Floor Statements

Mr. President, I rise to express concern that serious violations of the law appear to be occurring and should be aggressively pursued by the IRS and, in turn, prosecuted by the Department of Justice.

Specifically, numerous Internet gambling websites may be violating statutes such as 26 U.S.C. 4401 et seq. Section 4401 requires an excise tax equal to 2 percent of the amount of unauthorized wagers. Section 4404 makes clear that the tax applies to wagers ``placed by a person who is in the United States with a person who is a citizen or resident of the United States.''

I applaud the indictment in United States v. BETonSPORTS.COM and the inclusion of tax evasion charges in counts 14, 15, and 16.

These counts charge that the defendants attempted to ``evade and defeat the . . . wagering excise tax'' in three ways: (1) by failing to make any wagering excise tax returns on or before the last day of the month following the month the wagers were accepted, as required by law, to any proper officer of the Internal Revenue Service, (2) by failing to pay to the Internal Revenue Service said wagering excise tax, and (3) by directing that the wagering funds be sent outside the United States--all in violation of Title 26, United States Code, Section 7201, and Title 18, United States Code, Section 2.

I firmly support the decision of the Department of Justice to enforce the wagering excise tax and pursue any persons in violation.

Additionally, it is important to note that extremely large sums of money are at issue: count 14 charges that from January 29, 2001 to on or about February 3, 2002, the sum of approximately $1,094,669,000.00 in taxable wagers were had and received; count 15 charges that from February 4, 2002 to on or about February 2, 2003, the sum of approximately $1,228,874,000.00 in taxable wagers were had and received; and count 16 charges that from February 3, 2003 to on or about February 1, 2004, the sum

of approximately $1,235,374,000.00 in taxable wagers were had and received. That is over $3.5 billion in three years, and Internet betting has increased significantly in the last two years.

I would like to point out that significant income taxes and excise taxes appear to be owed by numerous persons. Collecting these amounts would be an important component of the Administration's efforts to address the ``tax gap.''

Further, with such large sums at issue, the IRS and the Department of Justice should see if money laundering is involved.

The State Department has expressed strong concern that Internet gambling operations could be used not only for tax evasion, but also for other criminal activities such as money laundering and terrorist financing:

Internet gambling is particularly well-suited for the

laying and integration stages of money laundering, in which

launderers attempt to disguise the nature or ownership of the

proceeds by concealing or blending transactions within the

mass of apparently legitimate transactions. Due in large

measure to the volume and speed of transactions, as well as

the virtual anonymity offered by the Internet, offshore

gambling websites are an area of considerable money

laundering concern. The Internet gambling operations are, in

essence, the functional equivalent of wholly unregulated

offshore banks with the bettor accounts serving as bank

accounts for account holders who are, in the virtual world,

virtually anonymous. For these reasons, Internet gambling

operations are vulnerable to be used, not only for money

laundering, but also for criminal activities ranging from

terrorist financing to tax evasion. (State Department,

International Narcotics Control Strategy Report, released

March 2004.)

The Department of Justice has echoed these concerns. At a hearing before the Senate Banking Committee, John G. Malcolm, Deputy Assistant Attorney General, Criminal Division, testified:

Another major concern that the Department of Justice has

about on-line gambling is that Internet gambling businesses

provide criminals with an easy and excellent vehicle for

money laundering, due in large part to the volume, speed, and

international reach of Internet transactions and the offshore

locations of most Internet gambling sites, as well as the

fact that the industry itself is already cash-intensive.

It is a fact that money launderers have to go to financial

institutions either to conceal their illegal funds or recycle

those funds back into the economy for their use. Because

criminals are aware that banks have been subjected to greater

scrutiny and regulation, they have--not surprisingly--turned

to other non-bank financial institutions, such as casinos, to

launder their money. On-line casinos are a particularly

inviting target because, in addition to using the gambling

that casinos offer as a way to hide or transfer money,

casinos offer a broad array of financial services to their

customers, such as providing credit accounts, fund

transmittal services, check cashing services, and currency

exchange services.

Individuals wanting to launder ill-gotten gains through an

on-line casino can do so in a variety of ways. For example, a

customer could establish an account with a casino using

illegally-derived proceeds, conduct a minimal amount of

betting or engage in offsetting bets with an overseas

confederate, and then request repayment from the casino,

thereby providing a new ``source'' of the funds. If a gambler

wants to transfer money to an inside source in the casino,

who may be located in another country, he can just play until

he loses the requisite amount. Similarly, if an insider wants

to transfer money to the gambler, perhaps as payment for some

illicit activity, he can rig the game so the bettor wins.

The anonymous nature of the Internet and the use of

encryption make it difficult to trace the transactions. The

gambling business may also not maintain the transaction

records, in which case tracing may be impossible. While

regulators in the United States can visit physical casinos,

observe their operations, and examine their books and records

to ensure compliance with regulations, this is far more

difficult, if not impossible, with virtual casinos. (John G.

Malcolm, Deputy Assistant Attorney General, Criminal

Division, Department of Justice, March 18, 2003.)

Again, there should be strong enforcement efforts to ensure that Internet gambling entities are not violating the law.

Madam President, I wanted to say a few words about the Supreme Court's decision last week in Gonzales v. Carhart. In that opinion, the Court held constitutional the Partial-Birth Abortion Act of 2003, a law that passed this Senate with strong bipartisan support, including my own.

I was heartened by this decision, and not just because partial-birth abortion is a disgusting act that should never be performed in a civilized society. I am also heartened because this decision represents a step towards restoring the American people's right to govern themselves through their elected representatives.

For too long, the Supreme Court has set itself up as an antagonist to the people and has shown unfortunate disregard for the judgments of those our governmental system is supposed to serve.

The decision yesterday is a departure from that trend, and it should give us all cautious optimism that the Supreme Court is coming around to a greater level of respect for the elected branches on questions of fundamental moral values.

I also want to send a word of congratulations and thanks to the man who made this legislation a reality, former Senator Rick Santorum. During the debates on this bill back in 2003, I can remember Senator Santorum being on the Senate floor virtually full-time, taking on all comers, engaging on every point, showing his skills as a debater, and displaying the passion and spirit that defined him during his two terms in the Senate.

Senator Santorum was our leader in the debates on this bill, and the Supreme Court's affirmation of the bill's constitutionality yesterday should be a moment of great pride for our former colleague. This bill is part of his legacy, and we owe him a debt of gratitude.

Mr. President, I appreciate the majority leader yielding for the purpose of commenting for a moment about the guest Chaplain who just delivered the prayer, who happens to be the chaplain of my church in Paradise Valley. Let me speak a few words about Tim Smith and his service to our congregation.

He is the associate director of Congressional Ministries at Valley Church, and his expertise is ministries throughout the community. He has been a pastoral minister for over 25 years, serving as a hospice chaplain, a prison chaplain, and a bereavement counselor. In addition, he is a certified spiritual director and mentor and teacher to those who study spiritual direction. Tim and his wife Rita are members of Valley Presbyterian Church. They are parents of two sons, one of whom, incidentally, interned in my office in Phoenix, AZ.

It is also a special privilege for a guest Chaplain to be here, and I express my appreciation also to our Chaplain, Dr. Barry Black, for his willingness and kindness in inviting Tim Smith to be with us today.

Mr. President, I welcome Tim Smith, Minister of Valley Presbyterian Church, to Washington and to the Senate.

Mr. President, I wish to comment on section 207 of the pending matter, the Court Security Improvement Act of 2007. Section 207 increases the statutory maximum penalties for the Federal offense of manslaughter. Pursuant to this legislation, the maximum penalty for involuntary manslaughter will be increased from 6 to 10 years, and the penalty for voluntary manslaughter will be increased from 10 to 20 years. This is a change that I sought to have included in last year's various court security bills. I am pleased to see that it will be included in this year's final Senate bill.

The need for an increase in the manslaughter statutory maximum penalty is made clear in testimony that was presented before the U.S. Sentencing Commission by Paul Charlton, the U.S. Attorney for the District of Arizona, on March 25, 2003. Despite recent changes to the guidelines for manslaughter offenses, the typical DUI involuntary manslaughter crime still is subject to a sentencing range of only 30 to 37 months. Yet, as Mr. Charlton noted in his testimony, under Arizona State law, the presumptive sentence for a typical DUI involuntary manslaughter offense is 10\1/2\ years. In other words, despite recent guidelines adjustments, the Federal criminal justice system still imposes a sentence for involuntary manslaughter in drunk driving cases that is only a third of the sentence that would be imposed for the exact same conduct under State law.

Mr. Charlton concluded that there is a ``dire need for immediate improvements to the manslaughter statutory penalty and sentencing guidelines.'' As he noted, ``the respect and confidence of surviving victims in the federal criminal justice system is severely undermined and will continue to be unless the statutory maximum penalties are increased to reflect the seriousness of the crime and the sentencing guidelines are comparably changed to reflect that increase.''

With this bill, the Congress finally acts on Mr. Charlton's recommendation to increase the statutory maximum. I would like to emphasize, however, that enactment of section 207 does not alone finish the job. As Mr.

Charlton noted in his testimony, even after Congress increased statutory penalties for these offenses in 1998, the sentences imposed by Federal courts ``remain[ed] inadequate to deter and punish offenders [as of March 2003] because the federal manslaughter sentencing guideline was never changed to reflect the increased penalty.''

The Sentencing Commission did eventually adjust the guidelines in response to the 1998 amendments, albeit 5 years after those changes were enacted. In case a staffer for the Sentencing Commission reads this speech in the Congressional Record, let me be clear: yes, we do expect the Commission to adjust the guidelines for voluntary and involuntary manslaughter in order to reflect the statutory changes made by section 207. And please persuade the Commissioners to act expeditiously. If this matter is not addressed during the next appropriate period for submitting proposed changes to the guidelines, I will contact the Commission to inquire why no adjustment has been made.

I ask unanimous consent that Mr. Charlton's 2003 testimony before the Sentencing Commission be printed in the Record.

Mr. President, I would like to speak for a few minutes on the bill on which we will be voting in approximately an hour, as the majority leader just said. I would like to speak directly to the point he attempted to make, which was why should there be a problem with allowing the Federal Government to negotiate for drug prices for Medicare by repealing Medicare's so-called noninterference provision?

Nobody doesn't support negotiation. Negotiation is at the heart of the Medicare prescription drug benefit. I was there when it was written in the conference committee and there was a conscientious decision to ensure that there would be competition for lowering prices by specifically designating pharmacy benefit managers to do negotiating with the drug companies to bring the prices down. So the first myth is that Medicare somehow does not involve negotiations. It involves extensive negotiations. What it does not do is allow the Federal Government to interfere in those negotiations and, in effect, put itself in between patients and doctors and the drugs.

The Medicare Fair Prescription Drug Price Act of 2007, on which we will be voting cloture, turns this law upside-down and basically inserts the Government into this process under these decisions. The purpose may sound simple--the Government, using its negotiating clout, forcing drug companies to give seniors deep discounts--but if you take a closer look and peel away the layers, you realize it is nothing more than a promise running on empty, void of details and muddled by political rhetoric rather than sustained by the facts. Let's look at the facts.

First of all, Medicare Part D is working. When Congress crafted the bill, we heard from our constituents loudly and clearly. They wanted a prescription drug benefit that guaranteed access to affordable drugs and offered a choice of plans. They didn't want to be packed into a one-size-fits-all, Government-run plan that didn't fit their needs, and in fact they asked us to model the benefit after the plan that is available to Members of Congress. We did that. We chose access over restrictions, choice over Government control, and competition over price control. As a result, Medicare Part D is exceeding everyone's expectations. Approximately 90 percent of Medicare beneficiaries have some form of prescription drug coverage. The average premium was $22, in 2007, which is 42 percent lower than the Government projected initially. On average, seniors saved $1,200 on their prescription drug costs last year.

Eight out of ten Part D enrollees report they are satisfied with their current coverage, and the Congressional Budget Office estimates that the drug benefit will cost the taxpayers 30 percent less, $265 billion in savings over the next 10 years.

To sum it up, we have 90 percent Medicare beneficiaries with coverage, 80 percent satisfaction rate, and it costs 30 percent less than originally estimated. If it ``ain't'' broke, don't fix it.

The second fact, drug negotiation is at the heart of the Medicare bill. For the first time in history, health insurance plans and pharmaceutical companies and these benefit managers whom I mentioned are required to negotiate better prices for seniors, just like they do for Members of Congress. The noninterference provision, which first appeared in democratically sponsored legislation, prevents the Federal Government from interfering in those negotiations. It is a basic economic principle. In competitive markets, supply and demand interact, determining the price of the good or service. How do you get a good price? These pharmacy benefit managers I mentioned have significant market power.

Consider this fact: The three largest PBMs have nearly 200 million members, compared to Medicare's 44 million. So when you talk about the Government using its considerable bargaining clout because it would represent 44 million, appreciate that these pharmacy benefit managers represent 200 million. They insure all of these people--Americans in the private sector, as well as Americans who have Government insurance. So the private drug negotiators already enjoy a significant competitive advantage. They use that power to negotiate lower prices and, as I pointed out, that negotiation has worked.

Third, the secretarial negotiation cannot achieve any lower price without rationing choice in access. That was the testimony before the Senate Finance Committee, and I think every one of us appreciates that we should be very careful about anything which could restrict access to care for our seniors. When the Finance Committee marked up this bill last week, I looked forward to getting some clarity on exactly how Members contemplated this secretarial negotiation, how it would work.

To my disappointment, no one could explain exactly how it would work. In fact, my colleagues openly and candidly admitted they had no plan or any specifics. What they said was that the Secretary would have to use his imagination and that it could take a number of different forms.

So what we are buying, in effect, is a pig in a poke. Nobody knows what the

Secretary would or could do in order to try to bring prices down; he would have to use his imagination.

I think it is appropriate for us to ask this kind of question before we buy into legislation that could so dramatically and negatively impact health care for our seniors. Restricting access could theoretically reduce lower prices if they were raised with some other program. That is the other downside to this legislation.

During the Finance Committee noninterference hearing, we heard testimony from Dr. Fiona Scott Morton, who is a Professor of Economics at the Yale School of Management. She made a couple of critical points. Individuals eligible to participate in Medicare Part D generate approximately 40 percent of prescription drug spending in the United States. The Secretary cannot negotiate a lower average price for such a large population; Medicare is the average.

So if it were somehow theoretically possible to reduce prices, they would have to go up somewhere else. That is the other point we established as well. There are many different organizations, including veterans organizations, that urged us to oppose this legislation because they understand that if you are somehow able to lower the prices for Medicare, they necessarily, arithmetically, have to go up somewhere else. The Veterans' Administration is one of those areas.

Let me quote from two letters, one received from the American Legion, which asks us to consider, and I quote:

. . . the serious collateral damage that would result from

repealing the noninterference provision.

The VA is a health care provider, whereas Medicare is a

health insurer. Any possible Medicare savings would likely

result in a reciprocal cost to the VA. Compromising the

noninterference provision by striking this section is not in

the best interest of America's veterans and their families.

The American Legion is not alone. The Military Order of the Purple Heart sent a similar letter to the Hill. Bottom line here: Cost savings are the result of true efficiencies. Repealing the noninterference provision is just another way to shift costs at the expense of other consumers.

In conclusion, during this markup of this bill in the committee, I offered three amendments, each of which ensured important safeguards: No. 1, to prohibit cost shifting, as I mentioned, to entities such as Medicaid or veterans or the uninsured; No. 2, to require a certification of cost savings to Medicare beneficiaries if these negotiations were to occur; No. 3, a certification of four beneficiary protections: One, individual choice of a prescription drug plan; two, access to prescription drugs by prohibiting a government formulary or other tool to restrict drug access; three, guaranteed access to local pharmacies; and, four, no cost shifting to other payors, such as Medicaid, veterans or the uninsured. All three of these amendments were rejected. In fact, somebody called them a red herring. Well, restricting seniors' access to prescription drugs and increasing drug prices for all consumers are not red herrings, they are important issues which have not been adequately addressed in this legislation.

Repealing this noninterference provision would put the Government, not the individual in charge, and put seniors one step closer to a single Government-run designed formulary.

I appreciate and respect the goals of my colleagues. We all want to improve access to affordable health coverage. But with all due respect, they are wrong. A great deal of expert testimony and experience with Medicare Part D by millions of Americans has demonstrated they are wrong. So I urge my colleagues, when considering how to vote on this motion for cloture, to appreciate the fact that, first of all, there is a great benefit that is producing savings and is well appreciated by the American people; that there are organizations that are very much opposed to this, such as the VA, and that we would be very foolish, it seems to me, to adopt a piece of legislation such as this about which there is no consensus as to how the Secretary would utilize his authority to negotiate.

Mr. President, I ask unanimous consent to have printed at this point in the Record an editorial from the Wall Street Journal of today, April 18, 2007, which further amplifies the points I have made this morning.

I yield the floor.

Mr. President, I wonder if my colleague will first allow me to lay down an amendment but not speak to it.

Mr. President, is there a pending amendment?

Mr. President, I ask unanimous consent to lay aside the pending amendment.

Mr. President, I simply ask unanimous consent to call up as a second-degree amendment to the pending amendment my amendment No. 866.

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

Mr. President, I rise to talk to my colleagues about my amendment No. 866 to protect the classified information handled by Congress.

Having served on the Intelligence Committee for 8 years, no one needs to tell me how important it is for Congress to have the information it needs to perform oversight of the intelligence community.

However, we must be mindful that much of this information could do great damage to our national security.

This bill includes what I believe are misguided provisions related to clandestine prisons, the Detainee Treatment Act, and the enormous expansion of access to highly sensitive national security information.

The bill would declassify information about the intelligence budget, dramatically expand the number of members and staff with access to the most sensitive national security information our government holds, and provide details of the interrogation techniques used by our military and intelligence community.

Can anyone imagine what would happen if al-Qaida became privy to the interrogation techniques our military and intelligence community use? Does anyone think al-Qaida wouldn't adapt and train its terrorists accordingly?

I believe disseminating this information is a mistake. But, if we are going to disseminate it, we must put in place a mechanism to ensure this sensitive information does not get into the hands of our enemies. And we must give pause to those who would use this information to conduct their own personal foreign policies, as has been seen in the systematic use of leaks of classified information in recent years.

My amendment will ensure this information is treated as it should be by imposing a 10-year criminal penalty on those Members and staff who leak our national security secrets.

I urge adoption of the amendment.

Medicare

Mr. President, today, on behalf of the Senate Republican leadership, I am introducing the Invest in America Act, a comprehensive set of legislative proposals that are designed keep American families and the American economy on the path of continued prosperity by preventing--the largest tax increase in our Nation's history--a tax increase that is scheduled to happen in 2011 if Congress fails to extend current tax policies.

The American economy is the envy of the developed world. Our unemployment rate is just 4.4 percent, and 7.8 million new jobs have been created since mid-2003. Not only are more Americans working than ever before, but the benefits of our growing economy are broadly shared by all Americans. Real, inflation-adjusted wages rose 2.2 percent in the last 12 months--faster than the average rate of the late 1990s. This meant an extra $1,279 in the past year for the typical family with two wage earners. To keep our economy growing on this strong and sustainable path, we must avoid tax increases that could damage our economy.

America's economy has been growing at a strong and sustainable pace due in large measure to the fact that Americans are willing to work harder and be more productive in their labor, thus creating more new goods and services at lower costs. Americans will continue to be productive and contribute to our strong economy if we reject marginal tax rate increases on the income they earn. Studies have shown that people really do work more if the tax imposed on their extra labor is relatively low. Arizona State University's distinguished economics professor, Dr. Edward Prescott, won a Nobel Prize in economics for research that proved this theory.

It's interesting that the big investment bank, Goldman Sachs, studied what would happen if taxes increase across-the-board, as is scheduled to happen in 2011 when the various tax rates and other provisions enacted since 2001 expire. The short answer is an immediate recession-- a recession that would not be avoided even if the Federal Reserve acted to cut interest rates. This study demonstrates very clearly why Congress cannot allow this tax hike to happen.

The President proposed in his fiscal year 2008 budget to make the tax rates and many other tax incentives enacted since 2001 permanent. In marked contrast, Democrats have produced budget resolutions in both the House and the Senate that assume all of these tax policies will expire and taxes will increase dramatically for virtually every American. In fact, the average family will see its taxes increase by about $3,675 if the Democrats are successful in canceling the tax relief. Today, Senate Republicans are going on the record in support of making these important tax policies permanent and in opposition to plans by Democrats to allow these tax increases to occur.

Our legislation underscores our commitment to American families and to a strong American economy by preventing the largest tax increase in American history. We believe that American families pay enough in taxes--indeed, revenues are running above historical levels. The Invest in America Act makes all of the current-law tax rates permanent so that no American family faces an automatic tax hike in 2011. I want to underscore that Republicans believe that no American family should face a tax increase--not young people just entering the job market and other lower-income Americans who are benefiting so substantially from the 10 percent bracket; not middle-income families; and not more successful Americans, including the almost 80 percent of taxpayers in the top bracket who report small business income.

Our legislation also invests in American families by making the $1,OOO-per-child tax credit, the marriage penalty relief, and the other components of the Economic Growth and Tax Relief Reconciliation Act-- EGTRRA--of 2001 permanent. American moms and dads face an enormous and unexpected reduction in the child tax credit in 2011,

when the child tax credit is scheduled to be cut in half. Republicans know that the child tax credit helps countless parents offset some of the costs associated with raising their children, and we know that reducing the credit by 50 percent will be a terrible blow to many families. That's why Republicans support making the current $1,000 per- child tax credit permanent.

Married couples will face an unwelcome surprise when the marriage penalty relief expires. The marriage penalty relief the Republicans enacted is aimed squarely at middle-income families because the relief is only provided for the standard deduction and the 15-percent bracket. Republicans believe there is no reason a married couple should face a higher tax burden than they would as two single taxpayers, and so we propose to invest in American families by making the marriage penalty relief permanent.

The Invest in America Act underscores our commitment to investing in America's future by making the important education-related tax benefits enacted in recent years permanent. This will help countless middle- income Americans afford higher education costs. Our legislation invests in America's future by extending the tuition deduction, extending the modifications to Coverdell education savings accounts, extending certain provisions for the student loan interest deduction, and extending the exclusion for employer-provided educational assistance. We also propose to permanently extend the $250 deduction for expenses of elementary and secondary school teachers.

Republicans also believe that parents ought to be able to pass on the fruits of their labor to their children without the Federal death tax confiscating half of their estate, above a small exemption amount. The death tax hits family businesses and family farms and ranches the hardest because the owners are often not wealthy families, but rather have most of their assets tied up in the value of the business or the value of the land. And while the death tax hurts families, it also hurts our economy if it forces family businesses to close down, eliminating good-paying jobs in the process. Under current law, the death tax is repealed in 2010, but springs back to life in 2011, when more than 131,000 families will have to file estate tax returns in that year alone. Americans pay taxes throughout their lives, and Republicans believe they should not have more than half of their assets taken in taxes at death too, so the Invest in America Act makes repeal of the death tax permanent.

The Invest in America Act goes beyond the 2001 and 2003 tax relief laws and also repeals--once and for all--the individual Alternative Minimum Tax (AMT). If you go by rhetoric alone, there is overwhelming bipartisan support in Congress for repealing the AMT. But, American taxpayers want action. The problems we have encountered from the AMT demonstrate what happens when Congress tries to target a tax specifically at the ``wealthy''--we almost always end up hitting the broad swath of middle-income families. The AMT was never intended to hit middle-income taxpayers, and Congress ought to repeal it before it imposes unnecessary and unexpected taxes on more and more families.

Republicans understand that, in addition to not raising taxes on families, we cannot take our strong and dynamic economy for granted; we believe we must invest in American competitiveness. While our legislation should not be viewed as a comprehensive approach to improving American competitiveness, we believe a necessary first step is to prevent tax increases that will surely hurt America's competitive position in the world economy. Specifically, the Invest in America Act makes permanent the current tax rates for capital gains and dividends; it makes the increased expensing amounts available for small businesses permanent; and it makes permanent the newly-enhanced research and development tax credit.

America cannot expect to be the home for worldwide capital markets if it is hostile to American investors, so the Invest in America Act makes the existing tax rates for long-term capital gains and for qualified dividends permanent. These lower tax rates implemented in 2003 and extended in 2006 have encouraged investors of all income categories to put their money to work in the markets, generating solid returns for American investors and providing much needed capital for American businesses to grow and create new jobs. It has been 4 years since these lower rates were enacted-long enough for us to determine once and for all that lower rates really do encourage increased economic activity.

Growth since the 2003 tax relief has averaged more than 3.5 percent, while it averaged just 1.3 percent from the first quarter of 2001 through the second quarter of 2003. The Dow Jones Industrial Average has risen by 40 percent since the lower investment tax rates were enacted. The average 401(k) balance has risen by about 65 percent since 2003. All of this investment activity makes it easier for entrepreneurs and businesses to raise funds to expand and grow their businesses, create more jobs, and improve standards of living around the country.

It's interesting to note that, while the conventional wisdom is that these lower investment tax rates only benefit ``the rich,'' half of all Americans own shares of stock, either on their own or in their retirement savings. In fact, most of the Americans who are benefiting from these lower rates are middle-income taxpayers. Moreover, the current 5 percent rate, which is available for the lower-income investors and drops to zero in 2008, is a sometimes-forgotten benefit, but it is especially important to our senior citizens who rely on their investment income. According to statistics calculated by the Joint Committee on Taxation, the vast majority of elderly taxpayers who report capital gains and dividends income have incomes under $100,000.

In addition to reducing tax rates to encourage more business investment, Congress also significantly increased the amount of investment that small businesses may expense in a given year. This has helped countless small businesses expand their operations by making the purchase of new equipment more cost-effective. Unfortunately, these increased levels are only in effect through 2009. Small businesses create most new jobs in the U.S. and comprise half of our private gross domestic product, so the Invest in America Act proposes to make the enhanced small business expensing levels permanent.

While low tax rates on income and investments are essential to keeping America competitive, Republicans know that many countries around the world are specifically and aggressively working to attract some of the most high-quality jobs and economic activities available: research and development. America hinders its ability to attract and retain R&D here because the tax incentives we give to encourage R&D are not permanent law, but must be extended every year or so. This makes it very difficult for companies to commit to large-scale R&D investments in the U.S., when other countries are offering permanent or longer-term tax incentives. To ensure that America remains the most attractive place for R&D, the Invest in America Act makes the R&D tax credit permanent.

The Invest in America Act also acknowledges that the U.S. tax system imposes a costly and frustrating burden on taxpayers, with filers spending an average 30 hours to complete the typical Form 1040. Six in ten Americans opt instead to hire a professional. The billions of dollars spent each year simply complying with the tax system could be put to a much better, and more economically beneficial, use. The Invest in America Act expresses the Sense of the Senate that the Finance Committee should report tax simplification legislation by the end of the year to make the tax system fair, transparent, and efficient, without raising tax rates.

Finally, I want to address the effect all of the tax changes have had on our budget deficit and to dispute the notion that Congress must raise taxes elsewhere if we are going to make existing tax rates and incentives permanent and repeal the AMT. It is important for all Americans to know that all of the additional tax revenue flowing into the Treasury from our growing economy, hardworking Americans, and from profitable investments has caused our budget deficit to shrink below 2 percent of GDP--well below its historical average. If we stay on our current progrowth path, reject tax increases,

and impose reasonable restraints on spending growth, we will balance the budget by 2012, if not sooner.

As for the notion that Congress must ``pay for'' tax relief with tax increases, I would note that the official estimates about how much certain tax provisions will ``cost'' the Treasury are just that, estimates. And they often prove to be wrong. For example, since 2003, the Treasury has collected $133 billion more in capital gains revenue than was originally projected by the Congressional Budget Office; revenues have exceeded official CBO projections by 68 percent. Second, the concept of requiring corresponding tax increases falsely assumes that the Government is entitled to the revenue, when it really belongs to the American people. Third, revenues are running above their historical average of about 18.2 percent and are projected to continue increasing even if we make the current tax structure permanent, as we propose in the Invest in America Act. If we raise taxes in order to extend the tax policies, we will be taking even more resources out of the private sector and spending them on government programs, which will certainly damage our economy. To protect our growing economy, I believe we must ensure that revenues, as a percentage of our economy, do not rise much above their current level.

I am pleased to be the lead sponsor of this important legislation that underscores the commitment of the Senate Republican leadership to investing in American families, America's future, and American competitiveness. America's economy is growing at a strong and sustainable level, to the benefit of all American families, but this growth will not continue if we unwisely allow taxes to be increased on work, savings, and investment--the very engines of economic growth.

Mr. President, today, on behalf of the Senate Republican leadership, I am introducing the Invest in America Act, a comprehensive set of legislative proposals that are designed keep American families and the American economy on the path of continued prosperity by preventing--the largest tax increase in our Nation's history--a tax increase that is scheduled to happen in 2011 if Congress fails to extend current tax policies.

The American economy is the envy of the developed world. Our unemployment rate is just 4.4 percent, and 7.8 million new jobs have been created since mid-2003. Not only are more Americans working than ever before, but the benefits of our growing economy are broadly shared by all Americans. Real, inflation-adjusted wages rose 2.2 percent in the last 12 months--faster than the average rate of the late 1990s. This meant an extra $1,279 in the past year for the typical family with two wage earners. To keep our economy growing on this strong and sustainable path, we must avoid tax increases that could damage our economy.

America's economy has been growing at a strong and sustainable pace due in large measure to the fact that Americans are willing to work harder and be more productive in their labor, thus creating more new goods and services at lower costs. Americans will continue to be productive and contribute to our strong economy if we reject marginal tax rate increases on the income they earn. Studies have shown that people really do work more if the tax imposed on their extra labor is relatively low. Arizona State University's distinguished economics professor, Dr. Edward Prescott, won a Nobel Prize in economics for research that proved this theory.

It's interesting that the big investment bank, Goldman Sachs, studied what would happen if taxes increase across-the-board, as is scheduled to happen in 2011 when the various tax rates and other provisions enacted since 2001 expire. The short answer is an immediate recession-- a recession that would not be avoided even if the Federal Reserve acted to cut interest rates. This study demonstrates very clearly why Congress cannot allow this tax hike to happen.

The President proposed in his fiscal year 2008 budget to make the tax rates and many other tax incentives enacted since 2001 permanent. In marked contrast, Democrats have produced budget resolutions in both the House and the Senate that assume all of these tax policies will expire and taxes will increase dramatically for virtually every American. In fact, the average family will see its taxes increase by about $3,675 if the Democrats are successful in canceling the tax relief. Today, Senate Republicans are going on the record in support of making these important tax policies permanent and in opposition to plans by Democrats to allow these tax increases to occur.

Our legislation underscores our commitment to American families and to a strong American economy by preventing the largest tax increase in American history. We believe that American families pay enough in taxes--indeed, revenues are running above historical levels. The Invest in America Act makes all of the current-law tax rates permanent so that no American family faces an automatic tax hike in 2011. I want to underscore that Republicans believe that no American family should face a tax increase--not young people just entering the job market and other lower-income Americans who are benefiting so substantially from the 10 percent bracket; not middle-income families; and not more successful Americans, including the almost 80 percent of taxpayers in the top bracket who report small business income.

Our legislation also invests in American families by making the $1,OOO-per-child tax credit, the marriage penalty relief, and the other components of the Economic Growth and Tax Relief Reconciliation Act-- EGTRRA--of 2001 permanent. American moms and dads face an enormous and unexpected reduction in the child tax credit in 2011,

when the child tax credit is scheduled to be cut in half. Republicans know that the child tax credit helps countless parents offset some of the costs associated with raising their children, and we know that reducing the credit by 50 percent will be a terrible blow to many families. That's why Republicans support making the current $1,000 per- child tax credit permanent.

Married couples will face an unwelcome surprise when the marriage penalty relief expires. The marriage penalty relief the Republicans enacted is aimed squarely at middle-income families because the relief is only provided for the standard deduction and the 15-percent bracket. Republicans believe there is no reason a married couple should face a higher tax burden than they would as two single taxpayers, and so we propose to invest in American families by making the marriage penalty relief permanent.

The Invest in America Act underscores our commitment to investing in America's future by making the important education-related tax benefits enacted in recent years permanent. This will help countless middle- income Americans afford higher education costs. Our legislation invests in America's future by extending the tuition deduction, extending the modifications to Coverdell education savings accounts, extending certain provisions for the student loan interest deduction, and extending the exclusion for employer-provided educational assistance. We also propose to permanently extend the $250 deduction for expenses of elementary and secondary school teachers.

Republicans also believe that parents ought to be able to pass on the fruits of their labor to their children without the Federal death tax confiscating half of their estate, above a small exemption amount. The death tax hits family businesses and family farms and ranches the hardest because the owners are often not wealthy families, but rather have most of their assets tied up in the value of the business or the value of the land. And while the death tax hurts families, it also hurts our economy if it forces family businesses to close down, eliminating good-paying jobs in the process. Under current law, the death tax is repealed in 2010, but springs back to life in 2011, when more than 131,000 families will have to file estate tax returns in that year alone. Americans pay taxes throughout their lives, and Republicans believe they should not have more than half of their assets taken in taxes at death too, so the Invest in America Act makes repeal of the death tax permanent.

The Invest in America Act goes beyond the 2001 and 2003 tax relief laws and also repeals--once and for all--the individual Alternative Minimum Tax (AMT). If you go by rhetoric alone, there is overwhelming bipartisan support in Congress for repealing the AMT. But, American taxpayers want action. The problems we have encountered from the AMT demonstrate what happens when Congress tries to target a tax specifically at the ``wealthy''--we almost always end up hitting the broad swath of middle-income families. The AMT was never intended to hit middle-income taxpayers, and Congress ought to repeal it before it imposes unnecessary and unexpected taxes on more and more families.

Republicans understand that, in addition to not raising taxes on families, we cannot take our strong and dynamic economy for granted; we believe we must invest in American competitiveness. While our legislation should not be viewed as a comprehensive approach to improving American competitiveness, we believe a necessary first step is to prevent tax increases that will surely hurt America's competitive position in the world economy. Specifically, the Invest in America Act makes permanent the current tax rates for capital gains and dividends; it makes the increased expensing amounts available for small businesses permanent; and it makes permanent the newly-enhanced research and development tax credit.

America cannot expect to be the home for worldwide capital markets if it is hostile to American investors, so the Invest in America Act makes the existing tax rates for long-term capital gains and for qualified dividends permanent. These lower tax rates implemented in 2003 and extended in 2006 have encouraged investors of all income categories to put their money to work in the markets, generating solid returns for American investors and providing much needed capital for American businesses to grow and create new jobs. It has been 4 years since these lower rates were enacted-long enough for us to determine once and for all that lower rates really do encourage increased economic activity.

Growth since the 2003 tax relief has averaged more than 3.5 percent, while it averaged just 1.3 percent from the first quarter of 2001 through the second quarter of 2003. The Dow Jones Industrial Average has risen by 40 percent since the lower investment tax rates were enacted. The average 401(k) balance has risen by about 65 percent since 2003. All of this investment activity makes it easier for entrepreneurs and businesses to raise funds to expand and grow their businesses, create more jobs, and improve standards of living around the country.

It's interesting to note that, while the conventional wisdom is that these lower investment tax rates only benefit ``the rich,'' half of all Americans own shares of stock, either on their own or in their retirement savings. In fact, most of the Americans who are benefiting from these lower rates are middle-income taxpayers. Moreover, the current 5 percent rate, which is available for the lower-income investors and drops to zero in 2008, is a sometimes-forgotten benefit, but it is especially important to our senior citizens who rely on their investment income. According to statistics calculated by the Joint Committee on Taxation, the vast majority of elderly taxpayers who report capital gains and dividends income have incomes under $100,000.

In addition to reducing tax rates to encourage more business investment, Congress also significantly increased the amount of investment that small businesses may expense in a given year. This has helped countless small businesses expand their operations by making the purchase of new equipment more cost-effective. Unfortunately, these increased levels are only in effect through 2009. Small businesses create most new jobs in the U.S. and comprise half of our private gross domestic product, so the Invest in America Act proposes to make the enhanced small business expensing levels permanent.

While low tax rates on income and investments are essential to keeping America competitive, Republicans know that many countries around the world are specifically and aggressively working to attract some of the most high-quality jobs and economic activities available: research and development. America hinders its ability to attract and retain R&D here because the tax incentives we give to encourage R&D are not permanent law, but must be extended every year or so. This makes it very difficult for companies to commit to large-scale R&D investments in the U.S., when other countries are offering permanent or longer-term tax incentives. To ensure that America remains the most attractive place for R&D, the Invest in America Act makes the R&D tax credit permanent.

The Invest in America Act also acknowledges that the U.S. tax system imposes a costly and frustrating burden on taxpayers, with filers spending an average 30 hours to complete the typical Form 1040. Six in ten Americans opt instead to hire a professional. The billions of dollars spent each year simply complying with the tax system could be put to a much better, and more economically beneficial, use. The Invest in America Act expresses the Sense of the Senate that the Finance Committee should report tax simplification legislation by the end of the year to make the tax system fair, transparent, and efficient, without raising tax rates.

Finally, I want to address the effect all of the tax changes have had on our budget deficit and to dispute the notion that Congress must raise taxes elsewhere if we are going to make existing tax rates and incentives permanent and repeal the AMT. It is important for all Americans to know that all of the additional tax revenue flowing into the Treasury from our growing economy, hardworking Americans, and from profitable investments has caused our budget deficit to shrink below 2 percent of GDP--well below its historical average. If we stay on our current progrowth path, reject tax increases,

and impose reasonable restraints on spending growth, we will balance the budget by 2012, if not sooner.

As for the notion that Congress must ``pay for'' tax relief with tax increases, I would note that the official estimates about how much certain tax provisions will ``cost'' the Treasury are just that, estimates. And they often prove to be wrong. For example, since 2003, the Treasury has collected $133 billion more in capital gains revenue than was originally projected by the Congressional Budget Office; revenues have exceeded official CBO projections by 68 percent. Second, the concept of requiring corresponding tax increases falsely assumes that the Government is entitled to the revenue, when it really belongs to the American people. Third, revenues are running above their historical average of about 18.2 percent and are projected to continue increasing even if we make the current tax structure permanent, as we propose in the Invest in America Act. If we raise taxes in order to extend the tax policies, we will be taking even more resources out of the private sector and spending them on government programs, which will certainly damage our economy. To protect our growing economy, I believe we must ensure that revenues, as a percentage of our economy, do not rise much above their current level.

I am pleased to be the lead sponsor of this important legislation that underscores the commitment of the Senate Republican leadership to investing in American families, America's future, and American competitiveness. America's economy is growing at a strong and sustainable level, to the benefit of all American families, but this growth will not continue if we unwisely allow taxes to be increased on work, savings, and investment--the very engines of economic growth.

Mr. President, we live in an age when medical miracles are occurring every day, many in my home State of Arizona. Breakthroughs are treating and curing children and adults who could have died from their diseases just a few years ago. And some of these cures and treatments are the result of stem cell research.

For example, thanks to the Cord Blood Registry located in Tucson, children and adults are being treated, and often cured, of once terminal diseases such as leukemia, aplastic anemia, cerebral palsy, and sickle-cell anemia. And these are just a handful of the 72 diseases that have undergone clinical trials or been treated using stem cells obtained from bone marrow and umbilical cord blood.

I favor the broadest possible effort to pursue promising medical technologies within appropriate ethical limits. Scientists have derived stem cells from two principal sources: the tissues, fluids, and organs of adults, and cells from human embryos. Human embryonic stem cells have only been obtained through a process that destroys the embryo.

In the last Congress, we passed, and the President signed into law, the Stem Cell Therapeutic and Research Act of 2005. This legislation was intended to spur additional advances by establishing an infrastructure to facilitate the collection and dissemination of two of the most promising categories of adult stem cells: those derived from bone marrow and those derived from umbilical cord blood. Based on reports in the media over the past 2 weeks, I would say this bill has been a success.

For example, the New York Times reported on a coming revolution to sports medicine from adult stem cells that could be able to heal and rehabilitate tendons, ligaments, muscle and cartilage.

More significantly, ABC News reported that adult stem cells are being shown to be useful in repairing damaged heart muscle. While this has been known for some time in other countries, U.S. doctors and scientists are now embarking on the first human clinical trials. This may turn out to be one of the most significant breakthroughs in recent history for treating the most deadly disease in the United

States--heart disease--which last year claimed the lives of almost 500,000 Americans.

What's more, a recent study conducted by the Wake Forest University School of Medicine promisingly resulted in scientists harvesting stem cells from amniotic fluid, which is the fluid that surrounds a baby before it is born. These amniotic stem cells offer many of the benefits found in embryonic stem cells, and without its ethical complications, demonstrating just how much faster science is moving than politics. Those researchers at Wake Forest found that amniotic-fluid stem cells proved successful in producing bone, heart muscles, fat, nerve, and liver tissues. All of this was possible without destroying the nascent life in an embryo.

By contrast, embryonic stem cell experiments have not yielded any treatments for human patients. Nevertheless, researchers believe there is much potential there, so a great deal of private and public money has been raised to pursue it.

In 2001, the President issued an Executive order that made available for the first time Federal funding for embryonic stem cell research using embryos that had already been destroyed. In the subsequent 6 years, the Federal Government has spent more than $130 million on this type of stem cell research and has spent more than $2.5 billion on all stem cell-related research.

In 2006, the Senate considered legislation that would have overturned a key element of the current policy: the stipulation that Federal taxpayers' money cannot provide an incentive for the further destruction of human embryos. While this bill was approved by Congress, it was later vetoed by the President.

I voted against this legislation because I believe that taxpayers should not have to subsidize the destruction of nascent human life, especially when a number of State governments and large universities have directed significant resources to embryonic stem cell research. Since there are already billions of dollars available for embryonic stem cell research on lines from newly destroyed embryos, increases in Federal funding and a change in the Federal policy are not necessary.

S. 5, which we are debating today, and which is similar to legislation already passed by the House, is essentially the same legislation as that the President vetoed last year. There is one difference: added to S. 5 is legislation that was passed unanimously by this body last year--the Alternative Pluripotent Stem Cell Therapies Enhancement Act. I supported that legislation, which was not passed by the other body. However, that very positive legislation is attached to legislation I cannot support because it would force taxpayers to subsidize the destruction of nascent life.

Thankfully, S. 30 is also being considered today. I fully support this legislation offered by Senators Coleman and Isakson. Their leadership has brought to the floor a bill that would build on the research that is treating patients now. This legislation would direct the Department of Health and Human Services to seek out alternative sources of stem cells and to study the possibility of establishing an amniotic and placental stem cell bank, similar to the bone marrow and cord blood stem cell bank, while reaffirming a policy that prohibits research that destroys human life.

We can all agree: stem cell research holds promise and has already provided life-saving treatments and cures. And we should continue to support that research within appropriate ethical restrictions. I urge my colleagues to oppose S. 5 and support S. 30.

Mr. President, National Crime Victims Rights Week will soon be celebrated. I would like to compliment John Gillis, the director of the Office of Victims of Crime at the Department of Justice, for his outstanding work on behalf of crime victims. I ask to have printed in the Record a column I wrote about Mr. Gillis.

The material follows.

Honoring Director John Gillis

(By U.S. Senator Jon Kyl)

Each April for the past 26 years, the Nation has observed

National Crime Victims Rights Week. This is a time when the

country recognizes the harm suffered by millions of Americans

at the hands of criminals and calls for additional ways to

support victims in their struggle for justice.

This year I'd like to use this week to praise the

leadership of John W. Gillis, the Director of the Justice

Department's Office for Victims of Crime (OVC). During his

long and distinguished law-enforcement career--including two

decades with the Los Angeles Police Department and a stint as

chair of the California Board of Prison Terms--Mr. Gillis has

fought tirelessly on behalf of crime victims.

Mr. Gillis experienced personal tragedy in 1979 when gang

members murdered his daughter Louarna as part of a targeted

killing of children of police officers.

This horrific tragedy compelled him to help found the

Justice for Homicide Victims and the Coalition of Victims

Equal Rights, an organization that works for the rights of

victims and their families. He also founded Victims and

Friends United and has been an active member of Memory of

Victims Everywhere and Parents of Murdered Children, a

support group for families of homicide victims.

The President nominated Mr. Gillis to become Director of

OVC in 2001, and I was honored to lead his nomination through

the Senate. Since the beginning of his tenure, he has

transformed the OVC into an organization that truly puts

victims first.

Through his ``victims first'' focus, he helped provide the

inspiration for the Scott Campbell, Stephanie Roper, Wendy

Preston, Louarna Gillis, Nila Lynn Crime Victims Rights Act

of 2004, named in part after his daughter, which Senator

Dianne Feinstein and I cosponsored, and which extends

meaningful and enforceable rights to federal crime victims

for the first time in our Nation's history.

To ensure that these new rights will be enforced through

our courts, Mr. Gillis has supported the National Crime

Victim Law Institute and new clinics across the country; such

as the one here in Arizona, established by Arizona Voice for

Crime Victims, which provided the first model in the Nation.

These clinics provide free legal and social services to

victims of crime who seek to be treated with the respect and

dignity that they deserve. Congress has followed the example

Mr. Gillis set by providing critically needed resources to

support these efforts beginning in 2006, and we are committed

to continue expanding them.

Under his leadership, OVC created the Helping Outreach

Programs to Expand (HOPE) grant program to help fund

grassroots victim service organizations that have had

difficulty in obtaining public funding through other sources.

In 2002, 376 programs received over $1.8 million to support

its development efforts, and, in 2007, the HOPE program will

continue to develop and expand the use of grassroots service

providers to help expand outreach to victims.

OVC has reached out to the Native American communities

where the highest rates of violent crime occur. It increased

funding for services to victims and expanded eligibility for

this funding to include tribes not under federal

jurisdiction. In 2005, OVC funded approximately $8.5 million

for projects serving Native American crime victims, and, in

2006, it increased discretionary funding to $3.5 million for

the Tribal Victim Assistance Program, allowing 30 tribes to

develop direct services to victims of violent crime.

OVC also recently announced the availability of an online

application for the International Terrorism Victim Expense

Reimbursement Program, which is intended to reimburse victims

for allowable expenses incurred as a result of acts of

terrorism occurring outside the United States. Additionally,

under OVC's Antiterrorism and Emergency Assistance Program,

OVC provided assistance to jurisdictions to support the

response to incidents of mass violence on school campuses.

This Crime Victims Rights Week, we should not only honor

crime victims and those affected by crime, but think about

new ways to help and support victims in their struggle for

justice. The examples that I've cited are only a few of Mr.

Gillis's accomplishments as OVC director that will help those

seeking justice. And, I am proud to have someone like Mr.

Gillis guiding these efforts. His service to the President

and to crime victims is a credit to our country.

Mr. President, I raise a point of order. Under rule XVI, section 1711 of the bill is legislation on an appropriations bill.

Section 1711 of the substitute amendment makes changes to the immigration code's bars on entry to the United States for individuals tied to terrorist activity or groups. Although I agree with the stated purpose of this provision--to allow the Hmong and other groups that do not pose a threat to the United States to enter this country--I object to the language of this provision and have introduced two amendments to correct that language.

Everyone agrees that groups such as the Hmong and the Montagnards, who fought bravely alongside U.S. forces during the Vietnam war, should not be barred from entering this country. If section 1711 were tailored to aid the Hmong and other groups that do not pose a threat to the United States, I would have no objection to such a legislative proposal.

Unfortunately, the text of section 1711 does much more than simply allow the Hmong to remain in this country. The provision in this bill would extend the waiver authority in current law to groups that are definitely not friends of the United States--including to members of groups that the Secretary of State has designated as Foreign Terrorist Organizations.

Current law bars, without exception, anyone who is a member or a representative of a terrorist organization from gaining admission to the United States. Section 1711 would remove this categorical bar and allow members of even Tier I terrorist organizations to seek a waiver and admission to this country.

Tier I terrorist organizations include groups such as the Al-Aqsa Martyrs Brigade, the group that has been responsible for the majority of suicide bombings in Israel in recent years. Section 1711 would extend waiver authority to the Armed Islamic Group and to the Salafist Group for Call and Combat, the two principal terrorist groups that have carried out a bloodthirsty campaign massacres, abductions, and rapes in Algeria over the last 15 years. The provision in the Senate substitute would extend waiver authority to Hamas, Hezbollah, and Palestinian Islamic Jihad, and the Senate bill would even extend waiver authority to al-Qaida.

I do not think that there is a single Member of this body who believes that any member of al-Qaida, Hamas, or Hezbollah should ever be considered for admission to this country. Yet the Senate bill would allow members or representatives of all of these groups to be considered for entry to the United States.

Another problem posed by section 1711 of the Senate bill is that it would also make it very difficult to bar entry to someone who has given material support to a terrorist organization. The section would effectively require the Department of Homeland Security to prove a negative--to show that an individual did not act under duress--when it seeks to bar someone who has given material support to terrorism from entering this country.

Imagine a situation, for example, where DHS learns that an Iraqi seeking admission to this country had helped plant improvised explosive devices in Iraq. Approximately 1,000 U.S. soldiers have been killed by IEDs since the beginning of the Iraq war. And suppose

that this hypothetical individual claimed that he acted under duress-- that some unnamed person forced him to plant IEDs. Under the Senate bill, DHS would have to prove that this person did not act under duress in order to bar him from the United States. This makes no sense. If we learn that someone has provided material support to terrorism, and that person seeks a waiver and entry to this country, at the very least, it is that person who should bear the burden of proving that he acted only under duress.

As I mentioned earlier, I have filed two amendments that are designed to address these problems with section 1711. I have concluded, however, that there is no reason at all to enact this provision on the emergency war supplemental. There is no reason that this measure cannot be enacted through regular order. To that end, I will introduce legislation this week that will provide relief from terrorism-related immigration bars to the Hmong and other groups that do not pose a threat to the United States.

Everyone agrees that groups such as the Hmong should not be barred from the United States. Moving such a bill through regular order will also protect the rights of the minority, and allow the full Senate to ensure that this legislation does not include the excesses that appear in section 1711. We all agree that we should help the Hmong. But I would venture that we would also all agree that we should not extend immigration waiver authority to members of Hamas and al-Qaida.

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

Madam President, I wish to speak to the amendment that was laid down by Senator Cochran from Mississippi, an amendment to strike language from the bill that is pending before us, language that would inhibit the ability of our commanders on the ground to carry out the message we have asked them to perform in Iraq.

As we are all aware, this security supplemental is designed to provide money for the conduct of our operations in Afghanistan and Iraq. There is a timetable here. The commanders have said they need, by April 15, the beginning part of this funding so they can carry out the missions we have asked them to perform. When I was there about a month ago, this message was given to me over and over when I would say: Is there anything I can do for you: Senator make sure we get the funding without the strings attached when we need that money.

So the President requested this security supplemental appropriations bill. The House has acted. The Senate has the bill before us this week. Madam President, this funding bill will do no good if it has limitations imposed in it that prevent us from carrying out the mission, and the President has already said if language that sets a timetable for the withdrawal of our troops is included, he will be forced to veto the bill. We understand that.

It makes no sense to me that we would go ahead and pass such a bill, knowing the President will veto it, because there would be no way for us to go back and redo it all before the April 15 time, when the troops begin to need this money. Many have suggested that this is actually a slow-bleed strategy on the part of some to put a poison pill in the bill, forcing the President to veto it, knowing it means the troops would not get the money they need when they need it. I would rather like to think that this is a genuine point of view on the part of some of my colleagues who believe we should put strings attached on this funding and somehow that will provide a more clear way for us to achieve our mission. I don't understand it, but I suspect somebody could argue that.

What I would like to do is support Senator Cochran's amendment to simply strike this language from the bill. If the President is able to continue to carry out the Petraeus plan and we have funding to do that, we will know soon enough whether it will enable us to achieve the mission. By the summertime or thereabouts, if it appears this surge is not working, then we will know that as well.

What I cannot understand is why anybody would want to pull the rug out from under the troops just at the time it appears the President's strategy is beginning to work. When I was there, there was already cautious optimism, signs of success of the plan--nobody wants to declare success or victory, of course, but that those elements of success continue to be manifested and be reported on.

I ask unanimous consent to have printed in the Record, at the conclusion of my remarks, a piece by William Kristol and Frederick Kagan from the Weekly Standard of April 2, 2007, entitled ``Wrong on Timetables.''

Madam President, this piece by William Kristol and Frederick Kagan tries to take the arguments that have been offered by the opposition in favor of a timetable and demonstrate why those arguments are incorrect. The first of the arguments is that the Iraqi Government needs stimulus by us, or a threat by us, that if they don't hurry up and do what they are supposed to do, we are going to pull out. This kind of strings attached, therefore, makes some sense. They point out

the fact that, first of all, the resolution itself that was defeated in this body a week or so ago by a vote of 48 to 50, that resolution, which would have established timetables, was defeated, among other things, because the Iraqis have already gotten the message.

It is not so much about sending a message to them as it is about sending a message to our enemies and to our allies and to our own troops, which says regardless of what you do, we are going to be out by a certain date. The problem with the goals and with the specifics that are supposed to be achieved, the benchmarks, so-called, in the legislation is that it matters not how well the Iraqi Government performs; we are still going to be out by a date certain. So it is not the kind of message we want to send to the Iraqi Government and, clearly, not the kind we want to send to our enemies who simply know they have to just wait us out.

Another argument is that American forces would be able to fight al- Qaida, and we don't need to be involved in the civil war of the Iraqis. It would take a lawyer to figure that out. You are going to have to have a lawyer with every squad on patrol to figure out whether they are fighting al-Qaida or somebody else or what kind of action can be taken. It is very hard to distinguish whom you are fighting when the fighting is going on. Al-Qaida is definitely a problem. What did al-Qaida do? They went over to bomb the Golden Mosque in Samarra, which got the Shiites to decide they had to provide protection with militias, which went over and attacked the Sunnis, who then went over and attacked the Shiites and achieved the objective that al-Qaida wanted: to foment violence among different factions within the country.

Where do you draw the line against fighting al-Qaida and someone else if someone else is doing al-Qaida's bidding? It is a very convoluted proposition. Clearly, you cannot have troops there to fight one specific enemy but not another, especially when they are so difficult to identify.

Finally, some think it is too late, that we have already lost, and we might as well figure out a way to get out. I haven't heard my colleagues talk that way because, under that scenario, you ought to cut off funding today and not wait for the 6 or 8 or 10 months called for under the resolution. As I said, the Senate defeated the virtually identical provision 2 weeks ago. One of the reasons is because our military is making progress. It is finding that, for example, in Sadr City, the mayor of Sadr City essentially invited the Iraqi and coalition forces in without a shot being fired. The forces of Moqtada al-Sadr have either gone underground or disbanded. Al-Sadr himself is believed to have gone to Iran. Prime Minister Maliki has made it clear he is not going to relent against the forces of the Sadr army. He has fired the Deputy Health Minister, one of Sadr's allies. He has turned a deaf ear to the complaints of al-Sadr. He oversaw the cleaning out of the Interior Ministry, which was a stronghold that was corrupting the Iraqi police. He has worked with other coalition leaders to deploy the Iraqi units pursuant to the Baghdad security plan. Interestingly, he has also visited the sheik in Ramadi, which is the capital of Anbar Province and formally the real base of al-Qaida operations, and has gotten cooperation with the tribal leaders in that area to join us in the effort against al-Qaida and other insurgents.

All of this is demonstrating cooperation of the Government in Baghdad, clearly refuting the notion that somehow the American policy has to be to threaten the Iraqis to cooperate with us or else we will leave and the only way to do that is by expressing that through a timetable. Clearly, the Iraqi Government is cooperating, and setting arbitrary deadlines would send exactly the wrong message both to our allies and, of course, to our enemies.

We need to express the view to our allies that we will be there to protect them when the going gets tough. The enemy is not simply going to lie down and allow this plan to continue to work. They will fight back. As somebody said, there are going to be good days and bad days, but our allies need to know that we will be there in the bad days and that we won't set an absolute deadline for getting out.

The other point I made earlier is the services need this supplemental appropriations bill, and that is why it is necessary for us to strike provisions of section 1315, provisions which would deny that funding without the strings that are attached.

To this point, I also alluded to the fact that section 1315 is internally contradictory and self-defeating. As I said, it provides benchmarks for the Iraqi leaders to meet and then says it doesn't matter whether they meet them, we are out of here. The resolution would not send any message that is constructive in any way and certainly is not changing the behavior of the administration.

There are some who might believe they could support section 1315 because it is less restrictive than the House language. Indeed, it is somewhat less restrictive, although essentially a distinction without a difference.

This bill has to go to conference. There has been a great deal of discussion by pundits and others that the more liberal element in the House of Representatives is going to insist upon, at a bare minimum, the language that passed the House of Representatives which they felt was too moderate to begin with. We are likely to get change in a conference that is language the President will have to veto, language which is closer to the House language than the Senate language. I think, therefore, Senators should not be acting under the illusion that we can go ahead and pass this language and make sure that either in conference everything gets taken out or at least this language, rather than the more difficult House language, will be what is sent to the President.

The reality is these are real bullets. This is not something with which to play around. I don't think we can be voting for something just because maybe in the conference committee we can try to make it a little bit better.

Madam President, I wish to get to this point that will, perhaps, put this in perspective. I can't remember another time in history when the United States in the middle of a war has set a deadline and basically told the world: We will be out by this specific date. To state the proposition is to illustrate how odd and destructive a proposition it is. If someone can come to the floor and tell me when this has been done in the past and when it has had a salutary effect on the conflict, I would be very interested and would certainly be willing to listen to how that might have a positive effect here. But even colleagues on the other side of the aisle several months ago expressed themselves on the matter of timetables and deadlines, and they know who they are; they acknowledge this is not the way to fight a war. One thing you cannot do is tell the enemy when you are going to be leaving because it simply allows the enemy to wait you out. Nothing has changed. That fact still remains, and it seems almost inconceivable to me that Members now would be deciding it is now OK to set a deadline and to set timetables.

Some might argue that it is just a goal, it is not a timetable. But the reality is there are both embodied in this section which we seek to strike. The beginning phrase is, ``The President shall commence the phased redeployment of United States forces from Iraq not later than 120 days after the date of enactment of the act.'' That is not a ``maybe,'' it is not an ``if everything goes well'' or ``if everything doesn't go well,'' it is a ``shall commence'' redeployment. The goal is ``with the goal of redeploying by March 31, 2008,'' but the ``shall commence'' is pursuant to that goal. So you have to start it, and then you keep going, and your goal is to get it done by March 31, 2008. The only exception is for the limited purposes of leaving troops behind to protect our infrastructure and coalition personnel, training and equipping Iraqi forces, and conducting targeted counterterrorism operations.

How do you decide how many troops you need to leave behind to conduct targeted counterterrorism operations when virtually everything we are doing in Iraq right now is counterterrorism? How do you decide we are going to be able to cut, say, in half the number of troops and still be able to effectively conduct targeted counterterrorism operations? If you are driving down a street to conduct a targeted counterterrorism operation and somebody begins firing on you, do you have to ask them whether they are a terrorist before you can return fire? Do you turn

to your lawyer sitting in the humvee with you: I want to comply with the law, so can I shoot back or not?

This is ludicrous. We cannot impose these kinds of conditions on our troops in the middle of combat and expect them to perform their mission safely. We send the best trained and best equipped troops into harm's way, and we need to give them the other tool they need to prevail; that is, the ability to carry out their mission as their commanders have defined it for them, not as it is micromanaged by a bunch of lawyers in Washington or Members of the Congress.

So, No. 1, this isn't just a wish that we redeploy. It begins ``shall commence the phased redeployment not later than 120 days after the date of enactment of this act,'' and the goal is to have it all done by March 31 of next year. That is so destructive in the middle of war that I just can't believe my colleagues would actually contemplate doing that or that they can believe putting these kinds of limitations on our troops is a realistic way to fight a war--conducting targeted counterterrorism operations but not returning fire against, what, against somebody defined as an insurgent, maybe? I don't understand it, and I don't know how many lawyers it is going to take to understand it. Our troops on the ground who are in the middle of a conflict certainly are not going to be able to fight and defend themselves under restrictions such as these, which is, I gather, precisely why the President says he will have to veto it.

That gets me to my last point. I can understand why, Madam President, if you felt this was a lost cause, you would want to just say: Let's have a vote to get out and be done with it and not fund the troops. But instead, there are some--and I am not suggesting in the Congress but there are some who have talked about this as a very clever strategy. They say the opponents of the President and the Congress are going to be able to say they voted to support the troops because they voted for a supplemental appropriations bill for that purpose, knowing all along, however, that it is a false exercise because it puts restrictions on the troops fighting the war that they can't possibly live with, so the President has to veto it. But he will get the blame, not them.

Well, that is too clever by half. The American people understand this. I urge, if any of my colleagues are considering supporting this for that reason, that they fail to appreciate that the American people, yes, would like to bring our troops home, they would like to see this conflict ended, but, no, they do not want it to end with an American defeat. They do not want to see us defeated and, most especially, I can't imagine anybody who wants to have our troops continue the war for a limited duration of time under rules which put them in great danger, which is what this would do. So the President has to veto it.

What happens when he vetoes the bill, if this is the form in which we pass it? We are now beyond April 15, the time the troops need the money, and yet Congress has still not acted to provide the security supplemental funding. The Defense Department now has to terminate contracts so they can switch money from this account over to this account and begin a very costly and time-consuming process of trying to make do while Congress makes up its mind, to make sure they can get the money to the troops so they can continue their operations.

Maybe secretly there are some out there who hope all of this will gradually reduce the ability of the troops to perform their mission so that it becomes a proposition where our strategy, even under the best of circumstances, can't succeed. In other words, the Petraeus plan fails because we couldn't get the support to the troops when they needed the support.

I hope that certainly my colleagues in the House and Senate will not buy into that proposition, will not pull the rug out from under our troops just when it appears this plan is showing signs of success. That slow-bleed strategy would not only ensure that we would lose everything we have gained so far, including the prospect of a success, but that our troops would be put in more danger now than they would be either by supporting them or simply by leaving. It would leave them in a middle ground, in the middle of a fire but without the ability to properly defend themselves.

Maybe some believe that would force our hand and just bring them home anyway, acknowledge defeat, and be done with it. I don't think that is what the American people want. If anybody is thinking that is the strategy behind this proposition, I think they are not only misreading American public opinion but do not have the best interests of our troops in mind.

Since that is the rationale behind this resolution, as offered by my colleagues, I am sure that is not the case. But that is why we need to strike this particular section from the bill.

We will talk later about some other items that need to be stricken as well. It is amazing to me, and I won't get into all the pork that is in this bill, but here we have a security supplemental, emergency funding to support the troops, and we decide to lard it up with all manner of items that are not emergencies, have nothing to do with supporting the troops, but because everybody knows this is a must-pass bill, they figure this is a real good opportunity for them to get things in the bill that might otherwise be very difficult to pass in the Congress.

Just a couple ideas: $3.5 million related to guided tours of the U.S. Capitol. I am all for guided tours of the U.S. Capitol, but is this an emergency?

There is $13 million for mine safety research. I am sure mine safety is important to research. Is this an emergency which can't be put in a regular appropriations bill?

We are targeting funding for sugar beets. I presume I like sugar beets--I am not sure--but I don't think it is an emergency for which we need to spend $24 million.

There is another $3 million funding for sugarcane, which I understand goes to one Hawaiian cooperative.

Here is something which would appeal to all the politicians: $100 million for security related to the Republican and Democratic Presidential nominating conventions. Is that next month, Madam President? I have forgotten. Nominating conventions would be in July and August, not of this year but the following year--not exactly an emergency we need to fund in an emergency security supplemental to conduct this war.

Do my colleagues hear what I am saying? Politicians have decided this is a good train to get on board because it has to move, we have to fund the troops. Since it is hard for us to get the Senate and the House to act on these items otherwise, we will just try to attach them to this bill.

We will have other amendments to try to remove these extraneous matters from this funding bill. But what I wanted to talk about today was primarily my concern that if we don't strike this section which has the timetables for withdrawal, then one of two things is going to happen: Either the President vetoes the bill and it then takes us forever to get a clean bill to the President, with the result that the troops don't have the funding they need and the strategy that is currently working becomes a self-fulfilling prophecy for those who say it can't work because they have denied the funds for it to work, or these provisions remain and, of course, it is impossible to conduct operations with these strings attached for our troops. Either way, it is a heck of a way to fight a war. And it illustrates to me that we ought not try to micromanage this conflict from the Halls of Congress. We have plenty of other things that should occupy our time than developing a strategy and the rules of engagement for fighting a war when we have perfectly good people, such as General Petraeus who was unanimously confirmed by this body, to develop a plan and see to it that it is properly executed. We have sent him over to do it. I suggest we give him and his troops the support they need to get the job done.

I would support the amendment of the Senator from Mississippi to strike this section from the bill.

Madam President, I yield the floor.

[From the Weekly Standard, Apr. 2, 2007]

Wrong on Timetables

(By William Kristol and Frederick W. Kagan)

Let's give congressional Democrats the benefit of the

doubt: Assume some of them earnestly think they're doing the

right thing to insist on adding to the supplemental

appropriation for the Iraq war benchmarks and

timetables for withdrawal. Still, their own arguments--taken

at face value--don't hold up.

Democrats in Congress have made three superficially

plausible claims: (1) Benchmarks and timetables will

``incentivize'' the Maliki government to take necessary steps

it would prefer to avoid. (2) We can gradually withdraw over

the next year so as to step out of sectarian conflict in Iraq

while still remaining to fight al Qaeda. (3) Defeat in Iraq

is inevitable, so our primary goal really has to be to get

out of there. But the situation in Iraq is moving rapidly

away from the assumptions underlying these propositions, and

their falseness is easier to show with each passing day.

(1) The Iraqi government will not act responsibly unless

the imminent departure of American forces compels it to do

so. Those who sincerely believe this argument were horrified

by the president's decision in January to increase the

American military presence in Iraq. It has now been more than

ten weeks since that announcement--long enough to judge

whether the Maliki government is more or less likely to

behave well when U.S. support seems robust and reliable.

In fact, since January 11, Prime Minister Nuri al-Maliki

has permitted U.S. forces to sweep the major Shiite

strongholds in Baghdad, including Sadr City, which he had

ordered American troops away from during operations in 2006.

He has allowed U.S. forces to capture and kill senior leaders

of Moktada al-Sadr's Mahdi Army--terrifying Sadr into fleeing

to Iran. He fired the deputy health minister--one of Sadr's

close allies--and turned a deaf ear to Sadr's complaints. He

oversaw a clearing-out of the Interior Ministry, a Sadrist

stronghold that was corrupting the Iraqi police. He has

worked with coalition leaders deploy all of the Iraqi Army

units required by the Baghdad Security Plan. In perhaps the

most dramatic move of all, Maliki visited Sunni sheikhs in

Ramadi, the capital of Anbar province and formerly the base

of al Qaeda fighters and other Sunni Arab insurgents against

his government. The visit was made possible because Anbar's

sheikhs have turned against al Qaeda and are now reaching out

to the government they had been fighting. Maliki is reaching

back. U.S. strength has given him the confidence to take all

these important steps.

(2) American forces would be able to fight al Qaeda at

least as well, if not better, if they were not also engaged

in a sectarian civil war in Iraq. The idea of separating the

fight against al Qaeda from the sectarian fighting in Iraq is

a delusion. Since early 2004, al Qaeda in Iraq (AQI) has

sought to plunge Iraq into sectarian civil war, so as to

critically weaken the government, which is fighting it. AQI

endeavors to clear Shiites out of mixed areas, terrorize

local Sunnis into tolerating and supporting AQI, and thereby

establish safe havens surrounded by innocent people it then

dragoons into the struggle. Now, heartened by the U.S.

commitment to stay, Sunni sheikhs in Anbar have turned on

AQI. In response, AQI has begun to move toward Baghdad and

mixed areas in Diyala, attempting to terrorize the locals and

establish new bases in the resulting chaos. The enemy

understands that chaos is al Qaeda's friend. The notion that

we can pull our troops back into fortresses in a climate of

chaos--but still move selectively against al Qaeda--is

fanciful. There can be no hope of defeating or controlling al

Qaeda in Iraq without controlling the sectarian violence that

it spawns and relies upon.

(3) Isn't it too late? Even if we now have the right

strategy and the right general, can we prevail? If there were

no hope left, if the Iraqis were determined to wage full-

scale civil war, if the Maliki government were weak or

dominated by violent extremists, if Iran really controlled

the Shiites in Iraq--if these things were true, then the new

strategy would have borne no fruit at all. Maliki would have

resisted or remained limp as before. Sadr's forces would have

attacked. Coalition casualties would be up, and so would

sectarian killings. But none of these things has happened.

Sectarian killings are lower. And despite dramatically

increased operations in more exposed settings, so are

American casualties. This does not look like hopelessness.

Hope is not victory, of course. The surge has just begun,

our enemies are adapting, and fighting is likely to intensify

as U.S. and Iraqi forces begin the main clear-and-hold phase.

The Maliki government could falter. But it need not, if we do

not. Unfortunately, four years of setbacks have conditioned

Americans to believe that any progress must be ephemeral. If

the Democrats get their way and Gen. Petraeus is undermined

in Congress, the progress may indeed prove short-lived. But

it's time to stop thinking so hard about how to lose, and to

think instead about how to reinforce and exploit the success

we have begun to achieve. The debate in Washington hasn't

caught up to the realities in Baghdad. Until it does, a

resolute president will need to prevent defeatists in

Congress from losing a winnable war in Iraq.

The fiscal year 2006 and fiscal year 2007 budget resolutions included an importation reserve fund for drugs imported from countries ``with strong safety laws.'' Yet the Dorgan-Snowe amendment omits that language. Does the Senator from New Hampshire agree that under the Dorgan-Snowe amendment, the term ``safe importation'' means from countries ``with strong safety laws''?

Mr. President, I am glad we are having the debate about the death tax. I regret the amendment I proposed a couple days ago was voted down. There were some suggestions it was because of the capital gains and dividends provisions that were tied to it. So I brought an amendment back with Senator Thune that would eliminate the capital gains and dividends part of it and simply have us vote, along with one education tax credit, for real reform to the death tax.

Now, I want my colleagues on the Democratic side to appreciate--and I have certainly appreciated working with all three of them.

Thank you, Mr. President. I prefer not to be raising my voice, but I cannot hear myself.

Let's understand what voting for the Democrat ``cover'' amendment would do. First of all, when we had a $5 million exemption we were talking about last year, all of the groups came to us and said: You have to index it for inflation or pretty soon it will not mean anything. The Kyl-Thune amendment is indexed for inflation, the $5 million exempted amount. The amendment that is being proposed on the Democratic side is not indexed for inflation, and you will hear from groups such as the Farm Bureau and the NFIB and other groups that understand it has to be indexed for inflation.

Secondly, you say the rate is 35 percent, but there is a surcharge for ``large'' estates. How are they defined? They are not defined. A majority of Americans, according to surveys, say rates above 35 percent are confiscatory. So the 40-percent top rate in this Democratic proposal is going to be a big problem for a lot of Americans, both those who have to pay and those who do not have to pay.

Finally, with respect to the idea this is paid for, appreciate the big expenses for estate tax are after the year 2011. So it is folly to say this is paid for. Yes, you will have raised taxes by about $60 billion to ``pay'' for this for the 5 years covered by the budget, but the reality is, it is not going to be paid for in the future.

Do you know what. All of us--the Senator from Arkansas, the Senator from Nebraska, the Senator from Louisiana, and other Senators on the Democratic side--have in the past appreciated the fact that when it comes to death tax reform, we should not raise taxes on some taxpayers to provide this relief for the people who have to pay the death tax.

The reality is, we should not have to raise money from one group of taxpayers to pay for the relief granted to this group. The reality is probably it is going to be the same group of folks.

So I say to my friends who would want to suggest this is a ``cover'' amendment, that they can be just fine on this issue of death tax if they will vote for the proposal that is before us right now. That is not the case. If you want the real cover, that is to say the appreciation of the American people, reserve your aye vote for the Kyl- Thune amendment which will come next.

Thank you, Mr. President. I appreciate my colleagues not supporting this proposition. There are two main--

I am sorry, Mr. President. I thought my amendment was at the desk. It is pending.

There are two main differences between the amendment that was just rejected and the one which I hope we will all support. The first difference was that the $5 million exempted amount for estates was not indexed

for inflation. In the Kyl-Thune amendment, it is indexed for inflation. I think if you will all check with your folks, you will find they want this indexed for inflation.

This is a little like AMT. At first it didn't hit very many people, but after awhile, it begins to hit a lot of people, primarily because of inflation. The same thing will occur here. The whole point of an exemption is so people would not have to worry about spending all the money on insurance and lawyers and accountants, and so on, to plan against the estate tax. That is why you want an exempted amount such as the $5 million, but it is important it doesn't get eroded over time. Again, one of the key differences between the amendment that was just rejected and this amendment, which I hope you will support, is this amendment is indexed for inflation.

Secondly, most Americans believe that a 40- or 45- or 50-percent rate is confiscatory.

The other difference between the amendment that just failed and the one I hope you will now support is that the maximum rate under this is 35 percent. I still think that is too high.

The amendment just agreed to had a maximum rate of 40 percent. I think 35 percent is too high, if you look at the various polls that have been taken. In any event, that is the maximum rate under this amendment. It has been supported by a bipartisan group on both sides of the aisle, which is why we sit at 35 percent, because the reality is that in order to have the estate tax reform, we are going to need a bipartisan coalition.

My concluding remarks are to reach out to my friends on the other side of the aisle. My final plea is that we can demonstrate in a bipartisan way by supporting this amendment, which has enough flexibility in it because it is a budget amendment rather than a specific proposal, to accommodate nuances that Members on both sides of the aisle would like to see in estate tax reform.

The time for reform has come. Adopting this amendment will make that point in a general way. Then we can sit down and work together to try to work something out that we can get passed. I would appreciate our colleagues expressing support for death tax reform by voting aye on the Kyl amendment.

Mr. President, how much time remains?

I would like to make sure my colleagues don't think I was misstating a fact. The top effective rate is 35 percent, but there is a 5-percent surcharge on the largest estates. Am I wrong in that?

Mr. President, I ask unanimous consent for the yeas and nays.

Mr. President, I thank the chairman for his remarks. I appreciate

it. Certainly, I knew there was no attempt to suggest that I was misrepresenting. I try to read things very closely. This is one of the situations where apparently it could have been read both ways.

I appreciate the comments of the chairman.

Madam President, I send an amendment to the desk and ask for its immediate consideration.

I ask that further reading of the amendment be dispensed with.

Madam President, let me discuss this amendment briefly. It is cosponsored by Senator Thune from South Dakota. It is called the Kyl-Thune death tax reform amendment.

Yesterday we had a vote on an amendment that included several items, including death tax reform, and I believe some people might have voted against that because items in the bill included a continuation of the current rates for the capital gains tax and the tax on dividends. Because of that fact, we decided to make this basically a clean vote.

The only thing this bill deals with other than death tax reform is the continuation for teachers of the teacher tax deduction which we make permanent. This is the deduction that allows a teacher, when she pays or he pays for some items that are then taken to school to help the kids with their lessons, when they pay for those out of their own pocket--we think there should be a $250 deduction to help defray the cost of those items. That is all that is in this amendment now.

This Kyl-Thune amendment provides room in the budget resolution to enact meaningful tax reform. Obviously, I still believe repeal of the death tax is the best option. We have been trying to find agreement on a permanent reform, because planning for death tax now is a nightmare for families, and it is a nightmare right now because of the way this law is being phased out and then comes back with a vengeance to its previous form. It is a bonanza for the insurance companies, to be sure, and they are leading the opposition to the death tax reform. But they are wrong.

As a matter of fact, when the lobbyists for the insurance industry came to my office to argue this, I said: Before you make your argument, let me ask you to assume for a moment we have found a way to eliminate death. Now, you represent the undertakers; go ahead and make your case. That is the case with the insurance companies. They are making a lot of money on the backs of people who have to spend money to plan against the death of the person in their family who runs the farm or has the small business.

There is a far better way to use all of that money that is spent each year on avoiding the tax or preparing to pay for it. As a matter of fact, what we have found is there is almost an equal amount of money that is spent complying with the avoidance costs as there is in collection for the Government. Alicia Munnell, who was a member of President Clinton's Council of Economic Advisers, estimated the costs of complying with the estate tax laws are roughly the same as the revenue raised. The estate tax is expected to raise about $28 billion in fiscal year 2006. If the estate tax generates a dollar in compliance costs for every dollar in revenue, then obviously the aggregate cost of the tax is about $56 billion. The point is, for every dollar of revenue raised by the estate tax, another dollar is simply wasted to comply with or avoid the tax. Maybe I shouldn't say ``wasted.'' It does go to the insurance companies. So let me strike ``wasted.''

But the bottom line is we can do better. What this amendment does is to allow the budget to accommodate estate tax reform. I didn't pick my bill, even though I happen to think it is the best reform bill; I took a bill that has been provided by the senior Senator from Louisiana and has been supported by people on the other side of the aisle such as the junior Senator from Arkansas. What the budget would do is accommodate that particular death tax reform. It could accommodate other death tax reform as well, so long as it was within the amount of money we have provided here. The amount of money in this amendment is a total of about $32 billion over 5 years, and that needs to be added to the amount the Baucus amendment already provides for estate tax reform which would be a total of about $61.7 billion over a 5-year period.

The bill that was provided or written by the senior Senator from Louisiana provides a $5 million exemption indexed for inflation, which I think is a perfectly appropriate amount, a family business carve-out, which is very difficult to do legally, and a 35-percent top rate. That is where I differ, because 35 percent is still a very high top rate. It also recaptures the benefit of the $5 million exemption for estates valued over $100 million. The revenue provided for the death tax reform in the 5-year budget window is about $31.7 billion, as I said. The teacher deduction is about another $400 million, for a total of about $32 billion.

As I said, the amendment is structured so when it is combined with the Baucus amendment approved yesterday, the total amount of revenue would be sufficient to accommodate the Landrieu reform bill. If you take both amendments together, the Baucus amendment and Kyl-Thune, as I said, the total amount is about $61.7 billion, not offset with additional revenues. As a matter of fact, I don't believe existing law extensions--and, indeed, this is precisely what we would be talking about here--should have to be offset, particularly where they are actually provisions that enhance economic activity, just as extensions of existing mandatory spending need not be offset.

The amendment approved yesterday included an estate tax provision that

frankly I very strongly disagree with. In fact, some would say it is an insult to every family business or every family farm that is seeking relief. Not surprisingly, it is strongly endorsed by the insurance industry, because it provides for a 45-percent rate. Now, if you have a 45-percent rate, you are going to want to plan against that. You do not want to have to pay that rate on the estate that is left after your death. As a result, since the Government has taken about half your property above the exempt amount, you are going to want to plan against that. That is why I think we can do better than that, and this proposal does that.

Remember, the budget that has been proposed here allows increases on taxes on almost every single taxpayer, a total of about $736 billion over 5 years, which is, I believe, about 3 times larger than the biggest tax increase ever enacted in our history. The amount adopted yesterday by the chairman of the Finance Committee took the budget out of balance. It created a deficit, in other words, of about $6 billion in the year 2012. We believe the spending restraint we are capable of, combined with a very strong economy, will enable us to balance the budget by 2012 without increasing taxes.

Now, it is true the budget before us makes it impossible, because of the amount of spending in it, to balance the budget without a record level of tax increase. Unfortunately, that includes a confiscatory tax on thousands of American families. The budget resolutions don't dictate policy to the Finance Committee, but it would certainly be our intention to work with Senator Landrieu, Senator Pryor, and Senator Lincoln, who has been very much a leader in this area, and others to craft an estate tax reform proposal that would provide an exemption of at least $5 million indexed for inflation and provide workable relief for the smallest estates and farms, and a top rate that is no higher than 35 percent--hopefully lower.

We believe that this can be accomplished and that, as a result, my colleagues who might have opposed this amendment yesterday because it included the capital gains and dividend tax rates should be in a position to support the resolution that will be voted on today because of the fact that it accommodates a proposal supported by Members of both the majority and minority. It will be voted on tomorrow; I misspoke. I would like to have it voted on today.

A couple of other items, and I see my colleague, the Senator from South Dakota is here. I want him to speak to this. There are a couple of misconceptions I wish to address. According to the Joint Tax Committee, the total number of estate tax returns projected for 2011 alone is 131,000. By 2015, about 177,000 estates will file tax returns in that year alone. These are the numbers for each year. Some people had the idea that these were the numbers over 5 or 10 years; no, this is for each year.

The first misconception is that it doesn't apply to that many people. An awful lot of people need to file these returns. Secondly, the death tax, similar to other taxes, is very sensitive with respect to economic growth. When businesses can put this money back into their business and create jobs, rather than pay the estate planning to insurance companies, it helps our economy as well as helping the business grow. An entrepreneur or an investor will have a very big disincentive to grow their business, regardless of the amount of the exemption, above that exempted amount if the tax rate imposed on new growth over and above the exemption is too high.

We can argue about what the tax rate ought to be. But I think almost everybody would agree the tax rate of 45 percent is confiscatory. What incentive does somebody have to grow his business beyond the exempt amount if the Government will take nearly half of everything over that exempt amount?

A couple of other points. We have historical evidence that the estate tax reduces capital stock in the U.S. economy. This is part of the reason we have grown so well in recent years, because of the downward projection on the estate tax and the hope that it will be eventually eliminated.

In a report by the Joint Economic Committee, they projected the estate tax reduced the stock of capital in the economy by approximately $847 billion, or 3.8 percent, over the last 60 years. That is a ton of money. By comparison, it has raised, during that same period, less than that--only $761 billion. So it has taken far more out of the private sector and hasn't added that much to the Government sector. This is money that could have been put to productive use.

I mentioned the fact that the avoidance costs are about equal to the take for the Government as well. That is another reason for this reform.

I will close with this point: Americans understand the rates now are confiscatory, that it is unfair; and even people who understand that they will never be subject to the estate tax appreciate its effect on others and understand it is an unfair tax. In a Gallup Poll from an April 2006, 58 percent of respondents said--and they called it the ``inheritance tax'' and didn't use the words ``death tax.'' They said the inheritance tax is unfair, and this confirms results of polls taken in both previous years. It is always called ``the most unfair tax'' when you list it among all the other taxes.

What is interesting about the Gallup Poll is that even though it was taken in April while Americans were filing their taxes, the death tax was called unfair--or the ``inheritance tax''--by more people than the despised alternative minimum tax that was discussed by the ranking member of the Finance Committee. Only 42 percent of respondents said the AMT was unfair. Yet it is affecting a lot more people than the estate tax. One reason people say it is unfair is because of the confiscatory rate, which is 46 percent this year. In the 2005 poll, when the rate was 47 percent, 81 percent of respondents said the estate tax is ``an extreme form of taxation'' and that the rate was unfair.

Finally, I note--and this was interesting to me as somebody who has studied politics a little bit--after the last election in the exit polls, voters were asked whether they thought the death tax was somewhat unfair or very unfair. They were broken into Kerry voters and Bush voters. Not unsurprisingly, 89 percent of Bush voters believed the death tax is somewhat unfair or very unfair. But 71 percent of Kerry voters also found the death tax at least somewhat unfair or very unfair.

So this is a view shared by most Americans of all political stripes, and it is time for us to reform the death tax, if not repeal it.

What we have done with this amendment--the Kyl-Thune amendment--is accommodate that reform in the budget. I hope my colleagues, when we have an opportunity to vote on it, will support it. I want the Senator from South Dakota to speak, but I would like a minute at the conclusion to talk about the support also coming not just from other small business organizations but from minority business organizations and others, to demonstrate the breadth of support around the country for reform of this very unfair tax.

I appreciate the courtesy of the chairman of the committee. If Senator Grassley takes a minute, and we have three other Senators who take 4 minutes, that gives me a minute to say thank you and that would do it. I propose that as a unanimous consent request.

I thank the Senator.

Madam President, if I may take 1 minute to make two quick points. I note that the chart of the Senator from Michigan uses the figures for the last year of the Bush tax cuts to show in the very best light the impact of reductions of a number of estates that pay the estate tax. It is a fairly low number, a relatively low number, and it will continue to be low if Republicans have their way.

Unfortunately, the next 2 years, years after which the Bush tax cuts expire, in the year 2011, the number goes back up to 131,000 and in the year 2015, according to the Joint Tax Committee, nearly 177,000 estates will file estate tax returns.

The second point is that the bottom line is that the 1 year cited by the Senator from Michigan does get down to a fairly low number because of the Republican tax cuts. Then they expire, and the number shoots back up.

The only other point I wish to make is our budget amendment is designed to accommodate a bill offered by the senior Senator from Louisiana which was

not offset at all because those of us who support reform of the death tax appreciate its significance in the lives of Americans and the priority to eliminate or to reduce that tax.

I suspect I am out of time, but I am happy to yield.

Off your time.

Madam President, I think that is correct.