Alzheimer's Breakthrough Act of 2009

Mr. President, Senator McCain and I are introducing today a bill to eliminate Federal corporate tax breaks that give special tax treatment to corporations that pay their executives with stock options. It is called the Ending excessive Corporate Deductions for Stock Options Act, and it has been endorsed by OMB Watch, the Consumer Federation of America, the Tax Justice Network-USA, and the AFL-CIO.

We are in a financial crisis. We are spending hundreds of billions of taxpayer dollars to try to stop the housing bust and prop up Wall Street. Too many of the middle class are watching the American dream slip away, while executives are getting mutli-million dollar compensation packages.

At the same time, mismatched stock option accounting and tax rules are shortchanging the Treasury to the tune of billions of dollars each year, while fueling the growing chasm between executive pay and average worker pay. The mismatch is this: companies are allowed to report one set of stock option compensation expenses to investors and the public through their public financial statements, and a completely different set of expenses to the Internal Revenue Service, IRS, on their tax returns. Put simply, our precious tax dollars are being wasted by an outdated and unfair corporate tax loophole that encourages corporations to hand out massive stock option grants to their executives. It is time to put an end to the excessive tax deductions being reaped by corporations at taxpayers' expense.

J.P. Morgan once said that executive pay should not exceed 20 times average worker pay. In the United States, in 1990, average pay for the chief executive officer of a large U.S. corporation was 100 times average worker pay. Recently, CEO pay was nearly 400 times that of the average worker.

The single biggest factor responsible for this massive pay gap is stock options. Stock options are a huge contributor to executive pay. A key factor encouraging companies to pay their executives with stock options is the misguided Federal tax system that favors stock options over other types of compensation. Stock options give employees the right to buy company stock at a set price for a specified period of time, often 5 or 10 years. Virtually every CEO in America is paid with stock options, which are a major contributor to sky-high executive pay. According to Forbes magazine, in 2008, the CEOs at the 500 largest U.S. companies took home a combined $5.7 billion, averaging $11.4 million each.

For example, according to an Equilar Inc. analysis of 2008 filings with the Securities and Exchange Commission, SEC, Oracle Corporation's CEO was granted options estimated in value at more than $71 million just last year. That grant was on top of the pay he received from vested and exercised stock options given to him by his company in the past. In 2008 alone, those stock options amounted to a personal gain of more than $543 million. That is $543 million in stock option gains in a single year. Stunningly, his company gets to deduct this outlandish ``compensation'' from its taxes--even though the company never paid him that amount, and even though the existing tax code generally limits corporate deductions for executive pay to $1 million per executive.

Oracle's CEO was not alone. Equilar has identified dozens of U.S. executives who obtained tens of millions or even hundreds of millions of dollars from stock options in 2008. For example, the CEO of Qualcomm Inc., had $209 million in stock options gains in 2008, while the CEO of Occidental Petroleum had gains of $184 million.

Between the repricing of some stock options and grants being made while stock prices are low, the recent stock market recovery will likely mean that many executives will continue to reap astronomical stock option-related compensation, and their companies will continue to reap unwarranted tax deductions from stock options gains.

Why do corporate executives have so many stock options to cash in? A key reason is that U.S. accounting rules allow companies to report their stock option expenses one way on the corporate books, while Federal tax rules require them to report the same stock options a completely different way on their tax returns. In most cases, the resulting book expense is far smaller than the resulting tax deduction. That means, under current U.S. accounting and tax rules, stock option tax deductions taken by corporations often far exceed the recorded stock option expenses shown on the companies' books. The result is a tax windfall.

Stock options are the only type of compensation where the Federal tax code permits companies to claim a bigger deduction on their tax returns than the corresponding expense on their books. For all other types of compensation--cash, stock, bonuses, and more--the tax return deduction equals the book expense. In fact, companies cannot deduct more than the compensation expense shown on their books, because that would be tax fraud. The sole exception to this rule is stock options. In the case of stock options, the tax code allows companies to claim a tax deduction that can be two, three, ten or one hundred times larger than the expense shown on their books.

When a company's compensation committee learns that stock options can produce a low compensation expense on the books, while generating a generous tax deduction that is multiple times larger, it creates a temptation for the company to pay its executives with stock options instead of cash or stock. It is a classic case of U.S. tax policy creating an unintended incentive for corporations to act in a particular way.

This bill is particularly timely given the new administration's stated goals to close unfair corporate tax loopholes, strengthen tax fairness, and reign in excessive executive compensation. Given the current financial crisis, staggering health care costs, and ongoing defense needs, now more than ever, we cannot afford this multi-billion dollar loss to the Treasury.

To understand why this bill is needed it helps to understand how stock option accounting and tax rules got so out of kilter with each other in the first place.

Calculating the cost of stock options may sound straightforward, but for years, companies and their accountants engaged the Financial Accounting Standards Board (FASB) in an all-out, knock-down battle over how companies should record stock option compensation expenses on their books.

U.S. publicly traded corporations are required by law to follow Generally Accepted Accounting Principles, GAAP, issued by FASB, which is overseen by the SEC. For many years, GAAP allowed U.S. companies to issue stock options to employees and, unlike any other type of compensation, report a zero compensation expense on their books, so long as, on the grant date, the stock option's exercise price equaled the market price at which the stock could be sold.

Assigning a zero value to stock options that routinely produce huge amounts of executive pay provoked deep disagreements within the accounting community. In 1993, FASB proposed assigning a ``fair value'' to stock options on the date they are granted to an employee, using mathematical valuation tools. FASB proposed further that companies include that amount as a compensation expense on their financial statements. A battle over stock option expensing followed, involving the accounting profession, corporate executives, FASB, the SEC, and Congress.

In the end, after years of fighting and negotiation, FASB issued a new accounting standard, Financial Accounting Standard, FAS, 123R, which was endorsed by the SEC and became mandatory for all publicly traded corporations in 2005. In essence, FAS 123R requires all companies to record a compensation expense equal to the fair value on grant date of all stock options provided to an employee in exchange for the employee's services.

The details of this accounting rule are complex, because they reflect an effort to accommodate varying viewpoints on the true cost of stock options. Companies are allowed to use a variety of mathematical models, for

example, to calculate a stock option's fair value. Option grants that vest over time are expensed over the specified period so that, for example, a stock option which vests over four years results in 25 percent of the cost being expensed each year. If a stock option grant never vests, the rule allows any previously booked expense to be recovered. On the other hand, stock options that do vest are required to be fully expensed, even if never exercised, because the compensation was actually awarded. These and other provisions of this hard-fought accounting rule reflect painstaking judgments on how to show a stock option's value.

Opponents of the new accounting rule had predicted that, if implemented, it would severely damage U.S. capital markets. They warned that stock option expensing would eliminate corporate profits, discourage investment, depress stock prices, and stifle innovation. 2006 was the first year in which all U.S. publicly traded companies were required to expense stock options. Instead of tumbling, both the New York Stock Exchange and Nasdaq turned in strong performances, as did initial public offerings by new companies. The dire predictions were wrong. Stock option expensing has been fully implemented without any detrimental impact to the markets.

During the years the battle raged over stock option accounting, relatively little attention was paid to the taxation of stock options. Section 83 of the tax code, first enacted in 1969 and still in place after four decades, is the key statutory provision. It essentially provides that, when an employee exercises compensatory stock options, the employee must report as income the difference between what the employee paid to exercise the options and the market value of the stock received. The corporation can then take a mirror deduction for whatever amount of income the employee realized.

For example, suppose a company gave an executive options to buy 1 million shares of the company stock at $10 per share. Suppose, 5 years later, the executive exercised the options when the stock was selling at $30 per share. The executive's income would be $20 per share for a total of $20 million. The executive would declare $20 million as ordinary income, and in the same year, the company would take a corresponding tax deduction for $20 million.

The two main problems with this approach are that: the deduction amount is significantly greater than the value of what the company gave away, often years earlier, and the $20 million in income obtained by the executive did not come out of the company's coffers. In most cases, the $20 million was paid by unrelated parties on the stock market. Yet the tax code allowed the corporation to declare the $20 million as a business expense and take it as a tax deduction. The reasoning was that the exercise date value was the only way to get a clear figure for stock option tax deduction purposes. That reasoning lost its persuasive character, however, once consensus was reached on how to calculate stock option expenses when granted.

Stock option accounting and tax rules have evolved separately over the years and are now at odds with each other. Accounting rules require companies to expense stock options on their books on the grant date. Tax rules provide that companies deduct stock option expenses on the exercise date. Companies have to report the grant date expense to investors on their financial statements, and the exercise date expense on their tax returns. The financial statements report on all stock options granted during the year, while the tax returns report on all stock options exercised during the year. In short, company financial statements and tax returns identify expenses for different groups of stock options, using different valuation methods, and resulting in widely divergent stock option expenses for the same year.

To examine the nature and consequences of the stock option book-tax differences, the Permanent Subcommittee on Investigations, which I chair, initiated an investigation and held a hearing 2 years ago, in June 2007. Here is what we found.

To test just how far the book and tax figures for stock options diverge, the Subcommittee contacted a number of companies to compare the stock option expenses they reported for accounting and tax purposes. The Subcommittee asked each company to identify stock options that had been exercised by one or more of its executives from 2002 to 2006. The Subcommittee then asked each company to identify the compensation expense they reported on their financial statements versus the compensation expense on their tax returns. In addition, we asked the companies' help in estimating what effect the new accounting rule would have had on their book expense if it had been in place when their stock options were granted. At the hearing, we disclosed the resulting stock option data for 9 companies, including three companies that were asked to testify. The Subcommittee very much appreciated the cooperation and assistance provided by the nine companies we worked with.

The data provided by the companies showed that, under then existing rules, the nine companies showed a zero expense on their books for that stock options that had been awarded to their executives, but claimed millions of dollars in tax deductions for the same compensation. The one exception was Occidential Petroleum which, in 2005, began voluntarily expensing its stock options, but even this company reported significantly greater tax deductions than the stock option expenses shown on its books. When the Subcommittee asked the companies what their book expense would have been if the new FASB rule had been in effect, all nine calculated book expenses that remained dramatically lower than their tax deductions. Altogether the 9 companies calculated that they would have claimed $1 billion more in stock option tax deductions than they would have shown as book expenses, even using the tougher new accounting rule. Let me repeat that--just nine companies produced a stock option book-tax difference of more than $1 billion.

KB Home, for example, is a company that builds residential homes. Its stock price had more than quadrupled over the past 10 years. Over the same time period, it had repeatedly granted stock options to its then CEO. Company records show that, over five years, KB Home gave him 5.5 million stock options of which, by 2006, he had exercised more than 3 million.

With respect to those 3 million stock options, KB Home recorded a zero expense on its books. Had the new accounting rule been in effect, KB Home calculated that it would have reported on its books a compensation expense of about $11.5 million. KB Home also disclosed that the same 3 million stock options enabled it to claim compensation expenses on its tax returns totaling about $143.7 million. In other words, KB Home claimed a $143 million tax deduction for expenses that on its books, under current accounting rules, would have totaled $11.5 million. That's a tax deduction 12 times bigger than the book expense.

Occidental Petroleum disclosed a similar book-tax discrepancy. This company's stock price had also skyrocketed, dramatically increasing the value of the 16 million stock options granted to its CEO since 1993. Of the 12 million stock options the CEO actually exercised over a five- year period, Occidental Petroleum claimed a $353 million tax deduction for a book expense that, under current accounting rules, would have totaled just $29 million. That's a book-tax difference of more than 1200 percent.

Similar book-tax discrepancies applied to the other companies we examined. Cisco System's CEO exercised nearly 19 million stock options over 5 years, and provided the company with a $169 million tax deduction for a book expense which, under current accounting rules, would have totaled about $21 million. UnitedHealth's former CEO exercised over 9 million stock options in 5 years, providing the company with a $318 million tax deduction for a book expense which would have totaled about $46 million. Safeway's CEO exercised over 2 million stock options, providing the company with a $39 million tax deduction for a book expense which would have totaled about $6.5 million.

Altogether, these nine companies took stock option tax deductions totaling $1.2 billion, a figure 5 times larger than the $217 million that their combined stock option book expenses would have been. The resulting $1 billion in excess tax deductions represents

a tax windfall for these companies simply because they issued lots of stock options to their CEOs.

Tax rules that produce huge tax deductions that are many times larger than the related stock option book expenses give companies an incentive to issue massive stock option grants, because they know the stock options will produce a relatively small hit to the profits shown on their books, while also knowing that they are likely to get a much larger tax deduction that can dramatically lower their taxes.

The data we gathered for nine companies alone disclosed stock option tax deductions that were five times larger than their book expenses, generating over $1 billion in excess tax deductions. To gauge whether the same tax gap applied to stock options across the country as a whole, the Subcommittee asked the IRS to perform an analysis of some newly obtained stock option data.

For the first time in 2004, large corporations were required to file a new tax Schedule M-3 with their tax returns. The M-3 Schedule asks companies to identify differences in how they report corporate income to investors versus what they report to Uncle Sam, so that the IRS can track and analyze significant book-tax differences.

This data shows that, for corporate tax returns filed form July 1, 2005 to June 30, 2006, the first full year in which it was available, companies' stock option tax deductions totaled about $61 billion more than their stock options expenses on their books. Similar data for July 1, 2006 to June 30, 2007, showed that the excess stock option tax deductions totaled about $48 billion. In addition, the IRS data shows that nearly 60 percent of the excess tax deductions in 2007 were attributable to only 100 corporations; 75 percent were attributable to only 250 corporations. The IRS also determined that stock options were one of the most important factors why corporations reported different income on their books compared to their tax returns.

Claiming these massive stock option tax deductions enabled U.S. corporations, as a whole, to legally reduce payment of their taxes by billions of dollars, perhaps as much as $10 billion, $15 billion, even $20 billion per year.

There were other surprises in the data as well. One set of issues disclosed by the data involves what happens to unexercised stock options. Under the current mismatched set of accounting and tax rules, stock options which are granted, vested, but never exercised by the option holder turn out to produce a corporate book expense but no tax deduction.

Cisco Systems told the Subcommittee, for example, that in addition to the 19 million exercised stock options previously mentioned, their CEO held about 8 million options that, due to a stock price drop, would likely expire without being exercised. Cisco calculated that, had FAS 123R been in effect a the time those options were granted, the company would have had to show a $139 million book expense, but would never be able to claim a tax deduction for this expense since the options would never be exercised. Apple made a similar point. It told the Subcommittee that, in 2003, it allowed its CEO to trade 17.5 million in underwater stock options for 5 million shares of restricted stock. That trade meant the stock options would never be exercised and, under current rules, would produce a book expense without ever producing a tax deduction.

In both of these cases, under FAS 123R, it is possible that the stock options given to a corporate executive would have produced a reported book expense greater than the company's tax deduction. While the M-3 data indicates that, overall, accounting expenses lag far behind claimed tax deductions, the possible financial impact on an individual company of a large number of unexercised stock options is additional evidence that existing stock option accounting and tax rules are out of kilter and should be brought into alignment. Under our bill, if a company incurred a stock option expense, it would always be able to claim a tax deduction for that expense.

Another set of issues brought to light by theIRS data focuses on the fact that the current stock option tax deduction is typically claimed years later than the initial book expense. Normally, a corporation dispenses compensation to an employee and takes a tax deduction in the same year for the expense. The company controls the timing and amount of the compensation expense and the corresponding tax deduction. With respect to stock options, however, corporations may have to wait years to see if, when, and how much of a deduction can be taken. That is because the corporate tax deduction is wholly dependent upon when an individual corporate executive decides to exercise his or her stock options.

Our bill would require that, when the company gives away something of value, it reflects that expense on its books and claims that same expense on its tax return. The company, and the government, should not have to wait to see whether the stock options given to executives later increased in value and were exercised. As with any other form of compensation, the company should determine the value of what it is giving away, and take the appropriate tax deduction at that time.

UnitedHealth, for example, told the Subcommittee that it gave its former CEO 8 million stock options in 1999, of which, by 2006, only about 730,000 had been exercised. It did not know if or when its former CEO would exercise the remaining 7 million options, and so could not calculate when or how much of a tax deduction it would be able to claim for this compensation expense.

If the rules for stock option tax deductions were changed as suggested in our bill, companies would typically be able to take the deduction years earlier than they do now, without waiting to see if and when particular options are exercised. Companies would also be allowed to deduct stock options that are vested but never exercised. In addition, by requiring stock option expenses to be deducted in the same year they appear on the company books, stock options would become consistent with how other forms of compensation are treated in the tax code.

Right now, U.S. stock option accounting and tax rules are mismatched, misaligned, and out of kilter. They allow companies collectively to deduct billions of dollars in stock option expenses in excess of the expenses that actually appear on the company books. They disallow tax deductions for stock options that are given as compensation but never exercised. They often force companies to wait years to claim a tax deduction for a compensation expense that could and should be claimed in the same year it appears on the company books.

The Levin-McCain bill we are introducing today would cure these problems. It would bring stock option accounting and tax rules into alignment, so that the two sets of rules would apply in a consistent manner. It would accomplish that goal simply by requiring the corporate stock option tax deduction to be no greater than the stock option expenses shown on the corporate books each year.

Specifically, the bill would end use of the current stock option deduction under Section 83 of the tax code, which allows corporations to deduct stock option expenses when exercised in an amount equal to the income declared by the individual exercising the option, replacing it with a new Section 162(q), which would require companies to deduct the stock option expenses shown on their books each year.

The bill would apply only to corporate stock option deductions; it would make no changes to the rules that apply to individuals who have been given stock options as part of their compensation. Individuals would still report their compensation on the day they exercised their stock options. They would still report as income the difference between what they paid to exercise the options and the fair market value of the stock they received upon exercise. The gain would continue to be treated as ordinary income rather than a capital gain, since the option holder did not invest any capital in the stock prior to exercising the stock option and the only reason the person obtained the stock was because of the services they performed for the corporation.

The amount of income declared by the individual after exercising a stock option will likely often be greater than the stock option expense booked and deducted by the corporation who employed that individual. That's in part because the individual's gain often comes years later than the original

stock option grant, and the underlying stock will usually have gained in value. In addition, the individual's gain is typically provided, not by the corporation that supplied the stock options years earlier, but by third parties active in the stock market.

Consider the same example discussed earlier of an executive who exercises options to buy 1 million shares of stock at $10 per share, obtains the shares from the corporation, and then immediately sells them on the open market for $30 per share, making a toal profit of $20 million. The individual's corporation didn't supply the $20 million. Just the opposite. Rather than paying cash to its executive, the corporation received a $10 million payment from the executive in exchange for the 1 million shares. The $20 million profit from selling the shares was paid, not by the corporation, but by third parties in the marketplace who purchased the stock. That is why it makes no sense for the company to declare as an expense the amount of profit that an employee--or former employee--obtained from unrelated parties in the marketplace.

The bill we are introducing today would put an end to the current approach of using the stock option income declared by an individual as the tax deduction claimed by the corporation that supplied the stock options. It would break that old artificial symmetry and replace it with a new symmetry--one in which the corporation's stock option tax deduction would match its book expense.

I describe the current approach to corporate stock option deductions as artificial, because it uses a construct in the tax code that, when first implemented 40 years ago, enabled corporations to calculate their stock option expense on the exercise date, when there was no consensus on how to calculate stock option expenses on the grant date. The artificiality of the approach is demonstrated by the fact that it allows companies to claim a deductible expense for money that comes not from company coffers, but from third parties in the stock market. Now that U.S. accounting rules require the calculation of stock option expenses on the grant date, however, there is no longer any need to rely on an artificial construct that calculated corporate stock option expenses on the exercise date using third party funds.

It is also important to note that the bill would not affect in any way current tax provisions that provide favored tax treatment to so- called Incentive Stock Options under Sections 421 and 422 of the tax code. Under those sections, in certain circumstances, corporations can surrender their stock option deductions in favor of allowing their employees with stock option gains to be taxed at a capital gains rate instead of ordinary income tax rates. Many start-up companies use these types of stock options, because they don't yet have taxable profits and don't need a stock option tax deduction. So they forfeit their stock option corporate deduction in favor of giving their employees more favorable treatment of their stock option income. Incentive Stock Options would not be affected by our legislation and would remain available to any corporation providing stock options to its employees.

The bill would make one other important change to the tax code as it relates to corporate stock option tax deductions. In 1993, Congress enacted a $1 million cap on the compensation that a corporation can deduct from its taxes, so taxpayers would not be forced to subsidize excessive executive pay. However, the cap was not applied to stock options, allowing companies to deduct any amount of stock option compensation, without limit.

By not applying the $1 million cap to stock option compensation, the tax code created a significant incentive for corporations to pay their executives with stock options. Indeed, it is very common for executives to have salaries of $1 million, while simultaneously receiving millions of dollars more in stock options. It is effectively meaningless to cap deductions for executive salary compensation but not also for stock options.

Further, while corporate directors may be comfortable diluting their shareholders' interests and doling out massive amounts of stock options, that does not mean that the taxpayers should subsidize it. This bill would eliminate this favored treatment of executive stock options by making deductions for this type of compensation subject to the same $1 million cap that applies to other forms of compensation covered by Section 162(m).

The bill also contains several technical provisions. First, it would make a conforming change to the research tax credit so that stock option expenses claimed under that credit would match the stock option deductions taken under the new tax code section 162(q). Second, the bill would authorize the Secretary of the Treasury to adopt regulations governing how to calculate the deduction for stock options issued by a parent corporation to the employees of a subsidiary.

Finally, the bill contains a transition rule for applying the new Section 162(q) stock option tax deduction to existing and future stock option grants. This transition rule would make it clear that the new tax deduction would not apply to any stock option exercised prior to the date of enactment of the bill.

The bill would also allow the old Section 83 deduction rules to apply to any option which was vested prior to the effective date of Financial Accounting Standard, FAS, 123R, and exercised after the date of enactment of the bill. The effective date of FAS 123R is June 15, 2005 for most corporations, and December 31, 2005 for most small businesses. Prior to the effective date of FAS 123R, most corporations would have shown a zero expense on their books for the stock options issued to their executives and, thus, would be unable to claim a tax deduction under the new Section 162(q). For that reason, the bill would allow these corporations to continue to use Section 83 to claim stock option deductions on their tax returns.

For stock options that vested after the effective date of FAS 123R and were exercised after the date of enactment, the bill takes another tack. Under FAS 123R, these corporations would have had to show the appropriate stock option expense on their books, but would have been unable to take a tax deduction until the executive actually exercised the option. For these options, the bill would allow corporations to take an immediate tax deduction--in the first year that the bill is in effect--for all of the expenses shown on their books with respect to these options. This ``catch-up deduction'' in the first year after enactment would enable corporations, in the following years, to begin with a clean slate so that their tax returns the next year would reflect their actual stock option book expenses for that same year.

After that catch-up year, all stock option expenses incurred by a company each year would be reflected in their annual tax deductions under the new Section 162(q).

The current differences between accounting and tax rules for stock options make no sense.

The current book-tax difference is the historical product of accounting and tax policies that have not been coordinated or integrated. The resulting mismatch has allowed companies to take tax deductions that are usually many times larger than the actual stock option expenses shown on their books, at the expense of the Treasury (i.e., other taxpayers). Companies are incentivized to dole out excessive options packages, producing outsized executive pay, while being allowed to reflect much smaller ``expenses'' on their books. They get to avoid paying their fair share to Uncle Sam by simply giving their executives the rights to huge sums of money from the financial markets.

Right now, stock options are the only compensation expense where the tax code allows companies to deduct more than their book expenses. In the last year for which the data is available, companies used the existing book-tax disparity to claim $48 billion more in stock option tax deductions than the expenses shown on their books. In these times of financial crisis, we cannot afford this multi-billion dollar loss to the Treasury, not only because of the need to finance the mounting costs of rescuing the economy, but also because this stock option book- tax difference contributes to the anger and social disruption caused by the ever deepening chasm between the pay of executives and the pay of average workers.

The Obama administration has pledged itself to closing unfair corporate tax loopholes and to returning sanity to executive pay. It should start with supporting the ending of excessive stock option corporate deductions. I urge my colleagues to join Senator McCain and me in enacting this bill into law this year.

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

Mr. President, first of all, I ask unanimous consent that we not go into the quorum call.

I ask unanimous consent to speak as in morning business.

Mr. President, I rise to discuss two important issues we will not have the chance to debate because we are unable to take up the Defense authorization bill.

Let me start with the need for repeal of the discriminatory don't ask, don't tell policy. We are so close to making a historic accomplishment that I think we would be able to look back on with pride. It is also simply the right thing to do. This country is long past ready for it, and it is the right thing because the don't ask, don't tell policy has been costly for our military. Treating gays and lesbians unequally because of their sexual orientation just does not make sense to me. We should not be denying gay and lesbian Americans the ability to serve our Nation simply because of who they are. We should not make them lie in order to serve.

The Chairman of the Joint Chiefs of Staff, ADM Mike Mullen, endorsed the repeal of don't ask, don't tell. He put it this way:

I cannot escape being troubled by the fact that we have in

place a policy which forces young men and women to lie about

who they are in order to defend their fellow citizens. For

me, personally, it comes down to integrity: theirs as

individuals and ours as an institution.

But as I said, this is not just about the right thing to do. The country is ready for it, and the military is ready for it. Things have changed since 1993. The country is now way ahead of us on this issue. A Washington Post/ABC News poll in February 2010 showed that 75 percent of Americans believe gay and lesbian Americans should be able to serve openly in the U.S. military--75 percent. There is almost nothing we can get 75 percent of the country to agree on these days. The country has been steadily moving in this direction for some time. In 1993, 44 percent of those surveyed favored this. It was up to 62 percent in 2001. And now we are at 75 percent. Multiple other polls reinforce this result. The country is way past being ready for this change, and so is the military.

Do we need to think carefully about how to implement repeal? Yes. That is why the Pentagon is undertaking a comprehensive review of how to implement the repeal. But is there any reason to think unit cohesion or military readiness is going to be negatively affected? No. There is simply no reason to think that. In fact, let's look to the military's own thinking on this question. A recent article in Joint Force Quarterly concluded that ``there is no scientific evidence to support the claim that unit cohesion will be negatively affected if homosexuals serve openly.'' No scientific evidence.

Let me also briefly tell you about my experience. Before I was a Senator, I did a number of USO tours over the years. On each tour, I was more and more impressed with the men and women of the military. This was between 1999 and 2006. I did seven tours. The last 4 years, I was in Iraq and Afghanistan and Kuwait. I would go with a very eclectic tour of guys and women: the Dallas Cowboys Cheerleaders, country western artists, almost all of whom are very rightwing, and we love each other because we went on these tours.

Let me tell you about one show I did. I am not going to say what base it was. I do not want to get anybody in trouble. We did a 4-hour show. This was the fourth year we did this with the sergeant major of the Army. We did a 4-hour show because we found out the troops loved the show because it was a little bit of home. During the show, I would--I was kind of the cohost with a beautiful woman named Leeann Tweeden, and we would do comedy routines, we would introduce music, and we would introduce the cheerleaders.

I would go out and do a monologue. This is something I would do and had done for a number of years. I would go out and I would say: You know, I have done now seven USO tours, and every year I am just more and more impressed with the military, except for one thing I don't get. It is this whole don't ask, don't tell policy.

Now, it was about 28 degrees where I was talking, and there were maybe a couple thousand troops. Most of them were standing, some were in the bleachers. This was like 3 hours into the show, but they were just loving the show.

I said: But there's one thing I don't understand. It is this don't ask, don't tell policy. We all know that brave gay men and women have served in our country's uniform throughout its history, and yet we have this policy. Take, for example, General Smith.

I then pointed to the commander of the base.

I said: Now, here is one of the bravest men ever in the history of our country

to don our Nation's uniform in battle, and yet he is one of the gayest men I have ever met.

And they started laughing and cheering.

I said: Now, why should General Smith have to stay in the closet when he is such a great leader? General Smith, stand up and wave.

He got up and waved, and everyone cheered. And in the bleachers there was a group of women soldiers who cheered extra loudly and waved at him, and he waved back at them.

At the very end of the show, we sang ``American Soldier'' by Toby Keith.

I don't know if you know that song. It is a beautiful song. I will always remember while doing the USO tours seeing soldiers with their arms around each other crying and singing: I don't do it for the money. I've got bills that I can't pay.

At the end of the show, the general came up and gave me this beautiful frame with an American flag that had flown over the base. He gave it to every member of our troop. When he gave it to me, he said, ``Al, keep telling those don't ask don't tell jokes. I think you may have some fans up there.'' And he pointed at those women. Later, those women came up to me and said, ``We are gay.'' And I think everybody knew it.

This was in 2006 when it was really hard for the military to recruit people, so they gave waivers out at that time. They gave waivers--moral waivers. They gave waivers for people who didn't do as well in school or didn't graduate from school. I swear, if you asked every man and woman on that base: Who would you rather have standing to your right and left, that gay man or that gay woman who has been serving with you for the last year or somebody who comes in here with a moral waiver-- and many of those troops who had moral waivers served very honorably and bravely--or someone with a cognitive waiver--and many of those flourished in the military--they would say: I want that gay soldier, that lesbian soldier, who I know has been on my right and on my left.

All gay and lesbian servicemembers want is to be able to serve. Instead, people are getting kicked out of the military--people who don't need any kind of conduct waiver, people who don't need standards lowered for them in order to serve, people who are patriotic and courageous and who have vital, irreplaceable skills.

What is more, the evidence is clear from other countries that have allowed gay and lesbian citizens to serve openly in their military--and Susan Collins spoke about this today. That evidence says this will not be a problem. Ask the Israelis, ask the Canadians, and ask the British. They have all successfully implemented open service.

But it is not only that the military is ready for this change; don't ask, don't tell is just costly for the military. Thousands of willing and capable Americans with needed skills have been kicked out of the military because of this foolish policy--and this policy alone. These are soldiers, airmen, and sailors in whom we have invested time and training. We cannot afford to lose dedicated personnel with critical skills when we are engaged in two wars.

On top of that, do we want our military officers spending valuable time and resources investigating and kicking troops out of the military for being gay?

The argument offered by some opponents is that this legislation goes back on the promise to take into account the comprehensive review being conducted by the Pentagon, but that is just a canard.

Let me remind you what Secretary Gates said about the review when he testified before the Armed Services Committee back in February. Secretary Gates said:

I fully support the President's decision. The question

before us is not whether the military prepares to make this

change, but how we best prepare for it.

Not whether, but how. That process is going forward, and the provision in this bill repealing the flawed don't ask, don't tell policy does nothing to interfere with the Pentagon's process. All the provision does is repeal the existing law. It does not tell the Department of Defense how to implement the repeal.

What is more, the repeal itself doesn't even go into effect until after the Pentagon's comprehensive review is complete and the President, Secretary of Defense, and Chairman of the Joint Chiefs of Staff have certified that the Department of Defense has prepared the necessary policies and regulations for implementation. They must also certify that the implementation is consistent with military readiness and effectiveness, unit cohesion, and recruiting and retention.

To be honest, I am not fully satisfied with that compromise. I wanted a moratorium on discharges. But that is the compromise, and it doesn't undercut the Pentagon's review in any way.

Don't ask, don't tell makes no sense. It is foolish, it is unjust, and we must end it. The country is ready, the military is ready, and it is the right thing to do. I urge all of my colleagues to stand for equality and for common sense and to stand for our troops. It is long past time to end don't ask, don't tell. We will be proud that we did.

Let me turn to the DREAM Act, which also would have come up if we had been able to get cloture and move to the Defense authorization bill.

Minnesota is what it is today because we welcomed immigrants with open arms. We welcomed the Swedes, who first tilled our fields and built our railroads. We welcomed the Norwegians, who thrived in our lumber industry and founded choirs that remain the best in the world today. We welcomed the Danes, who made our State a leader in dairy farming. We welcomed the Germans, the Finns, the Poles, and the Czechs.

In fact, from the time we were admitted to the Union in 1858 until 1890, no less than one-third of Minnesotans were born abroad. Today, most of the people we welcome don't come from Europe. They don't speak Swedish or German. They speak Spanish or Hmong or Somali, and they are not one-third of our population. Just 7 percent of Minnesotans were born abroad. So there are far fewer immigrants in Minnesota by percentage. Mr. President, let me tell you, these folks work just as hard and they show just as much promise.

I rise to speak in support of the DREAM Act because just by passing this law we can do something remarkable to help those Minnesotans--at least some of them. This is a group of young people who were brought here by their parents. They were raised as Americans and, for the most part, speak English just like you and I. But because their parents made a mistake, because their parents broke the law and entered the country illegally, or overstayed a visa, these kids are stuck. They can't go to college. They can't get jobs. They can't join our military. They are out of luck, and our society is going to pay for it.

The DREAM Act would allow these students to reenter society, to come out of the shadows of society to study or to serve in our country's military.

I want to put faces to the young people of Minnesota who would benefit from the DREAM Act. I am going to change their names to protect their identity.

There is a young man named Daniel. Daniel came to the United States from Colombia when he was 8. He grew up in the suburbs, and he ran varsity track and cross-country for his high school. Since he couldn't get a driver's license, he took a 2-hour bus ride every day just to get to classes at Normandale Community College. In his second year, Daniel's father died, leaving Daniel and his mother without any income.

Daniel almost dropped out, but he didn't. Instead, he became the first member of his family to graduate from college, with dual associate degrees in education and computer science--both with honors. Daniel is now at the University of Minnesota. He is trying to get his bachelor's degree. But since he can't work, he can't afford to attend school full time. So every semester, Daniel saves up all of his money to take just one class. He is completing his bachelor's one class at a time.

There is another remarkable young Minnesotan, Javier, who came to this country at the age of 15. He enrolled in St. Paul High School and quickly learned English, and by his senior year was taking advanced placement and college courses and volunteering at the State capitol. He even started to like the weather in Minnesota.

Today, Javier is an elected leader of student government at a college in our

State. He has become a role model not just for immigrants but for all his fellow students. Javier wants to dedicate his career to improving our educational system. But because of the decision his parents made, he can't.

I get letters from students like these all the time. Many of them are just as talented, and they all ask me for the same thing: the opportunity to work hard for this country. Let me repeat that: They only ask for the opportunity to work hard for this country.

Another young woman wrote me to ask:

We do not want welfare or any money. We are not asking for

immunity to the law. We are only asking for a chance to come

out to the light and live like any other person.

There are a lot of reasons we should help them. The first reason is that it is the smart thing to do. Some of my colleagues have stood here and said they couldn't believe the DREAM Act might be included in the Defense authorization bill.

In fact, the Defense Department has supported the DREAM Act since the Bush administration. This bill is actually a part of our Nation's strategic defense plan--hence, the Defense authorization bill. It will incentivize and reward students to wear our Nation's uniform, and our Nation will be safer because of it.

Here is another reason this is smart. We don't want kids like Javier doing dishes. We don't want kids like Daniel taking 10 years to get their bachelor's degree. We want them studying, contributing to our economy, and serving in our military. But there is a far more important reason we should pass the DREAM Act, and that is because it is the right thing to do.

Mr. President, there is a passage in Leviticus--a book that appears in both the Old Testament and the Torah--which I think is appropriate. Leviticus is a book of laws. It is said to describe God's covenant with the Israelites. This is chapter 19, verse 33:

When the foreigner resides with you in your land, you shall

not oppress the foreigner. The foreigner who resides with you

shall be to you as the citizen among you; you shall love the

foreigner as yourself, for you were foreigners in the land of

Egypt.

Mr. President, these are children, and we need to help them. They have learned in our schools, they have played with our kids, and they want to serve our country. We just need to give them a chance.

Mr. President, I yield the floor.

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

Mr. President, I ask unanimous consent to speak for up to 6 minutes as in morning business.

Mr. President, I rise today to honor the Minnesotans and their families affected by Alzheimer's disease and recognize September 21 as World Alzheimer's Day. Today, over 94,000 Minnesotans and 5 million Americans are living with Alzheimer's disease. These are epidemic numbers, and the toll on our families and communities is devastating. Alzheimer's is the seventh leading cause of death and costs our Nation $172 billion a year.

But today, on World Alzheimer's Day, we have reason to be hopeful. On this day, Alzheimer's is getting the attention it deserves. Take the first ever Alzheimer's Breakthrough Ride as an example. For the last 66 days, Alzheimer's researchers from across the country biked hundreds of miles to spread awareness about Alzheimer's. Today, these researchers arrived in Washington to demand that the fight against Alzheimer's be made a national priority.

I am proud to say that among the researchers on the ride is Minnesota doctor Michael Walters of the University of Minnesota's Grossman Center for Memory Research and Care. Dr. Walters rode from Madison, WI, to Chicago, IL, to raise awareness about Alzheimer's. He is here in Washington to demand that we in Congress provide the funding needed to make real progress against this disease. And we need real progress. After decades of research, there is still no effective treatment and no way to prevent or cure Alzheimer's. That is why my colleague from Maryland, Senator Mikulski, has put forth a bill to make Alzheimer's research a national priority. S. 1492, the Alzheimer's Breakthrough Act, would dramatically increase funding for Alzheimer's research at the National Institutes of Health. Under this bill, the NIH would also focus on prevention and early detection of the disease--two understudied areas that could drastically improve the health of millions of Americans. That is why I am proud to have cosponsored the Alzheimer's Breakthrough Act.

The bill puts us one step closer to finding a cure and gives hope to families affected by Alzheimer's. One such family is the Shapiros of Edina, MN. In 2006, Alan Shapiro was diagnosed with Alzheimer's disease. Alan's father, uncle, and grandfather have all died of Alzheimer's, and Alan's brother Robert is currently living with the disease as well. Right now, Alan is in the midstage of his disease and needs round-the-clock supervision. His wife Carol spends her days caring for him so they can continue to live at home together. In addition to caregiving, Carol also takes care of all the things Alan used to do, such as maintaining the house. While Carol is involved with local sport groups, she struggles just to stay afloat.

Like the Shapiros, many families affected by Alzheimer's will tell you that their needs are not being met. It is not always clear where to turn for help. Sometimes a doctor can tell you about a clinical trial or a friend can offer to do the grocery shopping, but unfortunately it is never really enough. Families such as the Shapiros need help planning for the future, they need help navigating complicated insurance policies, and they need help finding high-quality, long-term care services and respite care. Fortunately for families in need of this kind of help, there is a Federal law called the Older Americans Act. The Older Americans Act provides seniors and families affected by Alzheimer's with tools to create a long-term care plan, and it can help caregivers, such as Carol Shapiro, find services for their loved ones. For example, in Minnesota, the Older Americans Act funds the Senior Linkage Line. Families can call the line and get information about services for people with Alzheimer's available in their community.

Because of limited funding, even resources such as the Senior Linkage Line are not always well known or able to serve everyone who needs them the most. That is why it is important to take a close look at the Older Americans Act when it is up for reauthorization next year. It is critical that the Older Americans Act receive robust funding so families affected by Alzheimer's know about the resources that are available to them. It is also important that we strengthen the law to ensure that people with Alzheimer's have access to high-quality, long- term care services and that States have the resources to protect people with Alzheimer's who receive care at home.

Today, on World Alzheimer's Day, I am committed to making support for families affected by Alzheimer's a national priority. As a member of the HELP Committee and the Special Committee on Aging, I will be fighting for the needs of Minnesotans affected by Alzheimer's disease during the reauthorization of the Older Americans Act. I will be a strong supporter of Alzheimer's research so real progress can be made to stop this disease. I urge my colleagues to do the same. I ask that they take this important day to remember the families, such as the Shapiros, living in their home States.

Mr. President, I yield the floor.

Madam President, I rise to express my deep disappointment that we were unable to proceed to the Defense authorization bill.

I have been here a while, maybe I am wrong--I am searching my memory--I don't remember any time that we voted against proceeding to the Defense bill. I am going to go back. Certainly, in the time I have been here, I don't remember that.

It is a filibuster just to go to the Defense bill. It is perplexing to me because of some of what is in this bill--including funding for the defense health program to care for our military personnel and their families, including our wounded warriors. We know these wars in Iraq and Afghanistan have taken quite a toll on our military men and women, both in seen injuries and unseen injuries--injuries to the brain.

We know some incredible work is going on. I visited some of the research universities that are finding better ways to treat our wounded warriors. They are finding better ways to treat terrible wounds that result from horrible burns to our brave men and women. Now is the time to put those new and better treatments into place and there is a filibuster and we cannot get to the bill.

We know there is a military pay raise in this bill for our servicemembers. Those voting no to proceed to this are stopping that.

This bill authorizes TRICARE coverage for eligible dependents up to age 26. In other words, just as we did in the Health Care Reform Act, in this bill we are saying if you are in the military and you have a child, you can keep them on your coverage until they are 26.

It provides $3.4 billion for Mine Resistant Ambush Protected vehicles or MRAPs, which have proven highly successful in protecting our troops from improvised explosive devices, and it requires companies to certify for all DOD contracts valued over $1 million that they are not engaged in any sanctionable activity under the Iran Sanctions Act of 1996. So we would make sure that the DOD, Department of Defense, is not involved in giving contracts to companies that are trading with Iran. This is so important, as we seek to sanction Iran for its reckless activity in moving toward a nuclear weapon.

In the bill the Republicans blocked is also a repeal of the military's don't ask, don't tell policy. The bill includes a provision stating that there will be no repeal of this policy until there is a certification from the Department of Defense that it will not have adverse consequences on our troops.

Some said: Oh, this is just ignoring the Department of Defense, ignoring the Secretary of Defense. Not at all. The way Chairman Levin put it together definitely has a check on it. So I do not understand a lot of my colleagues' claims that it is just a quick repeal with no checks and balances from the Secretary of Defense.

I will say it again, it is clear in there, and I will read the exact words, that there must be, as we repeal don't ask, don't tell, a certification from the President, the Secretary of Defense, and the Chairman of the Joint Chiefs of Staff that there will be no significant impact on ``military readiness, military effectiveness, unit cohesion and recruiting and retention of the Armed Forces.''

I think it is important to note what countries allow gays and lesbians to serve. How about 22 of our allies who have fought with our service men and women in Iraq and Afghanistan: Australia, Britain, Denmark, France, Italy, the Netherlands, Slovenia, Switzerland, Austria, Canada, Estonia, Germany, Lithuania, New Zealand, Spain, Belgium, the Czech Republic, Finland, Ireland, Luxemburg and Norway and Sweden. In addition, Israel and South

Africa also don't discriminate against gays and lesbians. I don't know who we end up with, but some of the countries I can find that still discriminate against gays and lesbians in the service are Iran, Pakistan, Cuba, North Korea, and Turkey.

For us to stand with Iran, for us to stand with Cuba, for us to stand with North Korea, Pakistan, and Turkey over Australia, Britain, Denmark, France, Italy, the Netherlands, Switzerland, Austria, Canada, Germany, et cetera--it just doesn't make sense.

The point is, because we are part of this coalition of 22 other nations, our service men and women are already fighting alongside gays and lesbians.

A majority of Americans think it is the right thing to do, to allow our qualified young men and women to serve regardless of their sexual orientation. According to a CNN poll conducted in May, 78 percent of Americans said they support allowing gays and lesbians to serve openly in the military--78 percent of Americans. We would be standing with them and we would be standing with our allies.

Don't ask, don't tell is hurting our military. It is costing our Nation--more than 14,000 service men and women have been discharged from the military under don't ask, don't tell. It has cost taxpayers between $290 million and maybe up to more than a $\1/2\ billion to replace servicemembers who were discharged under this policy.

I know many Americans have seen in their living rooms, on the TV, men and women who are our neighbors' kids, and our neighbors, who have been kicked out of the military even though they were stellar service men and women. It is most unfortunate that our friends on the other side are mischaracterizing what is in the bill.

We allowed them an amendment to strip that language, and they said, oh, well, if we pass this, then the military would be caught off guard. Not at all. The way it is written specifies that there must be a certification that a repeal would not be harmful to our military.

I am also terribly disappointed we will not have a chance to vote on the DREAM Act. The DREAM Act allows those students who have been here most of their lives an opportunity to earn legalized status if they met certain criteria. Those are kids who were brought over as kids, maybe a month or 2, or a year or 2, or 5 or 6 years old. They must have lived in the United States for 5 years. They must earn a high school diploma. After high school, they must complete 2 years of college or serve in the Armed Forces for 2 years. They must demonstrate strong moral character, and only those who pass these tests would be eligible to get on the pathway to legality. Sixty-five thousand young people a year graduate from high school, but they cannot join the military, or they cannot go to college, because of their immigrant status. It was not their fault they were brought into the country by their parents. I want to tell you that our military has said--and I will quote retired Army LTC Margaret Stock. She said: ``Potential DREAM Act beneficiaries are likely to be a military recruiter's dream candidates for enlistment.''

Let me repeat that. The military itself has said, The DREAM Act will result in a military recruiter's dream, because some of these recruits are very good with foreign language skills, foreign cultural awareness, they are in short supply, and they would be excellent recruits.

Businesses support the DREAM Act. Our economic future is something we talk about every day around here. I read a U.S.C. study that said, if we finally begin a process where people who are here, who are hard working and caring, can stay here and come out of the shadows, it will create 25,000 jobs and increase the gross domestic product of my State and of the Nation.

That is why I have the San Jose Mercury News, home paper of the Silicon Valley, writing an editorial last week in favor of the DREAM Act, saying it will boost America's economic competitiveness. So here we have the time where we have something on the floor that is directly related to the military bill, because the military is saying it is a recruiter's dream, this DREAM Act, because they are going to have so many people lining up to join. We have Silicon Valley strongly supporting this, and I will tell you, the San Jose Mercury News said: ``The high school dropout rate in this country terrifies business leaders, who fear that in the coming decades we will not produce enough college graduates with math and science ability.''

That is why the Silicon Valley Leadership Group supports the DREAM Act. That is a group made up of Republicans, Independents, and Democrats. They wrote: DREAM Act students ``deserve a chance, and the U.S. economy needs their knowledge and ability.''

Companies such as Microsoft also support the DREAM Act. They wrote: ``The DREAM Act rewards those who place high value on education, and on service to country.''

Last week the president of the University of California, the chancellor of the California State university system, and the presidents of State universities in Arizona, Washington, Minnesota, Utah, and Washington wrote in support of the DREAM Act. They write in a letter: ``In the current international economic competition, the U.S. needs all the talent it can acquire and these students represent an extraordinary resource for the country. The DREAM Act . . . is an economic imperative.''

In closing, I want to talk about a couple of stories. I think this is very important. David graduated from high school with a 3.9 grade point average. He is studying international economics and Korean at UCLA. He has served as the leader of the UCLA marching band, and he spends his free time tutoring high school students. After graduation, he hopes to enter the Air Force and some day politics. In many ways, he is a model college student and a leader in his community. But he was born in Korea. He came here when he was 9. His family spent 8 years trying to navigate their way to legalized status, only to find out that their sponsor had erred in filling out the paperwork.

So here sits David. He had nothing to do with all of this. Here is what he says:

I will not be able to put my name down on a job application

because of my status. This country is throwing away talent

every second . . . but the DREAM Act can bring thousands of

students out of the shadows and allow them the opportunity to

work for the country they truly love right now.

I would say these students such as David did not choose to come to this country. They were brought here by their parents. The reality is, they have grown up here. This is the only country they know. I am very disappointed that we are not voting on this important bill today. I hope we can take up the DREAM Act later this year. I believe it will truly strengthen our economy, our military, and our Nation.

The very last point I want to make as we wind up this Congress is, I am so pleased that we passed the Small Business Jobs Act last week. I traveled across California. I have met with so many small businesses, and I did a conference call with about 10 of those businesses, including the Los Angeles Baking Company, the Blue Bottle Coffee Company in Oakland, biofuels manufacturer Solazyme, Capstone Turbine in Chatsworth, U.S. Hybrid in Torrance, the Back on the Beach Cafe in Santa Monica, and the Santa Barbara Adventure Company. These are small businesses in my State that are very strong. They could not get access to credit to expand and hire. As a result of the work we did, they will be able to get that credit. I want to thank the two Republicans who crossed over to vote with us. It shows us that we can make progress when we work together, because this has to come ahead of politics.

I went to a company called Renova. Renova is helping to make California the hub of the clean energy economy. Vincent Battaglia, the owner there, told me he has been getting no help accessing the credit he needs. He called our legislation ``the missing piece,'' the piece he has been waiting for.

Small businesses create 64 percent of our new jobs. That is what happened over the last 15 years. I believe this bill will help get them back on track. As they get back on track, our recovery will begin to have a little more energy behind it. Because it is very slow; it is agonizingly slow.

I wanted to state on the Record how much I appreciate the two Republicans--

I thank you and I yield the floor.

Mr. President, I yield 2\1/2\ minutes to Senator Reed.

Mr. President, I will yield myself just a minute and a half. I would ask that the Republicans have their speaker--if they are going to be using their time--to come immediately after me; otherwise, it would not be fair for us to be using up all of our time in advance.

Mr. President, this morning a number of Republican Senators stated they would support the current filibuster of this bill because they were afraid that if we take up the bill, we are going to have a closed process that would limit their ability to offer amendments. The majority leader has addressed this issue. He specifically said last Thursday that he is ``willing to work with Republicans on a process that will permit the Senate to consider these matters and complete the bill as soon as possible.'' He is very clear on this. He is not trying to prevent other amendments from being offered. However, there are not going to be any amendments, there is not going to be any opportunity to vote on any amendments unless we get 60 votes to overcome the current filibuster and proceed to the bill. It makes no sense for Senators to

block all amendments, which is what the effect will be if we do not end this filibuster, to deny consideration of this bill so we can consider amendments. It makes no sense to do that under the guise of wanting an open amendment process. We are not going to have any amendments unless we can get to this bill, unless we end this filibuster.

Amendments are appropriate. We have always had amendments on the Defense bill. The majority leader assures we are going to do that again, and I will do everything I can as chairman to make sure that is true. So the issue today is not whether there is going to be specific amendments in order; it is whether we are going to get to the bill so we can try to consider amendments to the Defense authorization bill. There are many amendments that should be considered, and I hope we do not continue this filibuster. I hope we can get 60 votes and do the important work of the Nation, which is to get a defense authorization bill passed after it has been considered.

I reserve the remainder of my time.

Mr. President, how much time do I have?

I yield the time to the Senator from Connecticut.

Madam President, I know the Senator from Hawaii has to leave, but before he goes I just wish every American could have heard from a hero not of this body, of this Nation but of the world. Senator Inouye did more than swim against the tide in order to put on the uniform of his country. He had to fight his way into the Army. He then became a Medal of Honor winner. The highest honor--the Medal of Valor-- that can be granted was awarded to Senator Inouye. He gave up more than just a few years of his life; he gave up part of his body for this country.

His eloquence and his passion for proper treatment of people who want to put on the uniform of this Nation is extraordinarily powerful. I only wish every American could have heard it. I thank him for that service and for that statement.

I also want to add a thank-you to the Senator from Illinois. I want to reinforce something he said by asking him a question. It had to do with that unanimous consent request to which he referred. The way this request was worded, even if--well, let me back up.

We have heard for 2 days objections from Republicans that there would be nonrelevant amendments that would be offered--which, of course, is permitted under our rules. As a matter of fact, the Senator from Arizona has on a number of occasions on this bill offered nonrelevant amendments. But even if that DREAM Act amendment of yours were modified so that it only related to young men and women who wanted to go into the Army to serve their country and the educational part of it, as important as it is, if that were left out--even if the amendment were designed so that it could be referred to the Armed Services Committee because it would be defense related, even if you could design an amendment like that, under this unanimous consent agreement no amendment related to immigration would be in order during those first amendments.

Is that not singling out immigration, saying, despite all of the protestations we heard here about wanting to make sure amendments were relevant--despite the history that is not required under the rule but that is the protestations we heard over the last few days, we want relevant amendments and the DREAM Act isn't relevant--under this unanimous consent request, even if the DREAM Act were modified so it might be within the jurisdiction of the Armed Services Committee because it would be focused on service in the Armed Forces, under this request no amendment relating to immigration would be in order; is that correct?

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

Mr. President, ever since an act of horrific violence on a bright blue morning 9 years ago, our Nation has been at war. At home and abroad, this war has tested our Nation, tested our military strength and our diplomatic skill, tested our resilience and our courage. Over the last few months, I fear our Nation has been in danger of failing one of these tests, a failure that would threaten our safety and the freedoms we hold so dear.

At issue is a plan to build an Islamic community center a few blocks away from the site of the attack on the World Trade Center and the larger question of whether our Nation will embrace diversity or choose a path of division. This is not just a question of doing the right thing, although it is that. It is not just a question of preserving the values that have made our Nation a beacon of freedom across the globe, although it is certainly that too. This is also a question of whether we will make our Nation safer by focusing on and extinguishing the flames of hatred that spawned the 9/11 attacks or, on the other hand, add fuel to the fire that threatens us.

There should be little doubt that religious intolerance has no place in a nation built on the idea, as Thomas Jefferson once wrote, ``that our civil rights have no dependence on our religious opinions.'' Our history is filled with moments in which we struggle to live up to that notion, in which Roman Catholics or Mormons or Jews or others found themselves beset by religious intolerance and wondering if the ideals set forth by our Founding Fathers would hold.

So it is in this case. American Muslims have built homes, raised families, and run successful businesses in communities across our country. They have been drawn here because of the belief, as one prominent member of Michigan's Arab-American community recently wrote, ``that there is room in America for all cultural and religious backgrounds.''

Well, that is the America in which they chose to build their lives. It is the America we aspire to be, that we claim to be. We should ask ourselves, if we would not object to a church or synagogue at that location in Manhattan, how can we object to a Muslim place of worship and remain true to our most fundamental principles?

Upholding the promise of our founding values should be reason enough to resist anti-Muslim sentiment. But there are equally powerful reasons that rely not on values but on simple common sense. The war that began on September 11, 2001, is not only a war against terrorists but a war to isolate those terrorists from broader Muslim society. We have seen time and time again that when we stray from our values, it is not just a moral failure but a national security failure. Our troops work every day to keep weapons out of the hands of al-Qaida and its terrorists. Yet, by indulging in intolerance, we hand al-Qaida a powerful propaganda weapon, one to use to stoke hatred of us and to recruit the terrorists who threaten our troops abroad and our citizens at home. We have already seen in the violent and even deadly protests in Afghanistan how anger can spawn anger and hatred and can inspire hatred.

By threatening to burn holy texts or by holding an entire faith as somehow responsible for the actions of its most fanatic members, Osama bin Laden and his kind are given precisely the kind of clash of civilizations they so desperately seek to create.

I was heartened by the words of Mayor Michael Bloomberg, who said:

We would be untrue to the best part of ourselves--and who

we are as New Yorkers and Americans--if we said ``no'' to a

mosque in Lower Manhattan.

I am also encouraged by the religious leaders of many faiths across our country who have stood up and said:

We support the rights of all Americans to worship in their

chosen place, through a climate of respect, dignity and

peace.

I am encouraged by the words of our commander in Afghanistan, GEN David Petraeus, who powerfully pointed out that the acts of religious intolerance are ``precisely the kind of action the Taliban uses'' to direct hatred at our brave troops.

I am encouraged by the words of our President:

This is America and our commitment to religious freedom

must be unshakeable.

I am heartened, too, by the reaction in my home State, which is home to a large, thriving, and valued community of Muslim Americans. The Grand Rapids Press has editorialized that ``[a] Manhattan mosque would be a powerful statement that the terrorists did not--and cannot--win.'' A columnist in the Detroit News wrote:

Ground zero would seem to be the perfect place to

demonstrate that religious tolerance is why so many flocked

to our shores in the first place, and remains a key block in

the foundation of our freedom.

A Detroit Free Press editorial reads:

It's not just about this being a mosque, but about the

religious freedom that we all hold dear, and that was such a

critical part of this country's founding.

Michigan civil and religious leaders of many faiths and backgrounds have invoked our most closely held beliefs and called on the Nation to speak and act in harmony with those beliefs. The power of those beliefs represents a powerful tool against the hatred that inspired 9/11.

The founding principles of our Nation call on us to stand with voices of tolerance and reason. Those who have given their all in the defense of those principles would surely hope that we would resist the calls to hatred and violence. Our moral authority depends on that. Preservation of the freedom that defines us depends on that. Our safety depends on that. I commend those who have spoken for tolerance and diversity, who have resisted anger and intolerance, and who in doing so have upheld our most important values and have made our Nation safer.

Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. President, for those who have been following this vote, this was an attempt to proceed to the Defense authorization bill. It is one of the most important bills we consider during the course of a year. Senator Levin of Michigan is chairman of the Armed Services Committee, and he was prepared to bring that bill to the floor.

There was an attempt made by the majority leader, Senator Reid, to allow three amendments to be considered--three amendments which would be considered before other amendments on the bill. One of the amendments related to the don't ask, don't tell policy. There is a provision already in the bill which allows--after review by the Joint Chiefs of Staff, the President, and the Department of Defense--the possibility of removing that provision from our law. That was one of the amendments. The second amendment related to Senate procedure on secret holds. But the third amendment--and the one I rise to speak to-- is the one which became the focal point of this last vote. That amendment related to a measure known as the DREAM Act.

Almost 10 years ago, I introduced this bill called the DREAM Act. The reason I introduced it was because I felt there was a serious injustice and unfairness going on in America. We have within our borders thousands of young people who were brought to the United States by their parents at an early age. I don't know what it was like in their homes, but there weren't many democratic votes when I was 5 years old as to where we were going for vacation. I went where I was told, and these children followed their parents to America. They came here and became part of America. We made certain they had an opportunity for an education and health care. We made certain they had an environment where they could grow up in this country, and for many of them, it was the only home they ever knew. But because they came to this country with undocumented parents, they were not legal. They were not documented. They couldn't be citizens.

That, to me, is a serious injustice. We do not, in this country, hold the crimes and misdeeds of parents against their children. What I have tried to do with the DREAM Act is to give these young people a chance-- a chance to earn their way to legal status and become part of the only country they have ever known. The DREAM Act isn't easy. The DREAM Act says if you came here as a child, if you were raised in the United States, are of good moral character, with no criminal record, and you have graduated from high school, then we give you 6 years. In that 6- year period of time, you have a chance to do one of two things to become legal: No. 1, serve the United States of America in the military; and No. 2, complete 2 years of a college education. Then we will give you a chance to come off temporary status and become legal in

America. But you have to earn your way all the way through, subject to review, examination, and all the requirements that should be there before someone gets this chance of a lifetime.

Well, the Republican minority leader came to the floor before this vote and he offered a unanimous consent request--which Senator Reid objected to--and here is what it said. Of all the amendments you can consider on the Defense authorization bill, you cannot consider any amendment that relates to immigration.

I know what that was about. The Senate knew what that was about. It was an attempt by the Republican side of the aisle to make certain the DREAM Act could never be called on the Defense authorization bill. They have made an empty argument on that side that this DREAM Act has nothing to do with the defense of the United States. It is an empty argument.

I would be happy to yield.

They reach legal status. They have to make application to go beyond it. In this situation, young people, undocumented in the United States, who want to voluntarily serve in our military, cannot do so. They are willing to risk their lives for America. Yet we say no.

The Secretary of Defense knows that is wrong. This morning, in a conversation I had with him in my office over the telephone, he reiterated what he had said to me before: These are the kind of young people we need in America's military--high school graduates from cultural traditions that respect the military; people who are going to make more diversity in our ranks. That is what we need. He knows, from a national defense perspective, these will be good recruits for our military and will distinguish themselves serving our country and coming up through the ranks.

That is what the DREAM Act offered to the Defense authorization bill. The Republican leadership and every Republican Senator said no.

I would say to the Senator from Nevada exactly that. The Defense Department's fiscal year 2010-2012 strategic plan for the defense of America specifically includes the DREAM Act as a means of meeting the strategic goal of shaping and maintaining a mission-ready, all-volunteer force.

In 2007, the Deputy Under Secretary of Defense at that time said the DREAM Act is very appealing because it would apply to the cream of the crop of students and be good for readiness. Over and over again, the Department of Defense has told us this is an opportunity for young people to serve your Nation, for America to be a safer place.

I wish to relate to my friend, the Senator from Nevada, a story I told him earlier. This young man came this morning to the U.S. Capitol from the city of New York. I say to the Presiding Officer, he lives in Brooklyn. His name is Cesar Vargas. Cesar Vargas came to the United States at the age of 5, brought here by his mom and dad from Mexico. He graduated from the regular public schools of New York and then went on to graduate from college. It was more difficult for him because he is undocumented. So he couldn't get any Federal aid to education--no Pell grants, no Federal student loans. But he made it and he graduated. He said to us this morning that after 9/11, because of his deep commitment to America, he tried to enlist in the Marine Corps. He said: I wanted to defend this country after we had been attacked by terrorists. He not only tried the Marine Corps, but he tried other branches as well and repeatedly he was turned down because Cesar Vargas is undocumented.

But his dream has not died. Now he is a third-year student at the City University of New York Law School. He speaks four languages. He said he is studying a fifth--Cantonese. He is an exceptionally gifted young man. Do you know what his ambition is? Once again, to join the Marine Corps--to be in the Judge Advocate General Corps to serve America, a country he dearly loves.

Because of this Republican decision--a procedural decision that says we can't consider the DREAM Act--we will not have a chance to vote on this important measure which would give Cesar Vargas and those like him a chance to volunteer to serve America. I would say to my friends and colleagues on both sides of the aisle, where is the justice in this decision? At least have the courage to let us bring this matter to the floor and stand and vote no. But to hide behind this procedural ruse-- this unanimous consent request--is totally unfair. It is inconsistent with the spirit and the history of this Chamber, where we deliberate and debate and vote. But they ran and they hid behind this procedural decision.

I will be happy to yield for a quick question.

I thank the Senator from Nevada, the majority leader, and I will tell him and those following this debate--some who are in the Chamber, in the galleries, who I am sure are disappointed, if not heartbroken at this point. I mentioned Cesar Vargas, who is here, but Gaby Pacheco, and so many others who have worked so hard for this chance, for this day, and my promise to them is this: As long as I can stand behind this desk and grab this microphone and use my power as a Senator, I will be pushing for this DREAM Act. It is my highest priority. It is a matter of simple American justice, and I would hope the 11 Republicans who joined us last time will stop cowering in the shadows and come forward and join us in a bipartisan effort and not stop us procedurally from even debating and deliberating this critical issue.

For those who are so sad today, take heart. Tomorrow is another day, and we will be there to fight for you, and many others will join us. Don't give up your dream to be part of this great Nation.

I yield the floor.

I reply to the Senator from Michigan through the Chair and thank him for this question. Just as the door was closed on Dan Inouye of Hawaii when, as a Japanese American from Hawaii, he wanted to serve his country, the unanimous consent request from the Republican leader closed the door on anyone who wished to serve this country if it involved the issue of immigration. It had one intent: stop the DREAM Act, stop these young people from being given a chance to serve their nation. That is clearly the intent. Unfortunately, the partisan rollcall that followed is evidence that was the strategy.

Just as Dan Inouye prevailed and persisted and not only served his country admirably but with the highest level of valor, I am convinced that many of the young people who leave heartbroken today by this vote will get their chance someday, just as the Senator did, and they will serve this country with distinction and they will serve this Nation as the Senator has led us in the Senate.