Close the London Loophole Act of 2008

Mr. President, day after day record-high oil and gasoline prices are hurting millions of American consumers and businesses. Unless we act, the record-high prices will continue to reverberate throughout our economy, increasing the prices of transportation, food, manufacturing and everything in between, endangering the economic security of our people and our Nation.

The price of crude oil recently reached a record high price of about $147 per barrel. Sky-high crude oil prices have led to record highs in the price of other fuels produced from crude oil, including gasoline, heating oil, diesel fuel, and jet fuel. The national average price of gasoline is at a record high of about $4.11 per gallon. Jet fuel costs nearly $4.30 per gallon. The price of diesel fuel, which is normally less expensive than gasoline, has soared to a record high of nearly $4.85 per gallon.

Rising energy prices greatly increase the cost of getting to work and taking our children to school, traveling by car, truck, air and rail, and growing the food we eat and transporting it to market. Rising energy prices greatly increase the cost of producing the

medicines we need for our health, heating our homes and offices, generating electricity, and manufacturing industrial and consumer products. The relentless increase in jet fuel prices has caused airline layoffs, fare increases, and service cuts. ``If fuel continues to go up, this industry cannot survive in current form,'' the president of the Air Transport Association said recently. Rising diesel prices have placed a crushing burden upon our Nation's truckers, farmers, manufacturers, and other industries.

My Senate Permanent Subcommittee on Investigations has conducted four separate investigations into how our energy markets operate. Last December, we had a joint hearing with Senator Dorgan's Senate Energy Subcommittee on the role of speculation in rising energy prices. As a result of these investigations and hearings, I have proposed several measures to address the rampant speculation and lack of regulation of energy markets which have contributed to sky high energy prices.

These investigations have shown that one key factor in price spikes of energy is increased speculation in the energy markets. Traders are trading contracts for future delivery of oil in record amounts, creating a demand for paper contracts that gets translated into increases in prices and increasing price volatility.

Much of this increase in trading of futures has been due to speculation. Speculators in the oil market do not intend to use oil; instead they buy and sell contracts for crude oil in the hope of making a profit from changing prices. The number of futures and options contracts held by speculators has gone from around 100,000 contracts in 2001, which was 20 percent of the total number of outstanding contracts, to almost 1.2 million contracts, which represents almost 40 percent of the outstanding futures and options contracts in oil on NYMEX. Even this understates the increase in speculation, since the CFTC data classifies futures trading involving index funds as commercial trading rather than speculation.

There are now, as a result, 12 times as many speculative holdings as there were in 2001, while holdings of non-speculative or commercial futures and options are up but 3 times. According to the basic law of supply and demand, the more demand there is to buy futures contracts for the delivery of a commodity, the higher the price will be for those futures contracts.

Not surprisingly, therefore, this massive speculation that the price of oil will increase, together with the increase in the amount of purchases of futures contracts, has, in fact, helped increase the price of oil to a level far above the price that is justified by the traditional forces of supply and demand.

The president and CEO of Marathon Oil recently said, ``$100 oil isn't justified by the physical demand in the market. It has to be speculation on the futures market that is fueling this.'' Mr. Fadel Gheit, oil analyst for Oppenheimer and Company describes the oil market as ``a farce.'' ``The speculators have seized control and it's basically a free-for-all, a global gambling hall, and it won't shut down unless and until responsible governments step in.'' In January of this year, as oil hit $100 a barrel, Mr. Tim Evans, oil analyst for Citigroup, wrote ``the larger supply and demand fundamentals do not support a further rise and are, in fact, more consistent with lower price levels.'' At the joint hearing on the effects of speculation we held last December, Dr. Edward Krapels, a financial market analyst, testified, ``Of course financial trading, speculation affects the price of oil because it affects the price of everything we trade . . . It would be amazing if oil somehow escaped this effect.'' Dr. Krapels added that as a result of this speculation, ``There is a bubble in oil prices.''

The need to control speculation is urgent. The presidents and CEOs of major U.S. airlines recently warned about the disastrous effects of rampant speculation on the airline industry. The CEOs stated ``normal market forces are being dangerously amplified by poorly regulated market speculation.'' The CEOs wrote, ``For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities.''

As to reining in speculation, the first step to take is to put a cop back on the beat in all our energy markets to prevent excessive speculation, price manipulation, and trading abuses. In the spring of 2001, when my Senate Permanent Subcommittee on Investigations began investigating our energy markets, the price of a gallon of gasoline had spiked upwards by about 25 cents over the course of the Memorial Day holiday. We subpoenaed records from major oil companies and interviewed oil industry experts, gas station dealers, antitrust experts, gasoline wholesalers and distributors, and oil company executives. We examined thousands of prices at gas stations in Michigan, Ohio, California, and other States. In the spring of 2002, I released a 400-page report and held 2 days of hearings on the results of the investigation.

The investigation found that increasing concentration in the gasoline refining industry, due to a large number of recent mergers and acquisitions, was one of the causes of the increasing number of gasoline price spikes. Another factor causing price spikes was the increasing tendency of refiners to keep lower inventories of gasoline. We also found a number of instances in which the increasing concentration in the refining industry was also leading to higher prices in general. Limitations on the pipeline that brings gasoline into my home State of Michigan were another cause of price increases and spikes in Michigan. The report recommended that the Federal Trade Commission carefully investigate proposed mergers, particularly with respect to the effect of mergers on inventories of gasoline.

The investigation discovered one instance in which a major oil company was considering ways to prevent other refiners from supplying gasoline to the Midwest so that prices would increase.

In March 2003, my subcommittee released a second report detailing how the operation of crude oil markets affects the price of not only gasoline, but also key commodities like home heating oil, jet fuel, and diesel fuel. The report warned that U.S. energy markets were vulnerable to price manipulation due to a lack of comprehensive regulation and market oversight.

For years I have been working with Senators Feinstein, Dorgan, Snowe, Bingaman, Cantwell, and others on legislation to restore some regulatory authority in the energy markets that had been exempted from regulation because of an ``Enron loophole'' that was inserted at the last minute into an omnibus appropriation bill in December 2000. For 2 years we attempted to close the Enron loophole, but efforts to put the cop back on the beat in these markets were unsuccessful, due to opposition from the Bush administration, large energy companies, and large financial institutions that trade energy commodities.

In June 2006, I released another subcommittee report, ``The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put a Cop on the Beat.'' This report found that the traditional forces of supply and demand didn't account for sustained price increases and price volatility in the oil and gasoline markets. The report concluded that, in 2006, a growing number of trades of contracts for future delivery of oil occurred without regulatory oversight and that market speculation had contributed to rising oil and gasoline prices, perhaps accounting for $20 out of a then-priced $70 barrel of oil.

That subcommittee report, again, recommended new laws to provide market oversight and stop excessive speculation and market manipulation. I coauthored legislation with Senators Feinstein, Snowe, Cantwell, Bingaman, and others to improve oversight of the unregulated energy markets. Once again, opposition from the Bush administration, large energy traders, and the financial industry prevented the full Senate from considering this legislation.

In 2007, my subcommittee addressed the sharp rise in natural gas prices and released a fourth report, entitled ``Excessive Speculation in the Natural Gas Market.'' Our investigation showed that speculation by a single hedge fund named Amaranth had distorted natural gas prices during the summer of 2006, and drove up prices for average consumers. The report also demonstrated how Amaranth had shifted its speculative activity to unregulated markets to

avoid the restrictions and oversight in the regulated markets, and how Amaranth's trading in the unregulated markets contributed to price increases.

Following this investigation, I introduced a new bill, S. 2058, to close the Enron loophole and regulate the unregulated electronic energy markets. Working again with Senators Feinstein and Snowe, and with the members of the Agriculture Committee in a bipartisan effort, we finally managed to include an amendment to close the Enron loophole in the farm bill that was then being considered by the Senate. Although the CFTC's new enforcement authority over these electronic markets was effective upon passage of this legislation, much of the CFTC's new oversight authority will have to be implemented through CFTC rulemaking.

Although the legislation to close the Enron loophole is important to reduce speculation in energy markets, it is not sufficient because a significant amount of U.S. crude oil and gasoline trading now takes place in the United Kingdom, beyond the direct reach of U.S. regulators. So we have to address that second loophole too.

One of the key energy commodity markets for U.S. crude oil and gasoline trading is now located in London, regulated by the British agency called the Financial Services Authority, FSA. However, the British regulators traditionally have not imposed any limits on speculation like we do here in the United States, and the British do not make public the same type of trading data that we do, i.e. it is less transparent. This means that traders can avoid the limits on speculation in crude oil imposed on the New York exchanges by trading on the London exchange. This is what is referred to as ``the London loophole.''

The Stop Excessive Energy Speculation Act--Energy Speculation Act-- which the majority leader and others recently introduced to address high prices and reduce speculation, includes a number of provisions that will help stop rampant speculation and increase our access to timely and important trading information and ensure that there is adequate market oversight of the trading of U.S. energy commodities no matter where the trading occurs. One of the key provisions in the Energy Speculation Act would close the London loophole.

The Energy Speculation Act would close the London loophole by requiring the Commodity Futures Trading Commission, CFTC, to determine whether a foreign exchange imposes comparable speculative limits and comparable reporting requirements on speculators that the CFTC imposes on U.S. exchanges prior to allowing traders in the U.S. trading U.S. energy commodities to access that exchange through a terminal located in this country. It would also give the CFTC authority to take action, such as by requiring traders to reduce their holdings, in the event that traders exceed these limits.

The legislation in the Energy Speculation Act to close the London loophole is very similar to legislation I previously introduced with Senators Feinstein, Durbin, Dorgan and Bingaman, S. 3129, to close this loophole. The legislation we introduced was also incorporated into legislation introduced by Senator Durbin, S. 3130, which, like the provisions of the Energy Speculation Act, would give the CFTC more resources and to obtain better information about index trading and the swaps market.

After these two bills were introduced, the CFTC imposed more stringent conditions upon the ICE Futures Exchange's ability to operate in the United States--for the first time insisting that the London exchange impose and enforce comparable position limits in order to be allowed to keep its trading terminals in the United States. This is the very action our legislation called for.

Although the CFTC has taken these important steps that will go a long way towards closing the London loophole, Congress should still pass the legislation to make sure the London loophole is closed. The Energy Speculation Act would put into statute the conditions the CFTC has stated the London exchange must meet before it will allow it to operate its terminals in the United States, and it would ensure that the CFTC has clear authority to take action against any U.S. trader who is excessively speculating through the London exchange or manipulating the price of a commodity, including requiring that trader to reduce holdings.

There is also concern that some large traders may be avoiding the limits on holdings and accountability levels that apply to trading on the regulated futures exchanges by trading in the unregulated OTC market. In the absence of data or reporting on the activity in the OTC market, however, it is difficult to estimate the impact of this large amount of unregulated trading on commodity prices. Moreover, even if we were to get better information about unregulated over-the-counter trades, the CFTC has no authority to take action to prevent excessive speculation or price manipulation resulting from this unregulated trading.

The legislation to close the Enron loophole placed OTC electronic exchanges under CFTC regulation. However, this legislation did not address the separate issue of trading in the rest of the unregulated OTC market, which includes bilateral trades of swaps through voice brokers, swap dealers, and direct party-to-party negotiations.

I recently introduced, along with Senator Feinstein, the Over-the- Counter Speculation Act, legislation that addresses the rest of the OTC market, a large portion of which consists of the trading of swaps relating to the price of a commodity. Generally, commodity swaps are contracts between two parties where one party pays a fixed price to another party in return for some type of payment at a future time depending on the price of a commodity. Because some of these swap instruments look very much like futures contracts--except that they do not call for the actual delivery of the commodity--there is concern that the price of these swaps that are traded in the unregulated OTC market could affect the price of the very similar futures contracts that are traded on the regulated futures markets. We don't yet know for sure that this is the case, or that it is not, because we don't have any data or reporting on the trading of these swaps in the OTC market.

The Energy Speculation Act introduced by the Majority Leader and others includes this legislation to give the CFTC oversight authority to stop excessive speculation in the over-the-counter market. These provisions in the Energy Speculation Act and in our Over-the-Counter Speculation Act represent a practical, workable approach that will enable the CFTC to obtain key information about the OTC market to enable it to prevent excessive speculation and price manipulation.

This legislation will ensure that large traders cannot avoid the CFTC reporting requirements by trading swaps in the unregulated OTC market instead of regulated exchanges. It will ensure that the CFTC can take appropriate action, such as by requiring reductions in holdings of futures contracts or swaps, against traders with large positions in order to prevent excessive speculation or price manipulation regardless of whether the trader's position is on an exchange or in the OTC market. The approach in this bill is both practical and workable.

Mr. President, I urge my colleagues to vote to proceed to the Stop Excessive Energy Speculation Act. This legislation contains several important provisions that will address the problem of excessive speculation that has been contributing to high commodity prices.

Mr. President, energy prices are on a roller coaster, taking American consumers and the American economy on an unpredictable, expensive, and damaging ride. Just over a year ago, a barrel of crude oil sold for $70 a barrel. In less than a year, the price doubled to nearly $147. Last week, that same barrel of oil cost $91, a price drop of $56 over a few months. Just in the past week crude oil prices have jumped from about $96 per barrel to $130 per barrel and then back to $106 per barrel. No one knows whether, by the end of the year, the price of oil will stay around $100, drop lower, or climb back up. The huge price spikes we experienced can't be explained by changes in supply and demand; about half the trading in oil futures results from speculation as to whether oil prices will rise or fall by traders without any interest in actually using the oil they are buying and selling.

The natural gas, gasoline, and heating oil markets have also seen huge price swings. The prices are up, they are down, they are unpredictable--making it impossible for many businesses and consumers to afford even basic goods and services.

The sky-high oil and gasoline prices in effect for the last year are taking a tremendous toll on millions of American consumers and businesses. Speculation--not supply and demand--is keeping prices high, and our economy is forced to respond to erratic price changes. Unless we act to protect our energy markets from excessive speculation and price manipulation, the American economy will continue to be vulnerable to wild price swings affecting the prices of transportation, food, manufacturing and everything in between, endangering the economic security of our people, our businesses, and our Nation.

Congress should act now to help tame rampant speculation and reinvigorate supply and demand as market forces.

Today, I am introducing legislation, along with Senators Bingaman and Harkin, that represents our collective effort to enact the strongest and most workable measures to prevent excessive speculation and price manipulation in U.S. energy markets. It will close the loopholes in our commodities laws that now impede the policing of U.S. energy trades on foreign exchanges and in the unregulated over-the-counter market. It will ensure that large commodity traders cannot use these markets to hide from CFTC oversight or avoid limits on speculation. The bill will strengthen disclosure, oversight, and enforcement in U.S. energy markets, restoring the financial oversight that is crucial to protect American consumers, American businesses, and the U.S. economy from further energy shocks.

More specifically, this legislation would make four sets of changes.

It will require the CFTC to set limits on the holdings of traders in all of the energy futures contracts traded on regulated exchanges to prevent traders from engaging in excessive speculation or price manipulation. Since we closed the Enron loophole this year all futures contracts must be traded in regulated markets.

It would close the ``London loophole'' by giving the CFTC the same authority to police traders in the United States who trade U.S. futures contracts on a foreign exchange and by requiring foreign exchanges that want to install trading terminals in the U.S. to impose comparable limits on speculative trading as the CFTC imposes on domestic exchanges to prevent excessive speculation and price manipulation.

It will close the ``swaps loophole'' by requiring traders in the over-the-counter energy markets to report large trades to the CFTC, and it would authorize the CFTC to set limits on trading in the presently unregulated over-the-counter markets to prevent excessive speculation and price manipulation.

It will require the CFTC to revise the standards that allow traders who use futures markets to hedge their holdings to exceed the speculation limits that apply to everyone else.

My Permanent Subcommittee on Investigations' investigations have shown that one key factor in price spikes of energy is increased speculation in the energy markets. Traders are trading contracts for future delivery of oil in record amounts, creating a demand for paper contracts that gets translated into increases in prices and increasing price volatility.

Much of this increase in trading of futures has been due to speculation. Speculators in the oil market do not intend to use oil; instead they buy and sell contracts for crude oil in the hope of making a profit from changing prices. According to the CFTC's data, the number of futures and options contracts held by speculators has gone from around 100,000 contracts in 2001, which was 20 percent of the total number of outstanding contracts, to almost 1.2 million contracts, which represents almost 40 percent of the outstanding futures and options contracts in oil on NYMEX Even this understates the increase in speculation, since the CFTC data classifies futures trading involving index funds as commercial trading rather than speculation, and the CFTC classifies all traders in commercial firms as commercial traders, regardless of whether any particular trader in that firm may in fact be speculating.

There is now, as a result, 12 times as many speculative holdings as there was in 2001, while holdings of nonspeculative or commercial futures and options is up but three times. The greater the demand there is to buy futures contracts for the delivery of a commodity, the higher the price will be for those futures contracts.

Not surprisingly, therefore, this massive speculation that the price of oil will increase, together with the increase in the amount of purchases of futures contracts, in fact, helped increase the price of oil to a level far above the price that is justified by the traditional forces of supply and demand.

In June 2006, I released a subcommittee report, ``The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put a Cop on the Beat.'' This report found that the traditional forces of supply and demand didn't account for sustained price increases and price volatility in the oil and gasoline markets. The report concluded that, in 2006, a growing number of trades of contracts for future delivery of oil occurred without regulatory oversight and that market speculation had contributed to rising oil and gasoline prices, perhaps accounting for $20 out of a then-priced $70 barrel of oil.

Oil industry executives and experts have arrived at a similar conclusion. Late last year, the President and CEO of Marathon Oil said, ``$100 oil isn't justified by the physical demand in the market. It has to be speculation on the futures market that is fueling this.'' Mr. Fadel Gheit, oil analyst for Oppenheimer and Company describes the oil market as ``a farce.'' ``The speculators have seized control and it's basically a free-for-all, a global gambling hall, and it won't shut down unless and until responsible governments step in.'' In January of this year, when oil first hit $100 per barrel, Mr. Tim Evans, oil analyst for Citigroup, wrote ``the larger supply and demand fundamentals do not support a further rise and are, in fact, more consistent with lower price levels.'' At the joint hearing on the effects of speculation we held last December, Dr. Edward Krapels, a financial market analyst, testified, ``Of course financial trading, speculation affects the price of oil because it affects the price of everything we trade. . . . It would be amazing if oil somehow escaped this effect.'' Dr. Krapels added that as a result of this speculation ``there is a bubble in oil prices.''

The need to control speculation is urgent. The presidents and CEOs of major U.S. airlines recently warned about the disastrous effects of rampant speculation on the airline industry. The CEOs stated ``normal market forces are being dangerously amplified by poorly regulated market speculation.'' The CEOs wrote, ``For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities.''

As to reining in speculation, the first step to take is to put a cop back on the beat in all our energy markets to prevent excessive speculation, price manipulation, and trading abuses.

With respect to the futures markets, the legislation we are introducing today requires the CFTC to establish limits on the amount of futures contracts any trader can hold. Currently, the CFTC allows the futures exchanges themselves to set these limits. This bill would require the CFTC to set these limits to prevent excessive speculation and price manipulation. It would preserve, however, the exchanges' obligation and ability to police their traders to ensure they remain below these limits.

This legislation would also require the CFTC to conduct a rulemaking to review and revise the criteria for allowing traders who are using the futures market to hedge their risks in a commodity to acquire holdings in excess of the limits on holdings for speculators.

Another step is to give the CFTC authority to prevent excessive speculation in the over-the-counter markets. In 2007, my Subcommittee issued a report on the effects of speculation in the energy markets, entitled ``Excessive Speculation in the Natural Gas Market.'' This investigation showed that speculation by a hedge fund named Amaranth distorted natural gas prices during the summer of 2006 and drove up prices for average consumers. The report demonstrated how Amaranth had shifted its speculative activity to unregulated markets, under the ``Enron loophole,'' to avoid the restrictions and oversight in the regulated markets, and how Amaranth's trading in the unregulated markets contributed to price increases.

Following this investigation, I introduced a bill, S. 2058, to close the Enron loophole and regulate the unregulated electronic energy markets. Working with Senators Feinstein and Snowe, and with the members of the Agriculture Committee in a bipartisan effort, we included an amendment to close the Enron loophole in the farm bill, which Congress passed this past spring, overriding a veto by President Bush.

The legislation to close the Enron loophole placed over-the-counter-- OTC--electronic exchanges under CFTC regulation. However, this legislation did not address the separate issue of trading in the rest of the OTC market, which includes bilateral trades through voice brokers, swap dealers, and direct party-to-party negotiations. In order to ensure there is a cop on the beat in all of the energy commodity markets, we need to address the rest of the OTC market as well.

Previously, I introduced legislation, S. 3255, along with Senator Feinstein, the Over-the-Counter Speculation Act, to address the rest of the OTC market not covered by the farm bill. A large portion of this OTC market consists of the trading of swaps relating to the price of a commodity. Generally, commodity swaps are contracts between two parties where one party pays a fixed price to another party in return for some type of payment at a future time depending on the price of a commodity. Because some of these swap instruments look very much like futures contracts--except that they do not call for the actual delivery of the commodity--there is concern that the price of these swaps that are traded in the unregulated OTC market could affect the price of the very similar futures contracts that are traded on the regulated futures markets. We don't yet know for sure that this is the case, or that it is not, because we don't have any access to comprehensive data or reporting on the trading of these swaps in the OTC market.

The legislation introduced today includes these same provisions to give the CFTC oversight authority to stop excessive speculation in the over-the-counter market. These provisions represent a practical, workable approach that will enable the CFTC to obtain key information about the OTC market to enable it to prevent excessive speculation and price manipulation. These

provisions are also included in the legislation introduced by the majority leader and others, S. 3268, to stop excessive speculation.

Under these provisions, the CFTC will have the authority to ensure that traders cannot avoid the CFTC reporting requirements by trading swaps in the unregulated OTC market instead of regulated exchanges. It will enable the CFTC to act, such as by requiring reductions in holdings of futures contracts or swaps, against traders with large positions in order to prevent excessive speculation or price manipulation regardless of whether the trader's position is on an exchange or in the OTC market.

The bill we are introducing today, unlike S. 3255, gives the CFTC the authority to establish position limits in the over-the-counter market for energy and agricultural commodities in order to prevent excessive speculation and price manipulation. The CFTC needs this authority to ensure that large traders are not using the over-the-counter markets to evade the position limits in the futures markets.

Earlier this year I introduced legislation with Senators Feinstein, Durbin, Dorgan and Bingaman, S.3129, to close the London loophole. This loophole has allowed crude oil traders in the U.S. to avoid the position limits that apply to trading on U.S. futures exchanges by directing their trades onto the ICE Futures Exchange in London. The legislation we introduced also was incorporated into the legislation to stop prevent excessive speculation introduced by the majority leader, S. 3268. These provisions are now included in the legislation we are introducing today.

After this legislation was first introduced, the CFTC imposed more stringent requirements upon the ICE Futures Exchange's operations in the United States--for the first time requiring the London exchange to impose and enforce comparable position limits in order to be allowed to keep its trading terminals in the United States. This is the very action our legislation called for. However, the current CFTC position limits apply only to the nearest futures contract. Our legislation will ensure that foreign exchanges with trading terminals in the U.S. will apply position limits to other futures contracts once the CFTC establishes those limits for U.S. exchanges.

Although the CFTC has taken these important steps that will go a long way towards closing the London loophole, Congress should still pass this legislation to make sure the London loophole stays closed. The legislation would put the conditions the CFTC has imposed upon the London exchange into statute, and ensure that the CFTC has clear authority to take action against any U.S. trader who is manipulating the price of a commodity or excessively speculating through the London exchange, including requiring that trader to reduce positions.

The legislation we are introducing today also includes a number of provisions in the majority leader's bill, S. 3248, that require a variety of studies, investigations, and reports designed to improve the transparency and regulation of the energy markets. It also provides authorization for the CFTC to hire an additional 100 employees to oversee the commodity markets it regulates.

On September 11, the CFTC issued a ``Staff Report on Commodity Swap Dealers and Index Traders with Commission Recommendations.'' The legislation we have introduced embodies several of the CFTC's recommendations to improve the transparency and regulation of swap dealers and commodity index traders. These recommendations include: develop and regularly publish reports on the activity of swap dealers and commodity index traders; more accurately assess the type of trading activity in the CFTC's weekly reports on commercial and noncommercial trading; review whether to eliminate the bona fide hedge exemption for swap dealers and create new limited risk management exemption; provide additional staff and resources for the CFTC.

Our legislation also is consistent with CFTC Commissioner Chilton's dissenting views on the CFTC's recommendations. In his dissent, Commissioner Chilton requested that Congress provide: ``specific statutory authorities to allow the Commission to obtain data regarding over-the-counter transactions that may impact exchange-traded markets; ``specific statutory authorities to allow the Commission to address market disturbances or violations of the Commodity Exchange Act, based on the data received regarding over-the-counter transactions;'' and authorization and appropriation for 100 additional employees.

Our bill provides the CFTC with the statutory authorities requested by Commissioner Chilton and authorizes the requested employees.

In summary, the legislation we are introducing today will give the CFTC ability to police all of our energy commodity markets to prevent excessive speculation and price manipulation. This legislation is necessary to close all of the loopholes in current law that permit speculators to avoid trading limits designed to prevent the type of excessive speculation that has been contributing to high energy prices. We hope our colleagues will support this legislation.

Mr. President, I ask unanimous consent that a bill summary be printed in the Record.

Mr. President, George Bernard Shaw once said: ``If all economists were laid end to end, they would not reach a conclusion.''

Sometimes I feel the same about legislation to extend expiring tax provisions. Sometimes it feels as though that process never reaches a conclusion. Regrettably, Tuesday, the Senate failed to invoke cloture on the motion to proceed to the House-passed renewable energy and tax extenders bill.

Today, we must begin anew the march to a conclusion for the tax extenders package.

Next week, the Senate will face a choice. We'll vote again on getting to the tax extenders bill. We'll vote on allowing the Senate to get to the substitute amendment, the text of which I introduce today. I think that it's a pretty easy choice.

We need to decide whether we will develop new jobs and new medications.

Or, we can continue to allow hedge fund managers to defer, without limitation, their compensation for investing other people's money.

The choice is easy. We must pass this package of expiring provisions. We must reach a conclusion.

Last month, the House passed its renewable energy and tax extenders package, by a vote of 263 to 160. It came over to the Senate last week. My Colleagues on the other side of the aisle objected to moving to the House bill, for which I was prepared to offer a substitute amendment.

Today, I am introducing that substitute amendment as a stand-alone bill. This extender package is fully paid-for. These offsets are fiscally responsible. And these revenue-raising provisions are also sound tax policy.

The first revenue-raising provision is an extension of the effective date of the worldwide allocation of interest. The bill would delay application of the new rule.

This section of the code is scheduled to take effect in 2009.

Many of the companies that will benefit from this provision told me that they would rather have business extenders, including R&D, active financing, and CFC look-through. They prefer those important extenders to a 2009 application of the world wide allocation of interest.

These companies want a conclusion. And, they realize that to get a conclusion, they, along with Congress, must be fiscally responsible and pay for these provisions.

This provision allows Congress to be fiscally responsible and to pay for the priorities of the business community.

The second revenue-raising provision addresses offshore deferred compensation. This provision prevents hedge fund managers from deferring income. This is not an increase in tax on hedge fund managers. Rather, it is a change in the timing of when they have to pay their income tax.

We need to make decisions about our priorities. Is the ability of hedge fund managers to defer taxation of their compensation more important than spurring research and development?

This bill has a solid energy-tax package. It has about $17 billion in incentives for alternative energy, efficiency, and clean coal. This package is important for our environment and energy security. And it's important to facilitate the transition to a carbon-controlled economy.

I have been working to get the Congress to pass a good energy-tax package for the better part of a year. At the beginning of last year, the Finance Committee conducted several hearings. Last June, the Committee marked up a bill to bolster investment in clean energy, efficiency, and clean coal. Our bill--a roughly $30 billion package-- passed the Finance Committee with a 15-to-5 vote.

The bill included a 5-year extension of the credit for production of renewable electricity. That credit enjoys strong bipartisan support.

It included 8-year extensions of credits for solar power. Solar power still needs significant subsidies to compete with fossil-based energy.

It included $4 billion in new funds for clean coal tax credits. These credits are needed to demonstrate that coal--which accounts for half of this Nation's electricity--can be burned cleanly.

The bill included a new consumer credit for plug-in hybrids. Already prototypes of plug-in hybrids can go a hundred miles on a gallon of gas.

The bill included a new credit for cellulosic ethanol. Some experts predict that cellulosic ethanol will become the fuel of the future.

Last June's Finance Committee package was largely financed by reducing tax benefits for oil and gas companies. We proposed repealing the manufacturing deduction for oil and gas firms. That raised about $9.4 billion for the package.

We proposed a tax on production in the Gulf of Mexico, with credit for the tax provided to companies paying royalties on that production. This raised more than $10 billion.

We also proposed tightening the rules on tax credits received by oil and gas companies that pay taxes to overseas jurisdictions. This proposal raised about $3.2 billion.

Taken together, these tax changes would have financed about two- thirds of the roughly $30 billion energy-tax package. We argued that the oil and gas offsets were justified, in part because of record-high oil prices. Recall that in 2005, President Bush said, ``With $55 (a barrel) oil we don't need incentives to oil and gas companies to explore.''

When the Finance Committee passed this energy-tax bill, oil traded at $69 a barrel.

After moving the bill through the Finance Committee, Senator Grassley and I offered that measure on the Senate floor. We offered it as an amendment to the energy policy bill.

But our amendment got 57 votes on the floor, 3 shy of the 60 votes that we needed to break a filibuster.

The objections, almost entirely from the other side, were that the bill would increase energy prices. They argued that our bill unreasonably targeted the oil and gas industry. They argued that the package was simply too big.

So we went back to the drawing board. In negotiations with the House, we cut the size of the energy package by about a third. We dropped the $10 billion tax on Gulf production. We retained repeal of the manufacturing deduction for large oil and gas firms, and the provision to tighten loopholes on foreign tax credits for oil and gas companies. And we also included nearly $7 billion in offsets from President Bush's own budget proposal.

That's right. About one-third of the package that came to the Senate floor in December was offset by items taken directly from proposals offered by President Bush in his 2008 budget.

Even though we cut the package by about a third, the bill still maintained meaningful support for alternative energy and efficiency. It included extension of the renewable energy production credit. It included long-term extensions of credits for solar power. It included $2 billion for clean-coal projects. And it included a new consumer incentive for plug-in hybrid cars.

It was not as ambitious as the June 2007 Finance Committee bill. But the compromise product that came to the Senate floor in December was a very good package.

Nonetheless, the President issued a veto threat on the bill. And 40 Senators followed his lead. On December 12, 2007, the compromise package failed in the Senate by a vote of 59 to 40, just one shy of 60 needed to break yet another filibuster.

Faced with the choice of maintaining tax breaks for oil and gas companies and investing in a fledgling alternative energy industry, the Senate minority chose to protect the oil and gas companies.

Faced with the choice of investing in green-collar jobs or maintaining the status quo on energy, the minority chose the status quo.

Remember the President's assertion that tax breaks were not needed when oil traded at $55 a barrel? Well, when the Senate voted on the energy package on December 13, 2007, oil cost more than $92 a barrel.

So where are we now? Vital new energy-tax provisions--such as incentives for plug-in hybrid vehicles--have not become law. Existing incentives--such as those for energy-efficient appliances--have lapsed. And in less than 7 months, many others will lapse, including the renewable energy production credit, solar credits, incentives for efficient buildings, and credits for biofuels.

So what do we do about it? To paraphrase Thomas Edison, ``I have not failed. I've just found two ways that won't work.''

I hope that this attempt will work. The bill that I introduce today, and on which I hope the Senate can vote next week, includes a robust energy package. It is very similar to that negotiated with the House last year. It is very similar to the one that got 59 votes in the Senate.

Like last year's bills, this package includes long-term extensions of renewable energy credits. It includes major funding for clean coal projects. It includes a new incentive for plug-in hybrids. And it includes extensions of vital incentives to promote energy efficiency.

This $17 billion energy package is slightly smaller than last December's. But it's still critically important to our Nation's energy future.

There is a key difference between this year's package and last year's: the offsets. In response to criticisms of the oil and gas offsets and the President's veto threat, we have dropped proposals to repeal oil and gas tax breaks.

Instead, we have included two offsets that have nothing to do with oil and gas. In fact, they have nothing to do with energy. They are simply good policy. And they have broad support.

The bill also extends provisions that offer tax benefits to individuals and businesses. One such provision is the teacher expense deduction.

Our schools are in desperate need of repair. Our students don't have the books or supplies they need. Some teachers have taken it upon themselves to use money from their own pockets to provide classroom supplies for their students.

In 2005 alone, more than 3.4 million families took the teacher expense deduction. The average salary for a teacher is about $38,000.

This says a lot about this profession's dedication to educating America's youth. These teachers work diligently to make sure that America stays competitive in this global economy by educating our children. And yet they pay out of their own pockets for supplies. The least we can do is to help share the cost.

Another provision that is important to American families is the qualified tuition deduction. Tuition costs have long been increasing faster than inflation. Parents and students worry about how to cover these escalating costs.

4.4 million families took the qualified tuition deduction in 2005. But the provision expired at the end of 2007.

The bill that I introduce today has other important benefits. Millions of families get tax relief from these expiring provisions and will suffer without this legislation.

Businesses will also suffer if Congress does not act. Many of the business provisions contained in the extenders package are crucial in allowing U.S.-based multinational corporations to compete effectively in a global economy.

America accounts for a third of the world's spending on scientific research and development, ranking first among all countries. This is impressive. But relative to the size of our economy, America is in sixth place. And the trends show that maintaining American leadership in the future depends on increased commitment to research and science.

Asia has recognized this. Spending on research and development has increased by 140 percent in China, Korea, and Taiwan. In America, it has increased by only 34 percent.

Asia's commitment is already paying off. More than a hundred Fortune 500 companies have opened research centers in India and China. I have visited some of them. I was impressed with the level of skill of the workers I met there.

There are workers in other countries who seek coveted research positions. Ireland, Poland, and other European countries would like American corporations to shift their R&D operations to their countries. Some of these countries offer incredible tax and non-tax benefits.

Yet our R&D tax credit expired on December 31. American corporations are at a competitive disadvantage. They are unsure if they will be able to obtain the benefit of the credit this year. And they need to plan for the future.

We need to pass an extenders package that allows American companies to take the credit as soon as possible.

American businesses need the R&D tax credit to compete in a global economy. The R&D tax credit gives companies an incentive to begin or continue research here in America. These jobs pay well and result in the creation of intellectual property.

We want these jobs. And we want the intellectual property to be created in our country.

American financial services companies successfully compete in world financial markets. We need to make sure, however, that the U.S. tax rules do not change that.

This legislation will extend the active financing exception to Subpart F. This provision preserves the international competitiveness of American-based financial services companies. This provision also contains appropriate safeguards to ensure that only truly active businesses benefit.

The active financing exception applies to active financial service income earned abroad by American financial services companies or American manufacturing firms with a financial services operation. The exception makes sure that this income is not subject to U.S. tax until that income is brought home to the U.S.

This provision will put the American financial services industry on an equal footing with foreign-based competitors who are not taxed on active financial services income.

There are several other provisions in this bill that encourage businesses to invest in this country. There are provisions that will help American businesses compete in a global economy. We must extend these provisions as soon as possible.

Finally, my bill will provide an AMT patch for 2008. The provision is not offset, because we recognize the reality of the budget constraints we face. We need to get this done. This is an important provision to the American families.

The patch will hold the number of people subject to the AMT at 4.2 million. As a result, over 20 million taxpayers will avoid the AMT next year.

The choice is easy. We should continue to support teachers, families and schools. We should continue to support the creation of jobs and intellectual property. That is why I urge my Colleagues to support this fully offset package.

Which is more important, Mr. President? 11 million families who take the state and local tax deduction, or a few hundred hedge fund managers?

Which is more important? 3.5 million teachers who pay out of their pocket for school supplies, or a few hundred hedge fund managers?

4.5 million families who struggle to pay for college tuition, or a few hundred hedge fund managers?

It is time to reach a conclusion. You can lay all the extenders bills end to end. But I submit that the best conclusion is the extenders package that I introduce today and that the Senate will try to get to next week. I urge my Colleagues to support the motion to invoke cloture on the motion to proceed.

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

Mr. President, I ask unanimous consent that I be permitted to use the remaining time, including the remaining leader's time.

Mr. President, it is good to be with you today to talk about this. Before we begin a vote on a serious subject matter, it is good to talk to you about a few issues and thoughts I have about what is happening and what should be happening during the next 2 weeks in the Congress.

This morning millions of Americans woke up to another costly commute to their workplace. They paid over $4 per gallon to fill their tanks. You will recall that 18 months ago it cost them about $2.60 to purchase the same amount of gasoline.

Family budgets are hurting. On average, the American family will spend $2,200 more for gasoline this year compared to last year. A number of surveys suggest that Americans are driving less because the increased price at the pump is too much a strain on their lives. They are turning to us, their elected representatives, and they are looking for real leadership. Sometimes I wonder whether they have given up or whether they actually expect us to do something. I suggest we ought to do something, and any effort on the part of the majority to make this a couple a day event with a vote on each side or perhaps no votes or no amendments by Republicans, let me say that will not be accepted with very much enthusiasm by the minority, and the Republicans will insist that we stay here until we have had an opportunity to vote on significant amendments that we think the American people are entitled to have put before the Senate.

It seems to me the American people are turning to us, their elected representatives, and asking and looking for some leadership. In overwhelming majorities, the American people are clamoring for more energy production at home. If any oil production or natural gas production exists that we own, which we are not allowing to be produced, the American people are saying: Why not? In fact, they are saying why not open it; let's see what it yields, what it does for us.

The message is clear: Americans are saying we need to drill for more American oil. Now, anything short of allowing up-or-down votes on amendments that will determine whether we honor the request of the American people to drill for more American oil--whether we are going to be permitted to do that is obviously in the hands of the Democratic leader. But I believe we will do our share as the minority--49 of us-- to make sure the American people understand whether they are getting a fair shake by us getting a fair shake here on the floor on amendments that would inure to the benefit of the American people. The majority has offered a speculation bill, so far, and that is all we have seen. In the midst of this clarion call from the American people, it now appears my friends on the other side of the aisle might have to be dragged kicking and screaming to even debate whether we need to produce more energy.

After a litany of stale proposals that were rejected--including a windfall profits tax, price gouging, manufacturing taxes, cap-and-trade taxes, and lawsuits against OPEC--the majority seems content to hang its hat on the speculation bill, and a possible ``use it or lose it'' policy. As I speak, it appears that the majority drafts in secret a policy that claims to advocate lower prices while not actually increasing production, and the American people, I believe, will grow more and more impatient, and it will not be hard for them to understand what we are saying as we tell them their impatience is justified.

I wish to address the ``use it or lose it'' issue. You understand that the other side is saying, as far as offshore drilling, there are already leases that exist, where we have given oil companies, large and small, the right to drill for oil or gas under the conditions of the leases that went forth. They were obtained by the oil companies, large and small, by bids. Some bids were very high, some were not so high. All in all, there are a lot of oil companies that have the right to drill. So the other side is asking, how many acres do they have the right to drill upon? And now they are sitting around trying to draft legislation that says they are not using that land they leased from us; they are not using it as much as they should, and we want to pass a law that says: Use it as we prescribe in this new law or lose it.

They are going to try to tell the American people that is the way to get more oil out of parts of the coastal areas of America-- understanding they are already leased. Oil companies already have paid money and oil companies are probably already doing everything they can to maximize their return on those leases. Yet, since there are a lot of acres, some of which have not yet produced, they are saying let's look at them and that is where we can get this new oil for America.

We say that is not true. Those leases are time-certain leases, all of them. They are either 5-year or 8-year or 10-year leases. However many millions of acres it is, that is what they are. If you don't produce within the timeframe allowed in the leases--5, 8, or 10 years--then you lose the lease. That is already the law. You already lose it based upon the leases you have.

Let's talk about this idea a little more. This idea was dreamed up in an argument first originated by the Wilderness Society. They claimed that oil companies were sitting on leases, and that if those companies developed those areas, we would not need to open new ones. If only that were true, what a wonderful bonanza we would have for the American people. It is not true. The other side is now saying oil companies must use it or lose it when it comes to these leases. They have proposed adding a tax on companies to punish them for not producing fast enough. This Wilderness Society argument demonstrates a fundamental lack of understanding of how we explore for oil and gas in this country. And the fact that this argument originates with a group that has led at least four major lawsuits in the past 4 years to prevent development in these very same areas speaks to how disingenuous it is. Part of the reason it takes so long for companies to produce is because groups such as the Wilderness Society keep throwing up roadblocks.

Companies are paying lots of money for the right to explore on a lease and are given a short period of time to produce oil. That is the way it is today already. We don't need a new law for that. We don't need new legislation now, when we have a limited amount of time-- perhaps 2 or 3 weeks--to debate energy legislation. With the cost of oil at $135 per barrel now, why on Earth would a lessee intentionally sit on a lease and choose not to make money on it?

Why would a company pay money essentially to rent a tract of land and then not use it? I heard the claim that 41 million acres is leased on the Outer Continental Shelf and that acreage, 33 million acres, is not being produced. The use of this statistic shows a fundamental lack of understanding of the long, risky process that begins even before bidding on a lease and hopefully ends with production. The other side is saying that unless oil is literally coming out of the ground on an acre, it doesn't count. Even if the acre is being explored or is in the process of getting an environmental permit or is in any way part of a process that is going on, it doesn't count. Additionally, the use of this argument by groups that consistently go to court to prevent development on existing lease areas speaks volumes about the intent here. Congress currently restricts access to 574 million acres in the Outer Continental Shelf. It actually is clear by any measurable assessment that the majority in Congress is ``sitting on'' far more oil than the oil companies themselves.

There are many different steps toward producing oil, and that, at any given moment, may not be producing but is active and under development. In the 5, 8, and 10 years that a company holds a lease, environmental assessments could be underway. Lessees could be trying to secure permits. The leasing agency could be challenged in litigation and could be reviewing seismic data. All of this takes time. So you look out there and say: It is leased, but it isn't producing yet. Of course not. If somebody tried to produce too quickly, they would be challenged for not spending enough time under the environmental permit laws doing what is required before one can drill.

There are many upfront costs that leaseholders take, that they have to do if they are going to acquire an oil and gas lease. Bonus payments and production, rental payments often cost millions of dollars, and these capital investments are only being made for the ultimate development and production of oil to return a profit on their investment. Simply put, if oil is not produced from a lease, the companies lose money on it.

To claim that companies are ``sitting on'' $135 oil simply ignores the historical fact that because you lease lands does not necessarily mean you are able technically or economically to produce on them or even that there is oil under your lease. But you are entitled to keep it and try to make it productive for the length of time that the lease prescribes within the contents and terms of the document--5 years, 8 years, or 10 years.

Finally, we should point out that the majority already has a ``use it or lose it'' policy. If you are not producing when the term of the lease expires, you turn it back. So this argument really is a fallacy. I have said this before on the floor. It seems as if the more it is said, the more it is documented, the more the other side claims that there are many leases that we should force the lessees to give the land back or produce under some new slogan called ``use it or lose it.''

As the specter of a limited debate lingers with minimal or no opportunity for amendment on this bill, the American family budget continues to be squeezed. Mr. President, 83 days after introducing the American Energy Production Act of 2008, I continue offering a new direction.

In 2006, we opened 8 million acres in the Outer Continental Shelf for leasing. This area contained an estimated 1.2 billion barrels of oil and nearly 6 trillion cubic feet of natural gas. In March of this year, two lease sales on the eastern and central Gulf of Mexico attracted more than $3.2 billion in high bids, upfront bids--a very high payment. The first sale in the central gulf was the largest sale in the history of deepwater OCS leases.

This area is America's new frontier. Today, there are more than 7,000 leases in the Gulf of Mexico that provide 25 percent of the oil produced in the United States and 15 percent of the natural gas produced in the country. The Department of Interior estimates that 300,000 jobs are directly related to gulf energy exploration and the production that comes from that exploration.

As a result of the Gulf of Mexico Security Act, the coastal States stand to reap great benefits from the production of gas through revenue sharing of oil and gas. The following rough estimate provides a window into the opportunity available to other States. According to the Minerals Management Service, Gulf States could receive more than $425 million in oil and gas revenues by 2013, $2.6 billion over the coming decade, and over $30 billion over the next 30 years. Yes, those are accurate estimates. That is what other States--not all of them but some other States--that are on our coasts that might agree to let us look in exchange for giving them the same kind of return we gave Louisiana, Mississippi, and the surrounding States, that is what they could look for. These are huge sums that will be raised and returned to the States through the production of our own energy resources.

They seek to allow coastal States on the Atlantic and Pacific to share in the energy opportunity. I know there are various opinions as to how many we will find there, but we will never know so long as we keep it locked up, which we have done for 26 to 27 years, where nobody would know and tried to hide it from the American people as if it did not belong to them and it was not any good. The truth is, it is theirs in absolute honest-to-God ownership, and it can produce crude oil of the best type and oil in large quantities.

Let's hope that what we do in this area is equal to nearly all the oil produced in the Gulf of Mexico in the last 50 years and is greater than all the oil imported into the United States from the Persian Gulf in 15 years.

This is a big opportunity for the American people, but the majority seems content with small ideas. Within two Congresses, we have passed two major pieces of energy legislation. These two bills were monumental undertakings and required months of deliberation to bring to fruition.

Last Congress, we had EPACT05 on the floor of the Senate for 10 days. We had 23 rollcall votes on the bill, including 19 just for amendments. We had filed 235 amendments to that bill; 57 of them were accepted. That bill took 4 months from the introduction before we sent it to the President.

Last year's Energy bill took almost a year before we had something we could send to the White House. That bill was on the Senate floor for 15 days and had a total of 22 rollcall votes. We filed 331 amendments to that bill and accepted 49 of them.

The majority leader seeks to limit the amendment process in a significant way. I trust we will have the staying power to at least have an opportunity for multiple amendments in the area we are speaking of because the American people deserve it and the American people should have it.

I have completed my remarks. I yield the floor.

Mr. President, I rise today to introduce the Economic Recovery Act of 2008. I think it is evident our economy is struggling to overcome the twin effects of record-high energy prices and a steep downturn in the housing market.

Earlier this year, this Congress acted to provide rebates to taxpayers to help them cope with the effects of the downturn in the economy. The hope was also that the impact of these rebate checks would be to stimulate the economy.

It is evident much more needs to be done, so the legislation I am introducing today is aimed at reinvigorating our economy. It is my proposal for a second economic stimulus package.

Over the course of the past several years, we have seen the price of oil climb by more than 400 percent, from about $30 per barrel in 2003, to more than $133 per barrel this morning. This escalation in energy costs threatens to plunge our economy into a recession, and it is imposing a tremendous hardship on middle-income and low-income families, on our truckdrivers, our farmers, our fishermen, our schools, virtually everyone.

Big factories and mills, as well as small businesses, have also been harmed by high energy prices. In fact, a week ago we learned a mill in Millinocket, ME, is going to be forced to shut down because it can no longer afford the oil that is essential to the operations of that paper mill.

We are working with Governor Baldacci to try to find alternatives. But it is a prime example of the tremendously harmful impact high energy prices are having on the economy of our State and indeed States throughout the Nation.

Gasoline is already topping $4 a gallon 2 weeks into the summer driving season. Maine families fear the cost of staying warm next winter because home heating oil prices have reached record highs.

At the same time, the cost of diesel fuel is pushing some of America's independent truckers to the brink of bankruptcy. Consider this astonishing fact. In 1999, a Maine truck driver could go from Augusta, ME, all the way to Albuquerque, NM, on $500 worth of diesel. Today, $500 worth of diesel will not get that truck driver to Altoona, PA. What a difference a few years makes.

Of course, with diesel prices continuing to increase, the problem is only getting worse. Meanwhile, weaknesses in the housing market are making it impossible for millions of Americans to get the financing they need to stay in their homes when their adjustable rate mortgages reset. Many of these families are being forced into foreclosure, leaving behind vacant properties and creating a ripple effect that is pulling down home values even further. This problem hurts communities across the Nation, and it requires an effective Federal response.

The legislation I am introducing today would provide much-needed help to Americans who are struggling with high energy costs and the weak housing market. Let me outline the provisions of the economic stimulus package I am proposing.

First, the Economic Recovery Act proposes a series of initiatives to promote increased energy efficiency that would help consumers save money on their energy bills, and help advance the goal of energy independence for our Nation.

Second, the bill provides relief from truck weight regulations that are injuring truckers in the State of Maine.

Third, it proposes a new program to finance transportation infrastructure that is based on the model of the Build American Bonds Bill.

Fourth, it would increase funding under the Workforce Investment Act so we can help displaced and unemployed or underemployed workers.

Fifth, it proposes tax incentives designed to help America's small businesses.

And, sixth, it would help to restore stability in the housing market by expanding the FHA Secure Program, which would help homeowners refinance mortgages that are in danger of foreclosure.

We have focused a lot on the housing problems and the turmoil in the housing and financial markets. Indeed, that is an important factor in the decline of our economy. As I have indicated, I think more needs to be done. But I am convinced high energy prices are an even greater cause of the economic downturn.

We must act to protect ourselves from rapid increases in oil prices and in the long term achieve energy independence. One way to help achieve both those goals is to encourage greater efficiency. My bill would double the funding for the Department of Energy's Weatherization Program, reaching $1.4 billion by the year 2010.

The bill would also provide $112 million each year for the valuable Energy Star Program, which helps consumers choose energy-efficient appliances, and would extend the renewable electricity tax credit through 2011 and the residential investment tax credit for solar and energy-efficient buildings through 2012.

My bill also includes a $500 credit to consumers who replace their old wood-burning stove with a new, cleaner-burning model using wood or wood pellets. This complements a proposal I introduced in February.

We must take action to address the impact rising diesel prices are having on the trucking industry, which is struggling. The rapid increase in the price of diesel is making it more difficult for our Nation's truckers to stay on the road.

It is also increasing the cost of delivering goods that communities throughout our country rely on. We can help trucks to operate more efficiently if we ease Federal trucking regulations that prohibit trucks that carry more than 80,000 pounds from traveling on the Federal interstate system.

My bill includes a provision that would create a 2-year pilot project that would permit trucks carrying up to 100,000 pounds, which is the weight level that is permitted on Maine's highways, to travel on the Interstate Highway system when diesel prices are at or above $3.50 a gallon. The savings on fuel consumption will benefit the trucking industry, the consumer, and our Nation at a time when we are looking for ways to decrease our dependency on foreign oil.

Let me tell you, the current system simply makes no sense at all. In Maine, the trucks that have 100,000 pounds of cargo are forced to leave the Interstate in Augusta, ME, a road that is built to accommodate the heaviest trucks, and instead are forced to go on secondary roads through towns and villages, stopping at railroad crossings. That wastes fuel, and is less safe than keeping them on the Interstate. The trip takes much longer because they are on secondary and slower roads that often are not the most direct routes to the destination. So that simply makes no sense at all.

Any proposal to stimulate the economy should help to fund transportation infrastructure projects. They are a proven means of fostering economic growth and are a lasting investment; an investment we need.

This past winter has been so difficult and so hard on the roads in Maine. I do not think I have ever seen so many frost heaves and so much wear and tear that the very difficult cold and snowy winter has had on our roads and highways as I have seen this spring in Maine. The legislation I have introduced calls for a $50 billion investment through new transportation bonds for roads, bridges, transit, rail, and waterways.

Now, I wish to give credit where credit is due. This proposal which I put into the economic stimulus package was first introduced by Senator Wyden. I was very pleased to be a cosponsor of his bill. I have included our proposal as part of this broader package. Not only will this funding serve as the catalyst for thousands of good jobs today, we all know construction jobs are good jobs, but it also will improve our transportation infrastructure, which is critical to economic development over the long term.

This is an investment that makes sense. Many of these transportation projects are ready to go. They only need the funding. We must also act to provide assistance to those who have lost their jobs in this economic downturn. Now, that means extending unemployment compensation benefits. I hope we are going to do that soon. But in addition, we need to invest in our workers.

In the last 4 months, we have seen 340,000 jobs lost across the country. Today, we have more than 1.6 million additional unemployed workers, compared to 2001; 800,000 more than a year ago. The national unemployment rate has jumped to 5.5 percent. In my home State, 33,600 Mainers are looking for work.

In view of this increase in unemployment, it makes no sense whatsoever that the President's budget actually proposes another cut in the Workforce Investment Act. In fact, overall, the President's budget would cut $1.5 billion from the Department of Labor's workforce programs.

We must invest in America's workforce. Yet since fiscal year 2001, funding for the Workforce Investment Act programs has been reduced by nearly $1.7 billion in real terms. My bill would provide $1 billion in additional Workforce Investment Act funding that would enable us to train nearly 300,000 additional workers.

The bill would also increase funding for the Dislocated Workers program and for Youth and Adult training programs. Support for job training, investing in our workers is critical, but it is also important that we provide relief to the job creators in our economy, and that is our small businesses. The fact is, small businesses create 80 percent of the net new jobs in America. During economic downturns, however, they struggle with cash flow and they must forgo investments they need to grow and remain competitive. That is why I am proposing some tax incentives to help small businesses.

First, we should make the Section 179 expensing limit for small companies permanent so they can count on it. Second, we should renew a provision of tax law that allows restaurant owners to depreciate their equipment more quickly, over 15 years.

Finally, we must take action to steady the housing market. More than 50 million Americans hold mortgages at present and, fortunately, most of them are current with their payments. But 7 million of these mortgages are so-called subprime loans, and most of them are adjustable rate mortgages that reset to higher, often unaffordable rates after only 2 or 3 years of very low introductory rates. What we are finding is a lot of first-time homeowners simply did not understand the risk they were taking with subprime loans. As a result, approximately 1.3 million of these 7 million subprime mortgages are delinquent and could soon be in foreclosure. This number is expected to rise as more mortgages reach the reset date.

I am not interested in bailing out speculators, people who took a gamble that housing prices were going to increase. What I am talking about are homeowners who were peddled an unsuitable mortgage product. We need to help them. Foreclosures inflict losses all around--on the families who lose their homes; on the neighborhoods where values fall as empty houses proliferate; on borrowers who face tighter requirements and higher costs, as perceptions of lending risk increase; and on those who work in the construction or real estate industry, dependent on a strong housing market.

One source of help--and this is what I am proposing in my bill--would be to bolster the FHASecure program administered by the Federal Housing Administration. This program allows eligible homeowners to avoid foreclosure by assisting them with refinancing so they can afford to make their mortgage payments. My bill would expand this program to make it easier for lenders to accept voluntary write-downs of distressed mortgages and allow borrowers whose incomes are not sufficient to meet the terms of their existing mortgages to refinance their homes on terms they could afford. My bill also grants the FHA expanded authority to adjust insurance premiums, depending on the individual borrower's risk profile, to ensure the solvency of the FHA insurance fund. These provisions could help FHA reach hundreds of thousands of additional homeowners by the end of the year, and to do so without taxpayer subsidies.

The legislation I am introducing today includes comprehensive proposals that, taken together, would go a long way toward addressing the two factors truly harming our economy--high energy prices and a weakening housing market. I urge my colleagues to work together in a bipartisan way, to look at the ideas that I and others have proposed so we can work together on a second stimulus package to address these concerns and to help restore and strengthen our Nation's economy.