A bill to amend title XIX of the Social Security Act to repeal the amendments made by the Deficit Reduction Act of 2005 requiring documentation evidencing citizenship or nationality as a condition for receipt of medical assistance under the Medicaid program.

Mr. President, am I right that we are prepared to proceed to the text of the conference reconciliation report?

Mr. President, before I explain what is in the conference report, I want to make clear what the tax policy is we are talking about. For 90 percent of the legislation that is before us, we are talking about maintaining existing tax policy as it has been, either from the 2001 Tax Reduction Act or the 2003 Tax Reduction Act. The reason I want to take some time to explain that--and that is not part of my explanation of the conference report--is because the public listening in and/or my colleagues are going to be confused over the words ``tax cuts.'' For 90 percent of this legislation, we are not cutting anybody's tax bill. What we are trying to do because of sunset is we are maintaining for the next year, or in some cases the next 5 years, existing tax policy. So I don't want anybody to come over and say we are cutting taxes.

If we don't pass this legislation in the year 2006, or in some cases in the years 2009 and 2010, people are going to get an automatic increase of taxes without a vote of Congress. So we are talking about maintaining existing tax policy. The reason we are talking about maintaining tax policy would be for two reasons. In the case of dividend and capital gains tax policy, the tax policy we adopted in 2003 is the reason we have created 5.2 million jobs.

That is why the economy is rolling. I know the public is listening. When they pay $3 for gas, the $3 for gas blinds them to the fact that we had 4.8 percent growth last quarter. It blinds them to the fact that we have 4.7 percent unemployment, which is practically full employment, and some economists would tell you it is full employment, or that we have a low inflation rate.

It seems that when my constituents, and probably constituents in every State, see high gasoline prices, that is all that is on their mind. I don't blame them because I put gasoline in my car--I don't have some driver do it, I put it in myself--and I know what the price of gasoline is. I know a lot of my constituents go out of the same convenience stores I do with a bottle of water. Bottled water, if you buy it in these small containers, you are paying about $8 a gallon for water and never complaining about the cost for water but complaining about $2.63 gas that you can buy in Des Moines, IA, this very weekend.

We are talking with regard to capital gains as maintaining existing tax policy. Just so everybody understands, we are not cutting anybody's taxes below what they are today. We are maintaining existing tax policy. But if we didn't take the action we are taking today, taxes would automatically go up in these areas by 33 percent, and for low- income people, who have zero capital tax gains, they go up--what would that be? One hundred percent. If they are not paying taxes today and they start paying taxes at the rate everybody else pays, it is a 100- percent increase in taxes.

I don't know why people would argue with us, when we have a zero capital gains for lower income people, that you would want to tax lower income people. But if we do not continue this tax policy, that is the case.

I wish to emphasize again what Chairman Greenspan has said about the 2003 tax policy we are continuing today, and that is that it is responsible for the economic recovery we have had of 18 quarters of economic growth and 5.2 million jobs being created.

The other part of the bill is to continue tax policy existing since 2001. That existing tax policy is that 22 million Americans--well, no, I better say it this way. That tax policy since 2001 has been that when we reduce people's taxes here on the one hand, we are not going to take it away from them on the other hand by having them hit by the alternative minimum tax. I am going to explain this in greater detail, but up front, a good part of this bill is to maintain the policy Senator Baucus and I have had in place since 2001 of holding people harmless from the alternative minimum tax. In other words, if you get a tax decrease here, we are not going to have the same people pay a tax over here on the alternative minimum tax.

As far as the alternative minimum tax is concerned, I think the best policy is what we did in the late 1990s when this body sent to President Clinton a bill to repeal the alternative minimum tax, and he vetoed it. I don't know how many Democrats we are going to have condemning us for not doing more on the alternative minimum tax. What more could you do than what we did in 1999 and repeal a very bad tax policy, the alternative minimum tax? And a Democratic President vetoed it. But they will probably be the ones complaining and crying the most because we are not doing more.

What we are talking about here today is maintaining present tax policy through this reconciliation bill for roughly 90 percent of it. Ten percent of it would be some change in tax policy. If people want details on that, I will be glad to go into that.

Maybe another thing I ought to explain--and it is more personal because I am going to be the chief negotiator for the Senate on this bill because I am chairman of the Senate Finance Committee--I have negotiated for a long period of time with Chairman Thomas, and everything has worked out fine as compromises have to work out fine, and I think I have done a very good job of protecting the Senate's position.

Let me remind everybody, all of my colleagues, particularly Republicans, particularly about a telephone call from the President on the Thursday before we began our Easter break--the exact date I don't have in mind--and in meetings with the leader and the Speaker and all this, we were just very anxious to get something done before Easter. At that point, the position of the House was that we were not going to have hold harmless on AMT. Consequently, I didn't agree to this agreement. I believe I probably disappointed a lot of my colleagues and the leader and the Speaker and the President of the United States because I just didn't, how would you say, surrender to a House position that we were doing too much on AMT.

Our policy since 2001 has been hold harmless, and I believe that is what we passed three times on the floor of the Senate: in November last year, January this year, February of this year, as the Democrats made us go through three periods of 3 days of debate on the same tax bill that ended up passing by a bipartisan majority of somewhere between 64 and 67. So it has been the policy of the Senate since 2001, reaffirmed by three votes of this body in the last 6 months, to hold harmless.

I didn't believe I was doing 66 Senators a favor by agreeing to something which would have 3.5 million--let's say more accurately 2.5 to 3 million taxpayers being hit by the alternative minimum tax out of the 22 million to whom I have already referred. So it took a little longer, and here we are--what, May 11, 1 month later than when it originally happened. But we have hold harmless in this bill. Hold harmless is in this bill.

Everything is going smoothly between Chairman Thomas and me. Nobody is going to believe that because if you read the papers, we are always at each other's throat. You know, those characterizations are entirely wrong. He has strong convictions about tax policy, and he is the negotiator for the U.S. House of Representatives. He has a right to stand firmly for their positions, but I have a responsibility to stand firmly for the Senate position, with the understanding that someplace there are some compromises. I guess enough said on that point.

I have mentioned, in summation, before I go into explanation about the conference report, and this is the third time, but it cannot be said too many times because I don't know how many times you are going to hear today--in fact, we ought to count how many times we are going to say we are cutting taxes, we are cutting taxes, we are cutting taxes. Would you keep track of that for me? I want to hear how many times that is used. We are not cutting anybody's tax. Maybe we ought be cutting people's taxes, but we are not. We are maintaining existing tax policy as expressed by this body in the 2001 and 2003 tax bill so 22 million Americans don't get hit by the alternative minimum tax and so that we have incentives for investment and taxes don't go up, and capital gains and dividends, without a vote of the people in 2009 and 2010; so that we keep the incentives Chairman Greenspan said are the reason we are having the economic recovery we have had for 18 quarters, creating 5.2 million jobs, 4.8 percent economic growth, 4.7 percent unemployment, et cetera.

We have moved to the final step in the tax reconciliation process to which I have already referred that we dealt with three times and probably 3 days each time during November, January, and February. We have an agreement of the conferees from the House and Senate on a conference report. The basic objective of this conference was to produce a conference report that will pass both the Senate and the House and be sent to the President.

To achieve that objective, we needed to focus our efforts on a true bipartisan, bicameral compromise. As I said and will probably say again today--but you have heard me say it over the last 3 months to my colleague and friend, Senator Baucus--a compromise must be bicameral. Likewise, I said to Chairman Thomas of the House and to House conferees that the compromise should be bipartisan.

In the Senate, we passed a reconciliation bill for the second time but the contents of the bill for a third time, on February 2, with a bipartisan vote that included 66 Senators. So that obviously includes a vast number of Democrats.

My preference was to continue working in conference to produce a bipartisan compromise that could pass in the Senate. Unfortunately, I doubt if we will get 66 votes for this conference report. But I am very hopeful that we will pick up some Democratic votes.

Going into conference, everybody knew that the House bill and the Senate bill were significantly different. The centerpiece of the House bill was a 2-year extension of the 15-percent maximum tax rate on dividends and capital gains and the zero percent tax rate that will apply to taxpayers in the lowest two tax brackets. Such an extension would continue the bipartisan tax policy enacted in 2003, a policy which has been vital to our economy's recovery and continued growth.

The centerpiece of the Senate bill was a 1-year extension and modification of the alternative minimum tax hold-harmless provisions. This provision would keep 15 million American families from being hit by the stealth tax. The AMT is a stealth tax because you really never know when you are going to be hit by it. Hitting Americans with such a stealth tax, the alternative minimum tax, is wrong. So, as I said before, the AMT should be abolished. It is not abolished. We did vote to abolish it in the late 1990s, but President Clinton vetoed that. So here we are, since 2001, working in a bipartisan way to do what we call hold harmless.

As I said at that particular time, my highest priority was to make sure we kept our promise to make certain that no additional taxpayers are brought into the AMT system on an annual basis, and that is the purpose of the Senate's hold-harmless provision on alternative minimum tax.

I will expand on that notion for a moment and be somewhat repeating myself from my extemporaneous remarks,

but exactly 5 years ago today, May 11, 2001, Senator Baucus and I announced the bipartisan deal that became the basis for historic 2001 bipartisan tax relief legislation. I say historic because taxes were as high as they had ever been in the history of the country as a percentage of the gross national product.

When newly elected President Bush released his budget for that first year in 2001, his tax relief plan did not contain a general hold harmless on the alternative minimum tax, and the House passed a bill that did not have hold harmless provisions for the alternative minimum tax. When Senator Baucus and I were negotiating the bipartisan plan, we agreed on that bedrock principle of hold harmless--hold harmless on AMT so no new people would get hit with it. Because they got a tax decrease over here, we should not take their taxes away over here.

We agreed to make sure the AMT would not take the tax relief we were providing. This is how we came up with the concept we refer to as hold harmless. To me, it goes to a fundamental principle of transparency in government: Don't promise taxpayers relief that you know they are not going to really get.

Some of my friends on this side of the aisle--meaning Republicans-- rightly complain about doubletalk on alternative minimum tax that we hear from Members on the other side, Democratic Members, the Senators from so-called blue States. You remember the blue-red map in Presidential elections of 2000 and 2004? Blue States generally go for Democratic candidates for President, red States go for Republican candidates for President.

I am going to refer to the blue States which are those that generally vote Democratic. Senators from these States are generally hostile to the tax relief we have provided in 2001 and provided again in 2003, and seem to be sympathetic to tax hikes. They take this position despite the fact that their constituents in these blue States, and represented for the most part by Democratic Senators, tend to bear the highest per capita Federal tax burden. The hostility of these Members seems to grow to a white-hot intensity when anybody above, say, $100,000 in income benefits from any tax relief package.

It has always been a strange disconnect to those of us on this Republican side of the aisle because that intensity--and at times what appears to be outright anger--seems to grow as the States' shade of blue grows much darker. Ironically, the per capita income, living costs, and Federal tax burdens tend to rise as the shade of the State tends to get a darker blue. The implication appears to be that constituents in these blue States should be happy to bear this high tax burden as their Senators fight against tax relief for them. In fact, Members from blue States seem to have no limit to the level of Federal taxes they believe folks in their States should bear. Taxes can never be too high, goes the rationale, as long as we keep growing the public's dependence on more Federal programs.

When Members on the Republican side hear demagoguery on taxes emanating from Members from blue States on a daily basis that we shouldn't have tax cuts for high-income people, they ask, Why do these folks then seem to change their mind when we are talking about the alternative minimum tax? As you tend to get intense debate that we ought to do something about the alternative minimum tax from the same Senators who are complaining because we are giving too much tax relief to high-income people in their various States, and the AMT happens to most dramatically impact taxpayers between $100,000 and $500,000. How is this any different from other forms of tax relief? They are hot and heavy to have the AMT which helps their taxpayers in blue States, but they are not hot and heavy to have tax relief in the first instance when you vote to reduce tax rates.

If I go to some extent talking about this contradiction, it is a contradiction that affects and bothers a lot of people on the Republican side of the aisle. It is an argument we do not understand. Frankly, it is a sentiment I have to overcome in my caucuses as I argue for the AMT and for tax relief; and I have had to argue this contradiction particularly with my House counterparts as we go to conference to negotiate differences between the House and Senate and try to explain to them why we need to do a hold-harmless provision on

Mr. President, first, I will respond to some of the things that Senator Baucus brought up in his opening statement. He complimented me in our working through this, and I always have a good working relationship with Senator Baucus. And 90 percent of the time, or maybe more, he and I are on the same side of the fence. I remind people in the Senate that on three occasions, in November and January and February, we were on the same side of the fence on this issue.

The difference between us now is related to the extension of the capital gains and dividend tax credit that was not in the Senate bill at that particular time. And since it is not in the conference report, that is one of the reasons he and I are on separate sides of the fence.

I will respond to some of the points he made on extenders because they are not in the conference report. Senator Baucus's criticism is right that they are not in this bill. They are, however, covered in a collateral agreement between tax-writing committees and congressional leadership. And on a document basis for my saying that we will be dealing with those, even though they are not in the conference report, I ask unanimous consent to have printed in the Record a joint statement on a collateral extenders agreement, that they will be in a follow-on piece of legislation that ought to be before the Senate very quickly. These are not in dispute between the House and Senate. This is a product under negotiation, but these issues are no longer under negotiation.

Mr. President, on Senator Baucus's criticism of the charts that I used, let me say that the

charts reflect the data of the Committee on Joint Taxation. I explained how the Committee on Joint Taxation is a professional group, not a Republican group or a Democrat group. They are paid by the taxpayers of this country to be experts on tax policy. I challenge many of my critics, and the sympathetic ears that these critics have in the east coast media, to also use the joint tax data because in a lot of the presentations already, and today, we are going to hear statistics that don't come from the green eyeshade people who have no political ax to grind in the Joint Tax Committee but, quite frankly, come from liberal think tanks who do have a political ax to grind.

I ask Democrats to use Joint Tax Committee data. I think my friends on the other side have an issue with the perspective of the charts. The charts I used earlier take into account the tax savings taxpayers enjoy relative to their tax burden. Democrats tend to look only at the tax benefit. They ignore the taxes people pay. That is where there is a very real difference. It is philosophical. The charts I used are accurate.

On the number of taxpayers by State, the source is the Internal Revenue Service, not a conservative or liberal think tank.

Finally, on the need to do an extension now, just ask folks in the market whether this decision to extend the capital gains and dividend tax provisions ought to be done now or in the year 2008. We hear that it is very important to have a long-term tax policy if you are going to encourage investment, and that is why we are extending this now at this particular time.

I would also like to refer to some comments that were made by the Senator from New Mexico. He spoke about the impact of one of our offsets for policy long term, speaking about the Roth IRA being the wrong kind of policy to put in this bill.

It is interesting to hear my friends on the other side criticize the Roth IRA conversion provisions in the conference report. One would be led to believe that this protaxpayer provision is somehow an evil Republican idea that the Democrats have never seen before. But I am afraid that my friends on the other side of the aisle have a short-term memory. They are giving this Finance Committee chairman and my Republican colleagues too much credit.

I wish I could take credit for what is called the Roth IRA. Maybe it could be called the Grassley IRA. But I can't. There is another Finance Committee chairman, not a Republican, who first laid out the exact IRA conversion proposal that is in the conference report we are going to vote on today.

Way back in 1991, there was a chairman of the Finance Committee, a famous Senator from Texas, by the name of Lloyd Bentsen. He introduced the identical provision as part of what they called the Tax Fairness and Savings Incentive Act of 1991. If the Roth IRA--later named the Roth IRA--was tax fairness in 1991 when the Democrats wrote it, it is tax fairness in 2006 as it comes back in a conference report.

Chairman Bentsen's bill would have allowed all taxpayers, regardless of income, to convert amounts from traditional IRAs into the new Roth- styled IRA account that he also proposed. In fact, the only difference between Democratic Chairman Bentsen's original proposal and the provision in the conference report is Chairman Bentsen's bill would have given taxpayers 4 years to pay tax on converted amounts compared to the shorter 2-year period under the provisions in this conference report.

But some may ask: Was Chairman Bentsen just a lone Democratic voice in the wilderness on this issue without support from fellow Democrats at that time in 1991? Not surprising to those of us who had the honor of serving with Senator Bentsen, it wasn't just his idea. His bill was introduced with 13 Democrats as original cosponsors, and it has a prominent list of Democratic cosponsors, many of whom are still serving with us in the Senate today. In fact, I can point to my good friend from Montana, Senator Baucus, as one of the original cosponsors of Chairman Bentsen's bill. Let me name some others: Akaka, Dodd, Inouye, Lieberman, Mikulski, and Senator Pryor's father was also an original cosponsor. So this is not a new idea, nor is it a Republican idea. It is an idea which has had bipartisan support in the Finance Committee and the Senate for the past 15 years, ever since Chairman Bentsen first proposed it. Indeed, the Bentsen bill was just the beginning of a long bipartisan history of this provision. So why today is there not bipartisanship on this issue?

In the next Congress, after Senator Bentsen became Treasury Secretary under President Clinton, the bill was introduced. Senator Roth--who would, of course, later become Finance Committee chairman--introduced Senator Bentsen's former bill, including the proposal that would become known as the Roth IRA conversion proposal. Senator Roth introduced this bill with a bipartisan list of 57 original cosponsors, 24 of whom were Democrats.

In the next Congress, Senator Roth reintroduced his bipartisan legislation with 52 cosponsors, and 18 Democrats were cosponsors of that bill, including Minority Leader Reid and Senator Kerry. It was a good proposal for the Democrats then. So why is it not a good proposal today?

Democrats say they are concerned about the budget deficit, but we all know our deficit was much larger as a percentage of GDP in the early 1990s than it is today. The real question is, Do my Democratic friends really oppose this protaxpayer provision that merely creates a level playing field when it comes to access to retirement plans or do they only have this objection because the provision is part of a progrowth tax relief bill that the Democratic leadership has decided to oppose today?

The bipartisan history of this concept didn't stop when Democratic Chairman Bentsen became Secretary of the Treasury. Roth IRAs became law in the Tax Relief Act of 1997. The Senate version of that legislation allowed all taxpayers to convert traditional IRAs to Roth IRAs, the same as the conference report before us this very day.

That bill passed the Senate--now listen, that bill passed the Senate. The exact thing we are doing today passed the Senate by an overwhelming 80-to-18 bipartisan vote.

When an income limit was placed on Roth IRA conversions during the conference negotiations in the 1997 act, the Senate came back the very next year in the IRS Restructuring and Reform Act and again showed bipartisan support for expanding the eligibility for Roth IRA conversions. Expanded Roth IRA conversion eligibility was part of the Senate bill which passed unanimously 97 to 0. So obviously Democrats voted for it then. It was also included in the final conference report which passed the Senate 96 to 2.

I hope this makes it very clear that this isn't a provision which came out of thin air. This isn't a Republican proposal. This isn't a budget gimmick. This is a provision which Democrats have long supported. This is a provision which was proposed by a Democratic chairman of this committee. This is a bipartisan provision. And most importantly, it is a good provision. Good policy makes good politics. It is a protaxpayer provision. This is a provision which means all Americans have access to the same retirement plans. This is a provision which brings in real revenue to the Federal Government. This is a provision which will increase tax compliance in an area in which there is much room for improvement. This is a provision which rewards those who work hard, pay their taxes, and do what we need to do more of: save for retirement. That is why it has such a long history of bipartisan support. It also is why it is a very good part of this conference report.

I would think people on the other side of the aisle would be ashamed of damaging the very good image Senator Bentsen had as a U.S. Senator, as a Democrat, as chairman of the Finance Committee. Why don't they honor his reputation as a Senator and vote for provisions he had that are in this conference report rather than being so partisan?

Mr. President, my friend from Montana referred to a report published by Federal Reserve staff, and I would like to make a few comments on that.

The report compares U.S. and European stock values during brief periods of time before and after the lower rates were announced in late 2002 and enacted in 2003. Since U.S. and European stock values moved together, the report concludes that the lower rates had

no effect on the aggregate market value of U.S. stocks.

The report was written by members of the Federal Reserve staff. It does not represent the views of the Federal Reserve itself. In fact, Chairman Alan Greenspan has repeatedly testified before the Congress that lower rates on dividends and capital gains represents good tax policy, and Ben Bernanke has cautioned that not extending the rates soon could negatively impact the economy.

I am not an economist, but it seems to me that the analysis of these Fed staffers is overly simplistic for at least four reasons:

First, the analysis covers a very short period of time--2 months surrounding the President's proposal in January 2003 and 4 months surrounding enactment of the reduced rates in May 2003. Looking at such a short period of time, the Fed staffers only tried to determine if the news of the tax cut had an effect on the U.S. market. Now, I am a believer in the efficient capital markets theory to some degree, but it can't be that simple. Surely, the broader, longer term benefits of these lower rates on the economy should be considered more than simply the news of their enactment.

Second, the analysis essentially assumes away all other factors during that short period of time could affect U.S. markets and European markets differently. It is hard for me to understand how this assumption could be valid. If that was true, then why would anyone consider investing in European stocks as a diversification strategy?

There is a multitude of factors that would seem to affect the U.S. and European markets differently, given how complex the U.S. and European economies are. The Wall Street Journal article that described this report noted a few things that ``might have contributed to a rise in European stocks or a drop in the U.S. market during the review periods'':

In the U.S., some companies reported weaker than expected earnings, while some European firms reported strong earnings;

There was a terrorist bombing in Saudi Arabia that ``rattled'' the U.S. market;

There were concerns about the weak dollar.

Third, the analysis assumes that the impending war in Iraq would affect U.S. and European stocks equally. Again, I am not an economist, but I find this assumption hard to believe.

Fourth, the Fed staffers' analysis does nothing to convince me that taxing something less doesn't make it worth more. It is common sense that people value assets based on how much those assets put in their pockets on an after-tax basis. So if the Government taxes certain investments less, it makes those investments worth more, relative to other investments. Of course, there are many other factors besides tax policy that affect investment value. But we should do what we can in terms of tax policy to promote economic growth.

The Wall Street article concludes with a quote from Michael Thompson, director of research at Thomson Financial, that ``attributing stock market gains to one isolated factor risks being `intellectually dishonest' ''. It would be just as intellectually dishonest to point at this simplistic study as a reason to raise taxes on dividends and capital gains.

Mr. President, my friend from Montana criticized the charts I showed earlier that showed how lower income taxpayers, relative to their tax burden, have more at risk than higher income taxpayers. In light of Senator Baucus' criticism of those charts, I want to go into detail regarding how the statistics were calculated by my Finance Committee staff.

To get a clear picture of the relative benefits of this tax policy, I have taken another step in the distributional analysis.

I looked at the size of the tax benefits in relation to the total tax liabilities that these taxpayers bear.

The results of this analysis show that, among taxpayers who benefit from this tax policy, those with less than $50,000 of AGI benefit more from this tax policy, especially when the lower income tax rate drops from 5 percent to zero percent.

According to the JCT data, 6.3 million tax returns with adjusted gross income of less than $50,000 benefited from the reduced tax rates on dividends.

The aggregate total income tax liability of these taxpayers was $12.4 billion, which is an average of $1,968 per tax return.

In 2005, the lower tax rates on dividends saved these taxpayers $600 million in the aggregate at an average of $95 per return.

In 2008, if we assume the same data, the elimination of dividend taxes for lower income families will save them an additional $350 million, which is an average of $56 per return.

In total, this tax policy will save $950 million, or an average of $151 per tax return.

That produces a savings of 7.6 percent for these taxpayers.

Tax returns with more than $200,000 in adjusted gross income would save $6.5 billion in the aggregate, or an average of $2,964.

These numbers, of course, are much bigger than the savings numbers for the less than $50,000 of AGI category. But these numbers represent only 2.2 percent of this group's total tax liability.

The estimates for capital gains show that 3.6 million tax returns with under $50,000 of AGI will report a savings of $680 million from lower tax rates on capital gains, or an average of $189 each, producing a 10.2-percent tax savings.

Those with $200,000 or more in AGI will save $13.7 billion in the aggregate or $11,421 each on average. To be sure, these dollar numbers are much higher than the less than $50,000 group, but as a percentage of total tax liability, it is only 7.6 percent, lower than the savings of the less than $50,000 group.

And what about seniors?

2.4 million tax returns filed by seniors with adjusted gross income of less than $50,000 benefited from the reduced tax rates on dividends.

The aggregate total income tax liability of these taxpayers was $4.4 billion, which is an average of $1,833 per tax return.

In 2005, the lower tax rates on dividends saved these seniors $500 million in the aggregate at an average of $208 per return.

In 2008, if we assume the same data, the elimination of dividend taxes for lower income seniors will save them an additional $250 million, which is an average of $104 per return.

In total, this tax policy will save seniors $750 million or an average of $312 per tax return.

That produces a savings of 17.1 percent for these taxpayers.

Four hundred thousand tax returns for seniors with more than $200,000 in adjusted gross income would save

$2.7 billion in the aggregate, or an average of $6,775 each, representing a 5.7-percent savings.

The estimates for capital gains show that 1.5 million tax returns will be filed by seniors with under $50,000 of AGI, reporting a savings of $305 million from lower tax rates on capital gains or an average of $204, producing a 13.2-percent tax saving.

Seniors with $200,000 or more in AGI will save almost 3.8 billion in the aggregate or $12,633 on average representing a 10-percent savings.

Now, I have a couple charts that summarize the tax savings as a percentage of total income tax liability across AGI levels.

This chart illustrates the relative savings from reduced dividend taxes across AGI levels.

Opponents of this policy want to persecute these taxpayers by taking back their 2.2 percent savings.

But at the same time they will punish these taxpayers by taking away their 7.6 percent savings.

And they will punish these seniors by taking away their 17.1 percent savings.

This chart illustrates the relative savings from reduced capital gains taxes across AGI levels.

Opponents of this policy want to persecute these taxpayers by taking back their 7.6 percent savings.

But at the same time they will punish these taxpayers by taking away their 10.2 percent savings.

And they will punish these seniors by taking away their 13.2 percent savings.

As this data shows, the tax policy enacted by Congress in 2003 to lower taxes on dividends and capital gains has provided meaningful benefits to taxpayers across the income spectrum, not just the rich.

In fact, lower income taxpayers will save more than higher income taxpayers when measured as a percentage of total tax liability.

These lower rates have allowed millions of taxpayers to keep more money in their pockets to spend or add to their savings through reinvestment in the economy, rather than give it to the Federal Government to spend.

I yield the floor.

Mr. President, it is very unfortunate that when it comes to issues of taxes that we see hand-wringing and we read editorials about who is receiving the benefits of a reduction in taxes or, in this case, who is going to have to face an increase in taxes because that is what this is all about, preventing an automatic increase in taxes if we don't do anything.

With the AMT, the alternative minimum tax, it is going to hit millions of families next year if we don't do something. We are going to have an increase in capital gains and dividends in a couple years if we don't take action today on this bill.

We should think of this as a question of who is going to see an increase in taxes. That is why the title of this bill is so on point. The title of the bill is the ``Tax Increase Prevention and Reconciliation Act,'' and the key part of those many words is ``tax increase prevention.'' That is the key part of the title. That is what this bill is all about. This is not about cutting taxes further. How many times have we heard the words ``cutting taxes'' used on the floor of this body?

What we are doing in this bill is making sure that people don't get an automatic tax increase because of sunset, and because Congress doesn't have guts enough to vote for a tax increase, they can stop legislation like this and have a tax increase and never have to be on record in favor of the tax increase. But we are not cutting taxes. We are keeping the same tax policy that we had in the 2003 tax bill, in the case of dividends, and we are keeping the same tax policy in the case of the alternative minimum tax that we had in the tax bill since Senator Baucus and I negotiated that tax bill in 2001--in other words, to hold harmless 22 million more people who are not going to be paying that tax on 2006 income who didn't have to pay it on 2005 income.

I would like to discuss some of the points on this matter that I hope will help keep the feet of people on the other side of the aisle, and maybe a couple on our side of the aisle, on the ground.

Let's start with the basic fact that thanks to the tax cuts we have enacted during the Bush administration, we have now removed millions of people from the Federal income tax rolls. Millions of hard-working families now do not have to pay any Federal income tax and, as my colleagues know, many of these families can get benefits from what is called the earned-income tax credit which serves the purpose of offsetting some payroll taxes low-income people pay.

Let me make it very clear. If you are bad-mouthing the tax policies of 2001 and 2003 in this administration, are you saying that it was wrong to take millions of low-income people who previously had to pay some income tax off the rolls? They probably couldn't afford to pay a little amount of income tax, and they are no longer paying income tax. It just shocks me that I would hear people bad-mouthing that tax policy that was adopted in 2001 which, quite frankly, is a continuation of some tax policy that was adopted in other tax bills in previous years.

That is a fact of life. Thanks to our tax cuts, millions of low- income families and individuals no longer pay Federal income tax. Yet people love to pull their hair about the fact that we are not giving tax cuts to these same low-income people. It is a fact of life that we all looked at. This kind of talk stops me right in my tracks. It reminds me of city folk who start to farm, plant soybeans, and wonder why they are not going to get a corn crop.

It is this way: If you don't pay Federal income tax--and remember, we just took lots of people, millions of people, off the Federal income tax rolls who don't pay Federal income tax--if you don't pay it, it is pretty hard to cut your income taxes. If you don't plant corn, you are not going to get a corn crop.

Again, this bill is focused on preventing tax increases, not cutting taxes. So anybody on the other side of the aisle who says we are cutting taxes for this group or that group doesn't know what they are talking about because what we are doing is continuing existing tax policy. If they want to go back and argue that tax policy adopted in 2001 and 2003 is wrong, that we cut taxes way back then, that is an intellectually honest argument. But don't say we are cutting taxes in this tax bill because we are not cutting taxes anymore. We are keeping the tax policy where it has been.

I find it particularly interesting that we hear from the other side of the aisle that we should have done just the alternative minimum tax in this bill and not done provisions for capital gains and dividends. Often, these folks arguing this way are the same folks who are wearing their hair shirt ragged on this issue of who is going to get tax benefits.

Interestingly, the Tax Policy Center, which is so often cited by newspapers and Members, shows that if we had just done capital gains and dividends and not done the alternative minimum tax, that would have provided more tax relief for low-income families and individuals. Let me make sure my colleagues understand that point. By including capital gains and dividends, this bill provides more tax benefits to low-income families and individuals than if we had just done the alternative minimum tax.

So I suggest to those who think they should only do the alternative minimum tax, they should hang up their hair shirt. We all know the reality is that capital gains and dividends are encouraging investors, new businesses,

and as a result we get 5.2 million new jobs. We get 4.8 percent economic growth in the last quarter--18 quarters in a row of growth. I don't say that; Chairman Greenspan says that the tax cuts are responsible for turning the economy around and having this growth.

Let me further say that Chairman Greenspan has always had a great deal of credibility, and he still does. If he says it is better, then I say it. But if we can both say it, we are both right.

You create new jobs, new businesses. It is absolutely wrong to state that low-income families are not seeing benefits. They are seeing the benefits of these tax policies previously enacted by these 5.3 million new jobs created, and they will see these benefits in the future with more new jobs being created.

This has helped Americans at all levels. It is reported that the percentage of Americans earning more than $50,000 a year rose from 40.8 percent of the population to 44.2 percent of the population in just 2 years. While inflation is a factor--it is a very low inflation rate-- that still reflects real gain.

To reduce all of this to a spreadsheet of who benefits directly from taxes is an easy game, and it is a good tool of demagoguery. The truth is that all Americans will benefit from a strong, growing, robust economy that will continue when we pass this bill because these policies are working today, and if we continue these tax policies, they are going to continue to grow the economy, producing new jobs and, more importantly, better jobs.

I would like to focus on this issue of who is paying the taxes in this country because that argument vexes me when I hear it demagoged. I ask unanimous consent to have printed in the Record an editorial from the Wall Street Journal last week that says: ``How to Soak the Rich (the George Bush Way).''

Mr. President, I will highlight a few points from this editorial that is based on Internal Revenue Service data. After the tax cuts passed by Congress and signed by President Bush, the Federal income tax burden substantially shifts as a greater burden to the wealthy. Well, that must be a shock to people on the other side of the aisle. It says that after the tax cuts passed by Congress and signed by President Bush, the Federal income tax burden substantially shifted as a greater burden to the wealthy. It cites these statistics: Between 2001 and 2004, the percentage of Federal income taxes paid by those with incomes of over $200,000 a year and above has risen from 40.5 percent to 46.5 percent. The tax share paid by millionaires has risen, with Americans with incomes over $1 million going from 16.9 percent to 17.8 percent in 1 year, from 2002 to 2003.

And what have we gotten from the tax cuts in capital gains and dividends? Not only has it sparked the economy, as Chairman Greenspan gives it credit for doing, but in response to the cuts in capital gains and dividends, we haven't seen revenues from capital gains and dividends go down as part of our overall revenues. But the Wall Street Journal editorial states that capital gains receipts have increased 79 percent after the cut in capital gains and dividend tax receipts have gone up 35 percent.

We are seeing all this with the bottom line being that tax revenues have been increasing at an incredible rate. The Secretary of the Treasury noted in a press conference with me that we have seen double- digit increases in tax receipts in the last 2 years--hundreds of billions of dollars of taxes coming in. And I think I remember the figures that the Secretary of the Treasury gave. But first of all, before I give those figures, let me say there may be some people listening who think if you increase tax rates, you increase revenue coming into the Federal Treasury. Then there are people who believe that if you cut tax rates, you are going to cut revenue coming into the Federal Treasury. We are in an era where we are cutting tax rates, 2001 through 2003, and the surprise is--and this is probably a shock to some people--we had $274 billion more coming into the Federal Treasury in 2005 than in 2004. And with the continuation of that policy, right now, we have $137 billion more coming into the Federal Treasury than we anticipated in a 6-month estimate at this point in this fiscal year.

So it is working. That is why the title of this article that I am submitting is: ``How to Soak the Rich (the George Bush Way).''

Mr. President, there are studies that go around that say you can get marginal tax rates too high; that people that have some means are going to decide they are only going to pay so much money into the Federal Treasury. Then you know what they do? Instead of choosing productive activity to make money and pay more taxes, they decide: I am not going to pay any more. They choose leisure and do nothing, or do less. But when you reduce marginal tax rates, there is something about the wealthy: They are greedy. They are going to take advantage of the opportunity, and they are going to invest, make more money, pay more taxes and, in the process, create more jobs. That is what is happening in this economy today.

My hope is that my colleagues will see past the editorials and the rhetoric that make fun of what we are trying to do because they are too stupid to read the studies which show that you can lower taxes and have more revenue come in and recognize the reality that the wealthy are paying the greater tax, which happens when you reduce taxes, you increase revenue, because they are done choosing leisure and then they have incentives for productivity. Also, I hope my colleagues realize that low-income families have seen their Federal income taxes reduced as well, as best evidenced by those who are no longer on the rolls, or additionally what Senator Baucus and I got in the 2001 tax bill: The 10-percent rate. And people over here are bad-mouthing the 2001 tax cut. Do you want to do away with the 10-percent rate? Do you want to let that sunset in 2010 because you don't have guts enough to vote for a tax increase? Do you want it to go into place automatically and have a 50-percent increase in the tax rate of low-income people? It doesn't sound to me like you are very populace when you say things such as that.

The tax cuts have benefited all Americans by giving us a strong and growing economy, creating new jobs, 18 quarters of economic growth, 5.2 million jobs. We need to keep this economy going, and the way to help that along is not to increase taxes on middle-income people by voting against this bill that prevents 22 million middle-income people from being hit with the alternative minimum tax and to not increase taxes on those who invest in new or growing businesses that create new jobs. This bill is about preventing a major tax increase. A tax increase will hurt the economy. Don't take my word for it, take Chairman Greenspan's word for it.

Mr. President, I yield the floor.

Mr. President, the Washington Post printed on its front page yesterday a chart that was intended to show that the tax benefits in this tax bill go disproportionately to the super rich. The information was based on a study by the Tax Policy Center, along with the Center on Budget and Policy Priorities that has made no secret of its opposition to the tax relief included in this conference agreement. So there is a biased view.

I have had an opportunity to dig into the details of how that particular study was conducted. But if it is like similar analyses, the reported dollar savings statistics don't tell the whole story, and for three reasons:

First, it includes all households, even those that do not file tax returns or don't owe any tax liability, and even those that have a negative tax liability because they receive refundable credits.

In analyzing the distribution of the tax cut, it makes more sense to look at who actually receives the benefits as opposed to what they do. In other words, why include people who don't pay any taxes in the first place?

Second, the statistics in that study did not take into account the fact that the tax rates on dividends and capital gains for those in the bottom two income tax brackets drop to zero percent in 2008. That is that rate we are extending.

Third, and most importantly, the statistics are not shown in the context of the total income tax burden that these taxpayers bear. It is common sense that income tax cuts can only go to people who pay income tax.

Let me repeat that because I think the other side wants to ignore that:

Income tax cuts can only go to people who pay income taxes.

The value of the tax cut should be measured then not only in absolute dollar terms but also in relationship to the total income tax liability.

This conference agreement before us has two centerpieces, the alternative minimum tax hold harmless, which passed the Senate with 66 votes. The extension of lower tax rates on dividends and capital gains is the second provision.

If we applied the logic of including all tax returns in the various income groups and compare the AMT and dividend and capital gains tax savings to the total income liability borne by those groups in the aggregate, we can see that all of these groups receive meaningful benefits.

That is what the chart before us says. This chart was prepared by my Finance Committee staff, but it is based upon analysis of data provided by the Joint Committee on Taxation, not some liberal think tank that has its own ax to grind. The Joint Committee on Taxation is not Republican or Democratic--they are professional tax people who just study taxes up and down, and their economic impact.

As the statistics from the Joint Committee on Taxation show, all of these income groups receive meaningful benefits from this conference agreement.

In fact, the biggest beneficiaries are those in the $100,000 to $200,000 and $200,000 to the $500,000 AGI categories. The $100,000 to $200,000 and the $200,000 to $500,000 category.

The reason that shows up on the chart that way is not because of the reduced rates on dividends and capital gains that the other side is complaining about; it is because of the alternative minimum tax, the hold-harmless provisions that I fought to get completely the way the Senate had included them in this conference report.

Of course, it is strongly supported by the same folks who strongly oppose this conference agreement because of the extension of lower rates on dividends and capital gains, which I point out benefits low- income taxpayers more than the AMT relief--as we can see on the chart, $50,000 and under and the $50,000 to $100,000 category.

The core of this conference agreement is the alternative minimum tax hold harmless, which is the Senate position I fought hard for in conference. The other main provision is the extension of the lower rates on dividends and capital gains in combination with two provisions providing meaningful income tax savings to Americans across the income spectrum, not just the rich. These savings will prevent over 15 million Americans from being hit by the stealth AMT tax and allow those taxpayers and millions more to keep more money in their pockets to spend in the economy, adding to savings rather than sending money here for Members of Congress to spend.

Let me remind people of something brought home to me when I held a town meeting in Iowa. I never have anyone come in and say they are undertaxed, but I sure have plenty of people come in and say that Congress is wasting a lot of money. So every time we have a tax bill, people are complaining because we are not taxing more to reduce the deficit, and higher tax rates do not bring in more revenue. The people crying about that are the very same ones who are voting all the time to increase expenditures whenever they get an opportunity.

I also address one of the important measures in this bill, the tax gap. Last January, 2005, the Joint Committee on Taxation provided a report on possible options to improve tax compliance. This report suggested that one of the key ways to deal with the tax gap is to impose withholding on certain payments made by government entities. The joint committee report stated:

The lack of a withholding mechanism on nonwage payments

leads to substantial underpayment of tax each year and has

long been identified as contributing to the tax gap.

And a further quote:

Payments made by the Federal government and State and local

governments represent a significant amount of those annual

payments that are not subject to withholding. Imposing

withholding on nonwage payments made by the Federal

government and State and local governments would improve

taxpayer compliance, reduce the tax gap, and promote

fairness.

The problems of government contractors not paying tax has been a subject of very good oversight of the Committee on Governmental Affairs, particularly led by Senators Coleman and Levin, as well as the Government Accountability Office. The findings of the Government Accountability Office report in June of 2005 show that over 33,000 contractors owed over $3 billion

in unpaid Federal taxes as of September 30, 2004. Clearly, there is a serious problem. Fortunately, there is broad bipartisan support for a solution proposed by Joint Tax of a 3-percent withholding on government payments.

I think it important that my colleagues recall that this basic, same reform was included in an amendment offered by the ranking member of the Budget Committee on November 17, 2005. That was vote No. 330. This amendment, which included this provision, was supported by all but two of the Members of the other side of the aisle.

I am pleased that there is wide recognition of the need for this reform and that this is not a partisan question. However, I do anticipate that some Senators will want to make an argument that we should have implemented this reform much earlier.

Several points on that issue. This is a real break from previous practice and will require changes in business as usual by Federal, State, and local governments. It is for these reasons that the Joint Tax Committee recommended at a minimum there should be a 6- to 18-month delay before implementation.

It was unfortunate that the amendment from the ranking member of the Committee on the Budget did not allow for this time period for governments to prepare for this new requirement. In fact, rather than giving the time allowed as recommended by the Joint Committee on Taxation, the provision was actually retrospective. However, I understand firsthand the difficulties of trying to deal with revenue issues in a specific year, so the author of the amendment has my sympathy.

We chose to go beyond the period recommended by the Joint Tax Committee and give governments and contractors additional time to prepare for this new withholding requirement. Allowing for additional time was a point that brought greater comfort to conferees in considering this new legislation. Additional time would give Congress an opportunity to hear from parties. It may be possible that after the dialog, we will be able to move up the effective year to begin this important provision dealing with the tax gap.

Let me be clear. This is a measure which has bipartisan support. That is very positive. We need to work on a bipartisan basis to deal with the tax gap. This is a good first step. The only question, then, is possibly one of timing. I have erred on allowing government and the contractors to fully prepare for this new requirement and for the Treasury to issue regulations that will give guidance allowing for a smooth start.

I also take a moment to respond to something that was said this morning by my friend from Oregon, Senator Wyden, a member of the Senate Committee on Finance. He is up on tax legislation most of the time. His earlier comments about his provision to eliminate energy bill tax incentives for major oil companies needs an explanation that I don't think he is aware of.

In November of 2005, he offered an amendment in the Committee on Finance to eliminate the tax break known as G&G for geological and geophysical costs that major oil companies received in the Energy bill. His provision is in this conference report. I went to the conference with his provision, and I came out of conference with his provision intact.

In addition, we actually improved the original Senate amendment and increased the amount of tax revenue that is going to be raised over the 5-year period. The provision of my friend from Oregon resulted in a $101 million Federal tax benefits savings for the 5-year budget window this bill covers. Through conference negotiations, we managed to find a way to actually increase the revenue raised over 5 years from that $101 million up to $160 million, and we still respected the concerns in the original Senate bill.

Another point I make is that the original proposal filed by my friend from Oregon actually lost $88 million in Government taxes the first year. In other words, the way the original amendment worked, it actually gave major oil companies an $88 million tax benefit, and under the reconciliation rules, that would not work. We had to change the formula so that the provision raised tax revenue of $160 million over all 5 years of the budget resolution.

I want the record to reflect that I upheld my part of that bargain. This conference report holds up its part of the bargain on that provision. The major oil companies only received one tax benefit in the Energy Policy Act of 2005. This conference report removes the tax benefit the major oil companies received from the G&G tax incentive.

I yield the floor.

Mr. President, I spoke this morning about the bipartisanship and the origination of the idea behind the Roth IRA conversions, and how Senator Bentsen was the inventor of that idea, and how it had such broad bipartisan support. I supported it. It also had bipartisan support when Senator Roth introduced the bill. It had passed the Senate so many times by big, bipartisan margins.

We hear people on the other side of the aisle badmouthing an idea of one of the most esteemed Members of their party in the history of the Senate, Senator Bentsen of Texas, who was chairman of this committee in 1991, 1992, and was going to be chairman in 1993 and 1994, but he became Secretary of the Treasury. Now all of a sudden it becomes partisan that we are including that idea in this legislation. I don't understand it.

I have this response to what was said. I heard my friend on the other side try to argue that the provisions in the conference report that will allow taxpayers to make Roth IRA conversions is a budget gimmick. Was it a gimmick when Senator Bentsen introduced it? It is not a gimmick. Nothing could be further from the truth.

The Roth IRA conversion provision generates real Federal revenue. In fact, the nonpartisan Joint Committee on Taxation estimates that the provision will generate $6.4 billion in Federal revenues over the next 10 years. This is a provision with longstanding bipartisan support in the Senate.

The Democrats have also tried to argue that the Roth IRA conversion provision will actually make the Federal deficit worse in the long term. That, too, is not true. Roth IRA conversions merely change the timing of when individuals must pay tax on their retirement savings, accelerating tax payments in the case of those who convert. It does not result in a net change in Federal revenues over any long-term period.

In addition, critics choose to ignore a reverse effect of the various retirement savings incentives. Because congressional budget estimates are done on a 10-year basis, these estimates ignore distant revenue gains as well as losses. Because tax incentives for retirement savings basically and typically are front-loaded, the 10-year budget estimates generally reflect only large losses of Federal revenue. These estimates ignore the fact that the Federal Government will recoup the tax on that money and the associated investment gains when it is distributed later in retirement.

From a budgetary standpoint, the Roth IRA conversion provision only balances out a small part of this effect. If anything, this provision has the potential to actually increase receipts over a long period of time because it will lead to higher tax compliance as folks voluntarily pay their tax up front.

This provision brings in real money into the Treasury, it is good, and, most importantly, it is bipartisan--or I guess it used to be bipartisan. Today it is very partisan, and that is something I don't understand. How could you as Democrats be for something over the 1990s and not be for it now? Is it because maybe the Republicans are in the majority? It just doesn't make sense.

I yield the floor.

I appreciate my distinguished colleague from Montana, Senator Baucus, raising this concern. I can assure him that the changes made to the section 199 wage limitation were intended to target the incentive to domestic production activities. If these changes unduly harm the types of industries he has raised in a way that is inconsistent with this intent, I would be happy to consider revisiting this issue in future legislation.

Mr. President, I am sorry we are now facing another filibuster and delay of efforts to reauthorize the PATRIOT Act. We have taken 3 days this week to deal with legislation Senator Sununu introduced to assuage concerns he and others had about the bill. Senator Sununu's proposed bill guaranteed that at least four more Members of the Senate were on board to completely support a cloture vote on and final passage of the Conference Report. It certainly brought on board all the Republicans who expressed concern over the bill. But we are still going through the process of grinding down certain provisions to get an up-or-down vote on reauthorizing the PATRIOT Act. That is all we are asking for, an up-or-down vote, to determine whether we want to extend the provisions of the PATRIOT Act. That is being held up. We have many other things that are important for us to do for our country, but we have been forced to spend an extraordinary amount of time on this.

If you look around, you will see that people are not engaging the issue. The complaints--Senator Kyl talked about some of them--are insubstantial. They are not the kind of serious concerns people have portrayed them to be. The act itself provides quite a number of provisions that simply allow investigators to use the same tactics to investigate terrorists, people who want to kill us, that they use to investigate wage-and-hour disputes, to investigate your taxes, to investigate drug dealers and pharmacists and drug dispensers and doctors. It is important that investigators continue to have these tools at their disposal.

It is unfortunate we have had this obstruction. We have seen a pattern of it, frankly. The more time we spend on delaying these kinds of provisions, means that at the end of the year there will be a jammed-up calendar. We will have appropriations bills that have to pass, and other bills that need to pass. All the days we had at the beginning of the year have now been frittered away on rearguing things that we have argued and settled before.

I don't mind debate. Senator Feingold has come down and spent a number of hours expressing his concerns. I respect him. He is a most articulate opponent of the act. He has certainly studied the act. We don't agree, but I respect that. But we went through all this in December for days on the floor of the Senate, debating these same issues. With Senator Sununu's compromise and suggestions for improvement that have been accepted, the basis for many of those complaints have gone away. Now we are taking another big, long time to reargue settled issues. I believe the majority leader, Senator Frist, is justified in his frustration that something that has been debated completely and fully and that now has a clear majority of Senators prepared to support it is being held up, delaying all the processes of the Senate.

Let's talk about the merits of the bill and how the law deals with certain issues for which we have heard objections. One of the biggest items and perhaps the biggest issue that Senator Feingold and opponents have raised has been the delayed search warrants. The bill that came out of the Senate was passed by unanimous consent. We moved the PATRIOT Act reauthorization out of the Judiciary Committee by a unanimous vote. We moved it out of the Senate by a unanimous vote. The House passed a bill by an overwhelming majority. The House and the Senate bills went to conference, and they discussed it. We made concessions on each side.

Senator Specter, chairman of the Judiciary Committee, a man who certainly has been respectful to civil liberties, has stated that he believes about 80 percent of the compromise that was reached favored the Senate version, not the House version. The House conceded on more issues than the Senate. They gave more than the Senate did. The bill that came out of conference was very close to the Senate bill. Then we hit the Senate floor, after having a unanimous vote, and now we have a filibuster. It is, indeed, frustrating.

Let me talk about the delayed search warrants. What the PATRIOT Act does is to codify, to make a part of the law of the country, provisions for delayed notice search warrants. Delayed notice search warrants are not, as some have said in the Senate, an unusual procedure. Delayed notice search warrants have been in use for decades, long before we passed the PATRIOT Act. This act did not create any new authority or close any gap because there was no gap to close. The PATRIOT Act simply created a nationally uniform process and standard for obtaining a delayed notice search warrant.

Some have said: The court said 7 days is what you ought to delay notice. That is the maximum time you should delay notice. That is not quite accurate. The Ninth Circuit, the most liberal circuit in the United States, the most reversed circuit in the United States by the Supreme Court, has held in one case that delayed notice search warrants that explicitly provided for notice within a reasonable period of time by the judge issuing the warrant pass constitutional muster under the fourth amendment. They said a delayed notice search warrant does pass constitutional muster. Then they went on to ask, though, what is a reasonable period of time? They defined it as 7 days, absent a strong showing of necessity. That is what the Ninth Circuit said, the most liberal circuit in America. But other courts, such as the Fourth Circuit, have upheld much longer initial delays as constitutional. For example, the Fourth Circuit has determined that a 45 day period for delayed notice is constitutional. The Fourth Circuit did not even suggest that 45 days was the upper limit. They simply concluded it was reasonable in those circumstances. The truth is, there is no standard set under current law by the courts that would mandate a specific period of time for a delayed notice.

When the House of Representatives passed its version of PATRIOT Act reauthorization, it called for 180 day delayed notification period. The vote in the House was 257 to 171, a bipartisan vote of Republicans and Democrats, to approve overwhelmingly a delay of 180 days. The bill we sent to conference had a 7 day delayed notification provision in it. When the conference reported the bill, it tilted much closer to the Senate bill. It came out with 30 days, less than the 45 that the Fourth Circuit had approved, more than the Ninth Circuit had said. And it was a perfectly logical process we went through.

About the importance of delayed search warrants in terrorist investigations, I can't express how strongly I believe that this has the potential to be the most significant provision in our legislation, the PATRIOT Act. Time and time again, Federal investigators, working with State and local investigators, determine that groups are involved in terrorist activities. They don't know all the people who are involved. They don't know the full extent, but they have probable cause to establish that they are violating or planning to attack the United States or are participating in a conspiracy to kill people to further their terrorist goals. So what do you do then?

Under the PATRIOT Act--not the National Security Act or what we have talked about, the national security intercepts you have heard so much about in the paper; those are international and involve the President's inherent authority--under the traditional law of America, what do you do if you have probable cause to believe these groups are meeting, that there is some sort of sleeper cell in existence, you have proof, not just suspicion, proof to the level of probable cause that they are participating in this scheme?

One of the most potentially beneficial things would be to get a search warrant for that house. But if you do it under normal conditions, when you have to conduct a search warrant if the defendant is not there, you provide him notice that you have conducted a search warrant. When you come to the door and before you go in, if no one is there, you have to leave a return on the door showing that you searched the place and any items you seized and who to contact. That is what you normally do in a search warrant.

Police officers do that every day. But first they go to a judge and they swear under oath that they have probable cause, and not only say they have it, they spell it out. And judges, on appeal, can review it. If the judge who approved the search warrant was in error, they can reverse it or the evidence can be excluded from trial. So you go to a judge. We are not in any way changing that great principle that a U.S. Federal judge or a State judge would have to approve a search warrant. You are not changing in any way the principle that they have to have probable cause under oath that evidence exists at the scene of the place searched which would be relevant to an investigation. All of that is the same as it has always been.

But the one critical thing--and this has been legitimated by courts and approved by the U.S. Supreme Court--is that you can, in certain cases, ask that the notice which you would normally give to the owner of the residence or the person who has custody and control of that location be delayed.

Now, this can be absolutely critical in a case of national security. It is so important. Please, I want you to understand that. You may be able to go in that area and find names, phone numbers, records, or bank deposits that would identify a whole group of other people, and you are not ready to arrest them that moment because you don't know where they are located. You need to check this out and follow up on it. If you arrest that bad guy and give notice to the people right there, the whole world will know it, and they will spread the word and they will scatter. That is exactly what will happen. So that is why, in certain instances, law enforcement officers have sought, and courts have approved without the PATRIOT Act, delayed notice search warrants.

So then when do you notify the person? All the PATRIOT Act says is that the police officers can delay notification for 30 days. At the end of that 30 days, if they don't come back to the court and show a legal basis to continue to delay to notify the defendant, they have to notify the defendant on the 30th day. That is all this Conference Report says. That is reasonable. It is not an abuse of the power of the Congress. It is not in any way contradictory to the great traditions of law enforcement in America. It has nothing to do with the President's Executive powers to fight a war. This is under the criminal law aspect of American justice.

I asked for delayed notices on rare occasions when I was a Federal prosecutor. I am telling you, whether investigating a big drug gang or a Mafia group, these are the kinds of things which can make all the difference in the world. And it is even more important in terrorist investigations because these people will scatter and because it is a matter of life and death. That is all I am saying. There is nothing unusual or strange about it.

The Department of Justice wrote a letter which said that a delayed notice warrant differs from an ordinary search warrant only in that the judge authorizes the officer executing the warrant to wait for a limited period before notifying the subject of the search because immediate notice would have an adverse result, as defined by statute, that could undermine the investigation. So this is all this is about. I think few people would dispute it. Yet we have a filibuster because some Senators apparently believe that 30 days destroys the Constitution. They believe that it violates the Constitution to ask the police officer to wait 30 days before they notify the defendant.

The House of Representatives, by an overwhelmingly bipartisan vote of 257 to 174, voted to allow the officers to delay 180 days. So now we have been here 3 days debating this issue this week. This is the No. 1 complaint they have about the bill. I don't know what it is that got us to this point.

The conference report before us today eliminates the possibility of an open-ended delayed notice. It requires notice within 30 days unless the court grants an extension. Current law allows for simply a reasonable delay, which is whatever the judge may decide in a given case. Well, they say, why do you need 30 days? Well, the Fourth Circuit found that 45 days is good enough. I will give this example which the Department of Justice gave: Operation Candy Box. A delayed notice was permitted in a multijurisdictional investigation targeting a Canadian- based ecstasy and marijuana-trafficking organization. The delay allowed for a successful, uninterrupted, month-long investigation that resulted in the arrest of over 130 people. Without delayed notice, agents would have been forced to reveal the existence of the investigation prematurely.

As a Federal prosecutor myself, I want to tell you, one of the biggest decisions in any investigation of any organized criminal group or terrorist group is the decision of when to conduct the takedown. When do you arrest them? Do you run out as soon as you know there is a group and you have

evidence on one of them--do you run out and grab that one? How stupid can you be? If you grab one, the rest will know it and know you are going to come after them; they are going to scatter or they will destroy evidence. They will run and hide, and they may create a sleeper cell in a different city and continue their plans to kill Americans or to sell dope or whatever it is they are doing illegally. So you have to plan the takedown.

When you are dealing with cases involving life and death, you have to be very careful about it. Don't think the agents don't work with prosecutors and staff people and plan out these takedowns to the most minute detail. When do you do it? Do you catch six low-level flunkies and let the big guys get away? No. Someone might say the big guy is coming into town the next day, so we will have a team there and we will have probable cause to arrest him. Then you get a search warrant. When do you execute the warrant? You want to execute it at a time of your choosing so you can wrap up as many of the members of the organization as possible at one time. That is what it is all about.

Sometimes you need to know more about this organization. You don't know all the people who are involved. That is where a delayed notice warrant can allow you to obtain information about other people who are involved and do further investigations and find out, maybe, that two or three dangerous criminals should also be arrested at or about the same time. They will provide you the probable cause to arrest them because you cannot arrest people without probable cause in America. You have to have evidence. You cannot just arrest somebody on suspicion.

So where do you get the evidence? Some people in this Senate forget that police officers are not magicians; they have to gather evidence. How do you get it? One way you find out the evidence is to conduct a lawful search on a warrant approved by a Federal judge or a State judge. If it is a Federal crime, it would be a Federal judge. Then you may execute a delayed notice warrant, and you may find more evidence of other people that can be corroborated and you can build up probable cause. And instead of having probable cause to arrest just 2 defendants, you may have probable cause to arrest 8 of them, and maybe you take down the whole sleeper cell. Maybe there are 8 in this town and 4 more in Boston and some more in San Diego or in Washington, DC. You can arrest all three or four cells at the same time. Would that not be the ideal thing?

I am telling you that this is what law enforcement officers attempt to do every day. They do it according to the laws that we require.

In 2002, the issuance of a delayed notice search warrant helped break a massive multistate methamphetamine ring. The delayed notice allowed investigators to locate illegal drugs, which provided further leads, eventually resulting in the seizure of mass quantities of drugs and the identification of those involved in the criminal organization. More than 100 people were charged with drug-trafficking offenses, and a number of them have been convicted.

In another case, a delayed warrant was issued to search an envelope which was sent to the target of an investigation. An envelope had been sent to the person, and they got a warrant to search the envelope. The search confirmed that the target was operating an illegal money exchange and was funneling money to the Middle East, including to an associate of an Islamic jihad operative. Delayed notice allowed the investigators to conduct a search without compromising an ongoing wiretap they had been carrying on based on probable cause, and with the approval of a U.S. District judge. But they didn't just conduct a wiretap; they were conducting this wiretap and they needed to find out if money or drugs were moving so they could seize that or allow the package to continue and then arrest the person who received it.

That is what we are talking about here. That is why there is nothing extreme in any way about the delayed notice search warrant law.

Well, what about the national security letters? You have heard a lot about that issue. The complaint is that Senators have said this will allow you to obtain information from people not connected to terrorists or spies. The national security letters, which existed long before the PATRIOT Act, can only be in a certain specific and limited number of circumstances.

Now, I will talk about those in a moment, but they are listed in 5 statutes, so it is not an open-ended provision. It only deals with national security issues. The procedures set forth in this act which allow those letters to issue are in no way extreme. They in no way threaten the great liberties all of us share but indeed are essential tools in this age of national security threats to our country, and they can be critical, critical, critical facts for investigators to enable them to identify those cells which may be in this country trying to attack and kill American citizens, as we saw on September 11.

I want to emphasize that national security letters existed long before the PATRIOT Act and can be used in only very limited circumstances for national security issues. In fact, it is a particularly valuable tool that is utilized frequently by investigators. The New York Times said there have been a lot of national security letters issued since 9/11. Well, we are doing a lot more investigation. Every FBI office in America is pursuing every lead that pops up, unlike what we were doing before 9/11, and are verifying and checking out and determining the kinds of things that are necessary to find out, such as if someone may be connected to a terrorist organization and may be planning an attack on the United States. Isn't that what we demanded after 9/11? But the numbers that have been published are clearly exaggerated. They are not accurate, and they have been criticized by the officials who are involved. I add that parenthetically.

The PATRIOT Act originally made very few changes to the national security letter procedure. It merely made relevance the standard for obtaining a national security letter and allowed special agents in charge to issue them. The special agent in charge would be the special agent in charge of the FBI office in New York City, for example, or in Boston or in Birmingham, AL, and those special agents in charge supervise everyone in the office. They are considered to be high- ranking FBI officials responsible for the law enforcement issues relating to their agency in that district. So this was what we originally passed.

However, now under this conference report, the national security letters are to be used only for investigations involving terrorism and espionage, and they must pertain to ``an authorized investigation'' involving ``national security.''

These are national security investigations. National security letters cannot be used to obtain unlimited categories of material. They can only be used to obtain very limited categories of material in the possession of third parties, not the defendant. The great protections against the searching of your home have not been undermined. What we are talking about here are records that are under the dominion and control of a third party. You can say they are your bank records, but they are the bank's records. You can say they are your telephone company records, but they are the telephone company's records.

The law has always made a big distinction between the kind of proof you have to have for someone to come in and search your desk, to search your automobile, to search your home, than the kinds of procedures they have to go through to get the record at the local motel that might have your name on it. It is not your record, it is the motel's record. You have a diminished expectation of privacy. The courts have consistently held this view ever since the issue has been discussed. It is a fundamental part of daily law enforcement in America.

So they can be used only to obtain these kinds of records, not records you have under your control that would require a search warrant approved by a judge on probable cause, as I discussed earlier, as you would in a delayed search warrant case. It is a big deal. I am telling you, in a case such as this, I bet you search warrants would be 30 pages of affidavits to justify what they are searching for. But these are simply subpoenas, basically, for these records.

These records, as I said, belong to companies, and the individuals to

whom they refer have a reduced privacy interest in them. These national security letters cannot be used to obtain ``content information'' that involve any communications you may have made or the words of those communications with the phone company, but simply what the billing record said and the phone numbers you called. But you can't get, through a national security letter, the words of your phone call or intercept or record your phone call in any way, or your e-mails. The content of your e-mails can't be obtained with a national security letter. The national security letter is simply a request by a national security investigator for records.

If the recipient such as the bank, for example, objects, the FBI cannot compel production without going to court. The conference report specifically allows the recipient, however, of a national security letter to move to quash or dismiss or modify the national security letter and to challenge the nondisclosure order that accompanies the national security letter, and to talk to their attorneys about it if they choose, and other people who may be necessary to comply with the national security letter.

Some people say the nondisclosure requirement can keep you from speaking with your attorney. This legislation specifically allows you to talk to your attorney or anybody else who is related to it before you decide to utilize a motion to quash.

Let me share this with you. Imagine, now, you are an investigator, an FBI agent, and you have serious cause to believe that an individual may be connected to a terrorist organization. You want to find out if they have been calling Kabul, Baghdad or Islamabad. It is critically important, at a preliminary stage in an investigation such as this-- critically important, I emphasize--that the people being investigated not know that they are being investigated, that the investigators are on to them. That is why we placed in the law the limitation that the person or entity subpoenaed should not go and tell the people that the Feds are out there asking for your bank records or your telephone records. How can you conduct an investigation? From these records is the way the police officers and FBI agents get the probable cause to conduct a search warrant.

How do you get probable cause to conduct a search warrant? You take lesser steps to obtain information that is available to you, and it builds up until you get enough to have probable cause to go a judge to get a search warrant to search the home and you may even want to delay notice to the people at the home until you can be sure that everybody in this organization is known to you and they can all be arrested before they can get away. So that is what this is all about. It is perfectly logical and part of our law enforcement heritage.

In the conference report that is before us, it also provides an express right to judicial review for all types of national security letters, allowing courts to modify or quash the order if compliance would be unreasonable, oppressive or otherwise unlawful. It also changed the certification requirement. It requires a higher level of certification before you can ask for nondisclosure in the issuance of a national security letter. The nondisclosure requirement is not automatic. Local FBI cannot ask it. The local special agent in charge can't ask for it. Now it has to be invoked by one of the top officials of the DOJ in Washington, an official who must certify that disclosure would ``endanger the national security of the United States.''

I want to say that is too high a standard. We are going to fail to execute requests for mere documents in control of banks and telephone companies and motels and records of that kind because a DOJ official in Washington is going to be nervous about whether he has enough proof to certify that this matter would endanger the security of the United States. That is too high a standard. But it is in this bill because the civil libertarians wanted to put it in here.

Any county district attorney in America this very day can issue a subpoena to a bank or to a telephone company to get your phone records or the records from your doctor. This is not unusual that investigators can obtain documents in the possession of third parties. Please hear me. I know Senator Kyl made the comment that it is easier for an investigator to obtain your business records relating to whether you have paid withholding tax than it is for an investigator, under this case, to get records of whether you are connected to a terrorist organization.

I would add a few other examples. A Federal drug officer, a DEA agent, can walk into any pharmacy in America today and examine the pharmacy records that exist to see if somebody has submitted false documents, is overpurchasing drugs or the pharmacist is failing to keep records. He can examine all the records that are there. He doesn't have to have a warrant or a national security letter.

The IRS agents investigating whether you paid your taxes can subpoena your bank records by an administrative subpoena that does not require a grand jury approval or approval of any prosecutor. He can do it as an part of an administrative subpoena because they are not your records. But if he goes into your house and tries to take your personal documents, that is not so because he has to have a search warrant. A provision requiring this high level of certification is important protection for sure, and the standard imposed on the top FBI official I believe is too high. I believe one day we are going to regret it.

An express right to challenge the nondisclosure requirement is included in the conference report. An express right to disclose the receipt of a subpoena to a attorney is protected. There is the requirement that the Department of Justice Inspector General must audit certain past and future uses of national security letters and provide a public report on the aggregate number of national security letters issued concerning U.S. persons. But IRS agents out there in every community in America are issuing subpoenas for your records by the thousands every week. They don't have to maintain these records.

Senator Feingold and others, I am sure, would be pleased to note that the House passed a 1-year misdemeanor for knowing and willful disclosure of a national security letter with no intent to obstruct the investigation, which the Senate dropped in conference. The House of Representatives' bill said if you violate the requirement that you not disclose, and run out and tell the people whose records have been subpoenaed, you would be subject to a misdemeanor. But, oh, no, they objected to that. So now, apparently, there is no penalty if someone violates the act and tells the terrorists that you are investigating them. That ought to make people happy. We ought to feel a lot better that our liberties are being protected.

Under the conference report, recipients of a national security letter can challenge the nondisclosure requirement after 2 years, a time period where the national security interests involved will be dissipated. The Sununu bill on the floor today, that was designed to complement the conference report and to alleviate some concerns a few Senators had, allows nondisclosure to be challenged after 1 year and each and every year thereafter. Some opponents of the report wish to see sunsets placed on National Security Letters. National security letters have never been subject to sunset. They are currently governed by six permanent statutes in the code already. No abuses of national security letters have surfaced, and a New York Times article that suggests these large numbers have been issued contains many inaccuracies and that is not accurate.

I want to emphasize that. Nondisclosure is absolutely critical in national security cases. Frankly, in reality, bankers and medical doctors and others who may have records subpoenaed or requested by the national security letter, for the most part, do not desire to tell the person if the FBI agent asks them not to. But they go to their lawyers, and we have gotten so lawyerly today, the lawyer may tell them: Well, I think you have an obligation to tell this bad guy that the FBI came by and picked up his records. If you don't tell him, maybe he can sue you.

So this is a protection for the bank, for the phone company, for the doctor who gets these records subpoenaed because then he can rightly tell anybody who complains after the fact: I would have told you, but the Federal Government told me not to.

Section 215, the FISA Court business record production orders, is another matter of importance. Section 215 orders for the production of business records allows the FBI to go to the FISA Court and seek these orders. You have to go to court now and seek a judicial order of the FISA Court for ``the production of tangible things, including books, records, papers, documents and other items'' for an investigation to obtain foreign intelligence information. It doesn't allow the FBI to go out and do it on their own. They have to go to court and present evidence that would justify production--basically, a form of subpoena authority. Section 215 orders must be preapproved by a judge and cannot be used to investigate ordinary crimes or even domestic terrorism, only foreign terrorism.

Orders for the production of business records under the USA PATRIOT Act, section 215, are not and cannot be used for so-called fishing expeditions. The fishing expedition complaint is wrong--wrong--wrong-- for three reasons. First, section 215 orders are court orders that must be authorized by Federal judges prior to issuance. Judicial review will cull out fishing expedition requests. Second, section 215 orders are available only for authorized national security investigations, not your run-of-the-mill investigation, a category that certainly does not include fishing expeditions. And the conference report clarifies that the orders cannot be used for threat assessments. Third, rigorous guidelines issued by the Attorney General govern when the FBI may use a section 215 order.

There has also been uproar over the three-part relevance test. The Senate bill included an unworkable and burdensome three-part relevance test. You recall--relevance plus. I opposed it. It was not good. I steadfastly believe that it was the kind of confusion that blocks legitimate action under this law and would undermine the ability for the investigators to do what we intended to authorize them to do. The test would have compromised the ability of the Government to get section 215 orders. The language of the three-prong test was ambiguous and would inevitably have resulted in major complications in terrorist investigations.

As we saw by the attacks on 9/11, seemingly small or technical barriers can make a critical difference to the success of a terrorism investigation. That is exactly what the three-prong test would have done.

Senator Kyl, who spoke earlier this afternoon, Senator Roberts, who is chairman of the Intelligence Committee, and I sent a letter to Chairman Specter, expressing our strong concerns with the three-prong test and asking him not to include it in the conference report. He did as we suggested. The conference report retains the three-part test only as a way to prove relevance. The conference report lists the three prongs of the Senate test as ways the materials sought are presumed to be relevant.

No. 1, the records pertain to a foreign power or an agent of a foreign power; No. 2, the records are relevant to the activities of a suspected agent of a foreign power who is the subject of such authorized investigation; or, No. 3, the records pertain to an individual in contact with or known to a suspected agent of a foreign power.

As Senator Patrick Leahy explained in 2001, the ranking Democrat on our committee:

The FBI has made a clear case that a relevance standard is

appropriate for counterintelligence and counterterrorism

investigations as well as for criminal investigations.

Let me just say this. Your county attorney in every county in America can issue a subpoena for your bank records, your telephone records, on the basis of relevance to an ongoing investigation.

That is how subpoenas are issued. It has always been a relevance standard. I don't see anything unusual about this at all. We provided additional protection for relevance.

The conference report also requires the application for a 215 order to include a statement of fact which shows ``reasonable grounds to believe that the records are relevant to an authorized national security investigation.'' The original PATRIOT Act simply required a showing that the records ``were sought'' for an authorized investigation. This is a Senate provision which was included in the conference report which certainly made it more difficult to obtain these national security letters, and I assume it made colleagues who have been objecting happy to see this higher burden of proof placed on the investigators. Frankly, I believe that was unnecessary.

Both the conference report and bill we are currently debating-- Senator Sununu's PATRIOT Act Amendments bill--imposed new civil rights safeguards on the use of section 215 orders contained in the PATRIOT Act as it currently exists. So by blocking the PATRIOT Act which presently exists from being reauthorized by the Conference Report, civil rights are being diminished since the report provides enhanced protection.

The conference report clarifies and makes clear that a recipient of a 215 order has an explicit right to disclose or seek an order through an attorney and to challenge the order in court. Senator Sununu's bill which we are debating today and which I am certain will pass goes a bit further. I do not know that it is critical, but I am willing to accept things that are not perfect by my standards because I know we need to reauthorize the PATRIOT Act, and this is a condition of reauthorizing it. Senator Sununu's bill lays out the process by which a person receiving a section 215 production order may challenge the legality of that order. They can file a petition with the FISA Court, and that petition is ``immediately'' assigned to a judge who, in 72 hours after the assignment, ``shall conduct an initial review of the petition.''

The conference report also retains a 4-year sunset on section 215. In other words, this provision will expire in 4 years unless reauthorized. I don't know why that is necessary, but people apparently believed it was, and so we put it in there.

The conferees added a requirement that the Justice Department institute ``minimization procedures'' limiting the retention and dissemination of information obtained through a section 215 order for certain particularly sensitive material. The FBI request for these orders must be approved by one of three top officials at the FBI: the Director, the Deputy Director, or the Executive Assistant Director. One of those three top officials in the FBI has to sign off on it if it includes library records, medical records that would identify a person, library patron lists, book sales records, firearms sales records, tax return records, or educational records. This is a Senate provision that was accepted by the conference.

The IRS agents can walk in any time and get your tax records, for heaven's sake, but we can't get a terrorist's tax records without going through the FISA Court. A DEA agent can go into a pharmacy and examine every record in there to find out how many drugs you may have bought or anybody else may have bought. The IRS can subpoena your bank records by administrative subpoena without even the approval of a Federal prosecutor. This is not any erosion of American liberties, is the only point I am making.

Again, this does not allow them to go into your house, into the desk you own at your office, and search your personal belongings. It does not allow any Federal agent to open the trunk of your automobile, to go in your automobile, open your glove compartment, and seize anything you may have that is in your personal custody and control. You still have to have a search warrant approved by a judge on probable cause. This involves materials held by third parties.

Documents which can be obtained in this fashion are limited to the types of tangible things which could be obtained under grand jury subpoena or other Federal court orders, and the FBI must craft procedures to minimize retention and dissemination of materials gathered under this provision. OK. We will try to destroy them in so many months to minimize the danger that somebody will have a file on you. I am telling you, if you like those shows on television, the real- life cold-case files, you see where the records held for 10, 15 years turn out to be the key documents in convicting some murderer 15 years down the road. I really do not like this idea that a properly obtained document or record kept as part of a confidential investigative file has to be destroyed prematurely. But that is what we have here so people's liberties won't be undermined.

Under the conference report, the Department of Justice must conduct two

audits of the FBI's use of 215 orders, enhanced congressional and public reporting is required, and the inspector general is required to conduct an audit of all section 215 requests since the passage of the PATRIOT Act. The ironic thing is if those who support a filibuster succeed in preventing a vote on the bill, these additional civil liberties safeguards won't become law.

The language about the libraries included in Senator Sununu's bill is also a concern of mine. Opponents of section 215 have tried to create the impression that the FBI is using section 215 to visit libraries nationwide to check the reading records of ordinary Americans. How often have you heard that?

Rebecca Mitchell, director of the Alabama Public Library Service, has a different point of view. She wrote me a letter on August 15 and said:

I want to personally thank you for your strong leadership

to stand on the PATRIOT Act. Our libraries should not be used

as a tool for terrorism. I know you have received negative

comments from the American Library Association on your stand,

but this is not the opinion of most librarians in our State.

Please continue to fight to keep our Nation free.

The point I tried to make was that there is no special protection for a library record which would bar a Federal terrorist investigator from obtaining those records. Your local county attorney can subpoena them the same as any Federal investigator to try to stop a terrorist.

Neither section 215 nor any other provision of the PATRIOT Act specifically mentions libraries or is directed at libraries. Nevertheless, as Director Mitchell points out, it is important that library records remain obtainable as one of the kinds of ``tangible records'' a section 215 order can reach. Intelligence or investigators may have good and legitimate reasons for extending to library/bookstore records.

I would just point out that I prosecuted a number of cases. I prosecuted one guy--they made a television show about it--and we got his records and got a search warrant and seized items he had. He had a book called ``Death Dealers Manual.'' He had a book called ``Deadly Poisons.'' That was relevant evidence to help convict him of a crime.

So we are not going to allow a prosecutor access to this information. A guy may say: I don't know anything about medicine; I have never studied it. If the prosecutor goes down and checks with the library and subpoenas the records and sees that he bought three books on medicine, that may be relevant evidence to an important case. So to say that somehow library records can't be subpoenaed as part of an investigation goes beyond the pale, frankly. But because the Library Association had a fit and they complained, we have put in special protections for libraries, virtually like the spousal privilege or the priest-penitent.

I will conclude my remarks by saying that I do remain frustrated--not at the good intentions of my colleagues. They are well intentioned. Our colleagues really want to improve liberty in America. But the truth is, they have gotten off base. We have let outside groups with agendas confuse people about this legislation--confuse them as to whether historic civil liberties are being undermined when they are not--and as a result, we have had more difficulty passing this bill than we should have.

I see the Senator from Texas is presiding. I appreciate his patience in listening to me. As a former attorney general of Texas and a former member of the Supreme Court of Texas, he is a thorough scholar in these issues. I am proud to say that though he wouldn't agree with everything I have said, but in general he agrees with my view that this act is sound. He has been a steadfast advocate for it and understands the necessity of it and that it does not undermine any of the classical liberties we as Americans take for granted.

I yield the floor.

Madam President, in consultation with the chairman of the committee, I ask consent that the filing deadline for the second-degree amendments to S. 1955 occur at 3 p.m. today.

Madam President, I begin by commending my good friend, the chairman of the Committee on Finance. He is a great American. People in Iowa are very lucky to have him representing them. I know of no finer man in the Senate.

I know Senator Grassley sought to defend the Senate's position in the conference committee. He is a proud man, too. He wanted to do what is right in defending the Senate's position, but I regret the conference committee could not end up more like the Senate product because the conference before the Senate today is much different than the bill that passed the Senate. It is so different that I am raising questions as to how much of the Senate bill we have in the conference.

This past Saturday, Lillian Asplund died. Ms. Asplund was the last American survivor of the 1912 sinking of the Titanic. She was the last survivor with actual memories of the event. Ms. Asplund's life reminds us that people make choices, and those choices can have significant consequences. Just as much, the bill before the Senate today reflects choices. Those choices will have significant consequences.

Shortly after midnight on that cold morning of April 15, 1912, passengers started evacuating that doomed ship. At the beginning, women and children went first. But it was not long before that rule gave way. Soon it became clear that the privileged went into the rescue boats first.

About that time, the most extraordinary thing happened: Some of those privileged and wealthy passengers decided to give up their place in line. They decided to let others go first. Benjamin Guggenheim, the son of the colossally wealthy mining magnet, sipped brandy and smoked cigars in a deck chair while the ship went down.

Today, on this bill, we see no such valor, we see no such sacrifice. Rather, in this bill, ideological wants push their way to the front of the line, ahead of America's needs.

At the end of last year, 16,000 American businesses lost their tax incentive to create high-paying research jobs for American-based workers. But relief for them did not make it into this bill.

At the end of last year, millions of school teachers lost a small but significant tax break for classroom supplies they purchase out of pocket. But relief for them did not make it into this bill.

At the end of last year, millions of middle-income American families with kids in college lost the ability to deduct tuition costs. But relief for them did not make it into this bill.

These provisions--what some people call the popular ``tax extenders''--were given second-class status. They did not make it into the lifeboat. And to what did these popular, already-expired tax provisions have to give way? Well, the first-class passenger on this ship is a tax break for investors, where not one dollar will be used until January 1, 2009.

I think it is important to remind ourselves of that. Not one dollar of cap gains and dividend tax breaks will be utilized by anyone until January 1, 2009. That is several years from now.

But some will say this tax break for 2009 is desperately needed today--Why? they say--to provide certainty. You might as well just call this tax bill, the 2009 Tax Increase Prevention Act, because it does just that: it prevents tax increases for the most well-off in the future, in 2009. This bill chose to prevent a tax increase in 2009, rather than prevent tax increases in 2006.

For the millions of families, teachers, businesses, and workers out there who lost their tax benefits on January 1 of this year, there is no tax increase prevention in this act. There is no ``tax increase prevention act'' for the so-called second-class citizens.

I do not call them second class at all. They are Americans. They are teachers. They are people working in research and development. They are families and kids trying to pay tuition costs. There is no relief for them. All of those provisions expired at the end of last year. Here we are, well into 2006, and they are not in this bill. Middle-American provisions are not in this bill. No. Rather, what is in this bill is for 2009, a tax break for 2009 for investors.

Well, some will also say: Oh, don't worry. Other tax legislation may be, might be, should be coming soon. Yes, and the check is in the mail.

Some will say these 2009 cuts on capital gains and dividend income will benefit all Americans, and you will see a blizzard of statistics and quotes to try to substantiate that point, including the chart you recently saw from my good friend from Iowa. Actually, that is not a Joint Tax Committee chart. That is a chart based upon the Finance Committee staff with Joint Tax Committee statistics. And that chart, frankly, does not accurately portray the facts. Many commentators who have commented on that chart have pointed out the discrepancies in it.

I am not going to get into this tit for tat, back and forth as to whose statistics are better. But I will say this, it defies common sense to argue that a tax break that takes effect in 2009 for the high- income Americans somehow benefits middle-income and lower income Americans more than the most wealthy. That totally defies logic. Someone can come up with a set of statistics to try to make that point but it is patently absurd.

Some will say these 2009 tax cuts, as I say, will benefit all Americans, and you will see statistics, but that is not the fact.

I decided to go to the source. I represent Montana. The more than 900,000 residents of Montana are my employers, so I asked the Montana Department of Revenue where the benefit of these tax cuts would go. Well, of course, not everyone in Montana has this type of investment income.

So the Montana Department of Revenue told me that just 400 households in Montana would receive an average benefit of $14,000 from the capital gains tax cut in 2009. Roughly, 90 percent of the households in Montana would get almost zero benefit from the capital gains cut. Ninety percent: almost zero benefit.

With these numbers, it is very hard for me to understand why this 2009 tax break is urgent, while Montana teachers and families with kids in college who lost their tax break last December must wait for the next rescue boat, whenever it may or may not occur.

Of course, I am very pleased that protection is in the bill from the alternative minimum tax. I am pleased that conferees included the full Senate-passed version.

Some may recall, it was a struggle to get that in the Senate-passed version last November. The original version, and the version that came out of committee, did not include a full hold harmless from the alternative minimum tax. Those versions would have left 600,000 more families paying that tax. We fought to improve the Senate bill to be a true hold harmless. And we succeeded in doing so before the bill finally left the Senate. That version is retained today. This protection from the alternative minimum tax will protect almost 17 million families across our country, including about 45,000 in Montana. The Montana tax collector tells me that AMT protection will help about a quarter of all households in Montana with incomes between $45,000 and $80,000. That group might have otherwise seen an average tax increase of $1,700.

Unfortunately, there is little else in this bill to be proud of. Working families have been left behind. Congress has chosen ideological wants over America's needs.

The Senate-passed bill did the tax business the Congress needed to do this year. I am proud of that bill. In contrast, the bill before us leaves much work undone. As a result, the deficit will probably be larger because the conferees made the choices they did.

I will have more to say about the fiscal effects of this bill. In the end, those effects may be the real iceberg. The fiscal effects of this policy may be the real disaster. Madam President, I urge my colleagues to reject the choice made by this conference. I urge my colleagues to vote against leaving those families and teachers and workers behind. I urge my colleagues to reject this disastrous bill.

One other point, Madam President, is this: The conferees had a choice. Basically, we did one thing we had to do. I should not say ``we'' because I was not on the conference. I was not allowed to be a member of the conference. But while the conferees did do something that was good--that is, make sure the taxpayers do not have to pay the alternative minimum tax--they had another choice, and the choice basically is this: Do they enact a tax break that does not take effect until 2009, for investors, or do they include provisions such as the research and development tax credit, the WOTC, the work opportunity tax credit, the tuition tax deduction, and the teachers deduction, which expired last year? Do they enact those and extend those for this year so people will still know research and development is important this year?

Again, the choice is: On the one hand, enact a provision that does not take effect until 2009 for investors or, instead of doing that, because that can be postponed for a couple years--we are not yet in 2009--extend the provisions which expired last year. These are provisions that American business and industry and innovators are desperately depending on--that is, the research and experimentation tax credit--to help America be competitive in the world. Or they could have included provisions that parents paying for college tuition can count on, teachers can count on for the supplies and so forth. All of these expired last year.

So again, the choice is: a 2009 tax break or help maintain those provisions which expired last year. That is basically what all this comes down to. That is the choice that was before the conferees. And the conferees chose the former, the 2009 extension--it does not take effect for a few more years--for the most well-off, at the expense of American businesses, their companies, and universities that are so depending on the research and experimentation tax credit. And, at the expense of teachers who so clearly today depend upon that little extra help for classroom supplies, at the expense of kids and families who so need that tuition deduction.

That was the choice that was made. And the choice, as I said, was ideological wants of a few at the expense of America's needs. That is basically what is before us today. That is why I think it makes sense not to adopt this conference report.

Madam President, our country is in a battle. It is a competitive battle with the rest of the world--China, India, Eastern European countries. There are so many countries that are so excited about their future, and they are trying to increase their economic position. I take my hat off to them. They are trying very hard, and they are doing a great job. Certainly, businesses in China and India are.

We have to meet that challenge. And it is a great opportunity for us. But to meet that challenge, we have to start today thinking strategically, thinking longer term. What does that mean? That means much more attention on education, a lot more attention on education, so we have the best and the brightest in America who can design the products we can utilize here, with high-paying jobs here, and export those products overseas.

Also, there is so much we have to do. We have to stop thinking short term in this country, in this Congress, in this administration and start laying the foundation for the long term.

Now, some will say: Well, we need, in 2009, to extend, for 2 more years, the dividend and capital gains tax cut because that is good for America. I have to say, I have lots of arguments and statements by very reputable people who say that is not the case. Let me refer to a couple of them.

Let's take the Federal Reserve. Let's talk about the stock market. Federal Reserve economists recently compared key U.S. stocks, which would benefit from the 2003 tax cuts, to other investments, which would not. What did they conclude? What did Federal Reserve economists conclude:

We fail to find much, if any, imprint of the dividend tax

cut news on the value of the aggregate stock market.

That is the conclusion of Federal Reserve economists. The Congressional Research Service agrees. What do they say?

Any stock market effects represent temporary windfalls to

holders of current stocks and are simply a manifestation of

the income effects of the tax cuts; these wealth effects

should not be considered as an additional stimulus. . . .

Recent studies finding that dividends had increased

substantially have been used to argue that the tax cut

induced private savings. This evidence does not appear

robust. . . .

There are lots of comments--lots. And I might say: Why is the economy doing pretty well today? The proponents of this conference report would like to say: Oh, it is because of the other tax cuts. The stock market went up dramatically more before those tax cuts went into effect. And since those tax cuts went into effect, the stock market has not done so well.

I might also point out that the economy is doing well now. Why? Read this morning's paper. There was a big, long article asking: Why is the economy doing so well? And what does this morning's paper say? What are the conclusions, basically? It is because of strong, aggregate demand-- where? China, India--for commodities, for oil, for gas, for coal, for uranium. That is what I think has kept basically demand strong. It is, also, frankly, a major propellant for the economy today. It is not the dividends and capital gains tax cut. That is a ruse. I am not going to go into it any more than that because I know subsequent speakers will have a blizzard of statistics to argue the opposite.

It kind of gets me to another point. When the rooster crows, does that cause the Sun to come up? Does it? I don't think so. Did the dividend and capital gains tax cuts cause the great economy we have? Not necessarily.

You have to ask yourself what is the real cause. The real cause is the underlying demand from other countries which are buying so many commodities. That is one reason why the price of oil is so high today, and that is what is causing the market to go up. That is what is causing the economy to be strong.

We have to ask ourselves: That is today; what about tomorrow? What about next year, 2 or 3 years from now? These tax breaks are also going to make the deficit and debt much worse. We want to be strong tomorrow. By tomorrow, I mean the next few months, the next, couple 3 years. We want the stock market to be high during that period. We want demand and wages to be high.

That will happen the more we focus on the basics today. The basics again are education, research, and development so that we start strategically to plan for our kids and grandkids. The conference report before us decides against that. This report says: No, forget the basics. Forget teachers, forget research and development. Even though those provisions expired last year, we won't do anything about them. Rather, we are going to pass this provision which costs so much money in this budget and doesn't take effect for 3 more years. That is not a choice most Americans would want us to make.

I notice Senators Bingaman and Dodd have been waiting to address the Senate. I would like to inquire through the Chair whether the Republican side has a speaker who wishes to speak. If not, I yield 10 minutes to Senator Bingaman, to be followed by 15 minutes to Senator Dodd. I ask unanimous consent for that. That is 10 minutes to Senator Bingaman and 15 minutes to Senator Dodd.

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

Mr. President, a few days ago, at Lincoln Center in New York City, illusionist David Blaine completed a week in a water-filled bubble. He then got himself chained up, got rid of his air hose, and tried to escape from the chains, while setting a world record for holding one's breath underwater. His goal was to hold his breath for 9 minutes.

His feat was impressive. But he failed. After 7 minutes, he had to be let out of the remaining chains. He had to be rescued.

This bill also contains an illusion. This bill's illusion is paying for tax cuts with further tax cuts. Like Mr. Blaine's illusion, this bill's illusion also fails.

I give Mr. Blaine a lot of credit. He does his illusions in full view of the public--an open water bubble in the middle of New York City.

The tax bill does its illusions in the dark--outside the budget window.

Some of those viewing Mr. Blaine in New York City thought he had a lot of chutzpah to try his feat. The sponsors of this tax bill also have a lot of chutzpah if they think they can balance one set of tax cuts with another set of tax cuts--and call that fiscal responsibility.

Mr. Blaine called his stunt ``Drowned Alive.'' That also a fitting name for what this bill would do to the American taxpayer.

I am talking about section 512 of this bill. That section would remove the income limits on conversions from traditional IRAs to Roth IRAs, effective in 2010. Under this provision, all who convert their IRA accounts in 2010 get a tax break--2-year averaging of the taxable amount of the conversion, with payments to be made in 2011 and 2012.

Why does the bill contort these changes into 2010 through 2012? There is an easy explanation. The conferees wanted to raise money in 2011 through 2013. They needed money on those years to help cover the cost of extending capital gains and dividends cuts. And they needed to cover those costs to avoid a point of order under the Byrd Rule. So a 2010 effective date and the funneling of transfers into 2010 serve a clear purpose.

The sleight of hand is that a provision that loses money--billions of dollars a year--in years beyond the budget window are made to pass muster as a revenue offset provision. The illusion is to call this provision a revenue raiser.

How does this provision raise revenue? It encourages taxpayers who earn more than $100,000 a year to transfer traditional IRA balances into a Roth account. These taxpayers would pay taxes in the short run on traditional IRA balances and get tax-free investment income later.

Take for example a taxpayer with an IRA holder who makes $120,000 and is covered by an employer-sponsored retirement plan. Say that this taxpayer contributes to a traditional IRA. Under current law, the contributions would not be deductible. At retirement, the taxpayer would pay ordinary income taxes on the invstment earnings--what tax advisers call ``the inside buildup.'' But the original contributions would be returned tax-free. They would be what tax advisers call ``basis'' in the account.

In 2010, say that the taxpayer takes advantage of the new law we create today and converted the traditional IRA to a Roth IRA. In 2011 and 2012, the taxpayer would pay taxes on 50 percent of the investment earnings that were in the account. At retirement, the taxpayer could withdraw any additional buildup in the account tax free.

So the provision would raise revenue by taxing the conversion in 2011 and 2012. Then the provision would lose revenue when withdrawals were made from the account in the future.

The provision would thus borrow from our children. The conferees felt a need for revenue in 2011 and 2012 to pay for a 2-year extension of the capital gains and dividends cuts. So this bill would take the revenues from the future and claim them now.

The philosophy of this bill is: Let's just spend it now. Let our children figure out how to replace the revenue that would have been collected 10 or 20 or 30 years from now.

How much revenue would this provision take from our children? The Joint Tax Committee's revenue estimates show losses of more than $1 billion in 2014, 1.2 billion in 2015. To get a good idea of the longer- term losses, we asked the Joint Tax Committee to provide us with an estimate for the same provision, but effective in 2006 instead of 2010, so we could confirm that there will be revenue losses further down the road.

Under the joint tax rules, you have to ask them for it beginning this year because they can provide the estimates.

If you ask them beginning in later years, under their rules, they will not do the math. We asked them to do the math and we asked if it went into effect this year.

Mr. President, I ask unanimous consent that the Joint Tax Committee's response appear at this point in the Record.

The Joint Tax Committee estimated that the pattern of increasing revenue losses continues, growing about $200 million a year. So by 2020, the loss would be over $2 billion a year. That extrapolates to $3 billion a year by 2030. In other words, this bill would take $2 to $3 billion from our children, every year, to pay for a 2-year extension of capital gains and dividends rate tax cuts, which we know would not go into effect until January 1, 2009.

That troubles me, and it should trouble all my colleagues.

The conferees made bad choices in putting this conference report together. American workers need an extension of the Saver's Credit that expires after 2006, but get an extension of a capital gains and dividends cut that does not expire until 2009. And the bill purports to pay for those tax cuts for with a Roth IRA conversion provision that starts losing revenue by 2014 and has losses that balloon outside the budget window.

There are so many reasons to vote against this report. The use of a tax cut to allegedly pay for another tax cut is just one symptom of a seemingly irresistible urge to put wants before needs. I encourage my Colleagues to join me in voting for setting the right priorities. I urge them to vote against this conference report.

I yield the floor.

Mr. President, I would like to enter into the Record some information I just received from the Joint Committee on Taxation. I asked them to provide me with information on who benefits from the capital gains and dividends tax cuts.

According to the Joint Committee on Taxation, 84 percent of the capital gains tax cut goes to individuals earning $200,000 or more. And also according to the Joint Committee on Taxation, 2 percent goes to households earning less than $50,000.

Additionally, for the dividends tax cut, 63 percent of the tax savings goes to individuals with annual income of $200,000 or more. And only 6 percent goes to taxpayers earning $50,000 and under.

I hope this information will help clarify some of the debate on the floor today. Again, these numbers are directly from the Joint Committee on Taxation with no interpretation.

I ask unanimous consent that this information be printed in the Record.

Mr. President, I want to talk now about the rules of the Senate. With this bill, the majority has once again abused the process. With this bill, the majority has once again shown its disrespect for the rule of law.

Mr. President, I have served in the Congress for 32 years. I have served in the Senate for 28 years. I am continually grateful to my employers, the people of the State of Montana, for giving me this opportunity.

I was in the Congress in 1975, when the Budget Committee reported the very first budget resolution. I was in the Senate in the early 1980s, when the Budget Committee reported its first budget reconciliation bill. I have seen this process change. And the Majority is changing this process again today.

Mr. President, this bill comes before us today under the extraordinary procedures that we call budget reconciliation. This is a process that bypasses the normal Senate rules.

Under the normal Senate rules, Senators may debate legislation at length. Under budget reconciliation, this bill is subject to a strict time limit.

Under the normal Senate rules, and rule XXII, it takes the affirmative vote of 60 Senators to cut off debate. Under budget reconciliation, a simple majority will determine the outcome of this bill.

The Senate chose early on to limit the power to use budget reconciliation. The Senate saw early on that this power could be subject to abuse.

Thus, starting in 1985, the Senate adopted the Byrd Rule against extraneous matter in reconciliation bills. This important rule was named after the dean of the Senate, the Senior Senator from West Virginia. The Senate enacted this rule to ensure that the majority did not abuse the budget reconciliation process to cover extraneous matters.

From 1985 through 1996, that meant that budget reconciliation bills could not worsen the deficit. Then, in 1996, the current majority chose to overturn that understanding of the rule. And in 1996, the current majority began the process of using reconciliation for legislation that worsens the Nation's fiscal balance. That choice is at the root of much of the fiscal debacle that we see today.

But at least one vital part of the Byrd rule remains. One part of the Byrd rule so explicitly prohibits worsening the deficit that the majority has not yet been able to write it out of the books. One part continues to prohibit including in reconciliation provisions that would cause a committee's entire work product to worsen the deficit in years beyond those covered by the reconciliation instructions. That part is section 313(b)(1)(E) of the Congressional Budget Act.

I believe that, today, the majority is taking another step down the road of abusing the reconciliation process. I believe that today the majority is willfully ignoring the application of that rule. And I thus believe that today the majority is once again cheapening the rule of law.

My complaint lies with the Roth IRA provision that I discussed earlier. As I noted, that provision will worsen the deficit by increasing amounts into the future. But because the majority chooses not to recognize this fact, I am left with no procedural recourse.

I'll try to demonstrate my point through a series of steps.

First, let me take the hypothetical case of a budget reconciliation bill that contained just the Roth IRA provisions in this bill but effective in 2006. That is the case for which the Joint Tax Committee has provided the revenue estimates that I discussed earlier. For the sake of simplicity, I ask unanimous consent that the Joint Tax Committee estimates be printed in the Record.

In summary, it shows a provision that begins with revenue increases but then shows revenue losses. Specifically, it shows revenue losses of $1.1 billion in year 5, $1.5 billion in year 6, $1.7 billion in year 7, $1.9 billion in year 8, $2.1 billion in year 9, and $2.3 billion in year 10.

Now, if this provision were the only provision in a budget reconciliation bill covering years 2006 through 2010, it would plainly violate section 313(b)(1)(E) of the Congressional Budget Act because of its revenue losses in the out years.

This is of course a simplistic analysis. There are other provisions in the bill before us. The question then arises whether those other provisions raise more revenue than the Roth IRA provision loses.

My Finance Committee staff have taken the Joint Tax Committee estimates for these other provisions--all the revenue raisers--and projected their current rate of growth into the future. The results are shown in another table, which I ask unanimous consent be printed in the Record.

This analysis shows that the provisions of this bill will worsen the deficit by $34 million in 2016, $128 million in 2017, $222 million in 2018, $316 million in 2019, and $410 million in 2020.

Now, if the appropriate authorities advised the Chair that the bill before us had the revenue effects described in this table, and the Roth IRA provisions caused the deficit to worsen in these by years by the amounts that I have cited, even when taken together with all the other provisions in this bill, once again, the Roth IRA provision would violate the Byrd rule.

Thus, if one does some rather simple arithmetic, one can readily see that the Roth IRA provisions in this bill would worsen the deficit in the out years. And doing that rather simple arithmetic would render the Roth IRA provisions out of order.

The problem is that my staff's estimates, and even the estimates of the Joint Tax Committee and the Congressional Budget Office, are not authoritative. Under the Budget Act, the Chair is required to turn to the Budget Committee for revenue estimates.

The problem is, for whatever reason, the Budget Committee majority has chosen not to do this rather simple arithmetic. The Budget Committee majority has chosen not to see the fiscal consequences of this bill.

It is not as though these fiscal consequences are somehow obscure. It should come as little surprise that one tax cut will not pay for another tax cut. But the Budget Committee majority chooses not to see.

It is not as though the Budget Committee cannot look into the future. The Budget Committee majority has complained of out year costs involving spending to help the victims of asbestos, for example. But when it comes to these tax cuts, the Budget Committee majority chooses not to see.

It is not as though the Budget Committee cannot recognize a budget gimmick when it sees one. The Budget Committee majority has complained of shifts from one year to another in the highway bill, for example. The Roth IRA provision before us today is the mother of all such shifts. But the Budget Committee majority chooses simply not to see.

Thus, Mr. President, I see this case as another abuse of the process. I see this case as another instance of disregard for the rules of the Senate. I see this case as another case of disrespect for the rule of law.

In 1996, this majority abused the reconciliation process by applying it to legislation to worsen the deficit. Last year, this majority abused the Senate rules by threatening to eliminate the right to extended debate through what folks call ``the nuclear option.'' And today, this majority adds another chapter to that history of abuse of power, by simply choosing not to see violations of the rule when they are there staring us all in the face.

I find it curious that the same majority that cried so loudly about ``the rule of law'' in the impeachment of President Clinton today once again shows such little respect for the rule of law right here in the Senate. For this disrespect for the rule of law is not about private morality. This disrespect for the rule of law is about the exercise of power.

There is a word for disrespect for the rule of law in the exercise of power. It is called tyranny.

And that, Mr. President, is another reason to vote against this conference report.

Mr. President, I must say that I was surprised to see such a complicated and controversial provision in the conference agreement. I am referring to the provision to repeal the grandfather clause that was enacted by the American Jobs Creation Act of 2004, as part of the repeal of the old FSC/ETI regime. Further, this provision was not in the Senate or the House bill.

What is most surprising, though, is that it may not have been necessary in addition to maybe not being prudent.

This provision purports to end a dispute with the European Union over these long standing tax incentives. But the EU said it was willing to accept the remaining time on the 2-year transition period, and the grandfathering of leasing contracts. The only provision

that the European Union is totally against is the grandfather clause for sales contracts. The European Union stated as much in a letter just last week where they said they wanted to work out a negotiated settlement.

So the question has to be asked: Why does this bill go beyond the European Union's concessions? In an attempt to increase the revenue raised by this bill, the bill eliminates binding contract relief for both lease and sales contracts.

In every step of the way during the last 7 years of this dispute, Congress has worked closely amongst tax and trade experts and alongside business to minimize the harm any new regime might entail. But not here. No hearings, no deliberations, ignoring a concession by the other side and game over.

It is interesting to reflect on the long history of this provision. Both the extraterritorial income and the Foreign Sales Corporation, or FSC, regimes offered exclusions for export income. The Jobs Act repealed the extraterritorial income exclusion provisions and provided transition rules to phase out the tax benefits. The Jobs Act also provided a grandfather clause which allowed certain contracts to continue to receive the extraterritorial income exclusion.

For the past two decades, the U.S. provided export-related tax benefits under the foreign sales corporation regime. In early 2000, the World Trade Organization found that the regime was a prohibited export subsidy under the relevant WTO agreements. Congress then repealed the foreign sales corporation provisions and enacted a new regime, the extraterritorial income regime, or ETI.

From its inception, the European Union has doubted the validity of this regime. The European Union lodged a complaint with the World Trade Organization. It argued that the provision was an export subsidy in violation of World Trade Organization agreements.

The World Trade Organization agreed with the European Union in August of 2001. An appellate body upheld the finding in January 2002. The World Trade Organization later ruled that the European Union could impose $4.03 billion in sanctions on its imports from the United States. Congress immediately began work to fix the problem. There were several hearings that lead to a number of bills attempting to either repeal or modify the exclusion provisions.

The Jobs Act repealed the extraterritorial income regime for transactions after December 31, 2004. It provided a transition rule that phased out the tax benefits over a 2-year period. Taxpayers could retain 100 percent of their exclusion benefits for transactions prior to 2005, 80 percent for transactions during 2005, and 60 percent for transactions during 2006. For transactions after 2006, a taxpayer would not have any income exclusion benefits.

The Jobs Act also provided that a contract in effect prior to September 17, 2003, would still be awarded exclusion benefits for the duration of the contract. This is what we call the binding contract relief. The purpose behind transition rules was to provide a soft landing to corporations. To give corporations time to adjust to the change in tax policy.

Prior to September 17, 2003, companies relied on the extraterritorial income tax benefits when they entered contracts. The binding contract relief protected U.S. companies where the company might otherwise be substantially harmed by the loss of the tax benefit. Eliminating the grandfather clause eliminates certainty for these U.S. companies.

We shouldn't blindly accept a provision that was not part of the Senate nor the House bill. We shouldn't blindly accept a provision that repeals a provision that took years to develop. We shouldn't blindly accept a provision that goes beyond what is required. I urge my colleagues to vote down this bill.

Mr. President, we have had a very interesting debate today. As I expected, it was a real battle of statistics and charts.

Again, I would like to thank my good friend, the chairman of the Finance Committee. I know that Senator Grassley fought hard to defend the Senate position in the conference committee. And I think the vote in favor might have been overwhelming if he had been successful in bringing back that Senate bill rather than the bill we have today.

But I look forward to working with him and battling side-by-side to deliver that promised second bill. And that brings me back to what I spoke of this morning: there is a substantial amount of work undone.

Despite $70 billion spent on tax cuts today, there are millions of teachers, families with kids in college, businesses that want to conduct important research or hire the hard-to-employ that will not see one dollar of the benefits handed out today.

It is true that this conference report made tough choices. Those choices were tough on teachers, tough on families, tough on businesses. Hopefully, their relief boat will be coming soon.

Until then, though, I will be voting against this bill that made the wrong choices--putting 2009 tax cuts before 2006 tax cuts, and putting ideological wants before America's needs.

I hope that the next bill will be a bipartisan product. I am sure if it is, that it will enjoy broad support in this Senate and across the country. I look forward to working on that bill.

Mr. President, I want to take a moment to thank the individuals who worked so hard on this legislation.

First, I thank my good friend Senator Grassley, the chairman of the Finance Committee, for his leadership on this bill. I also appreciate the hard work and cooperation of his staff, especially Kolan Davis, Mark Prater, Dean Zerbe, Elizabeth Paris, Christy Mistr, John O'Neill, Chris Javens, Cathy Barre, Anne Freeman, Grant Menke, and Nick Wyatt.

Second, I thank the staff of the Joint Committee on Taxation and Senate legislative counsel for their service.

Finally, I thank my staff for their tireless effort and dedication, including Russ Sullivan, Bill Dauster, Pat Heck, Melissa Mueller, Jonathan Selib, Judy Miller, Rebecca Baxter, Ryan Abraham, Carol Guthrie, and Brianne Rogers.

I also thank our dedicated fellows, Mary Baker, Stuart Sirkin, Thomas Louthan, Tiffany Smith, Laura Kellams, Caroline Ulbrich, Margaret Hathaway, and Robin Burgess. I also thank our law clerk, Christal Edwards.

I thank our hardworking interns Zachary Henderson, Lesley Meeker, Lauren Shields, Britt Sandler, Jordan Murray, and Andreas Datsopoulos.

Wage Limitation

Mr. President, I would like to engage in a brief colloquy with the distinguished chairman of the Finance Committee, Senator Grassley, regarding changes to the section 199 wage limitation. The conference report attempts to better target the application of the wage limitation by counting only those wages that are ``properly allocable to domestic production gross receipts.''

This change may have unintended consequences for certain industries. In some industries, many workers, particularly those with specialized expertise, provide services as independent contractors or through their own businesses. In such cases, service payments to these workers are not treated as wages under the current wage limitation.

When section 199 was first created, some of the impacted industries requested that we adopt a rule to count these payments for services in determining the wage limitation. The request was dropped because we addressed their issue indirectly by allowing them to use a broader wage base for calculating the limitation. By eliminating this ``headroom,'' we are resurrecting a problem for these industries.

These industries are doing exactly what section 199 was meant to encourage. They are creating high-quality manufacturing and production jobs and contributing substantially to our Nation's economy and trade. I am hopeful that we will reexamine this issue and take the steps necessary to ensure that these industries are not adversely and unduly affected.

I want to thank the distinguished chairman of the Finance Committee for this clarification and his willingness to work with me to address this important problem.

Mr. President, I ask unanimous consent that the pending amendment be set aside so I may offer an amendment which is at the desk, amendment No. 2892.

I yield to the Senator from Nevada.

Mr. President, I ask unanimous consent the pending amendment be set aside so I may offer an amendment at the desk, No. 2892.

Mr. President, we can obviously see what is going on here when the majority leader offered those two amendments earlier. He was filling the amendment tree. That means he is trying--in fact, he is going to do everything he can, and he will succeed, if he wishes--to refuse to allow Senators to improve this bill. Those amendments are nothing more than meaningless amendments, the amendments he has offered, that have to do with the effective date of the bill. They are nothing other than an attempt to prevent me or any other Senator from trying to amend this legislation.

Not only was this a take-it-or-leave-it deal from the White House, but now the majority leader and perhaps other Senators are apparently afraid of what happens if the Senate actually does its work on this issue and has open votes on the merits of these issues.

I want everyone to know that is the game that is being played here, on a bill that has major implications for the rights and freedom of the American people. Obviously, when the majority leader talks about how urgent it is that this be passed, he is conveniently ignoring the fact that this current law is in effect until March 10, and there is no risk whatsoever that the bill would not be renewed.

I am going to speak for a few minutes about the various amendments I have filed and that the majority leader is preventing me from offering.

Amendment No. 2892

Amendment No. 2892 is the amendment that would implement the standard for obtaining section 215 orders that was in the Senate bill the Judiciary Committee approved by a vote of 18 to 0 and that was agreed to in the Senate without objection. I hope my colleagues remember that. When the majority leader fills the tree, he is not preventing some type of esoteric amendments nobody has ever seen or heard of. Every member of the Judiciary Committee already voted for that

very provision and no Senator in the entire Senate, including the majority leader, objected to that being in the Senate bill. So this is not some kind of a last-minute deal. This is something the majority leader himself never objected to. It is a reasonable amendment that every Senator in one way or another has basically supported.

Of all the concerns that have been raised about the PATRIOT Act since it was passed in 2001, this is the one that has received the most public attention, and rightly so. This is the one that is often referred to as the ``library provision.'' A reauthorization bill that doesn't fix this provision, in my view, has no credibility.

Section 215 of the PATRIOT Act allows the Government to obtain secret court orders in domestic intelligence investigations to get all kinds of business records about people, including not just library records, but also medical records and various other types of business records. The PATRIOT Act allowed the Government to obtain these records as long as they were ``sought for'' a terrorism investigation. That is a very low standard. It didn't require that the records concern someone who was suspected of being a terrorist or spy, or even suspected of being connected to a terrorist or spy. It didn't require any demonstration of how the records would be useful in the investigation. Under section 215, if the Government simply said it wanted records for a terrorism investigation, the secret FISA court was required to issue the order-- period. To make matters worse, recipients of these orders are also subject to an automatic gag order. They cannot tell anyone that they have been asked for records.

Because of the breadth of this power, section 215 became the focal point of a lot of Americans' concerns about the PATRIOT Act. These voices came from the left and the right, from big cities and small towns all across the country. So far, more than 400 State and local government bodies have passed resolutions calling for revisions to the PATRIOT Act. And nearly every one mentions section 215.

The Government should not have the kind of broad, intrusive powers that section 215 provides--not this Government, not any government. The American people shouldn't have to live with a poorly drafted provision that clearly allows for the records of innocent Americans to be searched, and just hope that Government uses it with restraint. A Government of laws doesn't require its citizens to rely on the good will and good faith of those who have these powers--especially when adequate safeguards can be written into the laws without compromising their usefulness as a law enforcement tool. Not one of the amendments I am offering would threaten the ability of law enforcement to do what is needs to do to investigate and prevent terrorism.

After lengthy and difficult negotiations, the Judiciary Committee came up with language that achieved that goal. It would require the Government to convince a judge that a person has some connection to terrorism or espionage before obtaining their sensitive records. And when I say some connection, that's what I mean. The Senate bill's standard is the following: No. 1, that the records pertain to a terrorist or spy; No. 2, that the records pertain to an individual in contact with or known to a suspected terrorist or spy; or No. 3, that the records are relevant--just relevant--to the activities of a suspected terrorist or spy. That's the three-prong test in the Senate bill and I think it is more than adequate to give law enforcement the power it needs to conduct investigations, while also protecting the rights of innocent Americans. It would not limit the types of records that the Government could obtain, and it does not go as far to protect law-abiding Americans as I might prefer, but it would make sure the Government cannot go on fishing expeditions into the records of innocent people.

The conference report did away with this delicate compromise. It does not contain the critical modification to the standard for section 215 orders. The Senate bill permits the Government to obtain business records only if it can satisfy one or more prongs of the three-prong test. This is a broad standard with a lot of flexibility. But it retains the core protection that the Government cannot go after someone who has no connection whatsoever to a terrorist or spy or their activities.

The conference report replaces the three-prong test with a simple relevance standard. It then provides a presumption of relevance if the government meets one of the three-prongs. It is silly to argue that this is adequate protection against a fishing expedition. The only actual requirement in the conference report is that the Government show that those records are relevant to an authorized intelligence investigation. Relevance is a very broad standard that could arguably justify the collection of all kinds of information about law-abiding Americans. The three-prongs now are just examples of how the Government can satisfy the relevance standard. That is not simply a loophole or an exception that swallows the rule. The exception is the rule, rendering basically meaningless the three-prong test that we worked so hard to create in the Senate version of the bill.

This issue was perhaps the most significant reason that I and others objected to the conference report. So how was this issue addressed by the White House deal to get the support of some Senators? It wasn't. Not one change was made on the standard for obtaining section 215 orders. That is a grave disappointment. The White House refused to make any changes at all. Not only would it not accept the Senate version of section 215, which, no member of this body objected to back in July-- including the majority leader--it wouldn't make any change in the conference report on this issue at all.

So today I offer an amendment to bring back the Senate standard on section 215. It simply replaces the standard in the conference report with the standard from the Senate bill. I urge my colleagues to support this change, which we all consented to 6 months ago, and which was one of the core issues that many of us stood up for in December when we voted against cloture on the conference report.

I know that some will say they must oppose this amendment because it would disrupt a delicate agreement that has been achieved with the White House. I disagree. There is no reason we can't reauthorize the PATRIOT Act and fix section 215--in fact, there is every reason we should do so. This body has expressed its strongly held views on this issue before, and it should do so again. If this issue went to a vote in the House I'm confident we would have strong support because the House has already indicated a willingness to modify section 215 to protect the privacy of innocent Americans. That is the first amendment I wanted to offer. Let me next turn to amendment No. 2893.

Amendment No. 2893

The second one is amendment No. 2893. This amendment would ensure that recipients of business records orders under section 215 of the PATRIOT Act and recipients of national security letters can get meaningful judicial review of the gag orders that they are subject to.

Recipients of both section 215 orders and national security letters are subject to automatic, indefinite gag orders. This means both that a recipient cannot tell anyone what the section 215 order or NSL says, and that the recipient can never even acknowledge that he or she received a section 215 order or NSL. Now I understand there may very well be a need to protect the confidentiality of these business records orders and NSLs in many cases, particularly with regard to the identity of the people whose records they seek. But I do not understand why even the fact of their existence must be a secret, forever, in every case. Even classified information can undergo declassification procedures and ultimately become public, when appropriate.

So I think that meaningful judicial review of these gag orders is critically important. In fact, these automatic, permanent gag rules very likely violate the first amendment. In litigation challenging the gag rule in one of the national security letter statutes, two courts have found first amendment violations because there is no individualized evaluation of the need for secrecy.

So what does the reauthorization package do about this serious problem? Under the conference report, as modified by the Sununu bill, recipients would theoretically have the ability to challenge these gag orders in court, but

the standard for getting the gag orders overturned would be virtually impossible to meet. It is not the meaningful judicial review that the sponsors of the SAFE Act and so many others have been calling for.

Let me start with the NSL provision of the conference report. In order to prevail in challenging the NSL gag order, the recipient would have to prove that any certification by the Government that disclosure would harm national security or impair diplomatic relations was made in bad faith.

There would be what many have called a ``conclusive presumption'' the gag order stands--unless the recipient can prove that the Government acted in bad faith. We all know that is not meaningful judicial review. That is just the illusion of judicial review.

Does the White House deal address this problem? It does not. In fact, it applies that same very troubling standard of review to judicial review of section 215 gag orders.

The conference report that was rejected back in December did not authorize judicial review of the gag order that comes with a section 215 order at all. That was a serious deficiency. But the White House deal does not solve it. Far from it. Under the deal, there is judicial review of section 215 gag orders, but subject to two limitations that are very problematic. First, judicial review can only take place after at least a year has passed. And second, it can only be successful if the recipient of the section 215 order proves that the Government has acted in bad faith, just as I have described with the NSL provision.

My amendment would eliminate the ``bad faith'' showing currently required for overturning both section 215 and NSL gag orders. And it would no longer require recipients of section 215 orders to wait a year before they can challenge the accompanying gag orders.

That is not everything I would want to address with regard to this issue. I am also concerned that the judicial review provisions allow the Government to present its evidence and arguments to the court in secret. But this amendment which I would like to offer is a good solid start. At a time when the Government is asserting extraordinary powers and seeking to exercise them without any oversight by the courts, judicial review of Government assertions that secrecy is necessary more essential than ever.

We cannot face the American people and claim that overreaching by the government under the PATRIOT Act cannot happen because the courts have the power to stop it--and then turn around and prevent the courts from doing their job. The illusion of judicial review is almost worse that no judicial review at all. In America, we cannot sanction kangaroo courts where the deck is stacked against one party before the case is even filed. Obviously, I hope that my colleagues will support this very reasonable amendment, if we are given a chance to vote on it. I think many would find it quite pervasive and particularly some of the people who were part of the White House negotiations.

amendment to add nsl sunset

The third amendment I would like to offer, No. 2891, would add to the conference report one additional 4-year sunset provision. It would sunset the national security letter authorities that were expanded by the PATRIOT Act. It would be simply add that sunset to the already existing 4-year sunsets that are in the conference report with respect to section 206, section 215, and the lone wolf provision.

National Security Letters, or NSLs, are finally starting to get the attention they deserve. This authority was expanded by sections 358 and 505 of the PATRIOT Act. The issue of NSLs has flown under the radar for years, even though many of us have been trying to bring more public attention to it. I am gratified that we are finally talking about NSLs, in large part due to a lengthy Washington Post story published last year about these authorities.

What are NSLs, and why are they such a concern? Let me spend a little time on this because it really is important.

National security letters are issued by the FBI to businesses to obtain certain types of records. So they are similar to section 215 orders, but with one very critical difference. The Government does not need to get any court approval whatsoever to issue them. It doesn't have to go to the FISA court and make even the most minimal showing. It simply issues the order signed by the special agent in charge of a field office or an FBI headquarters official.

NSLs can only be used to obtain certain categories of business records, While section 215 orders can be used to obtain ``any tangible thing.'' But even the categories reachable by an NSL are quite broad. NSLs can be used to obtain three types of business records: subscriber and transactional information related to Internet and phone usage; credit reports; and financial records, a category that has been expanded to include records from all kinds of everyday businesses like jewelers, car dealers, travel agents and even casinos.

Just as with section 215, the PATRIOT Act expanded the NSL authorities to allow the Government to use them to obtain records of people who are not suspected of being, or even of being connected to, terrorists or spies. The Government need only certify that the documents are either sought for or relevant to an authorized intelligence investigation, a far-reaching standard that could be used to obtain all kinds of records about innocent Americans. And just as with section 215, the recipient is subject to an automatic, permanent gag rule.

The conference report does nothing to fix the standard for issuing an NSL. It leaves in place the breathtakingly broad relevance standard. And the White House deal doesn't do anything about this either.

It is true that the Senate bill does not contain a sunset on the NSL provision. But the Senate bill was passed before the Post brought so much attention to this issue by reporting about the use of NSLs and the difficulties that the gag rule poses for businesses that feel they are being unfairly burdened by them. At the very least, I would think that a sunset of the NSL authorities is justified to ensure that Congress has the opportunity to take a close look at such a broad power. And let me emphasize, the sunset in this amendment would only apply to the expansions of NSL authorities contained in the PATRIOT Act, not to pre- existing authorities.

I suspect that the NSL power is something that the administration is zealously guarding because it is one area where there is almost no judicial involvement or oversight. It is the last refuge for those who want virtually unlimited Government power in intelligence investigations. And that is why the Congress should be very concerned, and very insistent on including a sunset of these expanded authorities. A sunset is a reasonable step here. It helps Congress conduct oversight of these authorities, and requires us to revisit them in 4 years. Ideally we could go ahead and actually fix the NSL statutes now, but sunsetting the expanded powers would at least be a step in the right direction.

Adding this sunset does not change the law in any way. I cannot imagine that adopting this amendment would blow up the White House deal. This is a reasonable amendment, and again I want my colleagues to have a chance to vote on it.

sneak and peek amendment

The fourth amendment that I have, No. 2894, concerns so-called ``sneak and peek'' searches, whereby the Government can secretly search people's houses. The Senate bill included compromise language that was acceptable to me and the other proponents of the SAFE Act. The conference report departs from that compromise in one very significant respect, and the White House deal doesn't address this at all. My amendment would restore the key component of the Senate compromise by requiring that subjects of sneak and peek searches be notified of the search within 7 days, unless a judge grants an extension of that time because there is a good reason to still keep the search secret. It makes no other change to the conference report other than changing 30 days to 7 days.

Let me take a little time to put this issue in context and explain why the difference between 30 days and 7 days is necessary to protect an important constitutional right.

One of the most fundamental protections in the Bill of Rights is the fourth amendment's guarantee that all citizens have the right to ``be secure in

their persons, houses, papers, and effects'' against ``unreasonable searches and seizures.'' The idea that the Government cannot enter our homes improperly is a bedrock principle for Americans, and rightly so. The fourth amendment has a rich history and includes in its ambit some very important requirements for searches. One is the requirement that a search be conducted pursuant to a warrant. The Constitution specifically requires that a warrant for a search be issued only where there is probable cause and that the warrant specifically describe the place to be searched and the persons or things to be seized.

Why does the Constitution require that particular description? Well, for one thing, that description becomes a limit on what can be searched or seized. If the magistrate approves a warrant to search someone's home and the police show up at the person's business, that search is not valid. If the warrant authorizes a search at a particular address, and the police take it next door, they have no right to enter that house. But here is the key. There is no opportunity to point out that the warrant is inadequate unless that warrant is handed to someone at the premises. If there is no one present to receive the warrant, and the search must be carried out immediately, most warrants require that they be left behind at the premises that were searched. Notice of the search is part of the standard fourth amendment protection. It's what gives effect to the Constitution's requirement of a warrant and a particular description of the place to be searched and the persons or items to be seized.

Over the years, the courts have faced claims by the Government that the circumstances of a particular investigation require a search without notifying the target prior to carrying out the search. In some cases, giving notice would compromise the success of the search by causing the suspect to flee or destroy evidence. The two leading court decisions on so-called surreptitious entry, or what have come to be known as ``sneak and peek'' searches, came to very similar conclusions. They held that notice of criminal search warrants could be delayed, but not omitted entirely. Both the Second Circuit in U.S. v. Villegas and the Ninth Circuit in U.S. v. Freitas held that a sneak and peek warrant must provide that notice of the search will be given within 7 days, unless extended by the court. Listen to what the Freitas court said about such searches:

We take this position because surreptitious searches and

seizures of intangibles strike at the very heart of the

interests protected by the Fourth Amendment. The mere thought

of strangers walking through and visually examining the

center of our privacy interest, our home, arouses our passion

for freedom as does nothing else. That passion, the true

source of the Fourth Amendment, demands that surreptitious

entries be closely circumscribed.

So when defenders of the PATRIOT Act say that sneak and peek searches were commonly approved by courts prior to the PATRIOT Act, they are partially correct. Some courts permitted secret searches in very limited circumstances, but they also recognized the need for prompt notice after the search unless a reason to continue to delay notice was demonstrated. And they specifically said that notice had to occur within 7 days.

Section 213 of the PATRIOT Act didn't get this balance right. It allowed notice to be delayed for any ``reasonable'' length of time. What is ``reasonable''? Information provided by the administration about the use of this provision since 2001 indicates that delays of months at a time are now becoming commonplace. Those are hardly the kind of delays that the courts had been allowing prior to the PATRIOT Act.

I know that the conference report requirement of notice within 30 days was a compromise between the Senate and House provisions. And so, the Senator from Pennsylvania and others will strongly oppose this amendment, if I ever get to offer it. But let me point out that the House passed the Otter amendment to completely eliminate the sneak and peek provision by a wide bipartisan margin. I hardly think the House will balk at this reasonable amendment that allows these sneak and peek reviews but says that after 7 days you have to go back and get an application for more time, or you have to give notice to the persons whose house is intruded upon.

More importantly, here is the crucial question that no one has been able to answer so far. Listen carefully to the arguments made by the opponents of the amendment and see if they answer it this time, if we ever get a chance to debate it. What possible rationale is there for not requiring the Government to go back to a court within 7 days after a sneak and peek search and demonstrate a need for continued secrecy? What is the problem here? Why insist that the Government get 30 days of secrecy, instead of 7 days, without getting an extension from the court? Could it be that they think that the courts usually won't agree that continued secrecy is needed after the search is conducted, so they won't get the 90-day extension? If they have to go back to a court at some point, why not go back after 7 days rather than 30? From the point of view of the Government, I don't see the big deal.

It amazes me to hear Senators on the floor saying 7 days, 30 days. What is the difference? This is about big government coming into your home without your knowledge and saying it doesn't matter that you are not given notice in 7 days as opposed to 30 days. I tell you that it matters to people in my State, and it would matter to me. Government shouldn't be in your house without notice except for very narrowly identified circumstances that are consistent with the court decisions that allowed the sneak-and-peek provisions in the first place. There is a big difference between 1 week and 1 month when it comes to something like the Government secretly coming into your home.

Suppose, for example, that the Government actually searched the wrong house. As I mentioned, that is one of the reasons that notice is a fourth amendment requirement. The innocent owner of the place that had been searched might suspect that someone had broken in his house, and he might be living in fear that someone has a key or some other way to enter his house. The owner might wonder: When is the intruder going to return? Do the locks have to be changed?

I implore my colleagues to look at this issue from the point of view of an innocent person in their own home somewhere in their own home State. Why would we make that person wait a month to get an explanation rather than a week? Presumably, if the search revealed nothing, and especially if the Government realized the mistake and does not intend to apply for an extension, it will be no hardship other than a little embarrassment for notice to be given within 7 days.

If, on the other hand, the search was successful and revealed illegal activity and notifying the subject would compromise an ongoing investigation, the Government should have no trouble at all getting a 90-day extension of the search warrant. All they have to do is walk into the court and tell the judge: Judge, we found something, and we are now keeping the place under surveillance because there is ongoing criminal activity taking place there, so give us more time before we serve the search warrant.

That is all you have to say. What is so hard about that? We all know the judges will give them that. It is perfectly reasonable.

The Senate bill is already a compromise on this very controversial provision. There is no good reason not to adopt the Senate's position. I have pointed this out repeatedly and no one has ever come to the Senate and come up with any explanation of why the Government cannot come back to the court within 7 days of executing the search. The Senate provision was what the courts required prior to the PATRIOT Act. It worked fine then. It can work now.

Let me make one final point about sneak-and-peek warrants. Do not be fooled for a minute that this power has anything to do with just investigating terrorism or espionage. It does not. Section 213 is a criminal provision that applies in any kind of criminal investigation. In fact, most sneak-and-peek warrants are issued for drug investigations. So why do I say they are not needed in terrorism investigations? Because FISA, the Foreign Intelligence Surveillance Act, can also apply to these investigations. FISA search warrants are always executed in secret and never require notice--not in 7 days, not in 30 days, not in 180 days, not ever. So

if you do not want to give notice of a search in a terrorism investigation, you can get a FISA warrant. So any argument that adopting this amendment will interfere with sensitive terrorism investigations is false. It is false, plain and simple.

I look forward to hearing the response of the opponents on this issue. I am beginning to lose faith I will ever hear from them. But I also urge my colleagues to listen carefully: Will anyone come forward and argue convincingly that 7 days, which the entire Senate approved in July, is too short of a period of time? If not, we should adopt this amendment.

I have had the opportunity the last few minutes to describe the four remaining amendments I have filed. I have tried to explain them clearly. These are provisions that are either consistent with or the same as provisions that we approved in the Senate last year by unanimous vote in the Judiciary Committee and in a unanimous consent agreement in the Senate, which not one single Senator, including the majority leader, objected to. Or they were central to the concerns raised by so many Senators late last year. So these are obviously not extreme ideas. They are very reasonable ideas.

The idea that right after the motion to proceed was approved the majority leader would come and ``fill up the tree,'' which means preventing me from offering these amendments on the Senate floor, is a disservice to the Senate and it is a disservice to the American people. The American people are concerned about this legislation. Whether Members of this Senate want to admit it, there is a lot of concern about this legislation. The goal should be to make sure that the law enforcement in our country has the tools it needs to fight those who are involved in terrorism or spying. But the goal should also be to reassure the American people that we are not somehow trying to take away the rights and freedoms and privacy of perfectly innocent Americans. I would think all of us would want that to be the way this legislation is perceived.

The act of preventing reasonable amendments, under a limited timeframe, on provisions that have already been approved by the Senate or that so many Senators have raised concerns about, is a guarantee of causing anxiety and concern on the part of the American people that something is wrong, that somehow the power grab by this administration is out of control.

I implore my colleagues to join me in imploring the majority leader to allow us to offer these reasonable amendments. That is not only the right thing to do, it is our responsibility, as Members of this Senate.

I yield the floor and suggest the absence of a quorum.

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

Mr. President, I wish to speak for a moment, first of all, about the process we are going through and then about the substance of a couple of amendments that our colleague from Wisconsin would have liked to have introduced and have a vote on it with respect to the PATRIOT Act.

Our constituents might be wondering why we are on the floor of the Senate on this Thursday afternoon discussing the PATRIOT Act. After all, haven't we passed it? Of course, the answer is, in a sense, we have passed it now several times. But there are colleagues on the other side of the aisle who have decided that rather than let the will of the Senate be carried out with adoption of the PATRIOT Act so this bill can be sent to the President so he can then sign it, thus reauthorizing the act for another 4 years and giving the tools to fight terrorism to our intelligence and law enforcement officials that, rather, they are going to make us comply with all of the procedural technicalities which they can throw in our way which accomplishes absolutely nothing but requires us to take several more days to finish the process.

What can be gained from this? Nothing at all except that we waste more time thus making it more likely that we will not have time to do other business of the Senate, especially as it gets toward adjournment later on in the year.

What we are seeing is taking something very important for the protection of the American people--the PATRIOT Act--and using it for what I believe are improper purposes and simply delay action in the Senate so that we will have less time to act on other items.

There is no basis for delaying the PATRIOT Act. The votes are there to go to the conference and have the House of Representatives approve it, again, as it already has, so it can be sent to the President. There are no amendments that are going to be brought up. We are going to have a final vote on Tuesday--and that is it. But rather than being able to accomplish that result today, we are having to waste all of this time.

What kind of a message does this send to our allies who are, first of all, a little skittish about some of the news leaks about our surveillance programs in which they participate, to some extent. We get good information from our intelligence service, and I suspect they are worried about the lack of control over our intelligence process. They are not sure, I suspect, what to make of this debate about the PATRIOT Act. They thought we had it resolved so they could work with it on the basis of the laws they understood. They are not sure.

I often wonder what Osama bin Laden is thinking. I suspect he is not getting live coverage, but he is probably getting reports somehow or other, and he must be shaking his head: I thought I was pretty clear, I am really making threats against these guys, and they are playing around. They are not taking my threats seriously.

I, for one, am taking his threats very seriously--and so does the Director of the CIA and so does Ambassador Negroponte.

Our intelligence officials and the people we have asked to do this job for us take this threat dead serious. They have asked the Congress to give them the tools they need to fight this terrorist threat. Part of the tool is this PATRIOT Act, which has now been revised and reformed and amended and gone over again, and, finally, there are now three more changes to it--and it is done.

We have the ability now to simply pass it on to the President so he can sign it, and for 4 more years everybody knows exactly what we have to work with here.

Remember the 9/11 Commission following the tragedy of September 11, when we asked this commission to analyze what we could have done better and what went wrong, part of what they said was wrong was that there was confusion in our law enforcement intelligence community about what they could and should do.

In fact, legal interpretations differed so much they felt there was a wall that separated the intelligence agencies and the law enforcement agencies from even talking to each other.

One of the things the PATRIOT Act does is makes clear that there is no such wall; that at least our law enforcement and intelligence folks can talk to each other about these terrorists.

It is most distressing that we can't simply get this bill passed on to the President so that everybody knows we have it reauthorized again for another 4 years.

As I said, if there were any rationale behind this, other than simply delaying so that we can't do other business, you might have something to bite your teeth into and debate on the floor. But in truth, this thing, when it passes, is going to be overwhelming. I doubt that we will have a handful of votes against it. In fact, we may have less than a handful, which would be 5 votes against this when we vote on it. But I thought at least it would be interesting to see what some of the objectives posed by some of the most vociferous critics of the PATRIOT Act are, what those criticisms are, to examine them so we can see exactly what the complaints are about, about what the President has called an essential tool in the war on terrorism.

When you look at the suggested amendments--again, amendments which we are not going to be voting on because we have already been through that process three times and that has thankfully come to an end--I wanted to examine a couple of amendments our colleague from Wisconsin would have offered to illustrate it is not something we should be wasting our time on. One of them has to do with something that has been in existence for 40 years, called national security letters. It is essentially a subpoena for records that is just like a grand jury subpoena.

The county attorney or the district attorney goes to the grand jury and says: I think we need the following documents in order to see whether we can make our case. They write up this piece of paper, it is delivered, say, to a hotel, and it asks for the business records: We want to know everyone who checked in and out of the hotel for the last 3 days because we think maybe this person we are after may have checked into this hotel--that would verify his presence on the night of the murder, or whatever the case--so the hotel gives them the records.

There is no expectation of privacy in the records. When the hotel clerk says: Here, sign in--and he turns it over, you can see exactly everyone else who has signed into the hotel. There is nothing private about it.

These national security letters have been used for many different government agencies. If you are investigated for Medicare fraud, for example, your doctor might get one of these security letters asking for information.

Back when the security letters were authorized, we did not have terrorism. Now we have terrorism in a big way in the last decade or dozen years. Law enforcement authorities say: You know that process we have of getting business records through the security letters is a good process, and we ought to apply that to terrorism, too. Why not? If we can investigate drug dealers or bank fraud criminals or people like that with this kind of a subpoena for records, why shouldn't we be able to do it for terrorists? That is a much bigger deal.

Now for the first time our colleagues are saying maybe we should have a court process to review this. That process exists in a totally different context. If we want a much more formal procedure, there is something called a Section 215 warrant. That is court supervised. This is the sort of light version. If it is contested, of course, you have to go to court. Most of the time the records are easily given because they are not private records.

For the first time in the context of terrorism our colleagues are saying this is an invasion of privacy and we need a court to review this. My point is, it must be very confusing to law enforcement to have Congress debating something like this when there is no rationale for changing the law of 40 years that has been applied in everyday context throughout the country, and all of a sudden where we would want the most streamlined procedure, where we would care most about the cops, where we need speed because we do not know whether an attack is imminent, for example, in the situation that is much more serious, now we are saying we need to throw some roadblocks in the way of the law enforcement tool. It does not make sense.

I thought I would take two of the amendments--we are not going to be debating the amendments, but this is the kind of thing raised as an objection to the PATRIOT Act--the kind of amendments that would be offered. It shows how unnecessary this approach is.

Let me note one other thing. There have been a lot of unnecessary amendments attached to the PATRIOT Act. It is getting to the point where I wonder whether we can really do the job, our law enforcement community can really do the job that our constituents want it to do. For example, by my count, the final bill that we will send to the President requires 12 different reports or audits of our Nation's antiterror investigators. Obviously, oversight is important. Reports to the Congress are important. But it seems to me this is overkill. Our intelligence agencies should be devoting their resources primarily to investigating suspected terrorists, not to investigating each other. All of these reports simply add to the burden they already have.

And we wonder sometimes after the fact, when a September 11 commission reports that they were too burdened to do their job, how that could possibly be. Congress sometimes can be part of the problem as well as part of the solution.

All of the changes have been negotiated and renegotiated, as I said. At some point, we need to complete the bill. There are other amendments I would like to add, but I had my chance and this is not the time to be reopening the process for yet another round of amendments. It seems to me we ought to be moving on.

I will mention this one amendment. It is actually an amendment numbered 2893 that would have been offered by the Senator from Wisconsin. This amendment would strip away the protections for classified information about suspected terrorists and terrorist organizations in the manner I discussed a moment ago. The amendment not only risks revealing our level of knowledge of our data collection methods to those who would do us harm, but it also threatens to undermine our relations with allies who supply us with a lot of information in this war or terror. They do not do that so it can be given out to the public. The purpose of classification is to see that the information remains secret. But this particular amendment would allow classified information to be compromised during the challenge to a nondisclosure order for national security letters or a FISA business records order. FISA is the Foreign Intelligence Surveillance Act. It serves no substantial interest but, as I said, can be very damaging to our national security.

Let me put this in perspective. A section 215 order--which I discussed before, which is a FISA order and is always accompanied by a nondisclosure requirement--already is judicially reviewed, as I said. There has to be a court action on it before it can be issued. And under the amendment that was offered by the Senator from New Hampshire, a third party recipient of a section 215 order also would be able to have the courts review the section 215 order after its issue, which is a second round of review. We have added that in. To my mind this is redundant and unnecessary, but that has been added. That is one of those compromises to enable us to get to this point.

Let me put this issue in perspective. A section 215 order, which provides that second round of review, is much different than a national security letter which, as I said earlier, has been around since the 1970s. They have always been accompanied by a nondisclosure requirement. In other words, when the third party is served with this subpoena that says: Would you please give us these records, you are not supposed to tell the person that a law enforcement entity is seeking the records. Obviously, you do not want to tip them off that you are investigating them. There is a nondisclosure requirement. You cannot tell the person that the Government has come asking for the records. That requirement has always been automatic, and there has never been any provision for any judicial review of that nondisclosure requirement.

The national security letters, like virtually all other subpoenas, are also not judicially reviewed before they are issued. The conference report, for the first time in the history of these national security letters, authorizes judicial review of the need for the nondisclosure of the subpoenas. That was another compromise that was added. You not only have it in the formal section 215 requirement but also in the less formal security letter process. It allows the recipient to challenge the nondisclosure requirement, and it ensures the automatic nature of the nondisclosure requirement.

Now the FBI will have to evaluate each national security letter. The nondisclosure of the NSL and the nondisclosure requirement can only apply if the FBI certifies that the public disclosure of the service of the NSL will harm national security. In other words, before it is issued, the FBI has got to have a certification that the recipient of the letter may not disclose it because to do so would be to harm national security. That certification is based upon a very solemn judgment exercised by the Attorney General.

Critics condemn this provision as giving only the illusion of judicial review. When they say that, it bears mention that what they are condemning is language that is being added to a statute that never provided any kind of judicial review before that. For over a quarter of a century there has been none whatsoever, and yet there is a complaint this judicial review is not good enough. The sponsor of the amendment argues that the standard employed for the review of the security letter and the section 215 nondisclosure requirement is too high and can never be met.

It is high, but it is very high for a reason. If a challenge is made, the FBI needs to reevaluate whether there is a continued need for the disclosure. But if the FBI certifies that disclosure of the NSL would harm national security, that reclassification is conclusive. Now, when you say ``conclusive,'' that is a very high standard.

In this respect, the proponents of the amendment are correct; that is a high standard. But it is the only way the determination can work.

Think about it for a moment. Only the FBI, the people who are investigating the matter, not individual district judges, are in a position to determine when the disclosure of classified information would harm national security. Obviously, that is not something that a Federal district judge has any expertise on. You have to have, literally, a trial to determine whether that proposition were true in each particular case.

The reason nondisclosure might be necessary should be obvious. If a suspected terrorist or his associates, for example, are funneling money through a particular bank in a city, and if that bank were to make public the fact that it had received a security letter requesting records in a terrorism investigation, that disclosure would easily tip off the terrorists and their associates that they are under investigation. You do not want to do that.

It is also important that the FBI make the final determination whether the disclosure would harm national security. And only the agents in charge of these counterterrorism investigations will be able to evaluate how the

disclosure of a particular piece of information could potentially, for example, reveal sources and methods of intelligence and who, therefore, might be tipped off as a result of the disclosure.

We are all aware of this current controversy regarding the briefing of select members of the Intelligence Committee over a particular surveillance activity involving international communications with members of al-Qaida or people suspected of being with al-Qaida. The reason not every member of the Intelligence Committee is briefed is because of what we would call ``sources'' in this case. Methods of surveillance are so secret, so classified, that it has been determined that even some members of the Intelligence Committee should not be fully briefed on exactly how this methodology works.

So you can imagine when the FBI has sources of intelligence to protect or certain methods of intelligence gathering to protect, the last thing you want is for a judge to decide that those should simply be made public.

That is why this conclusive presumption is in the law, why it is so important, and why we cannot have this section amended to open that to public disclosure of that sensitive information. Yet this amendment numbered 2893 would allow every one of the 800 Federal district judges in the country, in fact, to be their own director of national intelligence and decide for themselves whether exposing classified information would inappropriately reveal the sources and methods I discussed, whether that might tip off terrorists to what we already know about them, and whether it would harm relations with our allies who, perhaps, have provided us with the information. Obviously, that cannot be allowed. We cannot expect our allies in the war on terror to cooperate with us if we treat this sensitive information that they provide to us with anything other than the most careful consideration. And we cannot expect our agents to be successful in detecting terrorist plots if every step of the way, every time they gather information through either a security letter or the more formal section 215 process, they can be sued and forced to divulge classified information about whom and where they are looking and what methods they are using.

This amendment would do serious harm to U.S. national security. And to what end? What powerful privacy interest or civil rights interest dictates a third party asked to produce business records in its possession must be allowed to disclose the existence of the investigation or must be given access to other classified information in order to plead that matter before the judge?

When the FBI is investigating organized crime in the United States and grand juries compel testimony or require the production of records, we do not let those witnesses or the parties holding the records publicize the fact that they had been subpoenaed or publicize that there was an ongoing investigation. We recognize that secrecy is important in an organized crime investigation and it outweighs any interest that third parties might have in talking about the investigation.

Why wouldn't we recognize the same realities in a terrorism investigation, an area where the safety and security of the American people are much higher? That is the kind of amendment that would be offered. Thankfully, as I said, we decided to go forward with the process and not have any more amendments and have the vote next week which will enable us to send this bill to the President.

My point in discussing this is to demonstrate there is no reason to have further debate or amendments, and we could have gotten done this afternoon and known we had reauthorized the act for another 4 years.

The only other amendment I want to discuss is amendment No. 2892, blocking these section 215 orders even where relevance is shown. This amendment is highly problematic because it would bar antiterrorism investigators from obtaining some third party business records even where they can persuade a court that those records are relevant to a legitimate antiterrorism investigation. We all know the term ``relevance.'' It is a term that every court uses. It is the term for these kinds of orders that are used in every other situation in the country. Yet the author of the amendment argues that relevance is too low a standard for allowing investigators to subpoena records.

Consider the context. The relevance standard is exactly the standard employed for the issuance of discovery orders in civil litigation, grand jury subpoenas in a criminal investigation, and for each and every one of the 335 different administrative subpoenas currently authorized by the United States Code. These national security letters have existed since the 1970s, and they have always employed a relevance standard.

Why now that we are faced with a terrorism threat, and we decide this same investigative tool should be available to investigate terrorists would we impose a higher standard to get the information? If anything, you would be talking about applying a lower standard because of the importance of the threat and the fact that sometimes speed is of the essence.

As the Department of Justice Office of Legal Policy recently noted in a published report--I want to quote this--``Congress has granted some form of administrative subpoena authority to most Federal agencies, with many agencies holding several such authorities.'' The Justice Department ``identified approximately 335 existing administrative subpoena authorities held by various executive-branch entities under current law.''

As I said, 215 orders already are harder to get than regular subpoenas, even though the subject matter would suggest that perhaps they ought to be easier to get. In the case of these section 215 orders, the law requires that the FBI first seek a determination of relevance from a judge, which makes it harder to get a 215 order than it is to get any other grand jury subpoena or virtually any other kind of administrative subpoena because none of them require preapproval from a judge. Even a grand jury subpoena is not approved or reviewed by a judge or the grand jury before it is issued. It is issued directly by the prosecutor.

It is interesting; there was a recent online article in National Review Online by Ramesh Ponnuru, a very good writer and student of this issue, who made the following comments. This is a quotation. He noted that critics say:

that investigators shouldn't be able to get business records

merely by convincing a judge that the records are

``relevant'' to an ongoing terrorism investigation. Yet that

relevance standard, from Section 215 of the law, is the exact

same standard employed for discovery orders in civil

litigation, for grand-jury subpoenas in criminal

investigation, and for each of the 335 different

administrative subpoenas currently authorized by the U.S.

Code. Getting a 215 order is harder than getting a grand-jury

subpoena or almost any kind of administrative subpoena, since

judges don't have to review the latter [before they are

issued].

Again, this is the current law. So even without an amendment, which would make it even more difficult, the law we are talking about with regard to terrorism investigations makes it more difficult in a terrorism investigation to get a subpoena than in any other situation. Yet the proponents of this amendment would make it even more difficult than that.

Now, let's imagine what this means. Here is a scenario:

Let's imagine that intelligence agents have discovered that

suspected Al Qaida agent Mohammed Atta is in the United

States and that he has hired another individual to work for

him. Under the Patriot Act legislation being considered now,

it will be easier for the federal government to subpoena

records in order to make sure that Atta is paying that

individual the minimum wage than it will be to obtain records

to find out if Atta is using him to engage in international

terrorism.

That is not right. I was going to say something else. I will just say that is not right. This is the existing law. This is before we would make it even more difficult with the amendment I discussed a minute ago.

So without making further arguments on this point, I think you can see that we have girded this PATRIOT Act with levels of civil rights protection and privacy rights protection that we do not have in any other part of the code, even though the need for speed and the need for agility to get after these terrorists is, I would argue, a much more important matter than investigating Medicare fraud or bank fraud or money laundering of whatever it might be.

We have not imposed all of those civil rights or privacy protections in those sections of the code, but here we

are going to add them and make it even more difficult for the FBI and other law enforcement and our intelligence agencies to do the job we want them to do. Then, of course, if something happens, we will haul them before Congress and say: Why couldn't you get your job done? And when they say: Well, the statute was a little tough for us to comply with, we will say: That will be no excuse.

So we need to be very careful what we do in considering further amendments to the law.

Mr. President, let me conclude by saying that the other amendments that would have been offered are in the same vein, making it unnecessarily difficult for our intelligence agents and our law enforcement officers to do the job we have asked them to do.

When my colleagues and I have had before us on the floor of the Senate amendments to add armor to humvees or to have better bulletproof vests or to have other kinds of equipment or tools for them to carry out the missions we ask them to perform when we send them into harm's way, we do not hesitate long to give our military everything they need because we want them to succeed in their mission. We do not want them to be left vulnerable in any way. Why? Because we want to be protected and we want them to be protected.

Yet when it comes to giving our intelligence agencies the tools to fight terrorism, we shirk back and say: Well, we are going to do it, but first we are going to add several layers of additional requirements to make it more difficult for you to do your job.

In the law and in this fight against terrorism, we are generally not fighting with airplanes and ships and the like. This is a different kind of war. This is a war against a very secretive enemy all over the globe. There is really only one way to get to this enemy, and that is with good intelligence to find out who they are, where they are, and what they are up to.

So the equipment we are giving to them, the tools for them to fight terror are these provisions of the PATRIOT Act and FISA and the other activities that have been discussed. This is what enables them to perform their missions. We cannot load these tools up with so many restrictions and legal loopholes that it is impossible for them to do their job. If we expect them to be able to protect us, we have to write these laws in clear, understandable, fair, and effective ways, certainly protecting our civil rights. But I think I have demonstrated we have done that.

If you do not need all these protections if you are investigating bank fraud, then I would say, as the lawyers say: A fortiori. They are less necessary in an investigation of terrorism, where speed may be required, where secrecy is absolutely critical, and therefore where the kind of protections that have been offered are very problematic to these folks doing their job.

So the bottom line is this: We have a good act, the PATRIOT Act. It is going to be reauthorized for another 4 years. We have already added numerous protections of civil liberties to it. It is, therefore, quite appropriate that the time for amendments has come to an end, that we not have any more of these amendments brought before us--I think I have demonstrated the harm those amendments would do--that we get on to the job of getting this legislation reauthorized so we can say to our constituencies we were able to provide the tools to fight terrorism that will protect them and their families.

That is our charge. There is only so much we as legislators can do, but this is something we can do, and we need to get about doing it.