Floor Statements

Mr. President, last Thursday a press release from the Department of Interior came across my desk that at first glance appeared to be the announcement of an April fool's joke. The press release stated beginning April 1, the Interior Department will deliver about 115,000 barrels of oil per day to the Department of Energy for the Strategic Petroleum Reserve. I thought this was an April fool's prank because this is about the worst possible time for the administration to be taking oil off the market for the Strategic Petroleum Reserve.

Crude oil and gasoline prices are historic highs and inventory levels are near historic lows. Consumers are paying record prices at the gas pumps. Manufacturers and farmers and a whole lot of other folks are paying high prices for diesel fuel. Our airlines face soaring fuel costs and so does the trucking industry. Our economy, which has major problems, will be weakened further by high energy prices.

To make the timing even worse, the Department of Interior plans to begin its oil deliveries to the DOE on April 1, the same date the OPEC cartel is scheduled to start cutting its oil production. The purpose and effect of OPEC's cuts are to raise oil prices further. The effect of the administration's stated plans to keep filling the Strategic Petroleum Reserve regardless of the price of oil, if implemented, will be the same, principally because tight supplies and private inventories will become even tighter due to the administration's additional demands for oil for the Strategic Petroleum Reserve.

Regrettably, the Interior Department's announcement is no April fool's joke. To the contrary, it is another misstep in the administration's illogical and counterproductive practice of putting oil into the Strategic Petroleum Reserve, regardless of the price of crude oil.

Over the past 2 years, this practice has pushed up oil prices with minimal improvement to our overall energy or national security and with great detriment to our economic security.

Let's just review what has happened with energy prices. Crude oil prices have been steadily increasing over the past 2\1/2\ years. Last week crude oil reached a 13-year high of over $38 per barrel. So far this year, crude oil is averaging about $35 per barrel. In 2003, a barrel of crude oil cost on average over $31. That was a record at that point. Climbing crude oil prices have led to higher prices for refined products, including gasoline, home heating oil, jet fuel, and diesel fuel.

Today, as well as four times in the last 10 days or so, the price of gasoline reached a record high. Nationally the average price of a gallon of gasoline is now $1.75. In Michigan, the average price of a gallon of unleaded is up to $1.78. There are fears prices could go over $2 if there is even a small interruption in supply.

The DOE's Energy Information Administration, the EIA, projects prices will rise on average to $1.83 per gallon

this spring, and that prices will remain at high levels throughout the year, averaging nearly $1.70 per gallon over the course of the entire year. These high oil and gasoline prices are hurting consumers and businesses. The EIA recently stated the average consumer paid $200 more for gasoline in 2003 than the previous year. Prices this year are already a dime per gallon more than in 2003. Over the course of a year, each 1-cent increase in the price of a gallon of gasoline takes $1 billion out of the pockets of American consumers.

Following the laws of supply and demand, the principal reason oil prices are so high is the amount of crude oil in private sector inventories in the United States is so low.

In fact, our private sector inventories are hovering around record low levels. In January, crude oil inventories fell to levels lower than at any time in the 28 years the Department of Energy has been tracking those inventories.

Why are supplies so low? This administration's oil policies are partly responsible. Since late 2001, the Department of Energy has taken millions of barrels of oil off the market and put them into the Strategic Petroleum Reserve.

In late 2001, the reserve held about 560 million barrels of oil. Since then, day after day, for over 2 years, the Department of Energy has added an average of about 100,000 barrels of oil per day to the Strategic Petroleum Reserve without regard to the price of oil.

Today, the Strategic Petroleum Reserve holds nearly 650 million barrels, or 93 percent of its capacity of 700 million barrels.

DOE plans to keep on adding oil to the Strategic Petroleum Reserve, no matter what the price, no matter how dangerously low private sector inventories are. In April, the DOE plans to add about 200,000 barrels per day to the Strategic Petroleum Reserve, just as it has been doing this month.

By taking oil off the market and pushing up prices when supplies were tight and prices were high, filling the Strategic Petroleum Reserve has decreased the amount of oil in private inventories. That is because when current prices are high, companies with oil in inventory will draw from those inventories to supply oil to their customers--including the SPR--before they buy expensive new oil.

From April 2002 through the end of last year--a period in which the oil markets were extremely tight, reflecting high prices and low supplies--oil inventories in the private sector decreased by almost as much as the petroleum reserve inventory increased. From April 2002 to December 2003, the Department of Energy deposited about 78 million barrels of oil in the petroleum reserve. During this same period, the United States private sector inventories declined by about 61 million barrels. So the 78 million barrels of oil that were deposited into the petroleum reserve are shown by this red line in the last approximately year and a half, the decline in the private inventories is shown by this white line over the same period. So you can see from the chart that the amount deposited in the reserve is almost the same--slightly more--as the decline in private inventories. That means, despite filling the reserve for almost 2 years, the total oil in inventory, private and public reserve, in the United States during this period increased by only 17 million barrels--under 2 percent.

Several studies have demonstrated that the decrease in U.S. private inventories since April 2002 is directly related to filling of the Strategic Petroleum Reserve. While there are other factors as well, such as OPEC production limits and increased global demand for crude oil, especially in China, the filling of the Strategic Petroleum Reserve has been a major contributor to the decrease in private sector inventories.

Goldman Sachs, one of the largest and most successful crude oil traders in the world, reported the following on January 16th of this year:

Large speculative positions, builds in Strategic Petroleum

Reserves, and low inventory coverage have contributed to

current price levels.

Goldman Sachs also stated:

Past government storage builds [build-ups] will provide

persistent support to the market

and that

current plans for the injection of 130,000 [barrels/day] of

royalty-in-kind barrels into the petroleum U.S. Strategic

Petroleum Reserve (SPR) between now and the end of September

. . . will likely provide even further support.

Here, the word ``support'' means keeping prices high.

In early 2002, the Department of Energy's own staff warned that filling the Strategic Petroleum Reserve in a tight market would reduce private sector inventories and raise prices and tried to persuade the administration to postpone putting oil into the reserve so oil supplies would be more plentiful.

In the spring of 2002, as prices were rising and inventories falling, the Department of Energy's own petroleum reserve staff warned the following:

Commercial inventories are low, retail prices are high, and

economic growth is slow. The Government should avoid

acquiring oil for the Reserve under these circumstances.

The administration chose to ignore those warnings. The reserve deliveries proceeded. As the DOE staff predicted, oil supplies tightened and prices climbed.

Last week, the Secretary of Energy repeated the administration's position that it would not suspend shipments of oil into the Strategic Petroleum Reserve, despite the high prices and low private inventories of oil. The Secretary rejected criticism of the Energy Department's position by claiming that the amount of oil placed in the reserve is too small to make any difference in the price of oil.

But in 2002, the Department of Energy's own staff refuted that very claim. The DOE Strategic Petroleum Reserve staff explained how taking these barrels off the market for an extended period of time would result in a large decrease to the overall supply of oil on the market. This is the DOE staff warning, which was ignored by the DOE and the administration:

If we look at the Strategic Petroleum Reserve in the

perspective of daily supply and demand, the SPR fill rates

are inconsequential. The fill rate is 100,000 to 170,000

barrels per day compared to world production and consumption

of 75 million barrels per day. However, when OPEC countries

are determined to maintain discipline in their export quotas,

the cumulative impact of filling the SPR becomes more

significant when compared to U.S. and Atlantic basin

inventories. Essentially, if the SPR inventory grows, and

OPEC does not accommodate that growth by exporting more oil,

the increase comes at the expense of commercial inventories.

Most analysts agree that oil prices are directly correlated

with inventories, and a drop of 20 million barrels over a 6-

month period can substantially increase prices.

In fact, commercial inventories did fall, on average, by 20 million barrels in each of the 3 successive 6-month periods. So what the DOE expert staff said is exactly what has come to pass.

``Most analysts agree,'' they said, ``that oil prices are directly correlated with inventories, and a drop of 20 million barrels over a 6- month period can substantially increase prices.''

The Strategic Petroleum Reserve holds by far the largest strategic oil reserves in the world. In contrast, U.S. private sector oil inventories have fallen well below normal levels. Private sector inventories of gasoline are also well below average.

In an article explaining why oil prices are so high, this week's edition of The Economist reports the following:

Another fact . . . propping up oil prices may be what [a]

trader calls ``supply-disruption risk.''

And then The Economist goes on as follows:

These worries have, in part, been fueled by a most

unexpected source: the American Government. Despite the high

prices, American officials continue to buy oil on the open

market to fill their country's Strategic Petroleum Reserve.

When prices are high, why buy, you might ask, and thereby

keep them up? The Senate has asked that question as well. It

passed a non-binding resolution this month calling on the

Bush administration to stop SPR purchases; but Spencer

Abraham, the Energy Secretary, has refused.

Mr. President, I hope the Energy Secretary and this administration will reconsider that refusal because the day after the Senate adopted our amendment I cosponsored with Senator Collins to cancel the planned shipments of 53 million barrels to the SPR, oil prices in New York and London fell by $1 per barrel on the news that this oil might not be placed in the Strategic Petroleum Reserve. But after the Department of Energy and key Members of Congress announced opposition to our amendment, even though it was adopted in the Senate, oil prices went right back up.

This real-world price change shows that the cancellation of the currently planned shipments to the Strategic Petroleum Reserve would provide some immediate relief from high oil and gasoline prices and also provide long-term relief, as the additional oil supplies would enable inventories to be built back up to normal levels.

In his testimony before the Senate Armed Services Committee last week, the Secretary of Energy cited ``national security'' as the rationale for continuing to fill the SPR despite high oil prices and low supplies. This rationale is unpersuasive for two reasons.

First, the 50 million barrels of oil that the administration plans to put into the SPR over the next year could be more productively used to replenish private sector inventories. Putting this oil into the SPR will raise our governmental inventories from 650 to 700 million barrels, an increase of about 8 percent; whereas keeping it on the market could boost our private inventories from 290 million barrels to 340 million barrels, an increase of about 17 percent. We, therefore, can get more bang for our buck--or, in this instance, bang for our barrel--by keeping this oil on the market.

Typically, a variety of interruptions in oil supplies can occur in the commercial marketplace. These disruptions may be caused by bad weather, political unrest, or mechanical failure in the actual production of oil. Although any particular disruption may not be foreseeable, based on past history it can be predicted, in general, that some such disruption will occur sooner or later. Because our private inventories are so low, those inventories will not be available to cover any such disruptions.

Since the SPR was established over a quarter century ago, we have never needed to release more than 30 million barrels from the SPR at any one time. At the outbreak of the first gulf war, in early 1991, we released 30 million barrels. In the fall of 2000, the last time we released oil from the SPR, we released around 30 million barrels. Even after we lost all oil production in Iraq last year, this administration did not release any oil from the SPR. It, therefore, appears, for the time being, that holding the SPR at the current level of 650 million barrels, which is 93 percent of capacity, would be sufficient security to cover events that are reasonably foreseeable.

Because current inventory levels in the private sector may be inadequate to cover minor supply disruptions, in the event of such a disruption the price of oil would likely spike to well over $40 per barrel, gasoline prices would jump to well over $2 per gallon, and we might even have to tap into the SPR. The way to avoid this painful scenario is to raise private sector inventories by keeping millions of barrels of oil on the market rather than putting them into the SPR. It does not make sense to increase our ability to respond to the most unlikely events at the expense of our ability to respond to the more certain ones.

Adding more oil to the SPR will increase our energy security only slightly while decreasing our economic security significantly. We cannot measure our national security solely by the number of barrels of oil in the SPR. Our economic well-being is also critical to our national security. In deciding whether or not to put oil into the SPR, the administration should adopt a broader view of what is important to our national security.

Affordable gasoline for American consumers is important to our economic and national security. Affordable jet fuel and the health of our airline industry is important to our economic and national security. Affordable diesel fuel and the health of our manufacturing, trucking, chemical, and agricultural industries is important to our economic and national security. When oil, gasoline, jet fuel, and diesel fuel prices are at or near record high levels, we should consider the importance of increasing the supply of oil to these industries as well as to the SPR program.

This real-world price change shows that cancellation of the currently planned shipments to the SPR would provide immediate relief in the oil and gasoline markets, and also provide long-term relief as the additional oil supplies would enable inventories to be built back to normal levels.

It is bad enough that the Department of Energy has refused to suspend SPR deposits. To make matters worse, the Department of the Interior has now announced that it too will take even more barrels off the market starting April 1.

Currently, the administration plans to remove 5.6 million barrels from the market and put them in the SPR during the month of April-- about 190,000 barrels per day. The latest announcement means that, beginning April 1, the administration will be taking even more barrels--for a total between 200,000 and 300,000 barrels per day--of oil off the market.

How much oil is 200,000-300,000 barrels per day? A lot. It is as much oil as we import from many countries, or as much as we get domestically from major oil-producing states. In December 2003, for example, we imported 211,000 barrels per day from Kuwait. In the same month, the State of Louisiana produced 244,000 barrels daily. Oklahoma produced about 180,000 barrels a day.

Moreover, by taking more oil off the market for the SPR when prices are high, the administration is needlessly increasing the cost of the SPR program for the taxpayers. In effect, the taxpayers will be paying over $35 per barrel for this oil for the SPR. By canceling these expensive deliveries, we could use the money obtained from the sale of this oil for our urgent homeland security needs. Indeed, this is just what the Levin-Collins amendment would do.

The administration sometimes claims that if we suspend SPR deliveries to increase supplies, OPEC might reduce production to counter our efforts. This is not a very good reason for not doing anything to improve our situation. To begin with, we shouldn't avoid doing something that makes sense for our national interests because we're afraid that OPEC might respond by taking action adverse to those interests. We must determine our own security, and not act in fear of OPEC. If they act negatively to us, we should have a response ready. Second, OPEC has not threatened to take any such action. The administration shouldn't project actions that OPEC hasn't even hinted at.

In fact, an article from last Friday's Oil Daily indicates that the effect of the Senate Budget Resolution amendment to postpone SPR deliveries is having a positive effect on OPEC--that in the wake of the passage of our amendment some OPEC members ``are doubly keen to reassure major consumers that they are happy to meet any shortfall [in supply].''

Finally, the same argument could be made against any proposal to increase our domestic oil supplies. If we accepted this argument, there would be no point in us trying to increase supplies in any manner whatsoever. It is always possible that OPEC will counter our measures to increase our energy supplies, but we cannot be paralyzed into inaction by fear of what OPEC might do.

I support filling the SPR, but not at any price. It is time for the administration to consider the effect of filling the SPR on our economic security. It is time for the administration to protect American consumers and businesses rather than just the SPR program. It is time to count jobs and growth, not only barrels of oil. It's time to stop filling the SPR.

I ask unanimous consent that the Department of the Interior press release regarding the reservation of oil for the SPR program, a recent article from The Economist on high oil prices, an article from last Friday's Oil Daily, and a bipartisan letter to the President from 53 House members urging the suspension of shipments to the SPR be printed in the Record.

Mr. President, the Senate has spoken. The administration should listen to common sense and to what the market says, that when supply in the private sector goes down, prices go up, and the Strategic Petroleum Reserve fills have made a major contribution to high oil and gasoline prices in this country. It adds little to our energy or economic security for the administration to pursue the course it is on. I hope it will reconsider the SPR deposits.

I yield the floor.

Mr. President, three weeks ago the Senate passed an amendment during consideration of the gun immunity bill which would close the gun show loophole. I supported this amendment because I believe it is common sense gun safety legislation.

Under current law, when an individual buys a handgun from a licensed dealer, there are federal requirements for a background check to insure that the purchaser is not a person prohibited from purchasing or possessing a firearm. However, this is not the case for all gun purchases. For example, when an individual wants to buy a handgun from another private citizen who is not a licensed gun dealer, there is no requirement to ensure that the purchaser is not in a prohibited category. This creates a loophole in the law, which makes it easy for criminals, terrorists, and other prohibited buyers to evade background checks and buy guns. This loophole is the gateway to the illegal market because criminals know they are not subject to a background check and no record is made of the sale.

I cosponsored the amendment offered by Senators Jack Reed and John McCain, which would close the gun show loophole, because I believe it is a critical tool in preventing guns from getting into the hands of criminals and other ineligible buyers. This amendment would have simply applied existing law governing background checks to individuals buying firearms at gun shows. Preventing easy and unchecked access to guns is critical in preventing gun violence.

This amendment also had the support of major law enforcement organizations including the International Association of Chiefs of Police, the National Troopers Coalition, the International Brotherhood of Police Officers, the Police Executive Research Forum, the Major Cities Chiefs, the National Association of School Resource Officers, the National Black Police Association, the National Organization of Black Law Enforcement Executives, and the Hispanic American Police Command Officers Association.

The gun industry immunity legislation would have provided unprecedented protection from liability to gun manufacturers and dealers, even in cases where their own gross negligence or recklessness led to someone being injured or killed. I opposed the bill and it was defeated in the Senate. However, before the bill was defeated, the gun show loophole amendment passed with bipartisan support. Given that, I hope the Senate will take up and pass gun show loophole legislation this year.

Mr. President, last night the Senate voted to accept the amendment I offered with Senator Collins to the fiscal year 2005 budget resolution to lower oil prices by placing over 50 million barrels of oil on the open market rather than depositing it in the Strategic Petroleum Reserve--SPR--as the administration had planned. I would like to note for the record that this amendment already is accomplishing its objective of lowering oil prices. At 11:30 a.m. this morning, just hours after the news of this amendment reached the markets, oil prices fell. According to Reuters, ``NYMEX crude oil futures fell more than $1 Friday morning after a U.S. Senate vote seeking to bar more shipments of crude oil to the U.S. emergency stockpile.''

This amendment is a win-win for the American people. Low supplies of oil in private inventories are a main reason for high prices. With more oil on the open market, prices for gasoline, heating oil, jet fuel and diesel fuel will decline and consumers will benefit. At the same time, our cities and States will gain from additional funds for homeland security.

The amendment directs the Department of Energy--DOE--to cancel delivery of 53 million barrels of crude oil currently planned for deposit into the SPR and to sell this oil on the open market. By selling oil on the open market, the Federal Government would generate over $1.7 billion in additional revenues. The amendment would allocate a portion of the $1.7 billion for deficit reduction and place the remainder in a reserve fund to be used for more homeland security funding for the States.

I will continue to work within the Congress to persuade--or require, if necessary--the Administration to suspend shipments of oil to the SPR to lower prices further.

I ask unanimous consent that the attached article on the drop in oil prices due to the Senate's action last night be printed in the Record.

Mr. President, last week, the Senate passed a 10-year extension of the assault weapons ban. We passed the assault weapons ban in 1994 because law enforcement agencies asked for it, and we extended it last week at their urging.

Studies have shown that the assault weapons ban works. According to National Institute of Justice statistics reported by the Brady Campaign to Prevent Gun Violence, gun trace requests for assault weapons declined 20 percent in the first calendar year after the ban took effect, dropping from 4,077 in 1994 to 3,268 in 1995. This statistic indicates that fewer of these weapons were making it onto the streets.

As my colleagues know, the 1994 law banned the production of certain semiautomatic assault weapons and high-capacity ammunition magazines. The 1994 law banned a list of 19 specific weapons as well as a number of other weapons incorporating certain design characteristics such as pistol grips, folding stocks, bayonet mounts, and flash suppressors. This law should not be allowed to sunset on September 13, 2004. This law does not need to sunset. Our Nation's law enforcement officers support this legislation, the President even has expressed his support, and the Senate passed an extension.

If the law is not reauthorized, the production of assault weapons can legally resume. Restarting production of these weapons will increase their number and availability and inevitably lead to a rise in gun crimes committed with assault weapons. The Senate has shown bipartisan majorities for renewing the assault weapons ban. President Bush should demand that Congress act this year to extend the ban.

Mr. President, I take this opportunity to pay tribute to Pamela Lamar Jordan, a tireless advocate for families and the plight of children. She was committed to serving the needs of her community and to improving the quality of life for young people in Saginaw. Pamela received numerous community service awards throughout her life. She will be missed by those whose lives she has touched.

Pamela Lamar Jordan was born in Saginaw, Michigan on June 24, 1961. She is a graduate of Arthur Hill High School and was in pursuit of her BSW at Saginaw Valley State University. She was a member of the Word of Faith International Ministries, where she worked with the Youth Department. She was also a 1999 graduate of the Spoken Word School of Ministry.

In 1995, Pamela founded the New Alternatives Youth Service Center in Saginaw, Michigan. The Center's purpose is to educate young people and to provide an alternative to drugs, gangs, and violence. Pamela was also a mentor with the Family Youth Initiative, which is affiliated with the Bay Area Substance Abuse Coordinating Agency.

Pamela was also the founder of the Saginaw Sister-2-Sister Spirit of Excellence Pageant. Sister-2-Sister promotes abstinence and works to decrease the rate of pregnancy among teenage girls in the Saginaw community. Pamela believed this program helps local teenagers better understand themselves, and provides them with the appropriate information necessary to make healthy life choices.

Pamela Lamar Jordan passed away at the age of 42 on March 7, 2004. She was a woman of great faith who was devoted to her family and to her community. Pamela is mourned by her family, the members of her church, and many people across my home state of Michigan. Pamela is survived by her husband Cornelius Jordan and her four daughters: Melony, Janey, Terri and Brianna.

This is, indeed, a great loss to all who knew her or for those who have benefitted from her work. I know my colleagues will join me in paying tribute to the life and work of Pamela Lamar Jordan. I hope her family takes comfort in knowing that her legacy will stand as an inspiration for generations to come.

Mr. President, I would like to introduce today, with Senator Norm Coleman, a comprehensive tax reform bill called the Tax Shelter and Tax Haven Reform Act. This bill is intended to respond to the ever increasing tax shelter and tax haven abuses that are undermining the integrity of our tax system, robbing the Treasury of tens of billions of dollars each year, and shifting the tax burden from high income corporations and individuals onto the backs of the middle class. Abusive tax shelters and the misuse of tax havens must be stopped.

For more than a year, the Permanent Subcommittee on Investigations, on which I serve, has been conducting an investigation at my request into the design, sale, and implementation of abusive tax shelters. I initiated this investigation back in 2002, but it has since been carried out in a bipartisan fashion with the support of Senator Coleman, who is our current Subcommittee Chairman.

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

In November 2003, our subcommittee held two days of hearings and released a report prepared by my staff which pulled back the curtain and provided an inside looks at how even some respected accounting firms, banks, investment advisors, and lawyers have become the engines pushing the design and sale of abusive tax shelters to corporations and individuals across this country. It was this investigative effort that inspired many of the provisions in the bill to combat abusive tax shelters and the professionals who promote them.

Another part of this bill results from subcommittee investigations examining how tax havens around the globe help taxpayers dodge their U.S. tax obligations, using corporate, bank, and tax secrecy laws to impede U.S. tax enforcement efforts. At one subcommittee hearing in 2001, a former owner of an offshore bank in the Caribbean testified that he believed 100% of his bank clients were engaged in tax evasion. He said that almost all were from the United States, described elaborate measures taken to avoid IRS detection of his clients' money transfers, and expressed confidence that the Government would defend client secrecy in order to attract business to the island. For the past few years, the IRS has made detection of offshore bank accounts used by individuals to conceal taxable income an enforcement priority, estimating that as many as 1 to 2 million U.S. taxpayers are hiding funds in offshore tax havens.

Corporations are also using tax havens to reduce their U.S. tax liability. A subcommittee hearing held in 2003, on an Enron tax shelter known as Slapshot, as well as Senate Finance Committee hearings on other Enron tax scams, show how corporations can utilize tax havens to avoid U.S. taxes. A GAO report recently released by Senator Dorgan and myself shows that nearly two-thirds of the top 100 companies doing business with the United States now have one or more subsidiaries in a tax haven. One company, Tyco International, has 115 tax haven subsidiaries. Data recently released by the Commerce Department further demonstrates the extent of U.S. corporate use of tax havens, indicating that, as of 2001, almost half of all foreign profits of U.S. corporations were in tax havens.

Over the years, subcommittee investigations have uncovered numerous instances of how U.S. tax enforcement efforts examining transactions, bank accounts, and other activities in tax havens have been delayed or impeded by tax haven secrecy laws and practices. This bill is intended to give the U.S. Government new tools to stop uncooperative tax havens from continuing to help corporations and individuals dodge their U.S. tax obligations.

Stop and think what is at stake here. Men and women in our military are putting their lives on the line every day for our Nation. They are in Iraq, Afghanistan, the Balkans, and now Haiti. To make sure we can provide them with the resources they need, all Americans need to contribute their fair share in taxes. Unfortunately, there are too many companies and individuals that finagle ways to avoid paying what they owe, despite the benefits they receive from this country. These tax dodgers deprive our Nation of billions of dollars in resources and add to the tax burdens of the rest of us.

Companies benefit from so much here in America: our stock market, telecommunications infrastructure, patent protections, educated workforce, research support, sophisticated financial systems, and basic law enforcement. Yet, too many companies run to use tax avoidance schemes based on abusive tax shelters and tax havens like a car speeding through a tollbooth, leaving the rest of us to pitch in the required fare and subsidize their free ride.

Corporate and individual tax dodges today take many forms. They include the following: Abusive tax shelters in which taxpayers use complex investment schemes with no real business purpose other than to evade tax; corporate inversions in which companies pretend to move their headquarters to an offshore tax haven just to avoid their U.S. tax bill; foreign tax havens in which taxpayers use bank accounts and shell entities in foreign tax havens to escape detection while dodging taxes; and structured financial transactions in which companies use shell entities in convoluted setups or improper transfer pricing schemes to avoid taxes. In most cases, these tax dodges are designed, sold and implemented by tax professionals who receive lucrative fees to help their clients avoid their tax obligations. To provide a better picture of some of these abuses, here are a few recent examples.

Perhaps the best-known corporate inverter is Tyco International, which operates out of New Hampshire and New Jersey, but claims a mailing address in Bermuda to avoid U.S. taxes. This tax dodge is a slap in the face of U.S. taxpayers, especially in light of the $300 million in Federal defense and homeland security contracts awarded to Tyco in FY 2002, as well as the months-long, taxpayer-financed prosecution of Tyco's former officers for diverting $600 million in corporate assets to their personal use. Tyco, once a proud U.S. corporation, has sunk to new lows in its attempts to avoid paying its U.S. taxes.

Corporate tax abuses aren't confined to large U.S. companies. One example of an abusive tax shelter being used by some small companies is called ``SC2,'' which was one of the tax shelters featured in our recent Subcommittee hearings and staff report. In this shelter, a closely-held corporation temporarily grants nonvoting stock to a tax- exempt charity and then allocates--on paper--a significant portion of the company's profits to that charity. Beforehand, the company takes steps to limit or suspend any obligation to actually distribute income allocated to its shareholders. The charity pays no tax on the paper profits allocated to it. When the original corporate owners eventually reclaim both the stock and undistributed profits, they claim that capital gains taxes, rather than higher ordinary income taxes, apply to the income previously allocated to the charity. The charity gets paid for its complicity, the corporate owners evade a lot of tax, and Uncle Sam is the loser.

A third tax shelter example involves a massive, $20 billion transfer pricing tax scam recently disclosed in a report issued by the bankruptcy examiner for Worldcom-MCI. The report states that Worldcom avoided paying hundreds of millions of dollars in state and Federal taxes over a four-year period, from 1998 to 2001, by claiming questionable expenses from related shell companies, including for a bogus intangible asset called ``management foresight.'' The

bankruptcy examiner, former Attorney General Richard Thornburgh, called on the company to sue its tax advisor and auditor, KPMG, for landing the company in this tax disaster, but Worldcom-MCI has, instead brazenly decided to continue using the tax dodge. This is the same company, by the way, that profits from billions of dollars in Federal and State contracts paid for--that's right--with taxpayer dollars.

The tax chiseling seems endless. Some of the tax ploys are arguably technically legal and require a change in law or regulation. Others appear blatantly illegal, yet elicit little or no penalty. Companies keep using them, and their competitors are put at a disadvantage unless they join in.

Too many respected accounting firms, financial institutions, and lawyers have joined in the sickening games by peddling tax dodges and taking a cut of the billions of dollars diverted from the U.S. Treasury. As IRS Commissioner Mark Everson has pointed out, accountants and lawyers should be the pillars of our system of voluntary tax compliance, not the architects of its circumvention.

This tax chiseling hurts average taxpayers, not only by leaving them with the burden of making up the lost revenues, but also by constricting resources for essential government programs. It is a lack of resources that results in the new Medicare drug prescription plan having a huge gap in coverage that denies elderly help with their prescription drug bills when they most need it. It's why our schools are burdened with unfunded mandates. It's why we have a giant and deepening deficit ditch threatening our children's economic well-being. The list of harmful consequences of tax dodging is long and disquieting.

The Tax Shelter and Tax Haven Reform Act we are introducing today contains a number of measures to put an end to these tax dodges:

To curb abusive tax shelters, the bill strengthens the penalties on tax shelter promoters and codifies the economic substance doctrine eliminating tax benefits for transactions that have no real business purpose or real economic impact apart from those tax benefits.

To crack down on the misuse of tax havens, we authorize Treasury to issue an annual list of ``uncooperative tax havens'' and suspend U.S. tax benefits for income attributed to those jurisdictions.

We also require the Treasury Department to issue standards for tax shelter opinion letters, and give the IRS new tools to take tough enforcement action against the accounts, lawyers, bankers and other financial professionals promoting or facilitating deceptive tax schemes.

Let me be more specific.

Title I of the bill strengthens a host of tax shelter penalties, which are currently so weak they provide no deterrent effect at all. Tow examples demonstrate the problem:

First, consider the penalty for promoting an abusive tax shelter, as set forth in section 6700 of the tax code. Currently, the penalty is the lesser of $1,000 or 100 percent of the promoter's gross income derived from the prohibited activity. That means in most cases, the maximum fine is $1,000. That figure is laughable, when many abusive tax shelters are selling for $100,000 or $250,000 a piece. Our investigation uncovered some tax shelters that were sold for $900,000 or even $2 million each, and instances in which the same cookie-cutter tax opinion letter was sold to 100 or even 200 clients. A $1,000 fine just doesn't cut it.

If further proof were needed, one document uncovered by our investigation contains the cold calculation by a senior tax professional at KPMG comparing possible tax shelter fees with possible tax shelter penalties if the firm were caught promoting an illegal tax shelter. This senior tax professional wrote the following: ``[O]ur average deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.'' He then recommended the obvious-- going forward with sales of the abusive tax shelter on a cost-benefit basis.

Proposals to increase the penalty for promoting abusive tax shelters have already passed the Senate three times and are included in the JOBS Act pending in the Senate. But these proposals are not tough enough to do the job that needs to be done. In general, they increase the penalty for promoting abusive tax shelters to a maximum of 50 percent of the promoters' gross income from the prohibited activity. Now, think about that. Why should anyone who illegally pushes an abusive tax shelter be allowed--if they get caught--to keep half of their profits? What deterrent effect is created by a penalty that allows promoters to keep half of their wages if caught, and all of them if they are not?

Penalities for those who peddle abusive tax shelters need to be a lot tougher. They should, first, make sure a tax shelter promoter is deprived of every penny of the profits earned from selling or providing legal advice on the shelter, and then pay a fine on top of that. Only that way is the promoter actually penalized for misconduct. Secondly, tax shelter promoters ought to face a penalty that is at least as harsh as the penalty imposed on the taxpayer who purchased their tax product, not only because the promoter is usually as culpable as the taxpayer, but also so promoters think twice about pushing tax schemes. Specifically, section 101 of the bill would increase the penalty on tax shelter promoters to an amount up to the greater of either 150 percent of the promoters' gross income from the prohibited activity, or the amount assessed against the taxpayer--including backtaxes, interest and penalties--for using the abusive shelter.

A second penalty provision in the bill involves what our investigation found to be one of the biggest problems--the knowing assistance of accounting firms, law firms, banks, and others helping taxpayers understate their taxes. Right now, under Section 6701 of the tax code, persons who knowingly aid and abet a taxpayer in understating their tax liability face a maximum penalty of $1,000 for assisting individual taxpayers and $10,000 for assisting corporate taxpayers. These paltry amounts provide no deterrent at all. Worse yet, the penalty applies only to so-called ``tax return preparers.'' Current law imposes no penalty at all on those who knowingly design and carry out the abusive tax shelter, so long as those persons don't actually prepare the taxpayer's return.

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

These are just two of the penalties strengthened by the Tax Shelter and Tax Haven Reform Act. Others include stronger penalties for tax shelter promoters who fail to register a new shelter with the IRS or fail to provide the IRS with a client list when requested, and stronger penalties for taxpayers who fail to disclose a tax shelter on their tax return or fail to disclose an offshore bank account.

Title II also contains many provisions to combat abusive tax shelters, but first I want to mention Title III, which focuses on the economic substance doctrine, and Title IV which addresses offshore tax havens.

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

Under the leadership of Senators Grassley and Baucus, the Chairman and Ranking Member of the Finance Committee, the Senate has voted three times to codify the economic substance doctrine, but it has yet to be enacted into law. Since no tax shelter legislation would be complete without addressing this issue, Title III of this comprehensive bill proposes once more to include the economic substance doctrine in the tax code.

Sections 401 and 402 in the Tax Shelter and Tax Haven Reform Act also tackle the issue of tax havens by deterring use of tax havens that fail to cooperate with U.S. tax enforcement efforts. There are dozens of jurisdictions around the world that have enacted corporate, bank, and tax secrecy laws and then, in too many cases, used these laws to justify a failure to provide timely information to U.S. law enforcement about persons suspected of either hiding funds in the jurisdiction's offshore bank accounts or using offshore corporations and deceptive transactions to disguise their income or create phony losses to shelter their income from taxation.

Section 401 of the bill would tackle the problem by giving the Treasury Secretary the discretion to designate offshore tax havens as ``uncooperative'' and to publish an annual list of these uncooperative tax havens. The Treasury Secretary is intended to develop this list by evaluating the actual record of cooperation experienced by the United States in its dealings with specific jurisdictions around the world. While many offshore tax havens have recently signed treaties with the United States promising for the first time to cooperate with U.S. civil and criminal tax enforcement, it is undetermined what level of cooperation will actually result. For example, after one country signed a tax treaty with the United States, the government that led the effort was voted out of office by treaty opponents. Treasury needs a way to ensure that tax treaty obligations are met and to send a message to jurisdictions that impede U.S. tax enforcement. This bill will help Treasury get the cooperation it needs.

in addition to authorizing Treasury to publish an annual list of uncooperative tax havens, section 401 and 402 of the bill would deter use of uncooperative tax havens by imposing two types of restrictions on taxpayers doing business in the designated jurisdictions. First, taxpayers would be required to provide greater disclosure of their activities on their tax returns, including disclosing on their returns any payment above $10,000 to a person or account located in a designated tax haven. Second, the bill would disallow any tax benefits, such as foreign tax credits or deferral of taxation, for income attributable to a designated tax haven. These restrictions would provide the United States with powerful weapons to compel tax havens to begin to cooperate with U.S. tax enforcement efforts.

In addition to addressing the need to increase tax shelter penalties, codify the economic substance doctrine and deter use of uncooperative tax havens, the bill includes a number of measures in Title II that would address other aspects of abusive tax shelters. I'd like to discuss a few of these.

Title II of the bill includes a number of additional measures to crack down on abusive tax dodges. Section 201 of the bill would, in part, direct the Department of the Treasury to issue as part of Circular 230 new standards for tax practitioners issuing opinion letters on the tax implications of tax shelters. The public has traditionally relied on tax opinion letters to obtain informed and trustworthy advice about whether a tax-motivated transaction meets the requirements of the law. The investigation conducted by the Permanent Subcommittee on Investigations found that, in too many cases, tax opinion letters no longer contain disinterested and reliable tax advice, even when issued by supposedly reputable accounting or law firms. Instead, too many tax opinion letters have become marketing tools used by tax shelter promoters and their allies to sell clients on their latest tax products. In too many of these cases, financial interests and biases were concealed, unreasonable factual assumptions were used to justify dubious legal conclusions, and taxpayers were misled about the risks that the proposed transaction would later be designated an illegal tax shelter. Reforms are essential to address these abuses and restore the integrity of tax opinion letters issued by reputable firms.

Treasury recently proposed standards that would address some of the ongoing abuses affecting tax shelter opinion letters; however, the proposed standards do not take all the steps needed. Our bill would require Treasury to issue standards addressing a wider spectrum of tax shelter opinion letter problems, including: (1) the independence of the opinion letter writer from tax shelter promoters, (2) collaboration among letter writers resulting in joint financial interest, (3) avoidance of conflicts of interest that would impair auditor independence, (4) review and approval procedures by a firm for opinion letters issued in the name of the firm, (5) reliance on reasonable factual representations, and (6) the appropriateness of fee charges. By addressing each of these areas, Circular 230 could help reduce the ongoing abusive practices related to tax shelter opinion letters.

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

These communication barriers between our key Federal civil enforcement agencies are outdated, inefficient, and ill-suited to stopping the torrent of tax shelter abuses now affecting or being promoted by so many of our public companies, banks, and accounting firms. To address this problem, section 203 of the bill would authorize the Treasury Secretary, with appropriate privacy safeguards, to disclose to the SEC, Federal banking agencies, and the PCAOB, upon request, tax return information related to abusive tax shelters, inappropriate tax avoidance, or tax evasion. The agencies could then use this information only for law enforcement purposes, such as preventing accounting firms or banks from promoting abusive tax shelters or aiding or abetting tax evasion, and detecting and punishing accounting fraud related to illegal tax shelters employed by public companies. Improved information sharing for law enforcement purposes would greatly aid our agencies in their enforcement efforts.

The bill would also provide for increased disclosure to Congress. Section 204 of the bill would make it clear, for example, that companies providing tax return preparation services to taxpayers cannot refuse to comply with a Congressional document subpoena by citing a consumer protection provision in the tax code, section 7216, prohibiting tax return preparers from disclosing taxpayer information to third parties. Several accounting and law firms raised this claim in response to document subpoenas issued by the Permanent Subcommittee on Investigations, contending they were barred by the nondisclosure provision in section 721 from producing documents related to the sale of abusive tax shelters to clients for a fee. The accounting and law firms maintained this position despite an analysis provided by the Senate legal counsel showing that the nondisclosure provision was never intended to create a privilege or to override a Senate subpoena, as demonstrated in Federal regulations interpreting the provision. To clarify the law, the bill would codify the existing regulations interpreting section 7216 and make it clear that congressional document subpoenas must be honored.

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

section of the bill would make it clear that, upon receipt of a request form a Congressional committee or subcommittee, the IRS must disclose documents, other than a tax return, related to the agency's determination to grant, deny, revoke or restore an organization's exemption from taxation.

Still another finding of the subcommittee investigation is that tax practitioners are circumventing current State and Federal constraints on charging tax service fees that are contingent on actual or projected tax savings. Traditionally, accounting firms charged flat fees or hourly fees for their tax services. In the 1990s, however, they began charging ``value added'' fees based on, in the words of a one accounting firm's manual, ``the value of the services provided, as opposed to the time required to perform the services.'' In addition, some firms began charging ``contingent fees'' that were based on a client's obtaining specified results from the services offered, such as projected tax savings. In response, many States prohibited accounting firms from charging contingent fees for tax work to avoid creating incentives for these firms to devise ways to shelter substantial sums. The SEC and the American Institute of Certified Public Accountants also issued rules restricting contingent fees, allowing them in only limited circumstances.

The subcommittee investigation found that tax shelter fees, which are typically substantial and sometimes exceed $1 million, are often linked to the taxpayer's projected tax savings or paper losses to be used to shelter income from taxation. For example, in three tax shelters examined by the Subcommittee, documents show that the fees were equal to a percentage of the paper loss to be generated by the transaction. In one case, the fees were typically set at 7 percent of the transaction's generated ``tax loss'' that clients could sue to shelter other taxable income. In addition, other evidence indicated that, in at least some instances, a tax advisor was willing to deliberately manipulate the way it handled certain tax products to circumvent the contingent fee prohibitions. One internal document at an accounting firm related to a specific tax shelter, for example, identified the states that prohibited contingent fees. Then, rather than prohibit the tax shelter transactions in those States or require an alternative fee structure, the memorandum directed the firm's tax professionals to make sure the engagement letter was signed, the engagement was managed, and the bulk of services was performed ``in a jurisdiction that does not prohibit contingency fees.''

Right now, the prohibitions on contingent fees are complex and must be evaluated in the context of a patchwork of Federal, State and professional ethics rules. Section 205 of the bill would simplify the existing prohibitions on contingency fees by putting into place a single enforceable rule, applicable nationwide, that would prohibit tax practitioners from charging fees which are ``contingent upon the actual or projected achievement of Federal tax savings or benefits, or of losses which can be used to offset other taxable income.''

Section 206 of the bill would establish that it is the sense of the Senate that additional funds should be appropriated for IRS enforcement, and that the IRS should devote proportionately more of its enforcement funds to combat rampant tax shelter and tax haven abuses. Specifically, the bill would direct increased funding toward enforcement efforts combating the promotion of abusive tax shelters for corporations and high net worth individuals and the aiding and abetting of tax evasion; the involvement of accounting, law and financial firms in such promotion and aiding and abetting; and the use of offshore financial account to conceal taxable income.

In a bipartisan letter that was recently sent to the Senate appropriations committee by Senators Coleman, Collins, Lieberman and myself, we wrote that, ``Tax enforcement is one area where a relatively small increase in spending can pay for itself many times over.'' Tens of billions in revenues that should support this country would actually reach the Treasury if we would hire adequate enforcement personnel, close the tax loopholes, and put an end to tax dodges.

It is past time to get serious about tax shelter abuses, uncooperative tax havens, and the tax dodgers who use them. This bill would send the message to tax dodgers that their shenanigans are unfair, unpatriotic, and unacceptable. We need to stop putting a disproportionate burden on the shoulders of the average American and make sure all taxpayers are paying their fair share.

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

Staff has a copy.

This is a Levin-Collins amendment. It halts deliveries to the Strategic Petroleum Reserve for the next 50 million barrels given the price of gasoline and jet fuel.

We would like perhaps 3 or 4 minutes on our side.

I will divide that time with the Senator from Maine.

Mr. President, I send an amendment to the desk on behalf of myself, Senator Collins, Senator Clinton, and Senator Stabenow.

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

Mr. President, we have skyrocketing gas prices and oil prices in most parts of the country. The major reason for this is private sector inventories are low. The major reason private sector inventories are low is we, at the same time, have seen a decline in those inventories of 50 million barrels in the last 2 years.

We have deposited in the Strategic Petroleum Reserve approximately 85 million barrels. Even the staff of the Department of Energy a year ago said the following:

Commercial petroleum inventories are low. Retail product

prices are high, and economic growth is slow. The Government

should avoid acquiring oil for the Strategic Petroleum

Reserve under these circumstances.

We would halt the deposit of oil in the Reserve, and we would use the money, approximately $1.7 billion, to restore a number of accounts in the Homeland Security Department; namely, we would restore about 80 percent of the money cut from the Homeland Security grant program; $250 million we would restore to firefighter grants to bring them up to last year. We would add money for port security, $150 million for deficit reduction, and about $220 million for an equity account.

This is a twofer. I yield the remainder of my time to the Senator from Maine.

Mr. President, oil and gasoline prices are at or near record-high levels. Oil and gasoline supplies are at or near record-low levels. If there are any disruptions in oil or gasoline supplies or production, there will be an insufficient amount of oil and gasoline to meet demand, and prices will skyrocket even further.

Yet, incredibly, in the face of this crisis, the administration is decreasing rather than increasing the supply of oil. Day after day, month after month, regardless of how high the cost for acquiring this oil, the administration is taking millions of barrels of oil off the market and depositing them into the Strategic Petroleum Reserve. By taking this badly needed oil off the market and placing it in the SPR, at extremely high prices, the administration is increasing the price of oil and gasoline.

The Levin-Collins amendment will increase Federal revenues by approximately $1.7 billion by, in effect, directing DOE to delay the filling of the SPR. The amendment will lower oil and gasoline prices by increasing oil and gasoline supplies in the commercial inventories. It will improve our overall energy security by moving us away from the brink of a crisis in supply. Moreover, it is both sound fiscal and resource management policy to put oil on the open market when prices are high, and place them into reserves later when prices are low.

As nearly every American knows, gasoline prices are at record-high levels. The average price of a gallon of gasoline, nationwide, as well as in my home State of Michigan, is $1.74 per gallon. In some states it is even higher. In California, for example, the average price for a gallon of gasoline is $2.18 per gallon.

Crude oil prices also are at near-record prices. Spot prices are over $37 per barrel. Futures prices for oil for the next several months are at or near $37 per barrel as well.

A major reason oil prices are so high is that the amount of crude oil in private sector inventories in the United States is at record low levels. Crude oil inventories are now lower than at any time in the 28 years that the Department of Energy has been tracking them. Oil prices are directly related to the amount of crude oil in inventories, since overall supply levels depend on both amounts produced and amounts in inventory. This is why prices are so high.

One of the reasons that supplies of oil are so low is that since late 2001 the Department of Energy (DOE) has been steadily taking millions of barrels of oil off the market and placing them into the U.S. Strategic Petroleum Reserve (SPR). In late 2001, the Reserve held about 560 million barrels of oil. Today it holds nearly 650 million barrels. DOE anticipates that at the current fill rate it will reach its goal of filling the SPR to its current physical capacity of 700 million barrels in the middle of 2005.

Clearly, now is not the time to be taking more oil off the market when the price of oil is so high. We need more oil and gasoline in refineries.

The Levin-Collins amendment is simple. It would, in effect, result in the deferral of the deposit of the 53 million barrels of oil that DOE currently plans to ship to the SPR over the next year. Assuming an average price of $33 per barrel--which is based on the current

futures prices for oil for the next 14 months, as well as the trend in spot prices over the past year--this would yield over $1.7 billion in Federal revenues. This will help lower oil and gasoline prices for consumers and businesses as well. This amendment is a win-win for consumers, taxpayers, and the Government.

The Levin-Collins amendment would apply these funds to strengthen our homeland security. We cannot expect our first responders to be well- trained, properly equipped and fully staffed to protect us, if we cut their funding sources. Our amendment restores $800 million to the State Homeland Security Grant program, which will bring the total funding for that program up to $1.5 billion; adds $250 million to the Assistance to Firefighters Grant program; and $275,000,000 for Port Security Grants. The amendment will also provide $155 million for deficit reduction.

Finally, the amendment provides an additional $220 million to the State Homeland Security Grant Program in order to provide for a more equitable formula for distributing funds under that program.

That depends on how loud the voices are.

Mr. President, I move to reconsider the vote.

Mr. President, I cannot support final passage of this budget resolution. In my judgment, this budget, like the President's budget that it reflects, is divorced from the reality that working families in Michigan and across the country face every day. The challenges facing our country today are enormous. We are allocating resources around the globe to combat terrorism. Our troops are putting their lives on the line every day to secure and rebuild Iraq and Afghanistan. Social Security and Medicare face unprecedented strains as the baby boom generation nears retirement. At the same time, the Federal deficit is ballooning to historic proportions.

Crafting a budget to accommodate these and other priorities requires a careful and balanced approach. But unfortunately, the administration's budget and the resolution before us today focus too heavily on promoting massive tax cuts mainly for the wealthiest Americans, adding a large amount to our national debt and forcing painful cuts in our Nation's priorities like education, health care and protection of the environment--cuts that have real consequences for all of us.

This resolution, like the President's proposal, would make permanent the tax cuts pushed through Congress by the President in 2001 and 2003, which the Congressional Budget Office (CBO) estimates will cost $1.1 trillion over the next 10 years. Substantial revenue reductions like these have already left in their wake the largest annual deficit in our Nation's history, estimated by CBO to be a staggering $478 billion for this year and they are projected to continue.

Moreover, this resolution hides its true future effects by failing to account for large expenses that we all know are coming. By using 5-year projections instead of the customary 10-year numbers, this budget disguises the size of our deficits. The cost of extending the tax cuts past 2010 explodes just outside of the 5-year window. It is also outside of this 5-year window that the surplus we have in the Social Security trust fund disappears, thereby making the unified budget figures even worse. When this budget plan is played out over 10 years, our deficits skyrocket and use up every penny of the Social Security surplus, funds that Social Security will need as our baby boomers start to retire.

The President's budget blueprint also failed to include a number of inevitable costs, such as the cost of continued military operations in Iraq and Afghanistan. I am glad to see that the Budget Committee recognized this fact and placed into a special reserve fund $30 billion for military operations in Iraq and Afghanistan for 2005. However, it is clear that more will be needed; it is unrealistic to fail to reserve amounts for Iraq or Afghanistan in 2006 or subsequent years.

This budget also doesn't take into account likely reforms to the Alternative Minimum Tax, reforms that are needed to keep tens of millions of middle class taxpayers from paying a tax that was originally meant to apply only to a small portion of high-income taxpayers. Because of these and other omissions, achieving the President's goal of cutting the deficit in half by

2009 is hollow rhetoric, especially if he continues to stick to his agenda.

Following the path of continuing the President's tax breaks is fiscally irresponsible. The tax cuts are heavily slanted toward the wealthiest Americans. The average tax cut for the wealthiest 1 percent would be nearly 90 times larger than the average tax cut for middle- income households.

In its attempt to accommodate these reckless and inequitable tax cuts, this budget proposes a significant number of cuts to vital programs. Despite the fact that millions of jobs have been lost since the beginning of the Bush Administration--many in the manufacturing industry--this budget offers little help to those looking for employment. I am disappointed that we couldn't pass the amendment offered by Senator Boxer that would have placed top priority on creating jobs in the U.S. now, discouraging the shipping of jobs overseas, and helping workers dislocated by global forces beyond their control.

Instead this resolution contains significant cuts to one of the most successful federal/state partnerships in government, the Manufacturing Extension Program (MEP). The MEP creates programs to help our country's manufacturers be more productive and competitive, thus, keeping jobs here at home. The resolution also completely slashes funding for The National Institute of Standards and Technology's Advanced Technology Program (ATP), which focuses on improving the competitiveness of American companies in the global marketplace by encouraging R&D through public-private collaboration in the development of promising technologies. In the face of a loss of 2.6 million manufacturing jobs over the past few years, we should be doing all we can to promote programs that help create manufacturing and hi-tech jobs. Supporting the MEP and ATP programs is one way to do this.

Additionally, I am extremely disappointed that this plan fails to extend unemployment insurance to workers who have exhausted their benefits. The number of individuals exhausting their regular State unemployment benefits and not qualifying for further benefits is higher than at any other time on record--about 90,000 workers a week; extending unemployment insurance is the right thing to do for displaced workers and for the economy because it provides an economic stimulus by putting money in the pockets of people who need it most.

And the misguided priorities don't stop there. Despite our attempts to amend it, this budget inadequately addresses the needs of our children by failing to fund our education programs.

The No Child Left Behind Act, approved overwhelmingly by this body just over 2 years ago, is intended to help our school children make progress toward reaching their full potential by providing things such as smaller classes, after-school programs, and technology and technology training for teachers. But the President's budget refuses to provide our school systems the funding they were promised. And now, despite attempts to change this, the budget resolution also inadequately addresses the need for increases in education funding to assist local schools. We cannot expect our schools to adequately meet the high academic standards that have been set if we neglect to provide them with the tools they need to succeed.

Not only does this budget fail our young school children, it also fails our older children who seek financial assistance to attend college. The Pell grant program is the single largest source of Federal Government grant aid devoted to financing postsecondary education. This program reaches over one-fifth of all undergraduates each year. Despite the program's successes, this body opposed increasing the maximum Pell grant by a $1,050 by reducing tax breaks for the wealthiest among us.

This budget also fails to meet the needs of our veterans by underfunding the Department of Veterans Affairs, forcing real cuts in the health services for America's veterans. Not only should we be redoubling our efforts to care for those who have already served in the military, but as a new generation of soldiers returns home from countries around the globe, we must ensure that they have access to a veterans' health system that is able to provide them with the care and services they have earned. Despite these obligations to the men and women who have been sent into harm's way to protect us and our way of life, I am disappointed that this body voted down more than an amendment to increase veterans' medical care, even when the cost was fully offset. Our veterans deserve not only our recognition and our gratitude, but also the appropriate funding for well-earned services and benefits.

And the unwise cuts don't end there. This budget would make steep cuts in housing programs that provide assistance to low-income families, our seniors, and the disabled. The proposal also cuts foreign aid, environmental programs, health programs and the list goes on and on, calling for significant reductions in nearly every part of government in an attempt to pay for the President's tax cuts.

I am pleased that the Senate passed the amendment offered by the Senator from North Dakota, Senator Baucus, to strike the reconciliation instructions requiring mandatory program cuts targeted at critical programs like Medicaid and the Earned Income Tax Credit (EITC). I hope this will end the attempts to cut these vital programs that serve low- income families and individuals, populations that are, unfortunately, growing. This is not the time to cut these critical and effective programs.

Medicaid, as my colleagues know, is the largest source of funding for medical and health-related services for low-income individuals. In 2003, the program assisted 24.8 million children, and 13.6 disabled, blind, and elderly individuals. The EITC program has been highly successful in assisting persons in low-income families raising children to transition from welfare to work. EITC helps individuals and families, particularly single working mothers, meet essential needs, from putting food on the table to paying monthly rent to assisting in required educations expenditures. According to the U.S. Census Bureau, the EITC helps lift over four million people out of poverty annually, including more than 2.7 million children. Cuts to either of these programs are unacceptable.

This budget is divorced from the reality that American families face every day. It burrows us deeper into the deficit ditch, continues our reckless reliance on the Social Security surplus and fails to provide vital programs with adequate funding. I cannot support it.

Mr. President, today I introduce a bill to grant normal trade treatment to the products of Ukraine. My brother, Congressman Sander Levin, has introduced an identical bill in the House. We introduced similar bills in the 107th Congress. It is our hope that enactment of this legislation, which builds upon and improves our previous legislative efforts, will help build stronger ties between the United States and Ukraine.

Roughly three decades ago, the Jackson-Vanik amendment was included in the Trade Act of 1974. While relatively small in number of words, this provision helped open up an entire society by exposing the repressive tactics of the Soviet Union. By focusing attention on the emigration restrictions that the Soviet Union placed on its

Jewish citizens, the Jackson-Vanik amendment reiterated American concern about the wide-scale human rights abuses occurring in the Soviet Union. In the process, the Jackson-Vanik amendment played a vital role in changing Soviet society.

The values that for nearly thirty years governed our relations with the Soviet Union, democracy, freedom and the rule of law, remain fundamental values to our nation. This bill seeks to address those concerns while recognizing the anachronistic nature of applying Jackson-Vanik to Ukraine. In addition, this bill provides Congress with a meaningful and effective tool to ensure that U.S. interests are fully addressed in World Trade Organization negotiations for Ukraine.

Ukraine does allow its citizens the right and opportunity to emigrate. Ukraine has been certified as meeting the Jackson-Vanik requirements on an annual basis since 1992 when a bilateral trade agreement went into effect. It is now time for the United States recognize this reality by eliminating the Jackson-Vanik restrictions and granting Ukraine normal trading status on a permanent basis. Our bill does this while addressing traditional Jackson-Vanik issues such as emigration, religious freedom, restoration of property, and human rights. These are the issues that led to the creation of the Jackson- Vanik amendment, and we should not ignore them at this time.

Ukraine has taken some steps toward the creation of democratic institutions and a free-market economy, but much more remains to be done. The way in which Ukraine's October 2004 presidential elections are conducted will go a long way toward determining the future path this important strategic partner and ally will take.

The world is closely watching the process and conduct of this year's presidential elections in Ukraine. Free and fair elections, regardless of their final outcome, will be an important step toward Ukraine's rapproachment with the community of nations. This election will be vital for the process by which it is conducted. Thus far, there remains reason for concern.

In Ukraine, there are many working to promote free and fair elections; however, the staff of many civic and non-governmental organizations are being harassed, intimidated and even physically harmed. In addition, members of the media are facing similarly hostile and life threatening situations. Just this month, Ukrainian affiliates of Radio Free Europe and Radio Liberty have been taken off the air, arrested and had their stations raided. Such actions are inexcusable and not in keeping with the fundamental values of freedom, openness and the rule of law. It is my hope that the October 2004 elections will aid Ukraine's transformation from a nation where fear undermines public discourse into a nation where all facets of society can freely engage in the market-place of ideas without fear of recrimination. The Ukrainian people deserve no less.

Jackson-Vanik no longer applies to Ukraine and should be waived. But we need to utilize other ways to address the many problems facing Ukraine. I also hope that this legislation will remind Ukraine of the benefits it can and will accrue when it rightfully assumes its place among those nations that are guided by democracy, transparency and the rule of law.

Mr. President, today I introduce a bill to grant normal trade treatment to the products of Ukraine. My brother, Congressman Sander Levin, has introduced an identical bill in the House. We introduced similar bills in the 107th Congress. It is our hope that enactment of this legislation, which builds upon and improves our previous legislative efforts, will help build stronger ties between the United States and Ukraine.

Roughly three decades ago, the Jackson-Vanik amendment was included in the Trade Act of 1974. While relatively small in number of words, this provision helped open up an entire society by exposing the repressive tactics of the Soviet Union. By focusing attention on the emigration restrictions that the Soviet Union placed on its

Jewish citizens, the Jackson-Vanik amendment reiterated American concern about the wide-scale human rights abuses occurring in the Soviet Union. In the process, the Jackson-Vanik amendment played a vital role in changing Soviet society.

The values that for nearly thirty years governed our relations with the Soviet Union, democracy, freedom and the rule of law, remain fundamental values to our nation. This bill seeks to address those concerns while recognizing the anachronistic nature of applying Jackson-Vanik to Ukraine. In addition, this bill provides Congress with a meaningful and effective tool to ensure that U.S. interests are fully addressed in World Trade Organization negotiations for Ukraine.

Ukraine does allow its citizens the right and opportunity to emigrate. Ukraine has been certified as meeting the Jackson-Vanik requirements on an annual basis since 1992 when a bilateral trade agreement went into effect. It is now time for the United States recognize this reality by eliminating the Jackson-Vanik restrictions and granting Ukraine normal trading status on a permanent basis. Our bill does this while addressing traditional Jackson-Vanik issues such as emigration, religious freedom, restoration of property, and human rights. These are the issues that led to the creation of the Jackson- Vanik amendment, and we should not ignore them at this time.

Ukraine has taken some steps toward the creation of democratic institutions and a free-market economy, but much more remains to be done. The way in which Ukraine's October 2004 presidential elections are conducted will go a long way toward determining the future path this important strategic partner and ally will take.

The world is closely watching the process and conduct of this year's presidential elections in Ukraine. Free and fair elections, regardless of their final outcome, will be an important step toward Ukraine's rapproachment with the community of nations. This election will be vital for the process by which it is conducted. Thus far, there remains reason for concern.

In Ukraine, there are many working to promote free and fair elections; however, the staff of many civic and non-governmental organizations are being harassed, intimidated and even physically harmed. In addition, members of the media are facing similarly hostile and life threatening situations. Just this month, Ukrainian affiliates of Radio Free Europe and Radio Liberty have been taken off the air, arrested and had their stations raided. Such actions are inexcusable and not in keeping with the fundamental values of freedom, openness and the rule of law. It is my hope that the October 2004 elections will aid Ukraine's transformation from a nation where fear undermines public discourse into a nation where all facets of society can freely engage in the market-place of ideas without fear of recrimination. The Ukrainian people deserve no less.

Jackson-Vanik no longer applies to Ukraine and should be waived. But we need to utilize other ways to address the many problems facing Ukraine. I also hope that this legislation will remind Ukraine of the benefits it can and will accrue when it rightfully assumes its place among those nations that are guided by democracy, transparency and the rule of law.

Mr. President, the purpose of this bill is said to be that you want to make sure you do not hold people accountable for the actions of others. That is what we have been told the purpose of this bill is. That is what the stated purpose of this bill is. This amendment says we surely should hold people accountable for their own actions. That is the difference. Are people going to be held accountable for their own reckless and grossly negligent conduct? The way this bill is written, the only grossly negligent conduct or reckless conduct somebody is held accountable for is if that conduct is also illegal.

What if the conduct is not illegal but is grossly negligent and reckless and causes the death or injury of somebody else? Should that manufacturer or that dealer be immunized if his own reckless or grossly negligent conduct is a proximate cause of death or injury? It is a simple provision. I am going to read it, if I have 20 seconds left:

None of the provisions in the act shall be construed to

prohibit a civil liability action from being brought or

continued against the person if that person's own gross

negligence or reckless conduct was a proximate cause of death

or injury.

The key word in this whole sentence is ``own.'' The key argument that the opponents of the amendment make is that you only should be responsible for your own actions, and I agree. The NRA has a point. You should be responsible for your own actions. This amendment says if your actions are reckless or grossly negligent, then you are not going to be immunized. This is not someone else's conduct. It is your own.

Mr. President, the question of whether or not the intelligence was flawed which was used so forcefully by the administration prior to going to war as the reason for going to war is a question which is going to consume the time of this body and a number of our committees for some time to come. It is a critically important question as to whether or not the intelligence was flawed, not just in terms of the accountability--which is so important if mistakes were made, if exaggerations were undertaken in order to advance the decision to go to war--but also in terms of the future security of this Nation.

This country went to war, we were told, because Iraq had weapons of mass destruction. That was the reason that was given over and over again by the administration. Whether or not there were other reasons, and there surely were, for that decision, which could be argued as a basis for the decision, the facts are that the American people were told it was the presence in Iraq of weapons of mass destruction which was the basis for attacking that country.

When a decision is made to go to war based on intelligence, it is a fateful decision. It has ramifications and impacts way beyond the current months and years. If the intelligence is as flawed as this intelligence was, we should find out why.

Whether people are glad we went to war or are not glad we went to war, whether history will prove we should have waited until we had greater support through the United Nations in order to avoid the kind of aftermath which we have seen, or not--we don't know what history is going to show in that regard--but regardless of the arguments back and forth as to the timing of it, the way in which it was handled, the failure to galvanize the international community so we had a broad array of countries with us, including Muslim nations so we would not be there as a Western occupying power with other Western nations after the military success; whether or not there was adequate planning for the aftermath, and I think it is obvious that there was not adequate planning, but regardless of what position one takes on all of those issues, it is incumbent upon us to find out how in Heaven's name the intelligence could be so far off.

How could we have 120 top suspect sites for the presence of weapons of mass destruction that were high-level to medium-level sites, where there was confidence that there were weapons of mass destruction either being stored or produced, and we batted zero for 120? How could we be so far off?

How is it possible that the CIA could tell us, as they did in their assessments, that there were chemical weapons and biological weapons and that a nuclear program was being undertaken again when, in fact, that apparently is not the case? How is it possible that intelligence can be as flawed as is this intelligence?

Again, regardless of what the arguments are on any side or any issue, I don't think any of us should be in the position of arguing that it is irrelevant to the future security of this Nation whether or not the intelligence upon which the decision to go to war was based is important. It is critically important.

Does North Korea have nuclear weapons or doesn't it have nuclear weapons? Should we put some credibility in the intelligence community's assessment of that? Where is Iran along the continuum of obtaining nuclear weapons? What are their intentions? Should we put confidence in the intelligence community's assessment of that?

Whether or not we place confidence or make decisions based upon the intelligence community's assessment is critically important. The lives of young men and women, perhaps the life of this Nation, could be dependent upon intelligence which is being assessed by the intelligence community. Life and death decisions are being made by the President of the United States based on decisions and assessments and appraisals of the intelligence community. When it is as wildly off as this intelligence community's assessments apparently were, then it seems to me we better find out for the future health of this country, not just in terms of trying to assess the accountability for past assessments.

Something happened to the intelligence after 9/11. The pre-2002 intelligence assessments relative to nuclear programs and biological programs and chemical programs were different from the October 2002 National Intelligence Estimate. Some of this has been set forth in the Carnegie Endowment's recent report. There are so many examples of where the intelligence shifted on these critical issues after 9/11.

A few examples: On the reconstitution of the nuclear program after 1998, the pre-2002 intelligence assessment was that Iraq had probably not continued their research and development program relative to reconstituting a nuclear program after 1998. Yet in October 2002, the intelligence community said, yes, it has restarted its nuclear program after the United Nations left in 1998. What happened between the pre- 2002 intelligence assessment and the post-9/11 assessment?

What about enriching uranium for use in nuclear weapons? Prior to 2002, the assessment was that Baghdad may be attempting to acquire materials that could be used to reconstitute a nuclear weapons program. But after 9/11, in the October 2002 National Intelligence Estimate, we have, yes, Iraq has imported aluminum tubes and high-strength magnets. The Department of Energy's disagreement with this conclusion was set forth, but the assessment of the intelligence community shifted after 9/11.

Whether they attempted to purchase uranium from abroad, the same kind of shift in the intelligence assessment, there were no reports mentioning any attempts to acquire uranium prior to that 2002 assessment, but in 2002, October, suddenly the National Intelligence Assessment says Iraq has been trying to procure uranium ore and yellow cake. Again, disagreement from the Department of State, but that was the assessment of the intelligence community, and on and on. We have this kind of change that occurred in the intelligence assessments.

What is the explanation for that? What happened? There is no evidence, as the President has mentioned; there is no evidence that Saddam Hussein was part of the attack of 9/11, so what happened that caused the intelligence community to shift its assessment of chemical, biological, and nuclear programs after the 9/11 attack on us? That is something which we must find out.

We must make a determination--hopefully someday there will be an outside commission which will make a comprehensive review of this whole matter--but, in any event, we must do the best we can through the Intelligence Committee.

I am making an effort, the Armed Services Committee, my staff, to look into these issues, particularly as they relate to the question of how intelligence affected the operations and the planning relative to our military effort in Iraq.

But we must make that decision. We have an obligation. This is not a partisan issue and it makes no difference to me whether this assessment is finished before the election or after the election. It must be made for the health of this Nation, as to how our intelligence community, No. 1, could be so totally wrong relative to the presence of weapons of mass destruction on Iraqi soil immediately prior to the war; and, No. 2, how and why did the intelligence community shift its assessments so significantly after 9/11 from the assessments that occurred before 9/ 11?

There is another aspect of this which relates to the way in which intelligence was used or exaggerated by the policymakers. Here we have another issue--an issue which is going to be looked at by the Intelligence Committee at least as far as the use of the intelligence is concerned up to the point where the war began. There are some recent statements that I think also require explanation.

I have tried a number of times to find out how the Vice President could have, about a month ago, made a statement relative to the vans that were found in Iraq, that those vans were part of a mobile biological weapons program. For the life of me, I do not understand how the Vice President can make that statement when Dr. Kay who has looked at the van has said that there is a consensus in the intelligence community--and I am now reading from Dr. Kay's answer to my question in the Armed Services Committee--that the consensus opinion is that those two trailers were not intended for the production of biological weapons.

How is it that the Vice President of the United States at about the same time that statement was made before the Armed Services Committee by the chief weapons inspector--that some trailers which were found in Iraq are unrelated to a biological weapons program--would say the opposite in a very public forum? What is the basis for the Vice President's statement? I tried to find out. In fact, I wrote the Vice President the other day asking him: What is the basis for your statement?

We should know. The American people should know when the Vice President says something as significant as that, that these particular vans which we have now gotten in our possession are, in fact, biological weapons laboratories. In fact, what the Vice President said on January 22 on NPR was:

I would deem that--

Here he is referring to those two vans--

conclusive evidence that Saddam did in fact have programs for

weapons of mass destruction.

Again, this is so totally opposite from what our chief weapons inspector has decided and said the consensus opinion is--that surely the American public is entitled to an explanation from the Vice President.

What is the basis for his statement of January 22 on national radio? What is the basis, Mr. Vice President, for your statement? The American public is entitled to know that. This is not some assistant secretary of some agency sitting in the bowels of the Pentagon or the bowels of some other building. This is the Vice President of the United States who is saying on national radio that we believe, in fact, that those semitrailers were part of the biological weapons program, that they were biological weapons vans. There is no explanation forthcoming, just sort of silence from the Office of the Vice President. We are entitled to more than that.

One possibility which the CIA's Director suggested when I asked him the question was that, well, maybe the Vice President was using old information when he said that. If the Vice President of the United States is making statements of significance based on old information, first, it seems to me he ought to say so and then say, Too bad that happened, I will make sure it doesn't happen again.

But it is also kind of discouraging, if that is true. There are daily briefings which I assume he is a part of--at least weekly briefings on these critical issues. We have a chief weapons inspector who says those vans, according to the consensus opinion, are not part of and were not part of the production of biological weapons.

But what all this is part of is kind of what is going to be phase 2 of the Intelligence Committee's investigation which is the use of intelligence by the policymakers. Here the statements of our top leadership go beyond the intelligence in a number of ways. They are much more certain than the intelligence communities' assessments were.

For instance, the Vice President, on August 2002, said the following:

There is no doubt that Saddam Hussein now has weapons of

mass destruction. There is no doubt that he is amassing them

to use against our friends and against our allies and against

us.

We have this additional aspect which is now being looked into by the Intelligence Committee and again by my staff on the Armed Services Committee as to how the administration could take the intelligence that was given and then turn those less certain findings into certainties.

Our friend from Arizona, Senator Kyl, made the point earlier tonight that there is a lot of uncertainty in intelligence, and he surely is right. But wow. It sure doesn't sound that way coming from the administration prior to the war.

Vice President Cheney told Tim Russert: We know with absolute certainty that Saddam is using his procurement system to acquire the equipment he needs in order to enrich uranium to build a nuclear weapon.

Secretary of State Colin Powell--and this will be my last comment-- said at the U.N.: There can be no doubt that Saddam Hussein has biological weapons.

The list of these statements where there is no doubt and there is absolute certainty that the administration says exists about these programs goes beyond what the intelligence communities' assessments were. It is those statements of absolute certainty which, it seems to me, require an explanation as to what was the basis of those statements of absolute certainty and there being no doubt, particularly in light of the fact Senator Kyl pointed out that intelligence is, indeed, very uncertain and should be treated that way.

I yield the floor.

Will the Senator yield?

Reserving the right to object, I would do everything I can reasonably do to obtain disposition of my amendment before 8 o'clock or whatever time it is tomorrow morning. So I ask the Senator from Virginia as to whether his unanimous consent request is that his amendment be in order following the disposition of my amendment?

If the UC is that following the disposition of the Levin amendment the amendment of the Senator from Virginia would then be the pending amendment, I would have no objection to that, providing that is the way it is presented.

Reserving the right to object now, Mr. President, that assumes they have not been disposed of prior to tomorrow morning or according to some modification of the pending unanimous consent agreement. I am not willing to agree that my amendment will still be pending tomorrow at that hour, nor am I willing to agree that we could not work out some modification of the unanimous consent agreement, which is now pending, to allow for the disposition of my amendment at some point before or after that appointed hour tomorrow morning.

Mr. President, in October 1960, then-U.S. Senator John Fitzgerald Kennedy, visited the University of Michigan in the heat of his successful Presidential campaign. The Presidential aspirant and self-proclaimed graduate ``of the Michigan of the East'' stood on the steps of the Student Union and called for the creation of a program that would enable college graduates to serve their Nation as part of a ``greater purpose'' rooted in service.

Forty-three years later, this program, the Peace Corps, has been a resounding success. Seeking to promote world peace and friendship by sending American volunteers to participate in community service in villages and towns across the world, this program addresses the critical shortage in technical capacity that many parts of the world face. Further, it fosters increased cultural understanding. Peace Corps volunteers, witting or not, represent their Nation while abroad and upon returning home help promote increased global awareness here as well.

President Kennedy, in his inaugural address, called for a ``grand and global alliance'' to fight tyranny, poverty and disease. With over 7,500 current volunteers in 71 nations, the Peace Corps has been a key part of this alliance. Since its inception, over 170,000 volunteers have worked in 137 nations in a variety of programs. An increasing number of Peace Corps volunteers are over 60

years of age. In fact, this year there is one 84-year-old volunteer. That said, our Nation's college campuses are still the largest source of Peace Corps volunteers. Our universities are ``immense reservoirs'' of talent and idealism, and each year thousands of college students seek to join the Peace Corps in hopes of pursuing a difficult yet rewarding task.

Last week, the Peace Corps released a list ranking the schools that provided the largest number of graduates accepted to the Peace Corps this year. Two schools from my home State, the University of Michigan- Ann Arbor and Michigan State University, were ranked fourth and eighth respectively in terms of the numbers of volunteers they provided. Since the inception of the program, these schools are ranked fourth and fifth overall in terms of the number of total volunteers that they have provided to the program. Both schools have worked to instill an ethos of volunteerism and service in their graduates, and for that they are to be commended.

All Peace Corps volunteers, regardless of their alma mater, deserve our respect and gratitude. By giving of themselves, they take concrete actions to improve the lives of countless individuals around the world.

Mr. President, I would like to take a moment to celebrate the 95th anniversary of the Detroit Rescue Mission Ministries. This very successful faith-based organization began as a food assistance program and over the years has broadened its scope to include 13 different ministries to combat problems such as homelessness, substance abuse, hunger and teen pregnancy.

The Detroit Rescue Mission Ministries provides food, shelter and spiritual guidance to more than 725 people a day and donates over 75,000 articles of clothing to the poor annually. The organization also provides over 500,000 meals and 146,000 nights of emergency shelter annually.

The Detroit Rescue Mission Ministries has consistently met the changing and growing needs of the Detroit community by partnering with churches, schools, and social and governmental agencies. The Christian Guidance Center, one ministry of the Detroit Rescue Mission, operates in cooperation with the Michigan Department of Corrections and provides individual counseling, group therapy, substance abuse support, rehabilitation groups, and social activities for Detroit area prisoners.

A pioneer in the field of serving the less fortunate, the Detroit Rescue Mission Ministries established the ``Genesis Houses,'' one of Michigan's first longer term residential facilities. In addition to sheltering the homeless, these homes provide food, clothing, advocacy and referral services.

Understanding the importance education plays in reducing poverty, the Detroit Rescue Mission established the Teen Moms Program, which provides housing to teen mothers who are enrolled in high school, GED training or junior high. To further educational opportunities, the Oasis Library furnishes residents with access to knowledge and facilitates computer literacy skills.

I know my Senate colleagues join me in offering our congratulations and sincerest appreciation to the Detroit Rescue Mission Ministries on its 95th anniversary. We recognize and thank the dedicated staff and volunteers who have made the organization a success and offer our support as they continue to work to fulfill their mission of rebuilding the inner city one life at a time.

Before the Senator from Virginia leaves the floor, I express to him my gratitude for his willingness to do what he has just done, which is to accept the facts that exist tonight, not because he likes them but because he realistically has understood there is no alternative. I have always admired my friend from Virginia. He has spoken out in support of the principle which is also included in my amendment. Although he did not say this to me personally, I know he will not mind me sharing this with the body. He also wanted to make it possible for me to have an opportunity for a vote tomorrow, if not an up-or-down vote, at least on a motion to table. I thank him for his expression of support to me personally and his willingness to help make it possible for me to have a vote tomorrow.

Mr. President, I thank the Senator from Virginia and all those in leadership who made it possible for this amendment to be voted on tomorrow afternoon and before final passage. This is a very significant amendment we will be voting on tomorrow.

It has been stated by the manager of the bill--and now I am reading his words--that we must insist the law be clear, unambiguous. That the officer--here an officer who was injured by a weapon--have a day in court if he is harmed--here I am skipping over a few words to get to the point--by someone who through negligence has caused a firearm to get into the hand of a criminal.

The amendment we will be voting on tomorrow afternoon makes it very clear lawsuits will be permitted if the defendant's own gross negligence and own recklessness was a proximate cause of somebody's death or injury. The Senator from Idaho has said on a number of occasions people should not be held liable for somebody else's criminal act. I do not disagree with that. What my amendment says is someone can be liable for their own recklessness and their own negligence. I make it clear in my amendment we are talking about gross negligence.

A number of cases have been referred to during the debate on this bill. One of the cases involves the so-called Bull's Eye Shooter Supply Company. We had a situation where a gun dealer was allegedly reckless in terms of failing to

secure his inventory and over and over again there were losses from that inventory, and the DC shooters who killed so many people, Muhammad and Malvo, got one of those guns.

But for the negligence and recklessness of that gun dealer, they would not have gotten those guns. That is the allegation in the lawsuit. So it is not Muhammad's and Malvo's criminal act that is the issue in this lawsuit in the State of Washington. It is the recklessness and negligence of the gun dealer that is the issue in that lawsuit.

The court there was faced with a motion to dismiss and the court ruled it was the alleged reckless or incompetent conduct of distributing firearms which was the cause of action, not the criminal activity of Muhammad and Malvo, and that but for that reckless and incompetent conduct in distributing firearms, the killing would not have occurred. So my amendment makes clear what I think should be clear in this law, or any law, which is reckless or grossly negligent conduct on the part of a defendant, if it is the proximate cause of somebody's death or injury, may be grounds for civil liability.

That is very separate from saying somebody is responsible for somebody else's criminal conduct. This is making somebody responsible for their own conduct which, of course, is the whole purpose of our tort law.

Tomorrow we are going to have an opportunity to make that clear in the bill on which we are going to be voting. It might be argued that the bill we are voting on says if you are negligent per se, you can be held accountable. That is fine. Negligence per se means if you violate a statute or violate the law.

But what happens if you are not violating a statute or law but that you are still reckless or you are still grossly negligent? What if you are not violating a criminal law or a statute but you are just simply reckless in the way in which you do not maintain your inventory and you do not secure the weapons you are selling? Most negligence, most gross negligence, and most recklessness is not based on a violation of law. It is based on a violation of a standard. We set forth those standards in gross negligence and recklessness in this amendment to make sure the people who are going to be subject to civil liability are people whose own gross negligence, whose own recklessness is the proximate cause of somebody else's injury or death.

It is simply not right that we say somebody whose gross negligence or recklessness has caused injury or death to someone else should not be liable unless they have also violated a statute.

The lawsuit filed by Detective Lemongello and Officer McGuire, the two injured police officers who were shot by a gun sold to a straw purchaser, alleged negligence on the part of the seller of that gun. The court denied a motion to dismiss the suit. This isn't a junk lawsuit. It is based on the alleged negligence of a gun dealer. But the bill before us would require it also to allege that the dealer violated a statute.

It is not right that people who have been injured or killed by the reckless or grossly negligent conduct of a gun dealer or manufacturer must also prove that the dealer or manufacturer violated a statute.

Individual responsibility has always been at the heart of good tort law and my amendment will keep it at the heart of the tort law that we are apparently going to be writing in the Senate.

Again, I thank all of those who made it possible for me to get to a vote tomorrow afternoon on a rollcall. I thank the Chair.