instead of the 2.6 percent that many have asserted, the actual difference between spending and revenue, the actual difference in addition to the debt was 4.5 percent of gross domestic product, and that number is a danger sign.

Most economists say your deficits should not be above 2.5 percent of GDP. The truth is, what got added to the debt last year was 4.5 percent of GDP. In the European Union, you cannot be a member in good standing if you run deficits in excess of 3.0 percent of GDP.

The big difference is what is happening with Social Security because back in the eighties, the deficits had almost nothing to do with Social Security. Social Security was running very small surpluses at the time. In fact, if you go back to 1983, there was no Social Security money to take to spend for other programs. There was no surplus in Social Security. But look what has happened since. Social Security surpluses have grown dramatically. This was intended, this was designed to prepare for the retirement of the baby boom generation. The whole idea was

to use these surpluses to pay down debt or to prepay the liability. That is not what has been done.

Under the President's policy, all of this Social Security money is being taken to pay for other programs. That is what is happening. All of it is getting added to the debt, all of it has to be paid back, and there is no plan to do it.

This is the difference between the eighties and now. In the eighties, almost no Social Security funds were available to be taken to pay for other items, now we have--just last year--$173 billion in that year alone.

Over the next 10 years, under the President's plan, they are going to take $2.4 trillion of Social Security money to pay for other things. That is a dangerous course.

Now, the President told us just last year:

So I can say to you that the deficit will be cut in half over

the next 5 years . . .

All of his assertions so far have been proved wrong. Now he tells us: Do not worry, we are going to cut the deficit in half over the next 5 years.

First, I do not think that is the appropriate test because we are in the sweet spot of the budget cycle. This is the time when we should not be running deficits at all because this is right before the baby boomers retire, and we are running these massive surpluses in Social Security. Those funds should have been used to either pay down debt or prepay the liability. Instead, the money has been hijacked. The money has been taken to pay for other things--digging a much deeper hole for the future. So when the President says the deficit will be cut in half over the next 5 years, that is not even the right test. This is not a time when we should be running deficits at all.

Beyond that, if one pierces the veil on the President's claim that the deficits are going to be cut in half, here is what they find out: He got there by just leaving out things. He just left out war costs, did not have any war costs in his budget past September 30 of this year. Does anybody believe the war costs ended on September 30 of this year? That is what the President's budget said.

He did not just leave out war costs, he left out the cost of dealing with the alternative minimum tax. The alternative minimum tax, which is the old millionaire's tax and is rapidly becoming a middle-class tax trap. It costs $700 billion to fix. The President just left that out of his budget.

The President wrote a 5-year budget instead of the 10-year budgeting that used to be done because at the end of the fifth year, the cost of his tax cut proposals explodes, driving us deeper into deficit and deeper into debt. Apparently, he did not want to share that information with the American people.

When one looks at the long-term outlook with those things added back in that the President left out, what one sees is a slight improvement in the deficit in the short term, but then it just explodes beyond the 5-year budget window. Why is that the case? Well, I have mentioned some of the reasons.

The first reason is war costs. In the mid-session review, the President had included $50 billion for ongoing military operations, but the Congressional Budget Office tells us that $50 billion does not begin to cover the real costs. They say the real cost is going to be $333 billion. So the President has left out a big chunk of spending that others say we will experience.

Second, by adopting a 5-year budget--it used to be 10-year budgets-- the President is hiding this fact: The cost of his tax cut proposals explodes right beyond the 5-year budget window. Is this not interesting? This dotted line is the end of the 5 years of the budget proposal presented by the President. Look what happens to the cost of his tax cut right beyond the fifth year. The cost of the President's tax cut proposal explodes right beyond the end of the fifth year.

Maybe it should not be a surprise that the President switched from 10-year budgeting to 5-year because he would have had a very hard time explaining how his plan will reduce the deficit when factoring in the exploding cost of his tax cuts, the additional cost of war, and the cost to fix the alternative minimum tax.

By the way, the pattern is much the same with the alternative minimum tax. The alternative minimum tax, which virtually everyone says needs to be reformed, the President did not put one thin dime in his budget proposal to deal with that. According to the Congressional Budget Office, it will cost $774 billion to fix. The President does not have any of it in his budget.

Look at the pattern. Here again, the dotted line is the end of the 5- year budget proposal of the President. Here is the pattern of costs of fixing the alternative minimum tax. What happens if we do not fix the alternative minimum tax? Well, here is what happens: In 2005, 3.6 million taxpayers were affected. If we fail to act, by 2010, 29 million taxpayers will be affected. So people are in for a big surprise. They thought they were going to get a tax cut? Instead, they are going to get into the swamp of the alternative minimum tax: 3.6 million people affected this year, 29 million affected 5 years from now if we fail to act. It costs $770 billion to fix, and there is not one dime in the President's budget to do it.

Here is what the President said in 2001 about the importance of paying down debt. The President told us at the time:

. . . (M)y budget pays down a record amount of national debt.

We will pay off $2 trillion of debt over the next decade.

That will be the largest debt reduction of any country, ever.

Future generations shouldn't be forced to pay back money that

we have borrowed. We owe this kind of responsibility to our

children and grandchildren.

The President was right about one thing. We do owe that responsibility to future generations, but he did not pay down any debt. Instead, the debt has exploded. The budget that my colleagues on the other side of the aisle passed and the budget that we are moving to take final action on does not pay down any debt. It explodes the debt. It takes the debt from $7.9 trillion now, and it increases it by more than $600 billion a year each and every year of the life of this budget--this after the President told us he is going to have maximum pay-down of the debt. There has been no pay-down of the debt. He is exploding the debt.

Every minute in 2005, the budget policies of our colleagues on the other side of the aisle increased the national debt by over $1 million. Every minute of every day, they have increased the debt by over $1 million.

What are the consequences of this fiscal failure? The consequences are very clear. Foreign holdings of our debt have exploded. It took 200 years to run up $1 trillion of debt held by foreign countries and foreigners. This President has doubled it in 4 years. We have gone from $1 trillion of foreign holdings of our debt to $2 trillion. That is an utterly unsustainable course. That is the outcome of the fiscal policy of this administration. It is not conservative; it is reckless. This is a policy of exploding our debt.

Who holds this debt? Well, I might add it is interesting that President Bush did in 4 years what 42 Presidents took 224 years to do. Forty-two Presidents ran up $1 trillion of external debt. This President exceeded them in 4 years. This President ran up more debt held by foreigners in 4 years than the other 42 Presidents combined in the history United States. Let me repeat that. This President ran up more debt held by foreigners in 4 years than 42 other Presidents ran up in 224 years. That is a record of fiscal failure unmatched in the history of this country.

They call themselves conservatives? Why, they should call themselves borrowers because that is what they are doing. They are engaged in the greatest borrow-and-spend spree in American history.

Who are we borrowing the money from? Increasingly, we are borrowing it from foreigners, from foreign governments, from foreign investors. Now we owe Japan over $684 billion. We owe China over $240 billion. We owe the United Kingdom over $170 billion. My favorite, the Caribbean Banking Centers, we owe the Caribbean Banking Centers over $100 billion. Where did they get their money? Anybody here do their banking in the Caribbean? We owe them over $100 billion. This is conservative? What is conservative about this? Some say this is strengthening the country. How is that? How does it strengthen the country to borrow more and more money from abroad?

This is all happening at the worst possible time--before the baby boomers retire. We are facing a demographic tsunami, and here it is: This is a depiction of the numbers of people in the

baby-boom generation. We have less than 40 million people who are eligible for Social Security and Medicare now, and we are headed for 81 million. That changes everything. Instead of preparing for it, this President has dug the hole deeper and deeper. There is nothing conservative about what is being done.

Let us go back to the so-called budget reconciliation that is before us today. The cover on the book says: Deficit Reduction. One has to read the book. They have to read every chapter of the book to find out the conclusion, and the conclusion has nothing to do with deficit reduction. Oh, no. The first chapter cuts spending $39 billion, but the second chapter cuts revenue $70 billion. So guess what: No deficit reduction here. The deficit is increased, not reduced. Then one has to read the third chapter of the book. What is found there? They are going to increase the debt $781 billion--one of the biggest increases in our national debt ever. If they get that increase, this President alone, in the 4 years he has been in power so far, will have run up the debt by $3 trillion.

In the next 5 years, he is going to run up the debt another $3 trillion. There used to be a TV show--what did they call it--the ``Six Million Dollar Man''? We have the $6 trillion President because the effect of his policies will be to run up the debt of this country by $6 trillion. That is truly stunning.

Here is the record. In 2002, debt was increased by $450 billion. In 2003, debt was increased by $984 billion. In 2004, it was increased by $800 billion. Now our friends on the other side want to increase the debt by $781 billion. That is a grand total of more than $3 trillion of additional debt. We know that, if this budget is passed, they are going to add another $3 trillion of debt over the next 5 years--a combined total of this President's policies of $6 trillion. That is this President's plan. Unfortunately, that is the plan of this Congress.

Don't take my word for it. This is a budget they euphemistically call a deficit reduction plan. If this weren't so serious, this would be very amusing. They place the title of ``Deficit Reduction'' on this plan. Come on. Here is what this plan does according to their own tables. Go and look in the conference report on the budget that was done earlier this year by the majority party in the House and the Senate. This is their conclusion about what is going to happen. This is their conclusion. You see the debt going up every year by more than $600 billion. That is their plan. If you look at the next 5 years, the debt under their plan is going to increase by more than $3 trillion, and they are out here with this book entitled ``Deficit Reduction Act,'' and their plan increases the debt by $3 trillion over the next 5 years. Have words lost their meaning? They call this deficit reduction. They are increasing the debt over $3 trillion, and they label this deficit reduction. That is breathtaking.

Chapter 2 of this book is to extend certain tax benefits, tax cuts. Many of those I support, but some of them are just overwhelmingly directed at the most wealthy among us. If you look at chapter 1 being written here, and chapter 1 being written over on the House side--by the way, the House budget is very clear. It is going to cut food stamps. It is going to cut Medicaid. The House bill takes from the least among us so that they can give to those who have the most.

When I say ``give to those who have the most,'' let me talk about two provisions that are in their tax plan. Extending dividends and capital gains cuts will, on average, give a millionaire a tax break for 1 year of over $35,000. Those earning less than $50,000 a year will get $6. Those earning from $50,000 to $200,000 a year, on average, will get $112. Those earning from $200,000 to $1 million a year will get, on average, $1,480. Those earning more than a million dollars a year will get $35,000 a year. It is a very interesting set of values. It is a very interesting set of priorities, to cut Medicaid and cut food stamps. This is not the Senate bill I am talking about. I am talking about the House bill. The House bill cuts food stamps, cuts Medicaid, cuts aid for those who are the least among us, takes the resources and gives them to those who have the most.

I don't know in what Bible they read that. I have not read any Bible that says the value ought to be take from those who have the least and give to those who have the most. In fact, I don't know of any holy book of any religion that says that is a value, that what we ought to be doing is taking from those who have the least among us to give to those who have the most among us. I don't know of any religion that has that as a value.

I know our colleagues on the other side will say: Wait a minute here. These tax cuts have fueled economic growth.

There are tax cuts that are helpful to economic growth. That is undeniable and clear. In 2001, I supported a significant package of tax cuts, tax cuts that the Congressional Budget Office told us would get a large bang for the buck in terms of economic growth. Part of those were included in the package. In fact, many of them were, and I supported those.

But many of these provisions simply went too far in terms of their cost and have pushed us over into a sea of red ink, massive deficits, and massive debt. They simply went too far.

Here is the record on revenues as a share of gross domestic product. In 2000, we were at a historic high. That is absolutely clear. Tax cuts were justified in 2000. I didn't think the magnitude of the tax cuts were justified, but clearly we needed tax cuts, partly to give lift to the economy. My own proposal to our colleagues actually had more tax cuts in the short term, much more than the President's plan, to give lift to the economy because that made good economic sense. But they put tax cuts on top of tax cuts on top of tax cuts and plunged revenue to 16.3 percent in 2004. That is the lowest it has been since 1959, and far below the level of spending for which they have all voted. So the result is red ink, massive red ink.

Here is what the Chairman of the Federal Reserve has said about deficit-financed tax cuts, because that is what is going on here now. We are borrowing the money to give tax cuts. From whom are we borrowing the money? Increasingly, we are borrowing it from the Japanese, the Chinese, Caribbean banking centers, to give tax cuts to the most wealthy among us. Does that really make sense? Is that really defensible? I don't think it makes any sense.

I am not alone. Chairman Greenspan, in his testimony before the Budget Committee last year, said:

If you are going to lower taxes you should not be borrowing

essentially the tax cut. That over the long run is not a

stable fiscal situation.

Chairman Greenspan has it right. We should not be borrowing to provide tax cuts, and we certainly should not be borrowing from foreign governments and foreigners to finance tax cuts. We certainly should not be borrowing more and more money from Japan and China and Caribbean banking centers and who-all knows who else in order to finance these tax cuts, driving us deeper and deeper into the deficit ditch before the baby boomers retire.

About the baby boomers, that is not a projection. They are alive today. They are going to retire. They are going to be eligible for Social Security and Medicare. About all I hear from the other side is they will cut Social Security, and they will cut Medicare in order to fill in the difference. That is where this is all headed. Make no mistake about it. Our colleagues on the other side of the aisle, their full intention is to shred Social Security and to shred Medicare in order to avert a fiscal disaster. We are headed for a train wreck. It is just as clear as it can possibly be.

What have our colleagues done? They have come out with this very, I would say misleading title on a book, saying it is a Deficit Reduction Act. When you read all the chapters of the book, it is not a deficit reduction proposal. It increases the deficit and explodes the debt.

Chapter 1, yes, they cut spending $39 billion over 5 years. Chapter 2, they cut revenue $70 billion over the same time. That increases the deficit by $31 billion. But chapter 3, that is the one they do not want you to read. You will not hear them talking about chapter 3 at all out here because they do not want you to know about chapter 3. In chapter 3, they are going to increase the debt by $781 billion. This is after they have already run up the debt over $2.5 trillion over the last 4 years. Now they are fixing to increase the debt another

$3 trillion over the next 5 years, and they are out here with a book called ``Deficit Reduction.'' Oh, no, I don't think the American people are going to buy that. I don't think the American people are going to be fooled by that. I don't think the American people are going to conclude that what this is about is reducing the deficit because it is not.

The simple truth is, this budget plan increases the deficit and it explodes the debt.

Mr. President, how much time do I have remaining?

Mr. President, let me say that on our side we have enjoyed working with the chairman of the committee very much. He is absolutely professional and fair and his word is good. We have had a very good working relationship on the Budget Committee. Obviously, we have disagreements about policy, but on the committee we have tried not to disagree in a disagreeable fashion. I have respect and admiration for the chairman of the committee, and we are going to try to work together to handle amendments in an expeditious and professional way so the time is well used.

I yield the floor.

Mr. President, I have recognition.

Mr. President, I understand the frustration of my colleague because his party has given him an impossible task--to come out and defend a budget plan that explodes the debt.

You notice there was not one comment by the Senator about the debt. Here is why there was no comment about the debt. Here is what has happened to debt under their watch. When President Bush took office, the gross debt of the United States was $5.6 trillion. Each and every year, the debt has gone up by $500 billion or $600 billion. In 2002, it went up to $6.2 trillion, a $500 billion increase; in 2003, $6.8 trillion, it went up another $600 billion; the next year, $7.4 trillion, another $600 billion; the next year, $7.9 trillion, it went up another $500 billion. Here is what it is slated to do under the budget plan they have put in place.

The debt keeps going up, up, up, by $600 billion a year by their own calculation, and they are out here touting that they have a deficit reduction package. Excuse me. Have words lost their meaning? They are out here talking about reducing the deficit, and their fiscal plan has done nothing but explode the debt of our country from $5.7 trillion when they took over and we are headed for over $11 trillion of debt by the time they are done. And they are out here touting a plan of deficit reduction. Come on. Come on. That doesn't pass the laugh test.

I understand the Senator from South Carolina was up here with a chart the other day that he called the Democratic Spend-O-Meter chart. Let me address that.

The Democratic Spend-O-Meter chart of the Senator from South Carolina is a complete concoction. He claims that the Democratic amendments this year would cost $470 billion. Absolute nonsense. Their Spend-O-Meter ignores the fact that many of the Democratic amendments were offset. He didn't count those offsets. In fact, because they included additional deficit reduction, the net effect of all Democratic amendments on the budget resolution would have reduced deficits by $57 billion.

Their Spend-O-Meter also double-counts the cost of some Democratic amendments because they treat them as if they were a package instead of offered individually. Some Democratic amendments covered the same subject area as an earlier amendment and would never have been offered if that earlier amendment had passed.

Their Spend-O-Meter also overstates the cost of Democratic amendments by misleading and falsely assigning 5-year costs to 1-year amendments. Most of these Democratic amendments were for only 1 year, but they have taken them and made them into 5-year amendments.

Those weren't our amendments. That is your concoction. That is your fabrication. That is not right.

Democratic amendments to the 2006 budget resolution would have reduced the deficit by $57 billion. Republican amendments to the 2006 budget resolution actually worsened the deficit by $79 billion. That is the real story of what happened earlier this year--net cost of GOP amendments: $79 billion of additional red ink; net effect of Democratic amendments: $57 billion of reduction in the deficit.

I also want to respond to the more general accusation that Democrats just want to spend. I would like to remind my colleagues of the record. Under the last Democratic administration, spending as a share of the economy came down steadily year after year, falling from 22.1 percent of gross domestic production to 18.4 percent of gross domestic production. During the term of the Democratic administration, spending went down.

Now I will compare that to the time since the Republicans gained control. Under our Republican friends, spending has gone from 18.4 percent of gross domestic production to 22.2 percent of gross domestic production. Who are the big spenders? When we were in control, spending went down. When they have been in control, spending has gone up.

That is not the end of the story. The bottom line is deficits. Here is the difference in the deficit records of various

administrations going back to the Reagan administration. They were in significant deficit the entire period of the Reagan administration. The Bush administration, Bush 1, dramatically increased the deficits. Under the Clinton administration, we pulled out of deficit and actually went into surplus for 3 years. In fact, 2 of the 3 years we were actually able to stop raiding Social Security trust funds.

Here is the deficit record under the second Bush administration: They plunged us right back into deep deficits and massive increase in debt. Now they have a budget plan that, by their own terms, by their own calculations, increases the debt of the country by $3 trillion over the next 5 years--and they are out here talking about reducing the deficit.

I suppose they can make the claim, but I don't think it will stand up very well. I don't think it will stand up to much scrutiny because we can look at the package--even this little package before the Senate right now. The fact is, there are many chapters to this book. The first chapter cut spending $39 billion. That is in the face of increasing the debt by $3.4 trillion over the next 5 years. They talk about it being a good start. I would say it is virtually no start. It is no start when you consider the second chapter which will cut the revenue by $70 billion. The combined effect is to increase the deficit.

If anyone wonders, go to chapter 3 where they increase the debt in 1 year alone by $781 billion. And they call themselves fiscally conservative? My goodness, that is conservative? That is not any definition of conservative I have read anywhere.

Let's see what is happening to the debt under our friends. They came in and it was $5.7 trillion and they have already run it up to $8 trillion. Here is what their budget proposal is doing now. If we adopt the 5-year budget plan, they will have run the debt of the country from $5.7 trillion to over $11 trillion. That is their record.

What are the results of these policies? The results of these policies are to build a wall of debt. Every year, debt is going up $600 billion a year under their budget plan. These are their numbers. Not my numbers, their numbers.

What does that translate into? That translates into an increase of debt by over $1 million a minute. That is the fact. That is what we are talking about.

What is the result? The result is in 4 years, they have doubled the debt held by foreign countries. U.S. debt held by foreign countries and foreign investors has doubled. It took 224 years to run up $1 trillion of foreign-held debt. In only 4 years, they have doubled it.

Here is the record, looking at the other 42 Presidents in American history. It took them 224 years to run up $1 trillion of external debt. This President has exceeded them in 4 years. This President has run up over $1 trillion of foreign-held debt in his term: $1.05 trillion versus 42 other Presidents, $1.01 trillion. It is pretty stunning what has happened.

And the result? Here it is: We now owe Japan over $684 billion. We owe China $248 billion. We owe the United Kingdom over $174 billion. We owe the Caribbean Banking Centers over $100 billion. This strengthens the country? How does that strengthen the country?

They do not want anyone to read chapter 3 of the book. No. They want to talk about deficit reduction. It is a wonderful title, but it has no relationship to the facts. The budget they have before the Senate does not reduce any deficit. They increase the deficit. They explode the debt. Under their own calculations they will increase the debt over the 5 years of this budget proposal by over $3 trillion. They have the chutzpah to come out here and talk about deficit reduction.

Let's read the third chapter of their book. The third chapter increases the debt limit of the United States in 1 year by $781 billion. And they are out here talking about deficit reduction? Come on.

The chairman said accurately we did not present a budget. That is exactly right, we did not present a budget. Why didn't we present a budget? Because they are in control. They are in control of the White House. They are in control of the Senate. They are in control of the House. We first had to try to defeat their proposal. Only then would we have had an opportunity or a chance to offer an alternative.

The first test was, can we defeat their budget? I tried my darnedest. The chairman knows that. I tried very hard to defeat the budget proposal they put before our colleagues because it exploded the debt by their own calculations by more than $3 trillion over the next 5 years. But I didn't succeed. They won. They passed their budget. If we could have stopped them, if we could have defeated them, then an alternative would have been in order and I would have been happy to offer an alternative if we had a chance to prevail. There was no chance to prevail. They won. The country lost, but they won. The country lost because their budget did not reduce the deficit. It increased the deficit and it exploded the debt.

By their own calculations, this 5-year budget they have put together will increase the debt of our country by $3 trillion. That is a fact.

I yield the floor.

Yes, sir.

That is correct.

Yes, they did. In fact, they were concerned we were going to pay off too much debt.

The Senator is correct. So we have had a swing from projections of a $5.6 trillion surplus to more than a $4 trillion deficit. That is a swing of $10 trillion.

I would say to the Senator, if I could, the situation is even much worse. Why is it much worse? Because the deficits understate what is happening to the debt.

Last year, for example, the deficit went up by something over $300 billion, but the debt went up by $551 billion. Most of the difference is the money they are taking from Social Security. Last year, they took, under the President's plan, $173 billion of Social Security money and used it to pay for other things. It all gets added to the debt, but none of it counts toward the deficit calculation.

Increasingly, this debt is being held by foreign countries and foreign investors. If you think about it, during the President's watch so far, he has increased the debt from $5.6 trillion to $7.9 trillion. That is a $2.3 trillion increase in the debt so far under his watch. I keep urging my colleagues to understand that you can't tell a book by its cover. This cover says it is deficit reduction. That is just the first chapter. You have to read all the chapters to conclude what is happening.

What is happening is, as the Senator has correctly described, the first chapter is, cut a little bit of spending. The second chapter is, cut even more revenue. The third chapter is--and this is the one they really don't want people to read--increase the debt of the country by $781 billion for 1 year. That will take the total up to over $3 trillion of added debt in just the 5 years that this President has been in power. Who is holding the debt?

Increasingly, it is foreigners. This President has increased foreign holdings of our debt by a trillion dollars. It

took 42 Presidents 224 years to run up a trillion dollars of external debt. This President has more than doubled that amount in 4 years.

Well, we owe Japan over $680 billion.

I interpreted a question from the Senator.

He had asked who was holding the debt, and this is who is holding the debt.

I would be happy to ask the Senator from Maryland a question, if he would yield for that purpose.

The Senator can see here the answer to the question he posed to me. I would ask: Who is holding the debt?

Mr. President, I think the chairman of the Budget Committee just summed up the position of his party when he said we have to borrow the money because we have the debt. That is exactly right. Their party has put us on a fiscal course to explode the debt. And when the Senator talks about deficit reduction, which is on the cover of the book of the matter that we are discussing today--it says deficit reduction--it just doesn't have any credibility because it is part of a package. The package is the budget that was passed earlier this year. This reconciliation process we are going through now was authorized by that budget. That budget didn't reduce any deficit; it increased the deficit. Most seriously, it exploded the debt.

Well, here it is. The budget we are working to conclude increases the debt by $3.4 trillion over the next 5 years. The spending cut they have out here right now is $39 billion. By the way, they are about to reduce that because the first amendment from our colleagues on the other side is a spending amendment.

But let's look at the whole package, the whole package that our colleagues have offered the country, have offered the Senate. If doesn't reduce the deficit, it doesn't reduce the debt, it dramatically expands the debt--not by my calculation but by their calculation. Here is their calculation of the increase in the debt of their 5-year budget proposal. They are going to run up the debt $3.4 trillion. This spending out here over 5 years of $39 billion basically does not touch it.

Now, my colleague had a whole list of possible tax cuts and said, well, maybe we are for increasing the taxes on the American people, on those various items. I support extension of many of those tax cuts, but I believe they ought to be paid for. That is the way we used to do business around here. We used to have a provision we called pay-go, and if you wanted to increase spending or you wanted to have more tax cuts, you could do it, but you had to pay for it. There is an old-fashioned idea: pay for it. Our colleagues over here don't want to pay for anything. They want every tax cut, they want every spending provision-- this increase in spending. They are in control. The spending they are complaining about, they passed it. They control the Senate of the United States. They control the House of Representatives. They control the White House. Every dime of this spending that they are complaining about, they passed--every dime of it. The President has not vetoed one spending bill. Every dime of this spending they supported.

But here is what they did on the revenue side. This is what has happened to the revenue. The revenue side of the equation collapsed, and, yes, we have had an upkick in the last year, absolutely. The Senator is correct. Revenue has increased in the last year. But look at where it is. It is way below the historical level. The result of this combination of their spending increases and their tax cuts has been to explode the deficits. We have had in the last 3 years the largest deficits in the history of the country. They have exploded the debt-- not by my calculation but by their own calculation and by the historic record.

Look, when this President came in, the debt was $5.7 trillion. In 5 years he is going to have added $3 trillion, if this budget plan passes. They ran up the debt another $551 billion for the last year alone. They are going to increase the debt of this country in the 5 years of this Presidency by $3 trillion, and in the next 5 years they are going to run it up another $3 trillion.

Now, facts are stubborn things. It is very interesting that my colleague on the other side, when he put up the possible tax cuts they are talking about, left this one out. You didn't see this. You didn't see this one mentioned, the capital gains and dividends tax cuts. Here is the distribution of those tax cuts, who gets them: Those earning over $1 million a year will get, on average, a $35,000 tax cut. Those earning less than $50,000 a year, this is what they get: $6--$6. That is what my colleagues on the other side of the aisle think is a fair distribution of the tax cuts--$6 for those earning less than $50,000 a year, $35,000 for those earning over $1 million a year. And one of the ways they reduce the cost of all this is to take from the least among us.

Go look at what the House of Representatives is proposing by way of their spending cuts. They are going to cut Medicaid, they are going to cut food stamps, the things that go to the least among us so that they can give additional tax cuts to those who have the most among us.

That is not a value that I have read in any Bible. My Bible does not say take from the least among us to give to the most among us. I have not seen that in any chapter of the Bible or, for that matter, in any holy book. Virtually every religion--perhaps every religion--has as a value that we help the least among us. We don't take from the least among us to give to those who have the most. But that is exactly what is before us in this proposal.

Again I say to my colleagues, you can't separate out the first chapter of the book they have labeled deficit reduction; you have to read the whole book. You have to read all the chapters. If you read the chapters of this book, what you find is in chapter 1, they cut a little bit of spending, in chapter 2 they cut even more revenue, and in chapter 3, they explode the debt by $781 billion. And they call it deficit reduction? Please.

If you look at the whole book, if you read the entire book, what you find is they are going to increase the debt of our country by $3 trillion over the next 5 years. And they are out here talking about deficit reduction? No, that dog won't hunt.

I rise to offer an amendment with Senator Nelson and Senator Feingold to restore some budget discipline. We want to go back to the pay-as- you-go rule that served this country so well in previous years. I thank Senator Nelson and Senator Feingold for their leadership on this issue. I see Senator Feingold is on the floor.

Our amendment is simple. It restores the original pay-go rules preventing new mandatory spending and new tax cuts unless they are paid for. My colleague talks about all the additional tax cuts he wants. That is fine. I will support a lot of them, but we have to pay for them. Otherwise, we are borrowing money from China, Japan, the Caribbean Banking Centers, and all the rest to give tax cuts that, in many cases, go predominantly to the wealthiest among us. What a bizarre strategy that is.

The proposal we are making today eliminates a loophole in the current pay-go rule which exempts tax cuts and spending increases that are provided for in the budget resolution. We don't have to pay for them if they are in the budget resolution. This huge loophole encourages fiscally irresponsible behavior, which is exactly how I would characterize the budget that is before us. It is fiscally irresponsible--fiscally irresponsible to increase the debt by $3 trillion when we have already almost $8 trillion of debt. If people are serious about fiscal discipline, this is their chance to prove it.

I would like to take a moment to remind my colleagues of the history of pay-go and why it is important to reinstate the original pay-go rule.

The rule was adopted in 1990 at a time when the Federal Government was facing unprecedented deficits, just as we are today. Originally, the pay-go rule created a 60-vote point of order against tax cuts and mandatory spending that would increase the deficit. Tax cuts and increased spending either had to be paid for or face a 60-vote point of order. Back in the nineties, the budget discipline of pay-go helped us turn record deficits into record surpluses. But the pay-go rule we have now has lost its teeth. What we are left with is a pale reminder of what pay-go used to be.

The current pay-go rule exempts all policies assumed in every budget resolution. As a result of these changes,

the budget resolution this year advocated borrow-and-spend policies. Here is what our current fiscal picture looks like: record budget deficits as far as the eye can see; an ocean of red ink. That is where we are now, and that is where we are headed.

In this year's budget, the majority paved the way for these reconciliation bills that are before us now that will actually increase the budget deficit. How? By shaving $39 billion of spending over 5 years, but then by cutting revenue $70 billion. The combined effect is to increase the deficit by $31 billion, and we already have record deficits. The whole idea of reconciliation was to provide fast-track protection to deficit reduction. Now it has been hijacked, and they are using these special provisions and special protections to increase the deficit. It is a perversion of the process.

Federal Reserve Chairman Alan Greenspan opposes tax cuts that are financed by increasing the deficit. Here is what he told Congress last year.

Question from Congressman Spratt:

Let me ask you this. You said you were for extension of the

original pay-go rule, which would apply to tax cuts as well

as to entitlement increases. Does that mean you would advise

us that as we approach these sunsets and expirations in

existing tax cuts, that they be offset before the renewal be

passed?

Mr. Greenspan:

Yes, sir.

That is the answer the chairman was perhaps seeking. He wants to extend these tax cuts. Many of them I do as well. But I want to pay for them. That is what pay-go provides. Here is what the Fed Chairman had to say on the question of restoring the original pay-go: ``Yes, sir,'' when asked a direct question if we should restore pay-go. Earlier this year in testimony before the House Budget Committee, Chairman Greenspan again reiterated his support for fully offsetting the costs of all tax cuts:

If you're going to lower taxes, you shouldn't be borrowing

essentially the tax cut. And that over the long run is not a

stable fiscal situation.

That is what we are doing here: Put it on the charge card, run it up, borrow the money. Where are we borrowing it? Increasingly we are borrowing it from abroad. Under this President, we have increased our debt held by foreign countries by over 100 percent. It took 42 Presidents 224 years to run up a trillion dollars of external debt. This President has doubled it in 4 years. That is an utterly unsustainable course.

Chairman Greenspan said before the House Budget Committee earlier this year:

All I'm saying is that my general view is that I like to

see the tax burden as low as possible. And in that context, I

would like to see tax cuts continued. But, as I indicated

earlier, that has got to be, in my judgment, in the context

of a pay-go resolution.

That is what we are offering today, a pay-go resolution. You can have more spending; you have to pay for it. You can have more tax cuts; you have to pay for them. That is the budget discipline we had earlier in the nineties, and it worked well in drawing us out of record deficits and back into surplus.

In the past, the chairman of the Budget Committee has agreed with the Fed Chairman's wise counsel. During the fiscal year 2002 supplemental bill, the Budget chairman had this to say. This is Chairman Gregg:

The second budget discipline, which is pay-go essentially

says if you are going to add a new entitlement program or you

are going to cut taxes during a period, especially of

deficits, you must offset that event so that it becomes a

budget-neutral event that also lapses.

He went on to say:

. . . If we do not do this, if we do not put back in place

caps and pay-go mechanisms, we will have no budget discipline

in this Congress and, as a result, will dramatically

aggravate the deficit which, of course, impacts a lot of

important issues, but especially impacts Social Security.

The Budget Committee chairman was right then, and if he took the same position now, he would be right now because the measure we are offering is pay-go. If you want to have new spending, pay for it. If you want to have more tax cuts, pay for them. That is critically important given the fact that the deficits and debt are going up, up, and away under this underlying budget resolution.

What we are offering today eliminates the pay-go loophole. The current pay-go rule exempts all tax cuts and mandatory spending increases assumed in any budget resolution, no matter how much they increase deficits. Our proposal is to go back to what has worked in the past. It is traditional pay-go. It says all mandatory spending and all tax cuts that increase deficits must be paid for or they have to get a supermajority vote of 60 votes.

Mr. President, I yield to my colleague from Wisconsin such time as he may use.

Mr. President, I thank my colleague, Senator Feingold, one of the most valued members of the Budget Committee, somebody who has been absolutely consistent on these issues and who has tried over and over to get the pay-go rules reinserted so we would have some assistance in restoring budget discipline.

I told a reporter the other day I have never seen this town so disconnected from reality as it is today. We have a measure before us that they call deficit reduction in the first chapter when we all know, if we read the whole book, it has nothing to do with deficit reduction. It is explosion of debt. Because by the time we get to the third chapter, what we find out is they are going to increase the debt by $781 billion all the while they are talking about reducing the deficit. It is like words have lost their meaning. It is as though, what is the book, ``1984,'' George Orwell--war is peace, love is hate, deficit reduction is deficit increase. This labeling ceases to have meaning when people come out and say they are doing one thing, when they are doing precisely the opposite thing.

It is going to be hard to fool people about this because people know we have big deficits. The last three deficits are the biggest in our history and people know the debt is increasing. They may not know the exact numbers, but they know the debt is not going down; the debt is going up. The hard reality is this budget package that is steaming through is going to increase the debt of the United States by $3 trillion over the next 5 years and that is by their own calculations. That is not my calculation. That is not the calculation of Senator Feingold. That is their own budget document's calculation. It says they are going to increase the debt $3 trillion. They are talking about over the same period of time a $39 billion spending cut, which is chapter 1. Chapter 2 is they cut the revenue $70 billion, so now they have increased the deficit. Chapter 3, they are going to increase the debt by $781 billion. That is just one year. The 5-year effect of their budget, and this is all part of the package, is to increase the debt $3 trillion, and they are going to spend a week talking about how they are reducing the deficit.

One of the best things we can do is restore the pay-go rules. Pay-go rules say if one wants to spend more money, pay for it; want more tax cuts, pay for them. That is a rule we ought to have. That is a rule we used to have. That is a rule that helped. It was not the only thing that worked, but it helped.

I hope very much that this body will adopt the pay-go provision we are putting before them.

I yield the floor.

Mr. President, I ask unanimous consent to lay aside the pending amendment and to call up my amendment on pay-go, which is at the desk.

Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. President, I also ask unanimous consent that the Democratic leader be recognized when the Senate reconvenes at 2 p.m.

Mr. President, I now yield 10 minutes to the Senator from

Florida, Mr. Nelson, who is a very important member of the Senate Budget Committee. Senator Nelson has been one of the most consistent Members on the Budget Committee, insisting on a return to fiscal discipline. I very much appreciate his leadership on this pay-go amendment, which is an attempt to restore the basic budget discipline.

I will yield time off the amendment.

Mr. President, I thank the Senator from Florida for his remarks. I thank him, as well, for his leadership. I have thought many times I wish there were more Bill Nelson's in the Senate because he has been a very strong voice on fiscal responsibility and in paying our bills and not shoveling the debt off to our kids and not continuing this policy of borrowing more and more money from abroad.

Is the Senator seeking recognition to respond?

Mr. President, parliamentary inquiry: At this point we are on the pay-go amendment. It would require consent, would it not, to lay aside the pending amendment?

If I might say to my colleague, if we could go to Senator Kennedy, he has only requested 5 or 10 minutes, and then at that point we could consider the amendment.

Senator Kennedy is recognized for 10 minutes.

I yield 7 minutes or the time the Senator might consume.

Mr. President, I am happy to yield an additional 2 minutes to the Senator.

Mr. President, reserving the right to object, and I will not object, I do want to, for the record, indicate we have had a number of requests that we move to delay the offering of this amendment. I will not do that.

Senator Enzi has been a very responsible member of the committee. He has every right to offer his amendment. The fact is, if he were delayed at this point, he could offer his amendment later. So those who are seeking to delay might force him into the vote-a-thon, but I believe Senator Enzi, who has been a fully responsible member of the committee, deserves his opportunity to offer this amendment, and I will not object.

Mr. President, when Senator Reid is recognized at 2 p.m., I yield him such time as he may consume.

I understand the Senator from Virginia has a motion at this time.

Mr. President, I rise today to introduce the Law Enforcement Officers' Protection Act of 2005. This act will guarantee tough, mandatory punishment for criminals who murder or assault police officers, firefighters, judges, court employees, ambulance-crew members, and other public-safety officers in the course of their duties. Attacks on police officers and judges are serious crimes. They merit the toughest penalties. LEOPA imposes the following terms of imprisonment for attacks on public-safety officers: (1) second degree murder, 30 years to life; (2) voluntary manslaughter, 15 to 40 years; (3) assault resulting in serious bodily injury, 15 to 40 years; (4) assault with a dangerous weapon, 15 to 40 years; and (5) assault resulting in bodily injury, 5 to 20 years. The act also imposes commensurate penalties for retaliatory murders, kidnappings, and assaults committed against the family members of public-safety officers.

LEOPA includes additional provisions that will deter attacks upon police officers. The act expedites Federal-court review of state convictions for murder of a public-safety officer; it limits the damages that can be recovered by criminals for any injuries experienced during their arrest; it removes arbitrary barriers to retired officers' right to carry concealed weapons under Federal law; it makes it a crime to publicize a public-safety officer's identity in order to threaten or intimidate him; and it increases existing penalties for obstruction of justice and interference with court proceedings.

Aggravated assaults against police officers are a serious national problem. According to the most recent F.RI. report on the subject, 52 law-enforcement officers were feloniously killed in the United States in 2003. In the 10 year period from 1994 through 2003, a total of 616 lawenforcement officers were feloniously killed in the line of duty in the United States.

These officers' assailants unquestionably are among the worst criminals. Of those individuals responsible for unlawful killings of police officers between 1994 and 2003, 521 had a prior criminal arrest, including 153 who had a prior arrest for assaulting a police officer or resisting arrest. The individuals who commit these types of offenses are among the most dangerous members of the criminal class. Tough sentences for these criminals not only protect those who risk their lives to protect us; they also directly protect the public at large by removing a dangerous class of criminals from society.

Ordinary assaults against police officers have become a widespread problem. More than 57,000 law enforcement officers were assaulted in the course of their duties in 2003, and more than a quarter of these assaults resulted in injury to the officer. These numbers represent more than one of every 10 officers serving in the United States. Our society apparently has reached a point where criminals feel entitled to assault a police officer when they are being arrested. LEOPA is designed to change that understanding, to show criminals that assaults against police officers are unacceptable.

It bears mention that because of improvements in technology, recent years' numbers of officers killed in the line of duty even understate the extent of the violence that officers face. As the Los Angeles Times noted in 1994, ``the number of officers killed--an average of 60 to 70 a year since the late 1980s--would have broken records, too, if not for the advent of bulletproof vests, police experts say; about 400 officers have survived shootings over the last decade because they were wearing protective armor.'' (Faye Fiore & Miles Corwin, Toll of Violence Haunts Families of Police Officers, N.Y. Times, Feb. 21, 1994, at 1). As the executive director of the Fraternal Order of Police noted recently, ``there's less respect for authority in general and police officers specifically. The predisposition of criminals to use firearms is probably at the highest point in our history.'' (Jerry Nachtigal, Crime Down, but Number of Police Officers Killed Holds Steady, Associated Press Newswires, Apr. 11, 1999).

Violence against police officers also inhibits effective law enforcement. It breeds caution among officers and hinders robust investigation. LEOPA is designed to restore balance to the law. It is designed to ensure that police officers do not fear for their safety when enforcmg the law, but instead, that criminals fear the consequences of breaking the law.

Finally, aside from their broader effects on law enforcement and society, aggravated assaults and murders of police officers simply are terrible crimes. The victims often are young and in the prime of life, leaving behind young children, spouses, and grieving parents. A few recent incidents in the news serve to illustrate the horrific toll that these homicides take on the surviving victims:

Los Angeles County Deputy Sheriff Shayne York, 26 years old, was murdered during an invasion robbery while waiting for his fiancee at a hair salon on August 16, 1997. He was killed solely because of his status as a police officer. The Los Angeles Times gave the following account of the crime from the testimony at the killer's trial:

The robbers yelled racial slurs and ordered customers and

employees to the floor, snatching valuables from everyone

inside. When one of the bandits found a law enforcement badge

in York's wallet, he kicked York as he lay on the ground,

according to testimony from [York's fiancee], also a Los

Angeles County sheriff's deputy. The gunman asked York if he

ever mistreated blacks and Crips gang members at Los Angeles

County's Pitchess Detention Center, where York worked. York

responded, ``No, sir.'' [The killer,] an alleged Crips gang

member, then pointed a pistol at the back of York's head and

squeezed the trigger, prosecutors said. [York's fiancee]

testified she saw York's body go limp as she felt his blood

flowing onto her legs. She said she heard the gunman say, ``I

always wanted to kill a pig.'' (Jack Leonard & Monte Morin,

Man Guilty of Killing Off-Duty Deputy, L.A. Times, Aug. 23,

2000, at B1.)

Deputy York's killer never expressed any remorse over this senseless crime. When jurors read their verdict at his trial, he shouted at them, ``May Allah kill you all, pagans, infidels.'' (Stuart Pfeifer & Richard Marosi, Jury Recommends Death for Robber Who Killed Deputy, L.A. Times, Sept. 8, 2000, at B7.)

California Highway Patrol Officer Don Burt, 25 years old, was shot seven times by a member of a street gang during a traffic stop on July 13, 1996. As Officer Burt lay wounded on the ground, the killer shot him in the head. The Los Angeles Times, covering the killer's trial, gave the following account of the testimony describing the devastating impact of Officer Burt's death on his family:

[Don Burt's father] relived some of his happiest memories

with his son--the wedding of his son and [daughter-in-law]

Kristin, and the day he was told he was going to be a

grandfather. But the proudest moment for both father and son

was when the younger Burt joined the Highway Patrol. ``I

pinned on his badge and 1 hugged him,'' the father said,

tearfully. ``The proudest I'd ever seen him. The gleam he had

in his eye--he was so proud.''

It was a quiet summer night the night his son died, [Burt's

father] told the 12-member jury. He and his wife had just

finished dinner. The telephone rang. It was their daughter-

in-law's father, also a CHP officer, saying there had been a

shooting in the area that the younger Burt patrolled. The

elder Burt, a 30-year veteran trooper, called the CHP

dispatch center to learn more. A patrol car arrived to take

the parents to the hospital. ``We drove [to the hospital] in

dead silence,'' Burt said. ``I knew my son was dead and 1

couldn't tell my wife. She was sitting there with hope and 1

couldn't tell her.''

Jeannie Burt said she didn't realize how serious her son's

injuries were until a few minutes after they arrived at the

hospital. ``I thought he wasn't hurt too bad, that everything

was going to be all right,'' Jeannie Burt told jurors. But

then, ``I saw Kristin's brother and he just shook his head.

And 1 knew my son was dead.'' Tears streamed down Jeannie

Burt's cheeks through most of her testimony. ``He wasn't

perfect, but pretty close to it,'' the mother said through

her tears. ``I'm grateful 1 had my son for the 25 years 1 had

him. 1 wouldn't trade that with anything. I'm just so sad

that my daughter-in-law has lost the love of her life. That

his son does not have a father.''

Kristin Burt, widow of the slain officer, said she was

seven months pregnant with their first child when her husband

of nearly three years was killed. She took the stand Monday,

faltering and fighting back tears as she described how the

coroner told her that her husband was dead. The coroner

``held my hand and slipped Don's wedding ring into my hand,''

Kristin Burt said. (Louis Roug & Meg James, Rage in the

Courtroom, L.A. Times, Apr. 18, 2000, at B1.)

Officer Burt's son, Cameron, was born two months after he was killed.

Compton Police Officers Kevin Burrell and James MacDonald were shot and killed by a wanted criminal during a traffic stop on February 22, 1993. Newspapers gave the following account of the crime: ``The officers were wearing bulletproof vests when they stopped a red pickup truck about 11 p.m., but were knocked to the ground by bullet wounds to their limbs. With the officers lying in the rain-soaked street, [the killer] pumped bullets into their heads, execution-style.'' (Jodi Wi1goren, Killer of 2 Compton Police Officers Sentenced to Death, L.A. Times, Aug. 16, 1995, at 1.)

Officers Burrell and MacDonald were both young men, with all of their parents still living, at the time of their deaths. At the killer's trial, their families described the deep trauma that the crime created. The Los Angeles Times gave the following account:

One after another, the mothers and fathers of Officers

James Wayne MacDonald and Kevin Michael Burrell took the

stand to cry out their losses. Three could not complete their

testimony without breaking down so badly that court recessed.

Burrell's mother told how she had heard the shots that killed

her son a few blocks from her home. MacDonald's father,

sobbing uncontrollably, blurted, ``Come home, Jimmy, let me

trade places with you,'' when he was asked what he would tell

his son if he could bring him back.

James and Tonia MacDonald told how they visit their son's

grave twice each day in their hometown of Santa Rosa, just to

chat. Clark and Edna Burrell told how neither of them can

bear to visit the cemetery where their son now lies.

``I heard the shots,'' Edna Burrell said. Then she told how

she reasoned that her son had been hit. ``I was listening to

my police scanner,'' she said, ``and I knew it was Kevin

because I didn't hear them call his name'' on other dispatch

calls. ``So when she (a police officer) knocked on my door,

all I could do is scream, 'Oh God, they shot my baby. ``,

With that, Edna Burrell broke down. Overwhelmed, she was led

from the courtroom, past where [ the killer] sat staring

straight ahead. Sobbing softly, she repeated what she had

said on the stand: ``How could he do that? How could he do

that?''

Both sets of parents said the deaths of their sons left

them feeling empty, lost and angry. ``The whole time I was

praying, just to let Jimmy live until I could see him

again,'' Tonia MacDonald sobbed, remembering the hours after

she was told about the

shooting. ``And then I was so mad at God. All I wanted was to

see him one more time.''

All four parents said old friends have fallen away as grief

consumed their lives. Mother's Day, James MacDonald

testified, has become unbearable. ``This year, when I got up,

I didn't tell her (his wife) 'Happy Mother's Day' because

it's a tough day,'' he said. ``I could see the tears in her

eyes.'' (Emily Adams, Slain Officers'' Parents Tell of Pain,

L.A. Times, June 1, 1995, at 1.)

It bears mention that all of the criminals responsible for the murders described here were convicted of capital offenses, and will be subject to the expedited federal review provisions in section 6 of LEOPA once they complete their State appeals.

Section 6 of the bill is named for Dr. John B. Jamison, a Coconino County, AZ, Reserve Sheriffs Deputy who was murdered while responding to a fellow deputy's call for assistance on September 6, 1982. The killer fired 30 rounds from an assault rifle into Dr. Jamison's car, killing the deputy before he could reach his gun or even unbuckle his seatbelt. Dr. Jamison was survived by his 13-year-old son and 10-year- old daughter. State courts completed their review of the killer's conviction and sentence in 1985. Federal courts then delayed the case for an additional 15 years. One judge on the U.S. Court of Appeals for the Ninth Circuit even tried to postpone the killer's final execution date on the alleged basis that the killer was wrongfully denied state funds to investigate a rare neurological condition that his lawyer had learned of while watching television. Dr. Jamison's killer ultimately was executed in 2000--18 years after the crime occurred, and 15 years after federal habeas-corpus proceedings began.

Section 6 is designed to prevent these kinds of delays in Federal review of cases involving state convictions for the murder of a public- safety officer. In the district court, parties will be required to move for an evidentiary hearing within 90 days of the completion of briefing, the court must act on the motion within 30 days, and the hearing must begin 60 days later and last no longer than 3 months. All district-court review must be completed within 15 months of the completion of briefing. In the court of appeals, the court must complete review within 120 days of the completion of briefing. In most cases, these limits will ensure that federal review of a defendant's appeal is completed within less than 2 years. This section also makes these deadlines practical and enforceable by limiting federal review to those claims presenting meaningful evidence that the defendant did not commit the crime--defendants would be barred from re-litigating claims unrelated to guilt or innocence. (Defendants still will be permitted to litigate all their legal claims in state court on direct review and state-habeas review, and in petitions for certiorari in the U.S. Supreme Court.)

The need for this provision is particularly stark in the judicial circuit that includes my home state of Arizona. The U.S. Court of Appeals for the Ninth Circuit's pattern of blocking capital punishment for all murderers--including those who kill police officers--is well documented. A recent committee report of the U.S. Senate, for example, notes that: ``Data for the last ten years show that outside of the Ninth Circuit, usually 70 to 80 percent of death sentences are affirmed by a [federal] Court of Appeals on collateral review. In almost every year, however, the Ninth Circuit has reversed the majority of death sentences that it reviews. Moreover, this percentage has climbed sharply in recent years . . . In the last three years, the Ninth Circuit has reversed 88 percent, 80 percent, and 86 percent of the death sentences that it has reviewed.'' (S. Rep. No. 107-315 (2002), at 72-73) The Senate report also notes that a core group of Ninth Circuit judges vote to reverse virtually every death sentence that they review. Judge Stephen Reinhardt, for example, had reviewed 31 death sentences by 2002, and voted to reverse every single one. Other Ninth Circuit judges have similar records.

As Ninth Circuit Judge Alex Kozinski has noted, ``there are those of my colleagues who have never voted to uphold a death sentence and doubtless never wil1.'' He continued: ``Refusing to enforce a valid law is a violation of the judges' oath--something that most judges consider a shameful breach of duty. . . . [But] to slow down the pace of executions by finding fault with every death sentence is considered by some to be highly honorable.'' (Alex Kozinski, Tinkering with Death, The New Yorker, Feb. 10, 1997, at 48-53)

This pattern of behavior extends to the Ninth Circuit's review of death sentences imposed for the murder of police officers. In the nine States under the Ninth Circuit's jurisdiction, 34 criminals have been sentenced to death for murdering police officers since the late 1970's. Only one--the man who killed Dr. Jamison--has ever been executed. The Ninth Circuit consistently has obstructed all other death sentences for criminals convicted of murdering police officers in the western States.

As one Orange County newspaper columnist notes, these numbers reflect poorly on our society's commitment to ensuring justice for slain police officers and their families:

When California voters reinstated the death penalty in

1978, they made killing an on-duty peace officer one of the

``special circumstances'' that could subject the killer to

execution. The idea behind that was simple enough. If you

made killing a cop a death-penalty offense, maybe it would

make criminals think twice before doing it. . . . But it's

doubtful that the special circumstance concerning peace

officers strikes any fear into the heart of a would-be cop-

killer. Because in the 24 years since the new death-penalty

law was passed, not one cop-killer has been executed in

California. During that time, more than 200 California peace

officers have been murdered in the line of duty, including

eight in Orange County, and dozens of cop-killers have been

sent to death row. But not one has died for his crime. True,

California hasn't been in any hurry to execute other

murderers, either. Since 1978, more than 700 killers have

been sent to death row, but only 10 have been executed. But

the justice system seems particularly reluctant to actually

enforce the death penalty against cop-killers. ``That sends a

terrible message,'' says Marianne Wrede of Anaheim Hills,

whose son, West Covina Police Officer Kenneth Wrede, was

murdered in 1983. ``It says the justice system doesn't

respect the sacrifices of police officers and their

families.'' (Gordon Dillow, State Balks at Executing Cop-

Killers, The Orange County Reg., Dec. 5, 2002)

These unconscionable delays have greatly increased the suffering experienced by the surviving families of murdered police officers. Again, a few examples from recent news stories illustrate the nature of the problems created by the current system of decades-long post- conviction review:

On August 31, 1983, West Covina Police Officer Kenneth Wrede, 26 years old, responded to a call about a man behaving strangely in a residential neighborhood. Wrede confronted the man, who became abusive and tried to hit Wrede with an 8-foot tree spike. Wrede could have shot the man, but instead attempted to defuse the situation. The man then reached into Wrede's car and ripped the shotgun and rack from the dashboard. Wrede drew his gun and persuaded the man to lay down the shotgun, but the man picked it up again when Wrede lowered his revolver and shot Wrede in the head, killing him instantly.

Years later, Wrede's parents described the terrible impact of this crime on their family. Marianne Wrede told of how ``a half hour before local television newscasts would broadcast the story, her doorbell rang. On the steps stood her son's commander and a police lieutenant. Between them stood Kenneth Wrede's distraught wife. `I knew it was bad news,' Marianne Wrede said. `I shut the door in their faces and I said, `It can't be my boy.' '' (Laura-Lynne Powell, Grief Unites Kin of Fallen Officers, The Orange County Reg., June 20,1991, at EO1) Many years after the crime, she reflected that ``every day I miss my son and it never goes away.'' (Anne C. Mulkern & Tiffany Montgomery, Caring Counts in Line of Duty, The Orange County Reg., Sept. 25, 1996, at BO1) Ken Wrede's father also described the impact of the loss of his son. ``My life will never be the same. I deal with it every day; when I hear a police siren and immediately think of my son, when I pull up next to a police car and think that that could have been him. I still stop as often as I can and tell the officers to have a good day and be careful.'' (David Haldane & Michael Wagner, For Some, a Reminder of Past Tragedy, L.A. Times, July 15, 1996, at A3)

Officer Wrede's killer was sentenced to death in 1984, and that conviction was affirmed by the California Supreme Court in 1989. Then in 2000--17 years after Ken Wrede's murder--a divided panel of the Ninth Circuit reversed the killer's death sentence. The

Ninth Circuit found that the killer's lawyer provided ineffective assistance of counsel at the penalty phase because he did not present additional evidence of the killer's abusive childhood and drug use.

At the time, Marianne Wrede noted, ``We thought we finally were close to getting this behind us. And now this.'' (Gordon Dillow, Long Wait for Justice Gets Worse, The Orange County Reg., May 11, 2000, at BO1) A California Deputy Attorney General denounced the decision, stating that ``it can always be suggested a jury should have heard something else in the penalty phase of a death penalty case.'' (Richard Winston, Reversal of Death Penalty in Officer's Killing Decried Courts, L.A. Times, May 10, 2000, at B3) West Covina Corporal Robert Tibbets, the original investigator at the scene of Wrede's murder, described the Ninth Circuit's decision as a ``miscarriage of justice.'' (Id.) He had promised Wrede's parents that he would accompany them to every court hearing for their son's killer. He made good on his promise, even 19 years later, when the killer was retried and again sentenced to death in 2002. But the Wredes now face another round of state and then federal appeals. At the retrial, Ken's father noted that ``my family and 1 had endured 19 years of trial, appeals, delays, causing us to relive the trauma of Kenny's death over and over again.'' The trial judge agreed. He stated, ``It is an obscenity to put anyone through this needlessly for 19 years. It is inexcusable for us in the system that we need to look at this case for 19 years to get it resolved. The system at some point in the line has become clogged and broken.'' (Larry Welborn, 19 Years and no Resolution for Parents, The Orange County Reg., Sept. 21, 2002)

Riverside Police Officers Dennis Doty and Philip Trust were killed by a man whom they attempted to arrest at his home on May 13, 1982. The man was in bed when the officers arrived and they permitted him to dress. The man then pulled out a gun that he had been sitting on and shot and killed both officers. He apparently sought revenge for injuries that he sustained when he was shot while committing a bank robbery. Officer Doty had served a tour of duty in Vietnam, where he had received a purple heart and bronze star. The State supreme court affirmed the killer's conviction and death sentence in 1991.

In 2002, 20 years after the murders, Federal district court reversed the killer's death sentence, finding that he had received ineffective assistance of counsel because he did not trust his lawyers. Local Superior Court judge Edward Webster denounced the decision, declaring that he was ``outraged by the entire federal process.'' He declared that ``this [ decision] is just a product of judges'' personal opinions and philosophies opposing the death penalty.'' (Marlowe Churchill, Riverside Judge Takes Federal Court to Task, The Press-Enterprise, July 22, 1995, at BO1) The Riverside assistant police chief noted that the decision was particularly unfortunate for the officers' families: ``They lived this 20 years ago, and not to have closure on the trial process is particularly difficult'' (Mike Kataoka, Court Annuls Death Decree, The Press Enterprise, May 31, 2002, at BO1)

Los Angeles Police Detective Tom Williams was shot and killed by a man against whom he had testified several hours earlier in a robbery trial on October 31, 1985. Detective Williams was killed while picking up his son at a day-care center. A local newspaper gave the following account of the crime: ``With [his son] Ryan sitting beside him in the front seat of his truck, Williams, 42, saw the man in the ski mask, saw the automatic weapon pointing out of the driver's side window of the passing car. But he was helpless to do anything to protect himself. All he had time to do was scream for Ryan to get down, then cover the boy with his own body.'' (Dennis McCarthy, Youth Feels Need to Serve, L.A. Daily News, Aug. 24, 1993, at Nl) The Los Angeles Times gave the following account of testimony from the killer's trial:

A seventh-grade pupil at a Canoga Park church school

testified Wednesday that he saw 6-year-old Ryan Williams

sitting on the ground crying moments after the boy's father,

a Los Angeles police detective, had been gunned down in the

street on Oct. 31,1985. Thomas C. Williams, 42, was picking

up Ryan from school at 5:40 p.m. when he was struck by eight

bullets from an automatic weapon. The detective died, slumped

against the driver's side of his orange pickup truck. . . .

[The pupil] said he looked toward Williams' truck, parked in

front of the Faith Baptist Church school, and saw the

windshield shatter. ``It split into pieces,'' [he] said.

``Then I ducked. I couldn't see anything. I got up because I

heard some little boy cry. I walked over. He was sitting on

the ground and he was crying and he had a bloody lip.'' (Lynn

Steinberg, Boy Tells of Fatal Attack on Detective, L.A.

Times, Feb. 11, 1998, at 12)

Detective Williams's killer remains on death row today, 20 years after committing this crime.

Garden Grove police officer Donald Reed was shot and killed while arresting a man at a bar on June 7, 1980. The killer appeared at first to cooperate with police, but then pulled a pistol from his jacket and began firing. One officer who comforted Reed as he lay on the ground describe the scene: ``I could see a sense of panic in Don's eyes. He said, `I am not gonna make it' '' (Daniel Yi, Slain Officer's Family Testifies, L.A. Times, Feb. 9, 2000, at B1)

When Reed died, he had two toddler sons, ages 3 and 1\1/2\. Reed's killer was sentenced to death, but the sentence was reversed on appeal, and he was retried and sentenced to death again in 2000. Reed's sons were 22 and 21 by the time of the retrial. Still coping with the loss of their father, they chose not to attend the second trial. ``I was a mother, a father, I had to teach them everything,'' Reed's widow stated. (Id.) Of her husband, she simply noted, ``He was taken unnecessarily.'' (John McDonald, Officer's Widow Details Trauma, The Orange County Reg., Feb. 9, 2000, at B01) She also described the impact on her family of holding a second trial 20 years after the crime. ``We had all moved on, and then this came back and smacked us in the face. It really just tears you apart.'' (Daniel Yi, Slain Officer's Family Testifies, L.A. Times, Feb. 9, 2000, at B1)

Los Angeles Police Officer Paul Verna was gunned down during a traffic stop on June 2, 1983, by two men who earlier had committed a series of violent robberies. The first man shot Verna from inside the car, and the second then exited the vehicle and shot Verna five more times as he lay on the ground. Verna was survived by his wife and two young sons. Years later, the state supreme court reversed the death sentence of one of the killers. A new trial was held in 2000. At the first trial, Verna's widow described the devastating impact of the crime on her family. She spoke of how ``no one who has not done it can know how difficult it is to tell two young boys that the daddy they loved so much is gone.'' (Janet Rae-Dupree, 2 Sentenced to Die for Killing Policeman, L.A. Times, Sept. 21, 1985, at 6) A local newspaper gave the following accounts of the sentencing retrial:

Vema's sons were young boys, 4 and 9, when he was murdered.

This past week, they testified as young men. They told the

jury that they did not have a lot of first-hand recollection

of their dad. They did have the memories of stories from

their mom and many others as to what their dad was like. Ryan

[the younger son] spoke of sometimes feeling uneasy at being

told how much he looked like and even acted like his dad,

whom he does not remember. Sandy, Verna's widow, spoke of the

challenge of properly raising two very young boys alone. (Jim

Tatreau, Who Was Paul Verna? Murdered Officer Deeply Missed

Hero, L.A. Daily News, Oct. 22, 2000, at V3)

``At age 33, to be a widow--my roles in life completely

changed. The very hardest part was when they were very young

kids--when Ryan, who was 4 years old when his father died,

would get hurt and would cry to his mother at bedtime,

`Mommy, I just want my daddy.' I couldn't give that to him,

no matter how hard I tried. I could do everything else, but I

couldn't give him his daddy.'' (Jason Kandel, Retrial Brings

Victim's Family to Tears, L.A. Daily News, Sept. 27, 2000, at

Mr. President, I rise today with my colleague, Senator Cornyn of Texas, to introduce the ``DNA Fingerprint Act of 2005.'' This act will allow State and Federal law enforcement to catch rapists, murderers, and other violent criminals whom it otherwise would be impossible to identify and arrest.

The principal provisions of the DNA Fingerprint Act make it easier to include and keep the DNA profiles of criminal arrestees in the National DNA Index System, where that profile can be compared to crime-scene evidence. By removing current barriers to maintaining data from criminal arrestees, the act will allow the creation of a comprehensive, robust database that will make it possible to catch serial rapists and murderers before they commit more crimes.

The impact this act will have on preventing rape and other violent crimes is not merely speculative. We know from real life examples that an all-arrestee database can prevent many future offenses. In March of this year, the city of Chicago produced a case study of eight serial killers in that city who would have been caught after their first offense--rather than after their fourth or tenth--if an all-arrestee database had been in place. This study is included in the record at the conclusion of my remarks.

The first example that the Chicago study cites involves serial rapist and murderer Andre Crawford. In March 1993, Crawford was arrested for felony theft. Under the DNA Fingerprint Act, the state of Illinois would have been able to take a DNA sample from Crawford at that time and upload and keep that sample in NDIS, the national DNA database. But at that time--and still today--Federal law makes it difficult to upload an arrestee's profiles to NDIS, and bars States from keeping that profile in NDIS if the arrestee is not later convicted of a criminal offense. As a result, Crawford's DNA profile was not collected and it was not added to NDIS. And as a result, when Crawford murdered a 37- year-old woman on September 21, 1993, although DNA evidence was recovered from the crime scene, Crawford could not be identified as the perpetrator. And as a result, Crawford went on to commit many more rapes and murders.

On December 21, 1994, a 24-year-old woman was found murdered in an abandoned building on the 800 block of West 50th place in Chicago. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the September 1993 murder, and this December 1994 murder could have been prevented.

On April 3, 1995, a 36-year-old woman was found murdered in an abandoned house on the 5000 block of South Carpenter Street in Chicago. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the two earlier murders that he had committed, and this April 1995 muurder could have been prevented.

On July 23, 1997, a 27-year-old woman was found murdered in a closet of an abandoned house on the 900 block of West 51st Street in Chicago. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the three earlier murders that he had committed, and this July 1997 murder could have been prevented.

On December 27, 1997, a 42-year-old woman was raped in Chicago. As she walked down the street, a man approached her from behind, put a knife to her head, dragged her into an abandoned building on the 5100 block of South Peoria Street, and beat and raped her. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the four earlier murders that he had committed, and this December 1997 rape could have been prevented.

In June 1998, a 31-year-old woman was found murdered in an abandoned building on the 5000 block of South May Street in Chicago. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the four earlier murders and one rape that he had committed, and this June 1998 murder could have been prevented.

On August 13, 1998, a 44-year-old woman was found murdered in an abandoned house on the 900 block of West 52nd Street. Her clothes were found in the alley. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the five earlier murders and one rape that he had committed, and this August 1998 murder could have been prevented.

Also on August 13, 1998, a 32-year-old woman was found murdered in the attic of a house on the 5200 block of South Marshfield. Her body was decomposed, but DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the six earlier murders and one rape that he had committed, and this additional murder could have been prevented.

On December 8, 1998, a 35-year-old woman was found murdered in a building on the 1200 block of West 52nd Street. She had rope marks around her neck and injuries to her face. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the seven earlier murders and one rape that he had committed, and this December 1998 murder could have been prevented.

On February 2, 1999, a 35-year-old woman was found murdered on the 1300 block of West 51st Street. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the eight earlier murders and one rape that he had committed, and this February 1999 murder could have been prevented.

On April 21, 1999, a 44-year-old woman was found murdered in the upstairs of an abandoned house on the 5000 block of South Justine Street. DNA evidence was recovered. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the nine earlier murders and one rape that he had committed, and this April 1999 murder could have been prevented.

And on June 20, 1999, a 41-year-old woman was found murdered in the attic of an abandoned building on the 1500 block of West 51st Street. DNA evidence was recovered from blood on a nearby wall, indicating a struggle. That DNA evidence identifies Crawford as the perpetrator. If the DNA Fingerprint Act had been law, and Crawford's profile had been collected after his March 1993 arrest, he would have been identified as the perpetrator of the ten earlier murders and one rape that he had committed, and this additional murder could have been prevented.

As the city of Chicago case study concludes:

In January 2000, Andre Crawford was charged with 11 murders

and 1 Aggravated Criminal Sexual Assault. If his DNA sample

had been taken on March 6, 1993, the subsequent 10 murders

and 1 rape would not have happened.

The city of Chicago study goes on to discuss the cases of 7 other serial rapists and murders from that city. Collectively, together with Andre Crawford, these 8 serial rapists and

killers represent 22 murders and 30 rapes that could have been prevented had an all-arrestee database been in place.

The DNA Fingerprint Act eliminates current federal statutory restrictions that prevent states from adding and keeping arresttee profiles in NDIS. In effect, the Act would make it possible to build a comprehensive, robust national all-arrestee DNA database.

Here is how the DNA Fingerprint Act works: First, under current Federal law, a DNA profile from an arrestee cannot be uploaded to NDIS until the arrestee is charged in an indictment or information. Thus today, even an arrestee charged in a pleading cannot have his DNA uploaded to the national index. The act eliminates this restriction, allowing arrestees to be included as soon as they are arrested. It also eliminates a statutory restriction that bars inclusion of profiles from suspects who provide so-called ``exoneration'' samples. The act recognizes that criminal suspects have no legitimate interest in evading identification for crimes that they have committed.

Second, the act requires an arrestee to take the initiative to opt out of NDIS if charges against him have been dismissed or he has been acquitted, and he does not want his DNA profile compared to future crime scene evidence. Current law places the burden of determining who may be removed from the index on the administrator of the DNA database, thus requiring the administrator to track the progress of individual criminal cases. This bureaucratic burden discourages states from creating and maintaining comprehensive, all-arrestee DNA databases. It also effectively precludes the creation of a genuine national all- arrestee database. In effect, only convicts' DNA profiles can be kept in the database over the long term. The act would allow arrestee profiles to be kept in the database as well.

Third, the DNA Fingerprint Act would allow expanded use of CODIS grants. Congress currently appropriates funds for use by states to expand their DNA databases. Current law restricts the use of these grants, however, to only building databases of convicted felons. This bill expands this authorization to allow use of these funds to build a database of all DNA samples collected under lawful authority--including samples taken from arrestees.

Fourth, the DNA Fingerprint Act allows the Federal Government to take and keep DNA samples from arrestees. The act gives the Attorney-General the authority to develop regulations allowing collection of DNA profiles from federal arrestees or detainees. The authority to issue such regulations would give the Attorney General the flexibility needed to respond to new legal developments and changes in technology.

And finally, the act tolls the statute of limitations for Federal sex offenses. Current law generally tolls the statute of limitations for felony cases in which the perpetrator is implicated in the offense through DNA testing. The one exception to this tolling is the sexual- abuse offenses in chapter 109A of title 18. When Congress adopted general tolling, it left out chapter 109A, apparently because those crimes already are subject to the use of ``John Doe'' indictments to charge unidentified perpetrators. The Justice Department has made clear, however, that John Doe indictments are ``not an adequate substitute for the applicability of [tolling].'' The Department has criticized the exception in current law as ``work[ing] against the effective prosecution of rapes and other serious sexual assaults under chapter 109A,'' noting that it makes ``the statute of limitation rules for such offenses more restrictive than those for all other Federal offenses in cases involving DNA identification.'' The DNA Fingerprint Act corrects this anomaly by allowing tolling for chapter 109A offenses.

Further evidence of the potential effectiveness of a comprehensive, robust DNA database is available from the recent experience of Great Britain. The British have taken the lead in using DNA to solve crimes, creating a database that now includes 2,000,000 profiles. Their database has now reached the critical mass where it is big enough to serve as a highly effective tool for solving crimes. In the U.K., DNA from crime scenes produces a match to the DNA database in 40 percent of all cases. This amounted to 58,176 cold hits in the United Kingdom 2001. (See generally ``The Application of DNA Technology in England and Wales,'' a study commissioned by the National Institute of Justice.) A broad DNA database works. The same tool should be made available in the United States.

Some critics of DNA databasing argue that a comprehensive database would violate criminal suspects' privacy rights. This is simply untrue. The sample of DNA that is kept in NDIS is what is called ``junk DNA''-- it is impossible to determine anything medically sensitive from this DNA. For example, this DNA does not allow the tester to determine if the donor is susceptible to particular diseases. The Justice Department addressed this issue in its statement of views on S. 1700, a DNA bill that was introduced in the 108th Congress:

[T]here [are no] legitimate privacy concerns that require

the retention or expansion of these [burdensome expungement

provisions]. The DNA identification system is already subject

to strict privacy rules, which generally limit the use of DNA

samples and DNA profiles in the system to law enforcement

identification purposes. See 42 U.S.C. 14132(b)-(c).

Moreover, the DNA profiles that are maintained in the

national index relate to 13 DNA sites that do not control any

traits or characteristics of individuals. Hence, the

databased information cannot be used to discern, for example,

anything about an individual's genetic illnesses, disorders,

or dispositions. Rather, by design, the information the

system retains in the databased DNA profiles is the

equivalent of a ``genetic fingerprint'' that uniquely

identifies an individual, but does not disclose other facts

about him.

Elsewhere in its Views Letter, the Justice Department also explained why the restrictive expungement provisions in current law are unnecessary and contrary to sound public policy. The letter noted that the FBI maintains a database of fingerprints of arrestees--without regard to whether the arrestee later was acquitted or convicted. The letter states, ``With respect to the . . . exclusion of DNA profiles of unindicted arrestees, it should be noted by way of comparison that there is no Federal policy that bars States from including fingerprints of arrestees in State and Federal law enforcement databases prior to indictment.'' The Justice Department also pointed out that ``[t]here is no reason to have a . . . Federal policy mandating expungement for DNA information. If the person whose DNA it is does not commit other crimes, then the information simply remains in a secure database and there is no adverse effect on his life. But if he commits a murder, rape, or other serious crime, and DNA matching can identify him as the perpetrator, then it is good that the information was retained.''

From the Chicago study--which examines the experience of just one American city over recent years--we know that an all-arrestee database can and inevitably will make the critical difference in solving and preventing violent sex offenses. From the British experience, we know that a comprehensive database can be a highly effective tool in solving crimes. And we know that DNA databasing does not violate the right to privacy. I urge the Congress to enact the DNA Fingerprint Act--before another preventable sex crime occurs.

I ask unanimous consent that the text of the Chicago study be printed in the Record.

Mr. President, tax shelter and tax haven abuses are undermining the integrity of our tax system, robbing the Treasury of tens of billions of dollars each year, and shifting the tax burden from high income individuals and businesses onto the backs of middle income families. These abuses account for a significant portion of the more than $300 billion in taxes owed by individuals, businesses, and organizations that goes unpaid each year. As a matter of fairness, these abuses must be stopped. Today, I am introducing, with Senator Norm Coleman, a comprehensive tax reform bill called the Tax Shelter and Tax Haven Reform Act of 2005 that can help put an end to these abuses. Senator Barack Obama is also an original cosponsor.

The Permanent Subcommittee on Investigations, on which I serve with Senator Coleman, has worked for years to expose and combat abusive tax shelters and tax havens. In the previous Congress, we introduced legislation confronting these twin threats to U.S. tax compliance; today's bill reflects not only the Subcommittee's additional investigative work but also innovative ideas to stop unethical tax advisers and tax havens from aiding and abetting U.S. tax evasion.

Abusive tax shelters are very different from legitimate tax shelters, such as deducting the interest paid on your home mortgage or Congressionally approved tax deductions for building affordable housing. Abusive tax shelters are complicated transactions promoted to provide large tax benefits unintended by the tax code. Abusive tax shelters are marked by one characteristic: there is no real economic or business rationale other than tax avoidance. As Judge Learned Hand wrote in Gregory v. Helvering, they are ``entered upon for no other motive but to escape taxation.''

Likewise, a tax haven is simply a country or jurisdiction that imposes little or no tax on income and offers non-residents the ability to escape taxes in their home country. The abuse of tax havens occurs when income is attributed to that country, even though little or no business activity actually occurs there. Tax havens are also characterized by corporate, bank, and tax secrecy laws that make it difficult for other countries to find out whether their citizens are using the tax haven to cheat on their taxes.

Today's tax dodges are often tough to prosecute. Crimes such as terrorism, murder, and fraud produce instant recognition of the immorality involved. Abusive tax shelters and tax havens, by contrast, are often ``MEGOs,'' meaning ``My Eyes Glaze Over.'' Those who cook up these concoctions count on their complexity to escape scrutiny and public ire. But regardless of how complicated or eye-glazing, the hawking of abusive tax shelters by tax professionals like accountants, bankers, investment advisers, and lawyers to thousands of people like late-night, cut-rate T.V. bargains is scandalous and has got to stop. Hiding tax schemes through offshore companies and bank accounts in tax havens with secrecy laws also needs to be attacked with the full force of the law.

Today, I would like to take a few minutes to try to cut through the haze of these schemes to see them for what they really are and explain what our bill would do to stop them. First, I will look at our investigation into abusive tax shelters and discuss the provisions we have included in this bill to combat them. Then, I will turn to tax haven abuses and our proposed remedies.

For three years, the Permanent Subcommittee on Investigations has been conducting an investigation into the design, sale, and implementation of abusive tax shelters. While I initiated this investigation when I was Chairman of our Subcommittee in 2002, it has since had the support of our new Chairman, Senator Coleman.

In November 2003, our Subcommittee held two days of hearings and released a report prepared by my staff that pulled back the curtain on how even some respected accounting firms, banks, investment advisors, and law firms had become the engines pushing the design and sale of abusive tax shelters to corporations and individuals across this country. In February 2005, the Subcommittee issued a report that provided further details on the role these professional firms played in the proliferation of these abusive shelters. Our Subcommittee report was endorsed by the full Committee on Homeland Security and Governmental Affairs in April.

The Subcommittee investigation found that many abusive tax shelters were not dreamed up by the taxpayers who used them. Instead, most were devised by tax professionals, such as accountants, bankers, investment advisors, and lawyers, who then sold the tax shelter to clients for a fee. In fact, as our investigation widened, we found hordes of tax advisors cooking up one complex scheme after another, packaging them up as generic ``tax products'' with boiler-plate legal and tax opinion letters, and then undertaking elaborate marketing schemes to peddle these products to literally thousands of persons across the country. In return, these tax shelter promoters were getting hundreds of millions of dollars in fees, while diverting billions of dollars in tax revenues from the U.S. Treasury each year.

For example, one shelter investigated by the Subcommittee and featured in the November 2003 Subcommittee hearings has since become part of an IRS effort to settle cases involving a set of abusive tax shelters known as ``Son of Boss.'' To date, more than 1,200 taxpayers have admitted wrongdoing and agreed to pay back taxes, interest and penalties totaling more than $3.7 billion. That's billions of dollars the IRS has collected on just one type of tax shelter, demonstrating both the depth of the problem and the potential for progress.

The Tax Shelter and Tax Haven Reform Act of 2005 that we are introducing today contains a number of measures to curb abusive tax shelters. The bill strengthens the penalties on promoters of abusive tax shelters. It codifies and strengthens the economic substance doctrine, which eliminates tax benefits for transactions that have no real business purpose apart from avoiding taxes. The bill deters banks' participation in abusive tax shelter activities by requiring regulators to develop new examination procedures to detect and stop such activities. It ends outdated communication barriers between key enforcement agencies to allow the exchange of information relating to tax evasion cases.

The bill also requires the Treasury Department to issue tougher standards for tax shelter opinion letters. It increases incentives for whistleblowers to report tax evasion to the IRS. The bill also provides for increased disclosure of tax shelter information to Congress. It simplifies and clarifies an existing prohibition on accountants being paid contingent fees which increase as phony tax losses increase. And it expresses the sense of the Senate that the IRS needs more funding to combat tax shelter abuses.

Let me be more specific about these key provisions to curb abusive tax shelters.

Title I of the bill strengthens two very important penalties that the IRS can use in its fight against the professionals who make these complex abusive shelters possible. A year ago, the penalty for promoting an abusive tax shelter, as set forth in Section 6700 of the tax code, was the lesser of $1,000 or 100 percent of the promoter's gross income derived from the prohibited activity. That meant in most cases the maximum fine was just $1,000.

Many abusive tax shelters sell for $100,000 or $250,000 apiece. Our investigation uncovered some tax shelters that were sold for as much as $2 million or even $5 million apiece, as well as instances in which the same cookie-cutter tax opinion letter was sold to 100 or even 200 clients. There are big bucks to be made in this business, and a $1,000 fine is laughable.

The Senate acknowledged that last year when it adopted the Levin- Coleman amendment to the JOBS Act, S. 1637, raising the Section 6700 penalty on abusive tax shelter promoters to 100 pefcent of the fees earned by the promoter from the abusive shelter. A 100 percent penalty would have ensured that the abusive tax shelter hucksters would not get to keep a single penny of their ill-gotten gains. That figure, however, was cut in half in the conference report, setting the penalty at 50 percent of the fees earned and allowing the promoters of abusive shelters get to keep half of their illicit profits.

While 50 percent is an obvious improvement over $1000, this penalty still

is inadequate and makes no sense. Why should anyone who pushes an illegal tax shelter that robs our Treasury of much needed revenues get to keep half of his ill-gotten gains? What deterrent effect is created by a penalty that allows promoters to keep half of their fees if caught, and of course, all of their fees if they are not caught? Tax shelter promoters ought to face a penalty that is at least as harsh as the penalty imposed on the person who purchased their tax product, not only because the promoter is usually as culpable as the taxpayer, but also so promoters think twice about pushing abusive tax schemes.

Effective penalties should make sure that the peddler of an abusive tax shelter is deprived of every penny of profit earned from selling or implementing the shelter and then is fined on top of that. Specifically, Section 101 of this bill would increase the penalty on tax shelter promoters to an amount up to the greater of either 150 percent of the promoters' gross income from the prohibited activity, or the amount assessed against the taxpayer--including back-taxes, interest and penalties.

A second penalty provision in the bill addresses what our investigation found to be one of the biggest problems: the knowing assistance of accounting firms, law firms, banks, and others to help taxpayers understate their taxes. In addition to those who meet the definition of ``promoters'' of abusive shelters, there are professional firms that aid and abet the use of abusive tax shelters and enable taxpayers to carry out the abusive tax schemes. For example, law firms are often asked to write ``opinion letters'' to help taxpayers head off IRS questioning and fines that they might otherwise confront for using an abusive shelter. Currently, under Section 6701 of the tax code, these aiders and abettors face a maximum penalty of only $1,000, or $10,000 if the offender is a corporation. This penalty, too, is a joke. When law firms are getting $50,000 for each of these cookie-cutter opinion letters, it provides no deterrent whatsoever. A $1,000 fine is like a jaywalking ticket for robbing a bank.

Section 102 of the bill would strengthen Section 6701 significantly, subjecting aiders and abettors to a maximum fine up to the greater of either 150 percent of the aider and abettor's gross income from the prohibited activity, or the amount assessed against the taxpayer for using the abusive shelter. This penalty would apply to all aiders and abettors not just tax return preparers.

Again, the Senate has recognized the need to toughen this critical penalty. In last year's JOBS Act, Senator Coleman and I successfully increased this fine to 100 percent of the gross income derived from the prohibited activity. Unfortunately, the conference report completely omitted this change, allowing aiders and abettors to continue to profit without penalty from their wrongdoing.

If further justification for toughening these penalties is needed, one document uncovered by our investigation shows the cold calculation engaged in by a tax advisor facing low fines. A senior tax professional at accounting giant KPMG compared possible tax shelter fees with possible tax shelter penalties if the firm were caught promoting an illegal tax shelter. This senior tax professional wrote the following: ``[O]ur average deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.'' He then recommended the obvious: going forward with sales of the abusive tax shelter on a cost- benefit basis.

Title III of the bill would strengthen legal prohibitions against abusive tax shelters by codifying in Federal tax statutes for the first time what is known as the economic substance doctrine. This anti-tax abuse doctrine was fashioned by federal courts evaluating transactions that appeared to have little or no business purpose or economic substance apart from tax avoidance. It has become a powerful analytical tool used by courts to invalidate abusive tax shelters. At the same time, because there is no statute underlying this doctrine and the courts have developed and applied it differently in different judicial districts, the existing case law has many ambiguities and conflicting interpretations.

Under the leadership of Senators Grassley and Baucus, the Chairman and Ranking Member of the Finance Committee, the Senate has voted on multiple occasions to enact this economic substance provision, but the House conferees have rejected it each time. Since no tax shelter legislation would be complete without addressing this issue, Title III of this comprehensive bill proposes once more to include the economic substance doctrine in the tax code. I hope that with continued pressure, it will become law in this Congress.

The bill will also help fight abusive tax shelters that are disguised as complex investment opportunities and use financing or securities transactions provided by financial institutions. In reality, tax shelter schemes lack the economic risks and rewards associated with a true investment. These phony transactions instead often rely on the temporary use of significant amounts of money in low risk schemes mischaracterized as real investments. The financing or securities transactions called for by these schemes are often supplied by a bank, securities firm, or other financial institution.

Currently the tax code prohibits financial institutions from providing products or services that aid or abet tax evasion or that promote or implement abusive tax shelters. The agencies that oversee these financial institutions on a daily basis, however, are experts in banking and securities law and generally lack the expertise to spot tax issues. Section 202 would crack down on financial institutions' illegal tax shelter activities by requiring federal bank regulators and the SEC to work with the IRS to develop examination techniques to detect such abusive activities and put an end to them.

These examination techniques would be used at least every 2 years, preferably in combination with routine regulatory examinations, and the regulators would report potential violations to the IRS. The agencies would also be required to prepare joint reports to Congress in 2007 and 2010 on preventing the participation of financial institutions in tax evasion or tax shelter activities.

During hearings before the Permanent Subcommittee on Investigations on tax shelters in November 2003, IRS Commissioner Mark Everson testified that his agency was barred by Section 6103 of the tax code from communicating information to other federal agencies that would assist those agencies in their law enforcement duties. He pointed out that the IRS was barred from providing tax return information to the SEC, federal bank regulators, and the Public Company Accounting Oversight Board (PCAOB)--even, for example, when that information might assist the SEC in evaluating whether an abusive tax shelter resulted in deceptive accounting in a public company's financial statements, might help the Federal Reserve determine whether a bank selling tax products to its clients had violated the law against promoting abusive tax shelters, or help the PCAOB judge whether an accounting firm had impaired its independence by selling tax shelters to its audit clients.

A recent example demonstrates how ill-conceived these information barriers are. A few months ago the IRS offered a settlement initiative to companies and corporate executives who participated in an abusive tax shelter involving the transfer of stock options to family- controlled entities. Over a hundred corporations and executives responded with admissions of wrongdoing. In addition to tax violations, their misconduct may be linked to securities law violations and improprieties by corporate auditors or banks, but the IRS has informed the Subcommittee that it is currently barred by law from sharing the names of the wrongdoers with the SEC, banking regulators, or PCAOB.

These communication barriers are outdated, inefficient, and ill- suited to stopping the torrent of tax shelter abuses now affecting or being promoted by so many public companies, banks, and accounting firms. To address this problem, Section 203 of this bill would authorize the Treasury Secretary, with appropriate privacy safeguards, to disclose to the SEC, Federal banking agencies, and the PCAOB, upon request, tax return information related to abusive tax shelters, inappropriate tax avoidance, or tax evasion. The

agencies could then use this information only for law enforcement purposes, such as preventing accounting firms or banks from promoting abusive tax shelters, or detecting accounting fraud in the financial statements of public companies.

Another finding of the Subcommittee investigation is that some tax practitioners are circumventing current State and Federal constraints on charging tax service fees that are dependent on the amount of promised tax benefits. Traditionally, accounting firms charged flat fees or hourly fees for their tax services. In the 1990s, however, they began charging ``value added'' fees based on, in the words of one accounting firm's manual, ``the value of the services provided, as opposed to the time required to perform the services.'' In addition, some firms began charging ``contingent fees'' that were calculated according to the size of the paper ``loss'' that could be produced for a client and used to offset the client's other taxable income--the greater the so-called loss, the greater the fee.

In response, many States prohibited accounting firms from charging contingent fees for tax work to avoid creating incentives for these firms to devise ways to shelter substantial sums. The SEC and the American Institute of Certified Public Accountants also issued rules restricting contingent fees, allowing them in only limited circumstances. Recently, the Public Company Accounting Oversight Board sent the SEC for approval a similar rule prohibiting public accounting firms from charging contingent fees for tax services provided to the public companies they audit. Each of these Federal, State, and professional ethics rules seeks to limit the use of contingent fees under certain, limited circumstances.

The Subcommittee investigation found that tax shelter fees, which are typically substantial and sometimes exceed $1 million, are often linked to the amount of a taxpayer's projected paper losses which can be used to shelter income from taxation. For example, in three tax shelters examined by the Subcommittee, documents show that the fees were equal to a percentage of the paper loss to be generated by the transaction. In one case, the fees were typically set at 7 percent of the transaction's generated ``tax loss'' that clients could use to reduce other taxable income. In other words, the greater the loss that could be concocted for the taxpayer or ``investor,'' the greater the profit for the tax promoter. Think about that--greater the loss, the greater the profit. How's that for turning capitalism on its head!

In addition, evidence indicated that, in at least one instance, a tax advisor was willing to deliberately manipulate the way it handled certain tax products to circumvent contingent fee prohibitions. An internal document at an accounting firm related to a specific tax shelter, for example, identified the States that prohibited contingent fees. Then, rather than prohibit the tax shelter transactions in those States or require an alternative fee structure, the memorandum directed the firm's tax professionals to make sure the engagement letter was signed, the engagement was managed, and the bulk of services was performed ``in a jurisdiction that does not prohibit contingency fees.''

Right now, the prohibitions on contingent fees are complex and must be evaluated in the context of a patchwork of Federal, State, and professional ethics rules. Section 201 of the bill would establish a single enforceable rule, applicable nationwide, that would prohibit tax practitioners from charging fees calculated according to a projected or actual amount of tax savings or paper losses.

Past laws, such as the Whistleblower Protection Act and qui tam lawsuits under the False Claims Act, demonstrate that individuals with inside information can help expose serious misconduct that the U.S. government might otherwise miss. The tax arena is no different. Persons with inside information can help expose millions of dollars in tax fraud if they are willing to step forward and tell the IRS what they know about specific instances of misconduct.

Under current law, potential whistleblowers with inside information about tax misconduct do not have an established IRS office that is sensitive to their concerns, provides consistent treatment, and oversees the calculation and payment of monetary rewards for important information. Section 206 of this bill, which is very similar to a provision developed by the Senate Finance Committee, would, among other measures, establish a Whistleblowers Office within the IRS, codify standards for the payment of monetary rewards, and exempt whistleblower monetary payments from the alternative minimum tax.

Each of these measures is intended to increase incentives for persons to blow the whistle on tax misconduct. The one key difference between our bill and the Finance Committee provision is that we would continue to give the IRS the discretion to determine the amount of money paid to an individual whistleblower; our bill would not enable whistleblowers to appeal to a court to obtain additional sums. The fact-specific analysis that goes into evaluating a whistleblower's assistance and calculating a reward makes court review inadvisable. The existence of an appeal also invites litigation and necessitates the expenditure of taxpayer dollars--not for tax enforcement but for a court dispute. The new Whistleblowers Office is intended to promote the consistent, equitable treatment of persons who report tax misconduct, without also inviting expensive and time-consuming litigation.

Section 205 of the bill would direct the Treasury Department to issue new standards for tax practitioners issuing opinion letters on the tax implications of potential tax shelters as part of Circular 230. The public has traditionally relied on tax opinion letters to obtain informed and trustworthy advice about whether a tax-motivated transaction meets the requirements of the law. The Permanent Subcommittee on Investigations has found that, in too many cases, tax opinion letters no longer contain disinterested and reliable tax advice, even when issued by supposedly reputable accounting or law firms.

Instead, some tax opinion letters have become marketing tools used by tax shelter promoters and their allies to sell clients on their latest tax products. In many of these cases, financial interests and biases were concealed, unreasonable factual assumptions were used to justify dubious legal conclusions, and taxpayers were misled about the risk that the proposed transaction would later be designated an illegal tax shelter. Reforms are essential to address these abuses and restore the integrity of tax opinion letters.

The Treasury Department recently adopted standards that address a number of the abuses affecting tax shelter opinion letters; however, the standards do not take all the steps needed. Our bill would require Treasury to issue standards addressing a wider spectrum of tax shelter opinion letter problems, including: preventing concealed collaboration among supposedly independent letter writers; avoiding conflicts of interest that would impair auditor independence; ensuring appropriate fee charges; preventing practitioners and firms from aiding and abetting the understatement of tax liability by clients; and banning the promotion of potentially abusive tax shelters. By addressing each of these areas, a beefed-up Circular 230 could help reduce the ongoing abusive practices related to tax shelter opinion letters.

The bill would also provide for increased disclosure of tax shelter information to Congress. Section 204 would make it clear that companies providing tax return preparation services to taxpayers cannot refuse to comply with a Congressional document subpoena by citing Section 7216, a consumer protection provision that prohibits tax return preparers from disclosing taxpayer information to third parties. Several accounting and law firms raised this claim in response to document subpoenas issued by the Permanent Subcommittee on Investigations, contending they were barred by the nondisclosure provision in Section 7216 from producing documents related to the sale of abusive tax shelters to clients for a fee.

The accounting and law firms maintained this position despite an analysis provided by the Senate legal counsel showing that the nondisclosure provision was never intended to create a privilege or to override a Senate subpoena, as demonstrated in federal regulations interpreting the provision. This

bill would codify the existing regulations interpreting Section 7216 and make it clear that Congressional document subpoenas must be honored.

Section 204 would also ensure Congress has access to information about decisions by Treasury related to an organization's tax exempt status. A 2003 decision by the D.C. Circuit Court of Appeals, Tax Analysts v. IRS, struck down certain IRS regulations and held that the IRS must disclose letters denying or revoking an organization's tax exempt status. The IRS has been reluctant to disclose such information, not only to the public, but also to Congress, including in response to requests by the Permanent Subcommittee on Investigations.

For example, earlier this year the IRS revoked the tax exempt status of four credit counseling firms, and, despite the Tax Analysts case, claimed that it could not disclose to the Subcommittee the names of the four firms or the reasons for revoking their tax exemption. Our bill would make it clear that, upon receipt of a request from a Congressional committee or subcommittee, the IRS must disclose documents, other than a tax return, related to the agency's determination to grant, deny, revoke or restore an organization's exemption from taxation.

Section 208 of the bill would establish that it is the sense of the Senate that additional funds should be appropriated for IRS enforcement, and that the IRS should devote proportionately more of its enforcement funds to combat rampant tax shelter and tax haven abuses. Specifically, the bill would direct increased funding toward enforcement efforts combating the promotion of abusive tax shelters and the aiding and abetting of tax evasion; the involvement of accounting, law and financial firms in such promotion and aiding and abetting; and the use of offshore financial accounts to conceal taxable income.

Tax enforcement is an area where a relatively small increase in spending pays for itself many times over. If we would hire adequate enforcement personnel, close the tax loopholes, and put an end to tax dodges, tens of billions in revenues that should support this country would actually reach the Treasury.

In addition to abusive tax shelters, the bill addresses the abusive tax havens that help taxpayers dodge their U.S. tax obligations through using corporate, bank, and tax secrecy laws that impede U.S. tax enforcement. The London-based Tax Justice Network recently estimated that wealthy individuals worldwide have stashed $11.5 trillion of their assets in tax havens. At one Subcommittee hearing in 2001, a former owner of an offshore bank in the Cayman Islands testified that he believed 100 percent of his former clients were engaged in tax evasion. He said that almost all were from the United States and would take elaborate measures to avoid IRS detection of their money transfers. He also expressed confidence that the government that licensed his bank would vigorously defend client secrecy in order to continue attracting business to the islands.

Corporations are also using tax havens to reduce their U.S. tax liability. A GAO report I released with Senator Dorgan last year found that nearly two-thirds of the top 100 companies doing business with the United States government now have one or more subsidiaries in a tax haven. One company, Tyco International, had 115.

Data released by the Commerce Department further demonstrates the extent of U.S. corporate use of tax havens, indicating that, as of 2001, almost half of all foreign profits of U.S. corporations were in tax havens. A study released by the journal Tax Notes in September 2004 found that American companies were able to shift $149 billion of profits to 18 tax haven countries in 2002, up 68 percent from $88 billion in 1999. Estimates show that funneling these profits from the U.S. to tax havens deprives the U.S. Treasury of anywhere from $10 billion to $20 billion in lost tax revenue each year.

Here's just one simplified example of the gimmicks being used by corporations to transfer taxable income from the United States to tax havens to escape taxation. Suppose a profitable U.S. corporation establishes a shell corporation in a tax haven. The shell corporation has no office or employees, just a mailbox address. The U.S. parent transfers a valuable patent to the shell corporation. Then, the U.S. parent and all of its subsidiaries begin to pay a hefty fee to the shell corporation for use of the patent, shifting taxable income out of the United States to the shell corporation. The shell corporation declares a portion of the fees as profit, but pays no tax since it is a tax haven resident. The icing on the cake is that the shell corporation can then ``lend'' the income it has accumulated from the fees back to the U.S. companies for their use. The companies, in turn, pay ``interest'' on the ``loans'' to the shell corporation, shifting still more taxable income out of the United States to the tax haven. This example highlights just a few of the tax haven ploys being used by some U.S. corporations to escape paying their fair share of taxes here at home.

Sections 401 and 402 of our bill tackle the issue of tax havens by removing U.S. tax benefits associated with jurisdictions that fail to cooperate with U.S. tax enforcement efforts. Dozens of jurisdictions around the world have enacted corporate, bank, and tax secrecy laws that, in too many cases, have been used to justify failing to provide timely information to U.S. officials investigating tax misconduct. Some tax havens have refused to provide timely information about persons suspected of either hiding funds in the jurisdiction's offshore bank accounts or using offshore corporations and deceptive transactions to disguise their income or create phony losses to shelter their U.S. income from taxation.

Section 401 of the bill would give the Treasury Secretary the discretion to designate such an offshore tax haven as ``uncooperative'' and to publish an annual list of these uncooperative tax havens. We intend that the Treasury Secretary will develop this list by evaluating the actual record of cooperation experienced by the United States in its dealings with specific jurisdictions around the world. While many offshore tax havens have signed treaties with the United States promising to cooperate with U.S. civil and criminal tax enforcement, the level of resulting cooperation varies. For example, after one country signed a tax treaty with the United States, the government that led the effort was voted out of office by treaty opponents. Treasury needs a way to ensure that tax treaty obligations are met and to send a message to jurisdictions that impede U.S. tax enforcement. This bill gives Treasury the tools it needs to get the cooperation it needs.

Under Sections 401 and 402 of the bill, persons doing business in tax havens designated by Treasury as uncooperative would be denied U.S. tax benefits and incur increased disclosure requirements. First, the bill would disallow the tax benefits of deferral and foreign tax credits for income attributed to an uncooperative tax haven. Second, taxpayers would be required to provide greater disclosure of their activities, including disclosing on their returns any payment above $10,000 to a person or account located in a designated haven. These restrictions would not only deter U.S. taxpayers from doing business with uncooperative tax havens, they would also provide the United States with powerful weapons to convince tax havens to cooperate fully with U.S. tax enforcement efforts and help end offshore tax evasion abuses.

Sections 403 and 404 further address offshore tax evasion. Section 403 would toughen penalties on eligible taxpayers who did not participate in Treasury programs designed to encourage voluntary disclosure of previously unreported income placed by the taxpayer in offshore accounts and accessed by credit card or other financial arrangements. Section 404 would authorize Treasury to promulgate regulations to stop ongoing foreign tax credit abuses in which, among other schemes, taxpayers claim credit on their U.S. tax returns for paying foreign taxes, but then fail to report the income related to those foreign taxes. Under the leadership of Senators Grassley and Baucus, both Sections 403 and 404 passed the Senate earlier this year as part of the Highway Bill, H.R. 3, but were dropped in conference.

The eyes of some people may glaze over when tax shelters and tax havens are discussed, but unscrupulous taxpayers and tax professionals see illicit

dollar signs. Our commitment to crack down on their tax abuses must be as strong as their determination to get away with ripping off America and American taxpayers.

Our bill provides our government the tools to end the use of abusive tax shelters and uncooperative tax havens and to punish the powerful professionals who push them.

It's long past time for Congress to act to end the shifting of a disproportionate tax burden onto the shoulders of honest Americans.

I ask unanimous consent that a summary of the bill's provisions and the text of the bill be printed in the Record.

Mr. President, I have been listening to this debate, and my least favorite part of being in the Senate is probably the floor debate that we have because it is rhetoric. It is not the substance that we ought to be debating on the Senate floor.

What we are talking about right now is an omnibus deficit reduction reconciliation bill, and it has $39 billion worth of savings in it. One can go ahead and talk about other legislation that will come up later and add those in different directions and come up with different numbers, but what we are talking about right now is deficit reduction. We spent a lot of time and a lot of effort to get it that way. Much of it is bipartisan, but we will not hear that kind of discussion on the floor probably. One will from me because I want to give some credit to the people who have worked with me on arriving at the biggest part of this reconciliation package in a very bipartisan way.

Senator Kennedy is the ranking member on the HELP committee, and my committee had responsibility for $13.65 billion in spending cuts over 5 years. We not only met that goal, we exceeded that goal. I want to say a little bit about how we did it. We did it in several areas. One of them is higher education. We provided more for kids going to college while we also provided savings. In the pensions area, we reduced potential outlays, and that saves money. In the area of FDIC reform, we reduced outlays so that we had savings so that we could provide for insurance for people at their retirement time that will aid communities. I will talk about all of that as we go along. I would like to begin by commending Leader Frist and Chairman Gregg for keeping the budget reconciliation process on track this year. Our shared commitment to meaningful deficit reduction is the reason that this package is on the floor this week. The omnibus deficit reduction reconciliation bill of 2005, which is S. 1932, is an ambitious step toward meaningful deficit reduction.

The budget agreement that Congress approved in April requires eight authorizing committees to produce $34.7 billion in spending cuts. As chairman of the Committee on Health, Education, Labor, and Pensions, that is a big bite of the apple, but it is not when it comes to the budget spending. My committee received the largest reconciliation instruction. It was $13.65 billion in spending cuts over 5 years. That is nearly 40 percent of the overall target. I am pleased to report that we exceeded that target and reported legislation with a net savings of $16.4 billion over 5 years.

That is an additional $2.75 billion beyond HELP's reconciliation target. So there is a significant amount of extra savings in the health, education, labor, and pensions component of this package, title VII, which I will discuss momentarily.

Now, 2 weeks ago, the HELP Committee reported a bipartisan bill that garnered support from four Democrats, in addition to all of the committee Republicans. We achieved this savings in several ways. One was the Higher Education Act reauthorization. It has been held up for some period of time because we are trying to identify proper funding levels, and reform programs so that more people can get more training. This will ultimately lead to students obtaining better skills, resulting in fewer jobs being outsourced. It is not just a college age situation. It is a college age-to-retirement situation and it includes careers. We addressed that separately in the Workforce Investment Act reauthorization. That separate bill passed 20 to 0 in the committee. So it was unanimous and unanimously bipartisan.

I also mentioned that the HELP Committee passed a bipartisan pension bill that garnered support from both sides of the aisle, but it was not unanimous. I have to explain why. We also have to solve the pension problem in this country so that people who have earned pensions get the pensions. We have worked on a comprehensive pension package. In fact, we passed a comprehensive pension package in the HELP committee and then we merged it with a comprehensive pension reform bill from the Finance Committee. We have to go through the process of getting that bill through on the floor and then conferencing it with the House who have yet a third version of the bill. I am hoping that we can do that full package that way. But in that part of the process, when we were doing that bill as a stand-alone bill, there was one

section in there that dealt with some hybrid forms of pension plans. I had one person on one side of the aisle who did not think we had gone far enough and one person on the other side of the aisle who thought we had gone too far. So we had two dissenting votes on that whole package.

When we take the pension reconciliation to the floor, as we are doing right now, we are not able to do the comprehensive pension package that we had reported previously. We are limited to reducing the outlays, which means increasing the fees. That would not be my preference for the way to go. There is a little provision in there that says that if we pass a complete reform, it will supersede what we are doing in reconciliation. I am assuming, and am pretty sure, the dissenting votes that we had when we worked the reconciliation package out of committee, which was both a combination of the education package and the pensions package, that the dissension was over having to raise fees in the pension part of the package. Otherwise, if it had been, again, just a stand-alone on the education part, I am pretty sure we would have had a unanimous, bipartisan vote. But we did have people from both sides of the aisle, in what I consider to be fairly significant numbers, supporting this. Writing this package has been a challenging process because it has required months of bipartisan negotiations. Spending reconciliation bills involve tough choices, about which programs to responsibly reform and how to reinvest subsequent savings, while still meeting deficit reduction goals. I am pleased about the role that the Health, Education, Labor, and Pensions Committee has played in this process.

I would like to briefly walk through the Health, Education, Labor, and Pensions title of the reconciliation bill. The HELP Committee's title has two components, as I mentioned, one dealing with higher education, the other with pensions. The higher education provisions in the reconciliation legislation are similar to the comprehensive higher education reauthorization bill that the HELP Committee agreed to unanimously in September, as I mentioned.

In addition to exceeding our reconciliation target, the title VII of the legislation provides additional benefits to students and strengthens access to higher education. Now, I have to say that one of the ways that we worked enthusiastically on doing this was when we were doing the budget process and outlining how much had to be saved by the various parts. First, in the pension area, we worked hard to come up with a reasonable number that could happen without businesses being put out of business. We wanted to do it so that people would be encouraged to continue pensions. I think that we have done that.

In the education portion, I asked the chairman of the Budget Committee if we could not work a little deal where if we saved more than the $7 billion that we were required under the budget act to save, if we could not have half of what we saved, with it really not starting until we got to the $7 billion. We had to get to $7 billion but if we got to $14 billion we would get half.

That gave us some incentive to look at what is actually happening in the higher education area and see ways that we could save.

I appreciate the enthusiastic participation of everybody on the committee and their staff because that is what allows these things to happen.

I have to tell you that the largest part of this, of course, comes from ending some corporate subsidies.

Title VII of the reconciliation bill reduces the deficit by $9.8 billion over 5 years. That is an additional $2.8 billion beyond the committee's $7 billion higher education savings target.

This also provides over $8 billion in increased grant assistance for low- and middle-income students, including $2.25 billion targeted to juniors and seniors in college majoring in math and science subjects or foreign language critical to national security. That is a junior-senior package for low- and middle-income students that will, I hope, bridge the gap that we are beginning to have with China and India on having people who are technically capable of keeping our economy growing.

Again, I want to emphasize that is $8 billion of increased grant assistance for low- and middle-income students. I don't think I used the word ``rich'' students in there. Did I? No, low- and middle-income students with a special target of math, science, and foreign languages critical to national security. We have to do something in this country to launch a greater interest in math and science if we are going to maintain the economic edge that we have at the present time. Our kids have to realize there is competition out there, that there are people who want their jobs, that there are people out there who want to be the employer of Americans, not the employee of Americans.

We have the $8 billion in increased grant assistance for low- and middle-income students.

It also reduces borrower origination fees which will benefit the students who finance some or part of their education through loans. That is a cost of $1 billion.

It incorporates language to provide financial relief to students impacted by Hurricane Katrina, including cancelling loans disbursed in the 2005-2006 academic year to students in impacted areas. That is a cost of $105 million.

Those are loans that could be difficult to use in light of the hurricane. But it takes care of that part.

We have an interest in doing some other things and need to do some other things with it yet.

But that is an outline of how cumulatively the higher education reforms save approximately a net of $9.8 billion, bringing the total deficit reduction in the package to $16.4 billion over 5 years.

I want to emphasize that those things are paid for that we talk about there.

The second component of the HELP Committee title addresses premiums to the Pension Benefit Guaranty Corporation, PBGC. The understanding when the resolution was adopted in April was that an additional $6.65 billion in deficit reduction would be achieved through pension reforms. It continues to be my hope that these savings can be accomplished in a bipartisan fashion outside of reconciliation. In reconciliation, however, we are in a position to only raise the PBGC premium instead of also addressing the funding rule that will ultimately determine plan solvency. In other words, this could drive more people into bankruptcy. But it is the best that we can do under the rules we have under budget reconciliation.

This legislation makes three changes to the current law that will generate approximately $6.7 billion in savings over 5 years. Here is how it does it.

It first increases the flat-rate premium paid by all single-employer plans, and it increases it from $19 to $46.75 per participant and indexes the increase to wage inflation.

Next, it raises the participant premium for multi-employer plans from $2.60 to $8 immediately, and likewise indexes the increase to wage inflation.

Third, it includes a new premium requiring companies to terminate their defined benefit plans through bankruptcy to pay a premium of $1,250 per participant for 3 years but only after the company successfully emerges from bankruptcy.

Why did we do that third part? That should be a part of coming out of bankruptcy--to repay some of the money that had to be potentially paid out, and paid out during the time the company was going through bankruptcy. But if we don't do that third part, what we were faced with doing was going with the singly-employer plan, flat-rate premium going from $19 to $59. We were able to keep it back at $46.75. Under the comprehensive bill, again, which I prefer to do, but it is not an option at this point in time, that would raise the premium to only $30 per participant. That is still a pretty significant rate, $19 to $30 per participant. And the reconciliation measure before us raises the premium to $46.75 per participant.

There are savings under the comprehensive reform, but this meets the requirements of getting to that $6.7 billion with the assurance that PBGC will be able to meet its payments as people's retirements come up who have been relegated to that system.

The short answer to why the premium was raised so high is we do not have as many legislative options in reconciliation as we have outside reconciliation. But it has to be done. This is one of the two to get it done. None of us want this premium ultimately to

be enacted into law. Adopting a comprehensive reform will solve that problem. But for now, the premium of $46.75 is the ``least bad'' option that we face.

To be clear that this premium label will be reduced, the bill language includes a special rule that the premiums contained in the reconciliation bill shall not go into effect if comprehensive pension reforms that accomplish the same savings are enacted before the end of this year. It is a pretty tight timeline.

I would also like to address some of the additional titles in the reconciliation package.

Two weeks ago, the Senate Banking Committee passed a budget resolution package that included S. 1562, the Safe and Fair Deposit Insurance Act of 2005. That is a bill that I introduced this year along with Senators Johnson, Hagel, and Allard. S. 1562 gained the support of a wide majority of Republicans and Democrats on the Banking Committee before the markup. It is also supported by the Department of the Treasury and the FDIC. I believe passing S. 1562 is crucial for the healthy operations of our Nation's banks and credit unions. The current FDIC system is in desperate need of improvement. Over the past 20 years, deposit insurance has been eroded by inflation and growing deposits falling to the dangerously low levels we have today. S. 1562 would give the FDIC statutory authority to make the deposit insurance fund healthy again, and in a way that accounts for the riskiness of each of the institutions it insures.

This bill is very important to keep the retirement funds and savings of Americans safe. In our rural towns and communities, depositors depend upon their local credit union or their local bank to deposit their hard-earned money. These financial institutions, in turn, lend money to local businesses and invest in their communities. This relationship benefits the customer, the institution, and the community. My bill would ensure that this relationship can continue into the future, adapting to changing economic cycles or unexpected crises.

I am also pleased the Senate Energy Committee included provisions to meet its budget reconciliation target that allows for responsible exploration in ANWR. With the energy crises our Nation faces, it is imperative that we make the most of our domestic supply. Wyoming is contributing dramatically to that supply but nothing like what could be done with ANWR. ANWR is a world-class resource, and with proper protections in place--and there are proper protections--we can recover the resource without damaging the area.

While the ANWR provisions will help our Nation's energy crisis, another rumored provision threatens to further burden consumers and burden an important industry in my State. Fortunately, the Judiciary Committee did not include a tax on explosives to meet their reconciliation goal. Such a tax would have been extremely costly to the mining industry and, in my view, did not make sense. The committee's decision to use other methods to meet their reconciliation number ensures that in this energy crisis consumers are not forced to pay even more to heat their homes and keep on the lights.

I want to reiterate just a little bit that in this budget reconciliation package the biggest part of the heavy lifting comes from Health, Education, Labor and Pensions.

We worked in a bipartisan way to provide for higher education and additional benefits for low- and middle-income students, and for juniors and seniors in that low- and middle-income situation to provide even more, if they will do math and science to meet some critical needs for their country. We have taken care of pensions.

There are some important things in this bill that should not be confused with other bills or other times. There are some very significant things that can happen if we can get this done. They can happen immediately for many of our college students.

I will work as much as possible to make sure that any savings that come from education go to education.

I really think that is the way it has to be. That is the principle under which my committee worked to make sure that we had the incentive for savings.

In closing, I look forward to working with my colleagues this week and in conference to complete work on this important legislation.

I yield the floor.

I was going to offer an amendment Senator Kennedy will want to speak on. We are working here together.

I have no problem.

Mr. President, I ask unanimous consent to set aside the pending amendment so I can offer an amendment.

Mr. President, I send an amendment to the desk.

Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. President, I join my colleagues, Senator Kennedy, Senator Alexander, and Senator Dodd, in offering an amendment to S. 1932, the Deficit Reduction Omnibus Reconciliation Act of 2005.

As chairman of the committee on Health, Education, Labor, and Pensions, my committee received the largest reconciliation instruction of $13.65

billion in spending cuts over 5 years. That is nearly 40 percent of the overall target. I am pleased to report that we exceeded that target, and reported legislation that will net $16.4 billion over 5 years. That is an additional $2.75 billion beyond HELP's reconciliation target. So there is a significant amount of extra savings in HELP's component of this package--Title VII--which this amendment addresses.

This amendment ensures that extra savings generated from education will be returned to education. Let me be clear, additional savings from students should be returned to students, just as they are in the other part of the reconciliation bill.

The amendment provides additional relief for students enrolled in postsecondary education who take out Federal student loans to pay for their education expenses. This amendment also addresses the elementary and secondary education challenges faced by the 372,000 schoolchildren displaced by Hurricane Katrina, their families, and the schools that opened their doors to accommodate the thousands of displaced students.

I congratulate Senator Alexander for his tremendous work in this area. He is in charge of the subcommittee that handles this area and did a tremendous job of pulling together different people, different opinions, different situations in coming up with a very comprehensive amendment that would solve those issues. I have to say, he did that in conjunction with Senators Kennedy and Dodd and myself. It was a very bipartisan effort.

There are some very sticky issues in this area that needed to be dealt with, and were dealt with, and it will take care of a significant body of students that need some significant help to make sure they get their education this year. We do not want kids in K through 12 out of school. We want them in school. And when we are forcing them on to other schools, we want to make sure that is taken care of, too.

First, I will discuss the additional relief for students enrolled in postsecondary education. The Higher Education Act amendments that are included in S. 1932 represent a significant boost in need-based grant aid for our neediest postsecondary students. Also included is a provision to relieve the fees that students pay to borrow under the Federal student loan programs.

The amendment I am offering today provides significant benefits to student borrowers, and makes Federal student loans more affordable. The amendment would reduce even further those origination fees for postsecondary students. The current fee of 3 percent would be reduced to 2 percent. Origination fees were originally applied to help reduce Federal spending on the guaranteed student loan program. It is time that students stop paying these fees to ensure the program's solvency.

Reducing these fees for students will save dependent students up to $500 dollars and will save independent and graduate students even more.

The average dependent student borrowing under the Federal Family Education Loan program or the Direct Loan program currently pays several hundred dollars in origination fees. Since the majority of students capitalize these fees, they will also pay interest on these fees for 10 years or more. Independent students could pay twice as much.

Over the life of the student's loan, these fees and the interest paid on them can add up to several thousand dollars, and they do not help students pay for tuition. These fees do not make any difference on the ability of students to afford college, and in many cases they only represent additional expenses.

This amendment begins to phase out these fees. At the 6.8 percent interest rate in the underlying higher education bill, this change could save dependent students nearly $500 over the life of their loans. Over $125 of that would be interest payments. With this amendment, independent students could save more than $1,000 and graduate students would save even more.

This amendment also addresses the elementary and secondary education challenges faced by the 372,000 schoolchildren displaced by Hurricane Katrina, their families, and the schools that opened their doors to accommodate them.

This amendment includes provisions from the Hurricane Katrina Elementary and Secondary Education Recovery Act, which is S. 1904, a bipartisan compromise that accomplishes the common goal of providing relief to support the instruction and services that the students displaced by this terrible storm need in order to continue their education, regardless of whether it is in a public or nonpublic school.

Over 300,000 students and their families were displaced by Hurricane Katrina. Their lives were disrupted, and they have no sense of when they will be able to return to their home communities. With this amendment we will be providing one-time, temporary, emergency aid on behalf of these students. All of us can agree that these displaced students deserve help to continue their education under these extraordinary circumstances caused by a disaster of unprecedented scope.

According to the U.S. Department of Education, schools in 49 States and the District of Columbia have opened their doors to help students displaced by this storm. Nine States have received more than 1,000 displaced students. Texas has enrolled as many as 60,000 students. The Houston independent school district alone enrolled 4,700 displaced students, hired 180 new teachers, added 37 new bus route, and ordered about 10,000 new textbooks to accommodate them. These statistics represent just the tip of the iceberg in terms of the number of schools that have accepted displaced students from the Gulf States. Approximately 25 to 30 percent of these students were attending nonpublic schools, and in their new communities the nonpublic schools have opened their doors to these students.

These States and schools need realistic, fiscally responsible assistance from the Congress to accommodate the students they have taken into their education system. This amendment will provide the relief necessary to support the instruction and other school services the displaced students need regardless of the school they are attending. Students will get the education services they need so that they can return as quickly as possible to their home school district without losing educational ground at a time when their lives have been turned upside down.

Our top concern was to make sure that all displaced students continued their education. School provides a sense of routine that is important in assuring students that things will return to normal. School provides them with access to a support system of friends and teachers, which is invaluable as they and their families continue to come to grips with the aftereffects of the storm. Some students are already returning home as their schools reopen, but severe problems of displacement do remain. Many schools will remain closed for the entire school year.

This amendment does not make permanent changes to Federal education laws. It is a one-time, temporary solution that sets aside ideological differences to make sure children are not harmed unnecessarily by the impact of this unprecedented disaster.

Developing this language was a difficult task, as we have limited resources, but we are faced with an almost unlimited need. It provides a comprehensive approach to address the needs of the hundreds of thousands of students who have been displaced. It focuses on the immediate needs of students with the expectation that they will return home to their local school.

Let me describe what this amendment does. First and foremost, it provides support for all displaced students, ensures accountability, and is fiscally responsible. Children displaced by this storm do not have the resources of their home communities to rely on for friends, activities, learning opportunities, and stability. These resources will assist students in their adjustment to new schools, new materials and standards, new classmates, and new teachers.

The amendment provides for a restart fund for special school reopening grants for school districts directly affected by the hurricane. These grants are meant to supplement FEMA funding to ensure the effective use of Federal funds. They can be used to repurchase textbooks and instructional materials, establish temporary facilities while repairs are being made, help reestablish the data that was destroyed,

and pay salaries of teachers and other personnel who are working to reopen these schools.

The largest portion of the funding under this amendment is focused on easing the temporary transition of students into new schools, both public and nonpublic, through one-time emergency aid. These funds will be used to help defray the additional costs incurred as a result of enrolling displaced students, and they can be used for purposes such as supporting basic instruction, purchasing educational materials and supplies, and helping schools temporarily expand facilities to relieve overcrowding.

It provides assistance to schools in a nonideological and responsible way. It is based on the number of students, public and nonpublic, reported by local school districts to the State. The funding flows through regular channels to local school districts and accounts established on behalf of students attending nonpublic schools. The amendment maintains public control of public money to ensure accountability.

Quarterly payments are made based on the head count of the displaced students temporarily enrolled in schools, with a maximum amount of $6,000--$7,500 for students with disabilities--per displaced students, or the cost of tuition, fees and transportation for nonpublic students, for the four payments.

States apply for these funds and are required to establish income eligibility criteria for aid on behalf of students in nonpublic schools. Nonpublic schools must waive or reimburse tuition in order for accounts to be established for their displaced students. Parents of displaced students must clearly make the choice for their child to attend a nonpublic school, and the nonpublic school must attest to the use of funds and the numbers of displaced students in attendance. Nonpublic schools shall use funds in secular and neutral ways, not for religious instruction, proselytization, or worship. Displaced children cannot be discriminated against on the basis of their race, color, national origin, religion, disability, or sex.

The assistance provided through this amendment is temporary. It sunsets at the end of this school year. This amendment is necessary because of the extraordinary circumstances and the emergency nature of this situation.

Through the savings in this reconciliation bill, we have the opportunity not only to authorize programs that will serve the thousands of children affected by Hurricane Katrina, but to defer the costs required to meet their education needs. Investing these funds in this way will meet an immediate need, but education is a longer-term investment in the future of our country and its ability to compete in a global economy. We must focus our efforts on ensuring that the educational needs of the children affected by this unprecedented emergency are addressed, and I believe that this amendment achieves that goal.

I urge my colleagues to support this amendment, and support returning additional education savings to the education needs of our students. I urge my colleagues to support student access to postsecondary education, which is critical to our ability to compete in the global marketplace. I can think over no better investment in the future of our students, businesses and Nation.

I ask unanimous consent that Senator Landrieu be added as a cosponsor of the amendment.

Mr. President, let me echo the comments of the Senator from North Dakota relative to his staff and himself. They are extraordinarily professional. As he mentioned, we do have some disagreements, but we do it in what I think is an appropriate way. We discuss the policy. We disagree on policy. But it is never personal, and there is always a cooperative spirit to try to do the business of the Senate. I greatly admire his professionalism and his staff's professionalism.

I understand the Senator from North Dakota has another 4 hours. I regret we are not going to hear him speak for that entire period of time because this last hour was certainly ``chartlizing''; not scintillating but ``chartlizing.''

The Senator has made a number of points, some of which I actually agree with but most of which I must say I find inconsistent with the facts that are on the ground. With what do I agree? I agree with the fact we are headed toward a fiscal problem of immense proportions primarily driven by the fact that we have a tremendous baby boom generation that is about to retire. Yesterday I spoke at some length about that. That is why we need to initiate efforts to get under control spending of the Federal Government, especially in the mandatory accounts--mandatory accounts being those accounts which people have a right to, simply because of their situation, whether it is a fiscal situation or personal situation. They may be a former member of the military--veterans benefits; they may be of a certain age; they may be of a certain income.

The most significant mandatory programs which are facing us are, of course, the entitlement programs benefiting retired individuals--Social Security, Medicare, and Medicaid. The only way you can address retired programs, mandatory programs, is through a reconciliation bill which is what we have before us today, a deficit reduction bill, because you have to change the law in order to accomplish changes in the ways those bills are going to spend money over the years to come.

So the Republican Congress, the leadership and the membership, has stepped forward with an aggressive proposal to try to do that. It is the first time in 8 years that we have seen an effort to try to put some brakes on the rate of spending on the mandatory side of the Federal Government.

Thirty-five billion dollars, $35 billion original instruction, and $30 billion is what the committees of the Senate have reported back in deficit reduction initiatives in this bill which is before us today. It cannot be discounted so casually, as the Senator from North Dakota has. He has essentially said it is not a deficit reduction because there will be a bill afterward that will give tax relief or it is not deficit reduction because the debt goes up. The simple fact is that those are inaccurate statements.

This bill, if you vote for it, will reduce the deficit by $39 billion in its present form. That is a fact, a simple, incontrovertible fact. There will be a tax relief bill that will follow this bill.

I wish to point out that my colleague from North Dakota--and he has openly said this--is going to probably vote for a lot of the amendments to that tax relief bill because they are good initiatives which need to be done. As he mentioned, the AMT, as he mentioned--I am not sure he mentioned it, but others have mentioned the State and local sales tax deductibility or deductibility of certain education expenses which teachers incur when they are trying to spend money on their classroom or the savings credit--all of these--or the R&D tax credit which makes us more competitive as a nation. The other side of the aisle is saying all those taxes should be raised on all those people. Are they saying that the 8 million people who fall under AMT should have their taxes raised? Are they saying people in the United States who get to deduct their sales tax should have their taxes raised? Are they saying that teachers who buy crayons for the classroom should have their taxes raised? Are they saying that small businesses, especially those that go out and invest in opportunity and creativity by doing R&D expansion, should have their taxes changed and raised? Maybe they are. Clearly, if they are claiming that the next bill, the tax relief bill, is a bad bill--that is what they are claiming because that bill is going to be made up primarily of those initiatives.

We can get into a debate about dividends and capital gains, also.

What has generated the revenue in this country in the last few years? We have seen one of the most dramatic expansions in revenue in this country in the last 20 years and rate of growth of revenue as a result of having cut taxes and given people more incentive to be creative, go out and invest, create careers for people, and create economics to create jobs.

This chart shows, as we have watched the tax cuts put into place, that revenues have been jumping every year. Why? They are headed back to the historical mean where they have been traditionally. They have been jumping because people have had an incentive to go out and invest, to create economic activity, to take risks, to create careers, create jobs, and that is taxable activity which is coming back to the Federal Government.

Sure, revenues have dropped dramatically, as many of the charts the Senator from North Dakota pointed out show. But the drop in those revenues was a function of two events which we had very little control over: the bursting of the bubble of the 1990s, which was the largest bubble in the history of world, bigger than the South Sea Bubble. It was the Internet bubble, and it burst. Quite honestly, we should have gone into a dramatic depression as nation as a result of that burst. But because this President had the foresight to put into place a tax credit on the productive side of the ledger, we did not see that dramatic economic downturn. We saw a reduction, and that reduction dropped revenues.

We were hit with 9/11. Never before has this Nation been hit with an event like 9/11 where we lost thousands of people on our soil here in the United States. Pearl Harbor, obviously, is a comparable. But the civilian losses were overwhelming, and the economic loss was dramatic. We were hit with a body blow to our economy. So that line went down again.

We had the bursting of the bubble, compounded by the single largest attack on our Nation certainly since Pearl Harbor, arguably exceeding Pearl Harbor in many ways, and the economic impact forced the economy down further. That is why the economy dropped. It wasn't the tax cuts that dropped the revenue. The tax cuts have been shown to increase revenues and will continue to increase revenues.

For the other side to take the position that anything else is happening is wrong because the facts are clear. The revenues are going up, and they are jumping dramatically back to the norm, 18 percent gross domestic product for the revenue. A lot of that is a function of tax relief which we will be seeing in the tax package which will be coming here to extend those tax relief initiatives in the next bill. But this bill

is about reducing the deficit by $39 billion, $35 billion being the original instruction. It is a huge step in the right direction.

Now we should ask, I believe--and I think the Senator from South Carolina is going to make this point rather dramatically--what is the response from the other side of the aisle? The response from the other side of the aisle, as I believe the Senator from South Carolina is going to point out, is that their proposal is to spend more money. That is their proposal for reducing the debt around here. They are going to spend more money. That doesn't work.

Since January, they have proposed spending increases which have exceeded or reached almost a half-trillion dollars in new programs, new initiatives, which isn't too surprising because that is the philosophy of the other side of the aisle. I don't think anyone takes that as a surprise. On the other hand, where is their proposal to cut the deficit, to reduce the debt, which the Senator from South Carolina talks about?

We searched, and we found their proposal. Wow.

Here it is. Here is the Democratic proposal on the budget. They have no budget. They haven't proposed a budget. Even when they were in the majority, they didn't propose a budget. At least they didn't bring one to the floor. They have no proposal at all to reduce the deficit or to reduce the debt. They do have a lot of concerns about our proposal. That is understandable because we wrote it. They didn't vote for it. There was not one Democratic vote for our budget. You wouldn't expect us to basically draft their language, but we are willing to take proposals, if they have them, to reduce the debt, to reduce the deficit, proposals which are constructive. But so far, there has been no budget from the other side of the aisle.

There will be a lot of targeted amendments, I presume, to spend more money, which will raise taxes on working Americans and on Americans generally. But as a practical matter, their efforts to reduce the deficit or reduce the debt are extraordinarily limited, especially compared to what we have done.

This is the summary of what this bill does. It is not the tax bill. This is not the tax relief bill. This is the debt reduction bill. It reduces by $71 billion entitlement spending, and $32 billion of new spending is put in place because we believed it was important to assist certain groups and because it was fair. The vast majority or large percentage of the $71 billion came from education accounts by reducing the corporate subsidies for lenders. Rather than take all of that money in deficit reduction, we believed a significant amount of that money-- about half--should flow back into student accounts to assist low-income students in getting a college education. It is a good proposal. The key to our Nation's capacity to compete is that we have creative and productive people. That means you have to send people to college. We have to help especially low-income kids get to college. This bill does that to the tune of $11 billion. Maybe the other side is opposed to that.

In addition, we want to make doctors more available to patients. We want senior citizens, when they walk into a clinic or into their health care area, to be able to see a doctor. We know that under the present law, doctors are going to be cut by 4.5 percent in their spending, and they are going to drop out of the Medicare system. The Finance Committee decided to fix that and hold doctors harmless by essentially freezing their pay rather than cutting it 4.5 percent. That is where the money is.

But the net effect of this bill is a $39 billion reduction in the deficit. You can say it is not much. I happen to think it is a lot. In South Carolina, $39 billion is a lot of money. In Ohio, $39 billion is a lot of money. In New Hampshire, $39 billion is a lot of money.

This bill is a lot of money put toward debt reduction. In my opinion, we should be passing it and actually should be passing it on a bipartisan basis because if the other side genuinely wants to reduce the debt and reduce the deficit, they have to vote for this bill. This is their opportunity.

I yield the floor to the Senator from South Carolina who will have a lot of thoughts on this issue.

Mr. President, I suggest the absence of a quorum.

I yield such time as the Senator from South Carolina may use.

After the Senator from South Carolina speaks, I intend to speak for 15 minutes and offer an amendment. Then it would be back to your side for whatever time you wish to take, so about half an hour from now.

I want to get the amendment in the queue. I will offer the amendment and then I will let the Senator from North Dakota yield to you for whatever you need for an opening statement--15 minutes?

And then back to me to explain the amendment.

Mr. President, I send an amendment to the desk.

Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. President, it is my understanding that at this point the Senator from North Dakota is yielding time to the Senator from Maryland, and it will be taken from the time of the Senator from North Dakota. After the Senator from Maryland makes his statement, I will reclaim the floor.

Will the Senator yield for a question?

As the Senator knows, I did yield to the Senator to make an opening statement. The understanding was it would be for about 10 minutes. It has been about 15 now. I am wondering if the Senator is planning on going on for an extended period of time.

That would be great. I thank the Senator.

Mr. President, point of order: No question was asked by the Senator from North Dakota. Is it correct to have an interchange of this nature?

The Senator from North Dakota's response was not in relationship to a question.

Mr. President, I had, as a matter of courtesy, yielded the floor so the Senator from Maryland could speak; he said for 10 minutes. It has now been a half hour. Cooperation does help in this institution.

Cooperation also helps on bills such as this. The Senator from North Dakota has taken considerable time to talk about the reduction in the deficit in the 1990s and the fact that we went into surplus, claiming it as an action of the Democratic Party. The deficit reduction which occurred during that part, there was another player in that, and that was the Republican Congress which essentially asked President Clinton to pursue a course of a balanced budget. And with some reticence, the final agreement was reached, and a balanced budget bill was passed. It was passed in cooperation. There was cooperation from Republican membership with a Democratic President.

It would be nice if we had that cooperation today from our Democratic colleagues. I find it uniquely ironic that they have decided to oppose a bill which reduces the deficit by $35 billion--that initially was the demand; it was a proposal put forward; now it is up to $39 billion--on the representation that, well, they can't support this bill because there may be a later bill that gives tax relief. You can't have it both ways. You can't claim you are for deficit reduction and for reducing the debt and then vote against the one opportunity you are going to have to do so. The one opportunity is this bill. This isn't a tax relief bill. There are no tax relief proposals in this bill at all. This is not a bill that in any way harms people of lower incomes.

In fact, the vast majority of the new spending in this bill is directed specifically at low-income students and patients on Medicare and assisting both of them. The Medicaid proposals in this bill were crafted by the Finance Committee to make sure they focused on making that program more efficient. It will actually, if the language in this bill passes, have an impact on the pharmaceutical industry but not on low-income individuals who benefit from Medicaid. In fact, because it has significant expansion of the flexibility of Governors to deal with Medicaid, most of the Governors you talk to, any that are sort of good managers, are saying they can do a lot more. They are going to be able to deliver a lot more Medicaid services to a lot more people as a result of the language in this bill, even though it saves money in the Medicaid accounts, because they are giving Governors more flexibility.

This is a bill which actually produces significant improvements in the delivery of services in this country to low-income individuals, especially those who want to go to college, those who are benefiting from Medicare, and those who are benefiting from Medicaid. At the same time, it reduces the deficit by $39 billion, or $35 billion if the amendment I just offered happens to be passed.

To say that you are not going to vote for this bill because there may be some bill coming down the road that gives tax relief to people is not consistent, and then to argue that you are for deficit reduction on top of that. This is your opportunity to vote for deficit reduction. This is it. This is the only vote you are going to get--at least in this exercise of reconciliation--to reduce the deficit. So vote for this. And if you are not happy with the tax relief package, vote against the tax relief package. Take the good, which you allegedly claim you want, which is deficit reduction, and reject what you consider to be bad, which is the tax relief package coming later.

No, I will not yield at this time.

The tax relief package to which they are opposed, which is coming down the pike, which they allege is part of this package so they have to vote against the debt reduction deficit reduction package, let's talk about what is in that package potentially.

The alternative minimum tax: Something like 8 million people will be

added to the alternative minimum tax if we don't extend what is known as the patch, if we don't exempt those people from being added to it. That is a $30 billion item right there. The folks on the other side want to vote against the tax reconciliation bill. They want to raise taxes on 8 million people. They want to create a tax revenue of $30 billion by making the alternative minimum tax apply to middle-income Americans. That is their choice.

The research and experimentation tax credit, the R&D credit, this is the credit which allows entrepreneurs, especially small businesses, to invest in R&D, which produces jobs, which makes our country more competitive, which keeps jobs from going overseas, which gives people careers. This is one of the most important tax initiatives in our Tax Code because it increases economic activity and increases opportunity and jobs. They want to vote against that one. Fine. Raise the taxes on small business and entrepreneurs who want to do R&D. That is the second largest item, $7 billion, that is going to expire in the next 2 years.

The deductibility of qualified credits, teachers' deductibility. We talked about that before. When teachers go out and buy things for their classrooms, they get a deduction for it. If they want to raise taxes on teachers, go ahead, have a tax increase on teachers.

The deduction for State and local sales taxes: Which States benefit from the deductibility of State and local taxes? Massachusetts, Connecticut, New York, New Jersey, Illinois, California--those are the high tax States. They are the ones with the highest sales taxes. How many Republican Senators are there from those States? I don't think there are any. But that is one of the items. They appear to want to raise taxes on people in those States by making their sales tax not deductible.

I have to tell you, I come from New Hampshire. We don't have a sales tax or an income tax. If you want to eliminate the deductibility of sales taxes, it is no skin off our nose. But I don't think it happens to be that great a policy. But that appears to be the position that is being taken here, if you listen to the other side as they excoriate the package of proposals that is coming at us as a result of the reconciliation process: First, the deficit reduction bill, the debt reduction bill; second, the reconciliation bill on taxes, the majority of which includes these right here. And these are the ones that are expiring in the next 2 years.

Then the third is the debt ceiling, which is put under reconciliation. Well, you know, we are at war. We had a downturn of dramatic proportions as a result of the bursting of the Internet bubble, and this country's expenses have gone up rather significantly because of those two factors--especially the cost of the war. In fact, if you look at discretionary spending, almost the entire increase is an attempt to fight terrorism and protect our Nation. Now, it may be that the other side of the aisle does not want to pay those bills, that they think we should not do a debt increase. Well, if you do that, the Federal Government defaults on its debt, chaos occurs in the marketplace, and people's savings will be wiped out not only in the United States but across the globe.

Maybe that is the fiscal position of the other side of the aisle. A debt reduction bill is a technical step in the sense it increases our ability to borrow the money. We are going to borrow the money because we have the debts. It is like saying, when you get your credit card bill, you are not going to pay it. Well, the practical implication of not paying is you file bankruptcy. Maybe the other side's position is let's file bankruptcy. It seems to be we should do nothing. However, the rate at which that credit card is being charged--because this is the only bill that does that. This is a deficit reduction bill. The $39 billion bill that is pending before us is a deficit reduction bill. So if you are not going to vote for this bill, you have no credibility on the issue of whether you are willing to cut the deficit or debt. It is one separate bill.

I will not yield. I yielded to the Senator for 30 minutes when he asked for 10, and to tell you the truth, I don't think that was consistent with the comity of the Senate.

No, I will not yield.

I will not yield on that point.

The next item: The second point is how much money have we generated from this tax cut. The tax cut has energized a significant increase in revenue to us relative to the budget. We have seen a 14-percent increase in 2005. We will see a 6-percent increase in 2006, and it is projected that this will continue to go up significantly as we move into the outyears. That is because as you reduce the tax rate on working Americans, you significantly expand the revenue of the Federal Government because people become more productive and they generate more activity, which generates income to the Federal Government.

That has been proven over and over and over again. The tax cuts of President Bush have shown that, the tax cuts of President Reagan showed it, and the first person to show it in fairly definitive terms was President John F. Kennedy, who put forth his tax cut which generated significant revenues to the Federal Government.

We are seeing a dramatic expansion in the revenue activity of this Government. To say anything else is inaccurate. Yes, the budget deficit is $314 billion, but it was supposed to be $440 billion or $420 billion. We have generated $100 billion of reduction in the deficit and almost all of it, almost all of it has been a function of new revenues coming into the Federal Government. There has also been essentially a freeze on discretionary spending, nondefense, which has been good, but essentially all that revenue has come out of this, come out of the fact that we cut taxes and we have generated more economic activity.

So when the argument is made that the tax cuts are inappropriate and that we are generating cuts for wealthy individuals at the expense of low-income individuals, it is just not consistent with the fact. The fact is, this deficit reduction plan significantly reduces the deficit but does it in a way that does not impact low-income individuals. In fact, the new spending initiatives in this plan, which are fully paid for by offsetting reductions, dramatically benefit low-income individuals, especially those who are working, who are going to college, and who are trying to benefit from Medicare.

Secondly, the tax provisions which will be coming in the next exercise, which is independent of this exercise, are provisions which are generally supported by most Americans. They are the deductibility of the R&D tax credit, deductibility of education credits, deductibility of savings credits, State and local taxes, sales taxes, and, of course, the AMT fix. The tax revenues of this country are going up dramatically on an annual basis, and they are projected to continue to go up. So we don't have a problem that we are an undertaxed society. We have a problem that we are not controlling spending.

The pending amendment which I sent to the desk is an amendment to address the fact that we are confronting a very significant threat in the world called avian flu. This Congress, this Senate, has tried to address this issue a couple times, but we know the avian flu issue is a ticking time bomb out there. Whether it is going to happen today or whether it is going to happen--well, not today, obviously, but whether it is going to happen within 12 months or 2 years or 5 years, we know the threat should avian flu transfer from birds over to humans is huge because we have a record to look to, which is the pandemics of the early part of this century.

We need to get ready for it, and we all recognize it, and there is an urgency to do that. It has been a bipartisan push to try to accomplish that. So this amendment essentially takes some of the dollars which have been saved in excess of the original reconciliation instruction and applies those dollars to try to address the pandemic situation.

In trying to accomplish that, we have addressed what I think is a significant need. In addressing the avian flu issue, it is more than just a money issue. We

all know that. There has to be an incentive for the vaccine industry to aggressively pursue some sort of cure to address not only avian flu but avian flu as it mutates through various systems. That has not been accomplished yet. But we know it will not be accomplished until we are successful in standing up to the vaccine industry and making sure that they have the resources to pursue an adequate treatment.

This amendment tries to accomplish that, and thus I have offered it.

At this point I yield the floor.