A bill to amend the Internal Revenue Code of 1986 to allow permanent look-through treatment of payments between related foreign corporations.

Mr. President, I have sought recognition to comment on legislation I am introducing that will continue a positive trend in the provision of benefits to severely injured servicemembers and their families by making assistance available when it is needed most. My bill would give active duty servicemembers who utilize VA's specially adapted housing grant assistance with the ability to also purchase Veterans' Mortgage Life Insurance, or VMLI, through VA. Under current law, the receipt of specially adapted housing grants is the gateway to VMLI eligibility. And only those separated from service and legally classified as ``veterans'' are able to purchase coverage through VMLI.

Servicemembers and veterans who are blind, have lost the use of both their legs, and who have other severely disabling conditions are eligible to receive up to $50,000 in grants from VA to assist with needed housing adaptations, such as the widening of doorways, the construction of wheelchair ramps, and the installment of handrails. Notwithstanding this grant assistance, servicemembers and veterans must still pay any underlying mortgage that exists on the modified home. To ensure that survivors are not saddled with mortgage debt they cannot afford following the death of a severely disabled veteran, VA's VMLI program is available. Under VMLI, up to $90,000 of coverage, or coverage in the amount of any outstanding mortgage debt, whichever is less, is available. Veterans pay premiums at standard mortality rates and VA contributes subsidy payments so that all program expenses are met.

Until recently, grants under the specially adapted housing program could only be made to individuals who had separated from military service. In recognition of what can be an extremely lengthy recovery and separation process for those with profoundly disabling conditions, in 2004 we in Congress allowed housing grants to be made to active duty servicemembers. However, we did not extend the same access to VA's VMLI program for those still on active duty, an oversight that my legislation would remedy.

VA estimates that roughly 30 servicemembers per year will receive specially adapted housing grants, thus giving rise to VMLI eligibility should my bill be enacted. Because it is optional, VA expects only 15 servicemembers per year to purchase VMLI policies. Therefore, subsidy costs associated with my legislation are minimal, less than $500,000 over 10 years.

This Congress increasingly is recognizing that the benefits provided to our wounded servicemembers need to flow immediately, and that outmoded distinctions between ``veteran'' and ``active duty servicemember'' mean little when it comes to honoring our commitment to them. My legislation continues what I believe is an encouraging trend that looks at the career of a military man or woman as a continuum. It is a continuum that begins the day they enlist and it ends the day they die. Our Government's benefits should reflect that reality.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I have sought recognition to comment on legislation I am introducing that will improve the availability of dignified burials for those who have served our country. The Veterans' Dignified Burial Assistance Act of 2007 would make three improvements to programs designed to ensure that veterans are perpetually honored for their service. Let me start by describing the first improvement which had its genesis, I am proud to say, in my home State of Idaho.

We have in Idaho a State veterans' cemetery located in Boise. The cemetery was established with the help of VA's State Cemetery Grants Program, a program which pays for 100 percent of

the costs of establishing, expanding, and improving state cemeteries. Over one thousand veterans have been interred in the Idaho State Cemetery since it opened in 2004. I want to focus on 91 of those veterans who were interred through a program pioneered in Idaho called ``Missing in America.''

Through the Missing in America program Idaho cemetery officials, working with veterans' organizations and others, have actively sought to locate the unclaimed cremated remains of veterans throughout the State. They contacted funeral homes, county coroner offices, and any other place where those remains may have been located. Remarkably, they discovered the remains of 91 veterans. After verifying that they had eligibility, all 91 veterans were given a dignified burial.

I suspect what was found in Idaho would be found in other States. My legislation would incentivize other States to develop Missing in America programs like Idaho's by allowing revenue from VA's plot allowance benefit to go to states which seek out and inter unclaimed remains.

Under current law, State cemeteries may be reimbursed for the cost of interring eligible veterans. For each eligible veteran interred, a $300 plot allowance may be paid by VA. Revenue from the plot allowance is used to operate and maintain the appearance of State cemeteries. However, plot allowance revenue is not payable to States when veterans are interred more than 2 years after the permanent burial or cremation of the veteran's body. Thus, since each of the 91 veterans interred in Idaho had been left sitting on shelves in an urn for a great deal longer than 2 years, no plot allowance is payable. This doesn't make sense. Just as our system of benefits does not abandon or give up on veterans who are homeless or chronically ill, so too should our burial benefits system be designed not to abandon or give up on veterans whose remains are unclaimed. To that end, my legislation would waive the 2- year limit so that States could receive plot allowance revenue for interment of the unclaimed remains of veterans. The extra plot allowance revenue could be used to help states meet costs associated with running this program and other cemetery operation costs. Most importantly, my legislation would reward States for giving veterans what is long overdue: a fitting burial.

The second way my legislation helps to ensure dignified burials is by increasing VA's plot allowance benefit from $300 to $400. As I mentioned earlier, the plot allowance can be paid directly to a State cemetery for the interment of eligible veterans. But it can also be paid to the survivors of veterans who purchase burial space on their own in the private market. Under current law, veterans who die in a VA facility, who are in receipt of disability compensation, or who have low incomes and are in receipt of VA pension are eligible to receive the $300 plot allowance benefit. The plot allowance, created in 1973, is designed to ensure that veterans are not buried in a pauper's grave. When the benefit was created, it covered 13 percent of the average cost of an adult funeral. Today, it only covers approximately 5 percent of the cost. An independent assessment of VA burial benefits directed by Congress and published in 2000 recommended, as an option, increasing the plot allowance to $670, which at the time of the assessment represented 13 percent of the average cost of an adult funeral. Since that assessment was published, the major veterans' organizations have persistently recommended that Congress increase this benefit. In its most recent budget submission, the authors of the Independent Budget recommended that the plot allowance be increased to $745. In 2001, Congress took a first step, raising the benefit from $150 to $300. My legislation would take yet another, measured step.

Finally, my legislation would authorize $5 million per year under VA's State Cemetery Grant Program for VA to assist States in meeting operational and maintenance expenses. As I mentioned, the State Cemetery Grant Program finances the cost of establishing, expanding, or improving State cemeteries. States must agree to provide suitable land for a cemetery and they must meet administrative, operational, and maintenance costs.

My purpose in introducing this aspect of the legislation is twofold. First, VA is in the midst of the largest national cemetery expansion since the Civil War. Guiding its cemetery expansion effort was a prospective look at where and how many veterans will be living 20 years from now. Based on that prospective analysis, national cemeteries are being built in those areas of the country that have veterans' populations of 170,000 or more and that are not residing within, or expected to reside within, 75 miles of an open State or national cemetery. It is therefore highly likely that after this expansion has concluded, no additional national cemeteries will be built for quite some time. Thus, in order to serve veterans' populations in less densely populated areas in the future, VA and the States will need to rely more on the State Cemetery Grant Program. Allowing reimbursement for some maintenance or operational expenses will serve to make the program more attractive to States, which may otherwise decline to participate in the program due to budget constraints. In fact, the 2000 independent assessment I spoke about earlier made the same point, recommending Congressional consideration of amending the grant program to allow for reimbursement of the sort contemplated in my legislation.

My second purpose behind this provision is a bit more parochial. There are eight States in the country without any national cemetery, including Idaho. These are States with small or scattered veterans' populations. VA's criteria for establishing national cemeteries makes it unlikely that veterans in these States will ever have access to a national cemetery within the borders of their home State. Yet their service was national in character, and the desire for recognition of that national service through interment in a national cemetery is real, if not practical. It is my opinion that the Federal obligation to veterans residing in States like my own is therefore heightened. And if the only way to heighten that obligation is by requiring reimbursement of a greater share of the expenses now borne by the States, so be it. To my mind, this would be an equitable outcome, and one that I hope VA factors into criteria it will develop should my legislation be enacted.

Let me make one final and very important point. The cost of my legislation is in the $8 million per year range. Although I am convinced of the merits of the legislation, I am also committed to adhering to our budget rules which require that appropriate spending offsets be identified before new spending is advanced. I assure my colleagues that should my legislation be reported from the Veterans' Affairs Committee, it will be fully offset in accordance with our rules and my own principle of fiscal discipline.

In summary, the Veterans' Dignified Burial Assistance Act of 2007 will help us along in our collective goal of providing veterans with lasting resting places to honor their lives and service. This is good legislation, and I urge the support of my colleagues.

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

Mr. President, I once again today introduced S. 1269, the ENFORCE Act, because this body has failed to move forward with sound immigration legislation. My bill is a strong step in the right direction to help solve our growing problem of illegal immigration.

I did this already. I did this last year. We had a chance to talk about it, but we never were able to get this up to a vote. I do want to keep this subject moving because people are not talking about this anymore. This bill focuses on securing our borders and empowering our citizens and law enforcement officers to fight the all-time high flood of illegal immigrants. There are around a million illegal aliens infiltrating our borders each year. It also addresses some of the lesser known but equally destructive exploitations of our Nation by some of these illegal immigrants.

I wish to be clear, for some reason--I am not sure why--- I have been honored over the years to speak at nationalization ceremonies. It is one of the emotional things a person can go through. When you see people coming into this country and doing it the way

they are supposed to, they learn the history. Those who have gone through the legal process know more about the history of America than the average person you run into on the street. I am very strongly in favor of legal immigration.

In 1997, the U.S. Commission on Immigration Reform stated that ``measured, legal immigration has led to create one of the world's greatest multiethnic nations.'' I agree with that statement. I also agree with their statement that when immigrants become ``Americanized,'' they help cultivate a shared commitment to ``liberty, democracy, and equal opportunity'' in our Nation. That is legal immigration. I agree with that.

However, I am quoting now from Roy Beck, executive director of Numbers USA. He stated:

A presence of 8 to 11 million illegal aliens--

I think the figure is now approximately 12 million--

in this country is a sign that this country has lost

control of its borders and the ability to determine who is a

member of this national community. And a country that has

lost that ability increasingly loses its ability to determine

the rules of its society--environmental protections, labor

protection, health protections, safety protections.

Further quoting:

In fact, a country that cannot keep illegal immigration to

a low level quickly ceases to be a real country, or a real

community. Rather than being self-governed, such a country

begins to have its destiny largely determined by citizens of

other countries who manage to move in illegally.

With that being said, I cannot and I will not stand idly by and watch our great Nation collapse under the pressures of uncontrolled illegal immigration. This is a crisis, one that must be addressed aggressively. While I would not belabor the point, I will chronicle some of illegal immigration's specific threats to our Nation's vitality and how this bill will address them.

First and foremost, the issue of border security must be addressed. My bill would help ramp up border security by providing a way for civilians and retired law enforcement officers to assist the Border Patrol in stopping illegal border crossings. Keep in mind, if you are a retired Federal law enforcement officer, they have a mandatory retirement age of 57. There are many of these who would work for expenses. What we are advocating is a three-tiered system where you have the Border Patrol who are skilled the way they are today but have them fortified by this army of retired law enforcement officers and then bring in the third tier which are those which we have watched in the past that have been very effective in adding to the numbers on the border.

It is already working. It is very similar to the National Border Neighborhood Watch. I know in my State of Oklahoma it has been a very effective program. It is more eyes to watch and more talent to arrest, when necessary. A more obscure issue that also warrants reform is the legal status of what has become known as anchor babies.

To better their odds of remaining in the United States, illegal immigrants have taken advantage of a constitutional provision granting automatic citizenship to anyone born on U.S. soil. Unfortunately, by providing citizenship to these ``anchor babies,'' as they are known, our Nation rewards the illegal entry of their parents and facilities the further exploitation of our borders and national resources.

This trend has contributed to the alarming fact that the illegal immigrant population is growing faster than the birthrate of American citizens. According to the Center for Immigration Studies, based on numbers from the National Center of Health Statistics, in 2002, there were about 8.4 million illegal aliens, which represented about 3.3 percent of the total U.S. population. That same year, there were about 383,000 babies born to illegal aliens, which represents about 9.5 percent of all U.S. births in 2002.

This problem continues to grow exponentially and serves as a strong incentive for more aliens to illegally cross into our country in hopes of shortcutting citizenship requirements. Language included in the ENFORCE Act will put an end to this much exploited practice.

Another ``supposed'' obligation we face is the education of illegal aliens. Some States, such as my State of Oklahoma, allow the illegal aliens the advantage of receiving in-State tuition at our State colleges and universities. I believe it is inexcusable to give away State-subsidized educations to those who do not pay taxes. This act will address this problem by making it unlawful for illegal aliens to receive this particular handout.

The ENFORCE Act includes several provisions to halt illegal immigrants' continued exploitation of our tax laws and our Social Security benefits. One of the greatest problems in this area is illegal immigrants' abuse of the individual tax identification number. That is the ITIN program.

Currently, it so closely resembles the Social Security number that many illegal immigrants are able to use it in place of a Social Security card to bypass our tax laws or receive wrongly awarded benefits. The ENFORCE Act will require a change in the physical appearance of this particular document so its identity can no longer be mistaken for that of a Social Security number, and it will also prohibit that document from being used for identification purposes.

Additionally, my bill will require Social Security numbers to expire as soon as a person's permission to be in the United States expires. So it would expire at the same time that permission expires.

It will prohibit illegal immigrants who gain legal status from collecting Social Security benefits for the time they worked illegally in the country.

Finally, the legality of day-labor centers is a topic that must be addressed by any comprehensive immigration reform package. These day- labor centers exist within illegal immigration-friendly ``sanctuary sites'' and not just in San Francisco. Day-labor centers are State- designated and funded sites where illegal aliens congregate and wait for employers to pick them up for a day of illegal work.

One such site was approved in 2005 in Fairfax County, VA, to be paid for by taxpayer dollars. Sanctuary cities such as these enable and encourage unlawful activity by both illegal aliens and the employers who hire them. The ENFORCE Act will outlaw the creation of those particular centers.

Illegal immigrants continue to cause a myriad of problems for our country and for law-abiding citizens such as you and me. Illegal immigrants not only drain our economy through their exploitation of public services and resources, but we must not forget the national security threat posed by would-be terrorists who have entered our country illegally or remain here unlawfully by overstaying their visas.

The Center for Immigration Study says:

Even though illegal aliens make little use of welfare, from

which they are generally barred, the costs of illegal

immigration in terms of government expenditures for

education, criminal justice, and emergency medical care are

significant. Illegal immigration is straining our economy,

jeopardizing our security, and burdening our education and

health care systems.

So this ENFORCE Act will provide solid tools to eliminate illegal immigration and strongly enforce the existing U.S. immigration laws. The seriousness of this crisis warrants that Americans of all political stripes come together to address this problem.

One thing that is not included in this legislation that I think should be included in any kind of reform--and some of my colleagues can remember I had on the floor of the Senate the legislation making English the official language of the United States--and it is interesting that some 88 percent of the American people want this, and some 70 percent of the Hispanic population want this also. It is also interesting that there are 50 countries around the world that have English as their official language, including Ghana in West Africa and some other countries, and yet we do not have it for ourselves. But that is going to be handled separately at a different time.

History shows us that declaring ``immigration bankruptcy'' does not work. We saw that in the amnesty of 1986. Simply granting citizenship to immigrants who are currently in our country illegally is not the answer. We have to enhance our border security, hold those accountable who encourage illegal immigration, and ensure that those who violate our laws by entering our country illegally do not remain here and are not easily welcomed back.

So I am introducing that legislation, and I am going to be bringing it up at the appropriate time.

Mr. President, I am pleased to rise today with my colleagues Senators Dodd, Graham, Domenici, and Landrieu to introduce the Free Flow of Information Act.

The free flow of information is an essential element of democracy. A free press promotes an open marketplace of information and provides public and private sector accountability to our Nation's electorate. By ensuring the free flow of information, citizens can work to bring about improvements in our governance and in our civic life. It is in our nation's best interest to have an independent press that is free to question, challenge, and investigate issues and stories, without concern for political party, position or who holds power. The role of the media as a conduit between government and the citizens it serves must not be devalued.

This principle that we practice at home is also one that we promote abroad. Spreading democracy abroad has become a pillar of United States foreign policy, and we have recognized that a free and independent press is both essential to building democracies and a barometer of the health of young and often imperfect democratic systems. The example of press freedom we set in this country is an important beacon to guide other nations as they make the transition from autocratic forms of government.

Unfortunately, the free flow of information to citizens of the United States is inhibited and our open market of information is being threatened. While gathering information on a story, a journalist is sometimes required to accept information under a promise of confidentiality. Without assurance of anonymity, many conscientious citizens with evidence of wrongdoing would stay silent. Restricting the manner in which appropriate news is gathered is tantamount to restricting the information that the public has the right to hear.

After a long period when there were few clashes between the media and authorities, a disturbing new trend has developed. More than 30 reporters have recently been served subpoenas or questioned in at least four different Federal jurisdictions about their confidential sources. From 1991 to September 6, 2001, the Department of Justice issued 88 subpoenas to the media, 17 of which sought information leading to the identification of confidential sources. In fact, three journalists have been imprisoned at the request of the Department of Justice, U.S. attorneys under its supervision, or special prosecutors since 2000. As a result, the press is hobbled in performing the public service of reporting news. I fear the end result of such actions is that many whistleblowers will refuse to come forward and reporters will be unable to provide the American people with information they deserve.

Most jurisdictions in our country have recognized that confidential sources are integral to the press's role of keeping the public informed, and have provided some kind of shield so that journalists can keep secret the names of such sources. Every State and the District of Columbia, excluding Wyoming, has, by legislation or court ruling, created a privilege for reporters not to reveal their confidential sources. My own State of Indiana provides qualified reporters appropriate protection from having to reveal any such information in court.

The Federal courts of appeals, however, have an inconsistent view of this matter. Some circuits allow the privilege in one category of cases, while others have expressed skepticism about whether any privilege exists at all. It does not make sense to have a Federal system of various degrees of press freedom dependent upon where you live or who provides the subpoena. In fact, 34 State attorneys general have argued that the lack of a clear standard of Federal protection undermines state laws.

In addition, there is ambiguity between official Department of Justice rules and unofficial criteria used to secure media subpoenas. The Department of Justice guidelines also do not apply to special prosecutors or private civil litigants. There is an urgent need for Congress to state clear and concise policy guidance.

In response to this situation, 2 years ago, I was pleased to join with my colleague Congressman Mike Pence, and Congressman Rick Boucher in the House of Representatives and Senator Chris Dodd in the Senate to introduce the Free Flow of Information Act. This legislation provides journalists with certain rights and abilities to seek sources and report appropriate information without fear of intimidation or imprisonment. The bill sets national standards which must be met before a Federal entity may issue a subpoena to a member of the news media in any Federal criminal or civil case. It sets out certain tests that civil litigants or prosecutors must meet before they can force a journalist to turn over information. Litigants or prosecutors must show, for instance, that they have tried, unsuccessfully, to get the information in other ways and that the information is critical to the case. These standards were based on Justice Department guidelines and common law standards.

Subsequently, additional protections have been added to this bill to ensure that information will be disclosed in cases where the information is critical to prevent death or bodily harm or in cases which relate to the unlawful disclosure of trade secrets. The bill also permits a reporter to be compelled to reveal the source in certain national security situations. Finally, the bill would provide protections to ensure that source information can be provided when personal health records and financial records were disclosed in violation of Federal law.

By providing the courts with a framework for compelled disclosure, our legislation promotes greater transparency of government, maintains the ability of the courts to operate effectively, and protects whistleblowers who identify government or corporate misdeeds.

It is also important to note what this legislation does not do. The legislation neither gives reporters a license to break the law, nor permits reporters to interfere with criminal investigation efforts. State shield laws have been on the books for years, and I have not seen any evidence to support a correlation between reporter privilege laws and criminal activity or threats to public safety. Furthermore, the Free Flow of Information Act does not weaken our national security. The explicit national security exception will ensure that reporters are protected while maintaining an avenue for prosecution and disclosure when considering the defense of our country. This qualified privilege has been carefully crafted to balance the distinct and important roles of both the press and law enforcement.

As ranking member of the United States Senate Foreign Relations Committee, I believe that passage of this bill would have positive diplomatic consequences. This legislation not only confirms America's Constitutional commitment to press freedom, it also advances President Bush's American foreign policy initiatives to promote and protect democracy. Our Nation always leads best when it leads by example.

Unfortunately, the press remains under siege in a number of foreign countries. For instance, Reporters Without Borders points out that 125 journalists are currently in jail around the world, with more than half of these cases in China, Cuba, and Burma. This is not good company for the United States of America. Global public opinion is always on the lookout to advertise perceived American double standards.

I would like to thank my colleague, Senator Chris Dodd as well as Mike Pence and Rick Boucher, in the House of Representatives for their tireless work on this issue. I look forward to continuing work with each of them to protect the free flow of information.

Mr. President, I rise to join my colleague Senator Lugar, along with Representatives Boucher and Pence in the House of Representatives, in introducing the Free Flow of Information Act. This bill would protect journalists from being forced to reveal their confidential sources, not as an end in itself, but as a means to a well-informed public. I applaud the tireless efforts of the senior Senator from Indiana, Mr. Lugar, in once again bringing this important issue to the attention of Congress and indeed the nation.

I hardly have to read the litany of grave wrongs that have been exposed because journalists called the powerful to account. And I don't have to remind you how many of those exposures relied on confidential sources. Without confidential sources, would we still be ignorant about abuse of power in the Watergate era? Without confidential sources, would Enron still be profiting from fraud? How long would torture at Abu Ghraib have persisted, if proof hadn't been provided to the press?

The free flow of information provides the American people its most meaningful check on abuses such as those. Thomas Jefferson said it best: ``If I had to make a choice, to choose the government without the press or to have the press but without the government, I will select the latter without hesitation.'' Jefferson clearly understood that a free Government cannot possibly last without a free press.

But today, we find this cornerstone of self-government facing a new threat. This threat has not come from the dictates of a dangerous government, but from the best of intentions. In a spate of recent cases, prosecutors have used subpoenas, fines, and jail time to compel journalists to reveal their anonymous sources. Judith Miller of The New York Times was jailed for 85 days for refusing to reveal a source. Two San Francisco Chronicle reporters were found in contempt of court for refusing to identify sources and hand over material related to the BALCO steroids investigation. A Rhode Island journalist was sentenced to home arrest on similar charges. Last year alone, a total of some two dozen reporters have been subpoenaed or questioned about confidential sources. They were all journalists prosecuted only for the offense of journalism.

The impact of these subpoenas on the broader issue of freedom of information is undeniable. Last summer, for instance, the editor-in- chief of Time magazine testified before the Senate Judiciary Committee. This is what he said about the fallout from the Justice Department's efforts to obtain confidential information from a Time reporter: ``Valuable sources have insisted that they no longer trusted the magazine and that they would no longer cooperate on stories. The chilling effect is obvious.''

The chilling effect is obvious. Experience has shown us that the most effective constraint on free speech need not be blatant censorship: A few cases like Ms. Miller's and the San Francisco Chronicle's, and news will begin censoring itself. We can only speculate as to how many editors and publishers put the brakes on a story for fear that it could land one of their reporters in a spider web of subpoenas, charges of contempt, and prison. When we minimize the impact of confidential sources, serious journalism is crippled. We will find our papers full of stories more and more palatable to the powerful and secretive. No one argues that that is the intention of those prosecuting these cases; but few deny that it could, in time, be their effect.

When journalists are hauled into court and threatened with imprisonment if they don't divulge their sources, we are entering dangerous territory for a democracy. The information we need to remain sovereign will be degraded; the public's right to know will be threatened; and I suggest to you that the liberties we hold dear will be threatened as well.

That is exactly why we need a Federal reporter shield. Forty-nine States and the District of Columbia have already recognized that need by enacting similar protection on the state level either through legislation or court decisions; the Free Flow of Information Act simply extends that widely recognized protection to the Federal courts.

The new version of this bill expands coverage in two significant ways. First, it will not only protect the information journalists obtain under the promise of confidentiality; it will also cover the ``work product'' of journalists as well, whether or not it was subject to that promise. And second, it no longer limits protection to mainstream reporters; the new version also shields any person ``engaged in journalism.'' In today's expansive media environment, it would be unacceptable to deny the shield to our citizen-journalists.

Of course, the reporter shield is not absolute. The public's need to know must be weighed against other goods, and that is why the bill establishes a balancing test that takes into account ``both the public interest in compelling disclosure and the public interest in gathering news and maintaining the free flow of information.'' Specifically, the bill will not protect anonymity when disclosure of a source would prevent imminent harm to national security, imminent death or bodily harm, or the release of personal or health related information. In other words, we are balancing our right to know with our need for security, whether physical or economic. Secrecy is as necessary in extreme circumstances as it is dangerous on the whole.

It is on the idea of balance that I would like to conclude. A prosecution, whatever its individual merits, sacrifices something higher when it turns on reporters; and so those merits must be balanced against the broader harms such a prosecution can work. If a free press inexorably creates a free government, as Jefferson suggested, then the agents of that free government, prosecutors included, owe a high debt to journalism. When prosecutors threaten journalism, they have begun to renege on that debt. So I am proud to support this valuable bill, a step toward rebalancing the pursuit of justice and the diffusion of truth.

Mr. President, today I am introducing legislation to make permanent a provision of our tax that was enacted in 2006 as part of the Increase Prevention and Reconciliation Act, but expires at the end of 2008. The controlled-foreign corporation (CFC) look-through provision allows U.S.-based multinational companies to better compete with foreign companies by enabling them to be more flexible in their overseas operations. In this age of global competition, I hope my colleagues will agree that the United States needs to maintain a business climate that encourages U.S.-based companies to grow and succeed. The CFC look-through provision is an important part of that effort.

For several years now, I have been encouraging my colleagues to recognize that our tax system puts many of our best U.S. employers at a competitive disadvantage as compared to foreign-based companies. Many foreign countries only impose tax on income earned within their borders; the United States taxes U.S. companies on their worldwide income.

The general rule is that income from a foreign subsidiary is not taxed by the United States until those earnings are brought back to the U.S. parent, usually in the form of a dividend. Subpart F of the Internal Revenue Code sets forth a number of exceptions to this general rule, imposing current U.S. tax, instead of allowing deferral of taxation, on subsidiary earnings generally when that income is passive in nature. One exception to the general deferral rule imposes tax on the U.S. parent when a foreign-based subsidiary receives dividends, interest, rents or royalties from another subsidiary that is located in a different country. If the two subsidiaries are in the same country, however, U.S. tax is generally deferred until the income is repatriated to the U.S. parent.

In 2005, I introduced legislation to extend this ``same-country'' treatment, the CFC look-through provision, to payments between related foreign subsidiaries that are located in different countries, and I was pleased that the 2006 tax reconciliation bill included this provision. Today, I am introducing legislation to make the CFC look-through permanent.

Today's global economy is significantly different from the environment that existed when the subpart F rules were first introduced in 1962. As the global economy has changed, the traditional model for operating a global business has changed as well. In today's world, it makes no sense to impose a tax penalty when a company wants to fund the operations of a subsidiary in one country from the active business earnings of a subsidiary in another country. For example, to operate efficiently, a U.S.-based manufacturer could establish specialized manufacturing sites, distribution hubs, and service centers. As a result, multiple related-party entities may be required to fulfill a specific customer order. Before the CFC look-through was enacted last year, U.S. tax law inappropriately increased the cost for these foreign

subsidiaries to serve their customers in a very competitive business environment by imposing current tax on these related-party payments, even though the income continues to be used in active operations in the foreign market.

In another example, financial institutions have established foreign subsidiaries with headquarters in a financial center, such as London, and branches in multiple countries in the same geographic region. This permits an efficient ``hub and spoke'' form of regional operation; however, this efficient business model made it difficult for the same- country exception to be met for payments of dividends and interest.

Before the CFC look-through was enacted, American companies were at a real and significant competitive disadvantage as compared to foreign- based companies. U.S.-based multinationals were penalized for responding to market or investment opportunities by redeploying active foreign earnings among foreign businesses conducted through multiple subsidiaries. To remove this impediment, Congress amended subpart F to provide a general exception for inter-affiliate payments of dividends, interest, rents or royalties that are generated from an active business.

Congress was right to apply look-through treatment to payments of dividends, interest, rents and royalties between subsidiaries. If the underlying earnings would not have been subject to subpart F, the payments should not be subpart F income. Look-through treatment for payments of dividends, interest, rents and royalties should be permitted as long as the payments are made out of active business, non- subpart F, income. Look-through principles are already well developed for other purposes of the Internal Revenue Code. For example, a look- through approach to the characterization of foreign income is used for purposes of calculating foreign tax credits. A consistent application of look-through principles simplifies the interaction between subpart F and the foreign tax credit rules.

If we want to keep U.S.-based multinational companies, which employ millions of workers here at home headquartered in the United States, we must modernize our tax rules so that our companies can be competitive around the globe. I urge my colleagues to cosponsor this legislation to make permanent this modest change in the law that will enhance the position of U.S.-based employers trying to succeed in competitive foreign markets.