Floor Statements

Mr. President, there has been a great deal of focus on the recent Senate testimony of David Kay, the former head of the Iraq Survey Group. Unfortunately, most media reports have highlighted only those statements by Dr. Kay that might be used to criticize the administration. They have largely ignored Dr. Kay's assertions that Iraq was more dangerous than we even realized prior to the war, that Saddam Hussein clearly intended to continue developing weapons of mass destruction, and other statements which contradict the false notion that the administration ``hyped'' intelligence on Iraq.

I thought it would be beneficial for the American people to have a chance to read Dr. Kay's entire testimony, including his edifying exchanges with members of the Senate Armed Services Committee.

I therefore ask unanimous consent that his entire testimony be printed in the Record.

Mr. President, I rise to speak about the highway transportation bill which we are on right now. I will discuss basically two general points. The first has to do with the amount of funding in the bill and the administration position on that matter. Then secondly, I will talk a little bit about the funding formula in the bill.

As everyone knows, we are talking about a bill that would authorize and pay for the highway transportation and mass transit needs of the country over the next 6 years, financed historically by the gas tax. The 6-year bill that has been offered intends to be more generous than that by taking in some additional revenues, providing a lot more funding, and extending the authorization that currently exists for a period of 6 years.

I ask unanimous consent that at the conclusion of my remarks this Statement of Administration Policy be printed in the Record.

I am quoting now from a February 11, 2004, Statement of Administration Policy from the executive office of the President, Office of Management and Budget. As my colleagues know, these Statements of Administration Policy are issued with respect to important legislation and they set forth the administration's position on the legislation.

After noting that the administration supports enactment of the 6-year highway funding bill, the letter says the following:

The administration's proposal, as modified by the

President's FY 2005 budget, would provide $256 billion over

six years, an historically high level of investment for

highways and transit. This proposal represents a $45 billion,

or 21 percent, increase over the Transportation Equity Act

for the 21st Century (TEA-21), the six-year bill enacted in

1998.

The administration goes on in this Statement of Administration Policy to say the following:

The administration believes that surface transportation

reauthorization legislation should exhibit spending restraint

and adhere to the following three principles.

Now, let me digress before I state what those principles are. The reason

the administration is talking about spending restraint is because the bill that is before us is far larger in its amount of spending than what the administration's proposal and the President's budget provide for, and it is far larger than is necessary. Frankly, in view of the status of our excess spending and our Federal budget deficit, it is more than we can afford.

Moreover, it is greatly in excess of the funds we collect with the gas tax, which in the past has been the funding that has been used to pay for this highway bill. So this is what the President and the administration is writing in this letter.

The administration believes the legislation should exhibit spending restraint and adhere to the following three principles: One, transportation infrastructure spending should not rely on an increase in the gas tax or other Federal taxes. Two, transportation infrastructure spending should not be funded through bonding or other mechanisms that conceal the true costs to the Federal taxpayers. And three, highway spending should be financed from the highway trust fund, not the general fund of the Treasury.

It goes on:

All spending for highways should be authorized and

appropriated from the Trust Fund and derived from taxes

imposed on the highway use, thereby maintaining the link

between Trust Fund revenues and highway spending.

Madam President, how does the administration's position and the articulation of the three principles under which it believes the bill should be funded compare with what we are considering on the floor here? I am going to go on and quote the administration's characterization of the legislation on the floor.

However, the bill pending before the Senate authorizes $262

billion on highway and highway safety, which is $50 billion

above the President's request, and $56 billion on mass

transit, which is $12 billion above the President's request.

In total the Senate bill authorizes $318 billion in spending

on highways, highway safety, and mass transit over the next

six years, a full $62 billion above the President's request

for the same period.

The Administration's proposed authorization level of $256

billion over six years is consistent with the three

principles listed above. We support a responsible six-year

bill and support many of the provisions contained in this

legislation. However, we oppose S. 1072 and the pending

substitute because their spending levels are too high and

they violate these principles discussed above. Accordingly,

if legislation that violates these three principles--such as

this legislation which authorizes $318 billion--were

presented to the President, his senior advisors would

recommend that he veto the bill.

There is more in the letter, but I think you get the gist of it. The administration is trying to tell us it would prefer a bill that, No. 1, adheres to the President's budget, to spend no more than $256 billion, and, No. 2, does not violate the three sensible funding principles the President lays out in the bill.

But the statement of administration policy notes that the bill before the Senate is a full $62 billion above the President's request, and it concludes in this part by noting that:

The administration, therefore, opposes Senate bill S. 1072 because the ``spending levels are too high'' and because ``they violate the principles discussed above.''

And if we end up passing legislation such as this, then the President's senior advisors will recommend he veto the bill.

I think the President is getting the same message the rest of us should be getting from our constituents, the American people: Congress and the President have been spending too much money.

In defense of the President, he has reached agreements in the past year with the leaders of the House and the Senate over spending limits and has said he would not support any legislation--and I presume he would have vetoed legislation--above that level. We have sent him bills at those levels. So in that regard, it is not the President's fault.

But I take responsibility as a Member of this body, and all of my colleagues should as well, that we as the body that initiates the spending proposals and sends them to the President must act more responsibly in ensuring that we do not exceed revenues, that we send the President bills that are fiscally restrained and that will not add to our budget deficit.

Alan Greenspan, the Chairman of the Fed, has made the point many times in recent months that the biggest threat to our economic growth and to our fiscal stability is profligate spending, and he has urged us to rein in our appetite for spending.

Some of my colleagues on the other side have expressed great dismay that when the Office of Management and Budget was finally able to calculate the cost of the Medicare prescription drug bill from last year, instead of $395 billion of cost over 10 years, as calculated by the Congressional Budget Office, the administration's people found that it actually would be far higher than that, over $500 billion.

Some of our Democratic friends have said--I gather they seem to suggest that therefore it is the President's fault. The President's people are the folks who found out that the spending was more than the $400 billion and have brought that forth and told us that. What should we do?

Later on I am going to give my colleagues an opportunity to bring the spending back in line with the $400 billion of which they seem so enamored. I think that is plenty. I think we can live within that $400 billion limit. So we will all have an opportunity to decide whether we really mean it when we say the spending on that bill should be limited to $400 billion over 10 years.

My point in digressing from the discussion of the highway bill is to note that there has been a focus on a lot of the spending the Senate and House have engaged in recently, and certainly the prescription drug and Medicare funding bill is one of the largest. Another we have had before us is the energy bill, which has a subsidy of about $30 billion. The administration budget request was $8 billion. That is another bill that, were we to pass in excess of $8 billion in subsidies, would exceed the administration's request.

Here is a third example where the Senate is poised to pass a bill way in excess of the President's request. My point is it is not the White House that is doing the spending, it is the Congress that is passing the bills that have the spending in them. The President is sending us a signal that he is tired of this and his advisors are saying, to be precise about it, that they will recommend a veto to the President if we don't get this bill more in line with what the President's budget is. He is sending us a message.

I urge my colleagues to read that message, to listen to what the President is saying. He means business. He is right. We are spending too much money. This bill is an over 40 percent increase in highway spending. We all know roads and bridges need to be built. We all understand some jobs are produced. That is fine. But do we, in this era of budget deficits and excess spending, have to increase spending in this one area by over 40 percent? Isn't a 21 percent increase over last year sufficient?

The President's budget is almost flat. It has about a half a percent increase--except for homeland security and defense--for the discretionary part of our budget. We know it is going to be difficult to live within that, but we should try. But how can we in good conscience pass a budget that has virtually no growth in it, except for homeland security and defense, and then with regard to highways say that is an exception; we are going to increase spending by 21 percent? The income of how many people in this country will grow 21 percent this year? Not very many. Not, certainly, for the average working man and woman.

I daresay, at a 21 percent increase, we can do just as well, in terms of building our roads and highways, and then if we need to adjust it later on because we are rolling in dough, we can do that. But for this year at this time with this kind of deficit, we should not do it. That is what the President's advisors are saying in this letter.

What I would like to do is talk for a little bit about how the bill before us violates those three principles. Let me just cite a couple of examples.

The first principle is that the transportation infrastructure spending should not rely on an increase in the gas tax or other Federal taxes. It doesn't rely on an increase in the gas tax, but it will rely upon Federal taxes because we will be taking money from the general fund. That gets us to the

second and third points. Transportation infrastructure should not be funded through bonding--we are not going to do that--or other mechanisms that conceal the true cost to Federal taxpayers. I will show you in this bill how that happened. And the third principle is highway spending should be financed from the highway trust fund and not from the general fund of the Treasury.

No. 2 and No. 3 go together here. Let me give a couple of examples from the highway part of this; not mass transit but the highway part is funded from the gas tax. We are going to collect $196 billion in gas tax revenue. That is how much we should spend on highways. But, no, we are going to be spending much more than that. How do we make up the difference? Obviously, Members of Congress are pretty creative in figuring out how to pay taxpayer dollars. So, a lot of new ways of deeming money to be in the trust fund have been thought up here. Some of them actually I suggest have some merit.

Just to give one example: Interest in the highway trust fund. The highway trust fund is a fund that has maybe $9 billion or $10 billion, give or take $1 billion, in it at any given time. You have to have some money in the bank. It is like a bank account, to pay the checks when they come due. There is always money coming in when people buy gasoline and pay the tax, and one thing we could do is attribute to the trust fund interest which is otherwise attributed to the general fund. That is between $1 and $2 billion. I am perfectly happy to have that attributed to the trust fund.

If you go through some exercises like that, you can get up to $214 billion, more or less, in revenue you say is somewhat legitimately attributed to gas tax revenues.

Let me give you two examples of revenues that are being attributed to the highway trust fund that really are not revenues in any sense of the term, and, therefore, would violate both principle No. 2 and principle No. 3.

One of these concepts has to do with the fact that counties, cities, towns, churches, and schools are by and large exempt from paying a gas tax. What we are going to do in this bill is pretend like they actually paid the tax. That is worth, I think, $8 billion. That is a nice thing, if you can get away with it. But I don't think it reflects reality. That is $8 billion. We are simply going to treat this as if the trust fund had received all of the money from counties, cities, towns, and so on.

Is the general fund going to collect that money from the schools, churches, cities, and towns? No. There isn't going to be any new revenue. Your school district is not going to have to pay money for the gasoline that it buys for the schoolbuses that are driven. They will not have to pay the Federal gasoline tax, but we will pretend like it does. That $8 billion is pretend money.

There is another part of this which they calculate at $9 billion that is attributed to the highway trust fund. What is this? The gas tax is 18.3 cents. But for ethanol users, we provide that they don't have to pay 5.2 cents of that. There is an exemption for that of 5.2 cents on each gallon. In this bill, we are going to pretend like they paid that to the trust fund. We are going to actually collect their money. The revenue will actually be collected. But when people ask for a refund, we will send it right back to them. Assuming that most people will ask for a refund because they can get it, we are going to be sending the money right back to them.

As a result, we take with one hand and we give back with the other, and the fund is no better off. There is no real money in the fund except what was there before. We haven't added to the fund. We have collected the 5.2 cents and then we give it back when the people apply for the refund.

Since Federal contractors actually have to pay their people, buy asphalt, and run their road graders, how are we going to make up this $17 billion?

As I have indicated, in both cases this is not real money. We are going to get it from the general fund. We are going to just spend that money from the general fund.

How are we going to do that? It is not in the budget. The Finance Committee has come up with a variety of tax law changes which will close certain corporate loopholes and in other ways raise revenue that is not currently raised. We had hoped and anticipated that additional revenue would be applied to a reform which has to do with corporate tax relief that will have to be passed this year because the WTO--the World Trade Organization--has ruled against the United States in a case in which we have been providing some tax relief to American manufacturers abroad. We are going to have to take that tax relief away in order to make these companies whole. We will have to pass a different kind of tax relief. To do that, you have to have the ability to pay for it. That is what this money was going to be used for. Instead of using it for that, we will use it to build bridges and highways. We will take that money, put it in the general fund, and send that over to the highway trust fund.

We are violating the principles laid down by the administration that none of this bill should be paid for by either a mechanism that conceals the true cost to the taxpayers or financed from the general fund of the Treasury.

This bill, both by being in violation of at least some of the principles laid down by the President and by being $62 billion in excess of what the President said the bill should cost, is going to create a situation in which the senior advisers of the President are going to recommend a veto. We should not be passing a bill under those circumstances or be passing this bill under those circumstances.

What do we do about it? There are a couple of different options. One of the options is that we could simply modify the bill to take out that $62 billion, get it back down to the level of the President's budget, and support that. I have an amendment that would do that. In effect, it will say the President's budget of $256 billion--that represents a 21- percent increase--ought to be enough, and, therefore, we would finance only that amount of money.

I think we should vote on that and express our will in that regard, support the President, and be willing to begin exercising some fiscal restraint.

Some people say they do not want to reduce the 6-year funding by that much money. They would actually be able to spend over 40 percent more than last year and, therefore, maybe what we should do instead is simply reauthorize the existing law for 1 year, get past the election, and then do another 6-year authorization bill that will spend 40 percent more than last year, since, obviously, that is going to cost more money than we are taking in in gas tax revenues, since there are objections to taking it from the general fund because that creates a horrible precedent, and therefore we will raise the gas tax.

We don't want to tell people that because, of course, in an election year we wouldn't want anybody to really think we intend to raise the gas tax. So let us be real quiet about this and not discuss this alternative too much because it assumes that next year we will come in and provide this large amount of money and raise the gas tax. We could do that. It certainly is at least better than what we have before us, because it simply reauthorizes at existing levels the highway authorization bill for 1 year and we can decide to do it next year at the time. Some of us would oppose the gas tax increase.

I suggest that either of those alternatives are better than the third alternative, which is to pass the bill that is before us.

I want to make this clear. There are not very many people in this body for whom I have greater respect than the chairman of the EPW Committee, the Senator from Oklahoma. I don't mean to suggest in anything that I am saying here that the effort of the committee and the chairman of the committee is anything other than an attempt in good faith to try to satisfy the demands of our country's infrastructure and provide the best possible highway transit funding program they can. I will say they have been very unfair about the way they treated my State, but that is another matter that I will talk about in a minute. I want to make it clear that the chairman has a tough job. He has done his very best in this regard. I want that to be very clear.

But the third alternative is to pass the bill before us. The argument made is that we know it is way too much money but we will get into the conference committee because the House

will pass a bill and then you will have the House and the Senate bills. We will get together and figure out an appropriate amount of money. We will get the President's people in there to negotiate to make sure it won't be too much so the President won't veto the bill.

That is another way to do it. I can't support that because we would be supporting a bill out of this body that is far too big in spending.

The House bill presumably will be above the President's request. It is a little hard to figure out how we are going to start with a bill that is $62 billion over what the President wants, and the House bill is--I don't know how much but let us pick a number--say, $50 billion more than the President wants. And somehow they are going to compromise at a number closer to what the President wants. That is ordinarily not the way things work around here. I think it will be close to $256 billion. They are playing with fire and risk sending the bill to the President which he is going to veto. That will demonstrate that we are not very responsible. I think that would be the wrong thing to do.

Let me address the other subject I said I would address, and that is the fairness of this bill.

I say to my colleague from Oklahoma that he would be the very first to say it is almost impossible to get a bill that spends this amount of money and divvy it up among over 400 Members of the House of Representatives and 100 Senators and have everybody think they have been treated fairly, especially given the historic unfairness of the way the formulas have worked.

Again, he has a tough job. I make the point right up front that I know he has tried his hardest to do this right. In fact, one of his guiding principles was to try to get all of the States up to a level of funding equal to 95 cents out of every dollar that they send to Washington for the highway gas tax. The minimum level today is 90.5 cents.

There are a lot of us who represent donor States such as Arizona. We are donors. We send $1 and we only get 90.5 cents back in highway revenues. The chairman wanted to try to do something about that to try to remove some of that unfairness. I commend him for that. For the most part, he has gotten States up to 95 cents out of every $1.

A lot of States are donee States, and they are way above a dollar. Obviously, the reason only some States get 95 cents back is some States get more than $1. But I commend the chairman for trying to get at least to 95 cents.

The problem is, as has been explained to me, there are some fast- growth States, such as Florida, California, Colorado, or Arizona. We have been at such a low level in the past in terms of the amount we were reimbursed, the 90.5 cents, and we are growing so fast in order to keep up with our growth, it would require so much money to catch us up to the 95-cent level that basically it cannot be done. So they will bring other States up to 95 percent, States that already for the past 5 years have done very well, for the past 10 years have done very well. For those States that have continually lagged behind, such as the ``growth'' States I mentioned, since it is so darned expensive to catch them up, we just will not try to do that for 5 years.

So here is the result we get, demonstrated on this chart. I note the dark blue represents on the chairman's chart a green color which he demonstrated the other day when we were discussing this, saying: Arizona actually will increase its spending over this period of time. Then in 2009--assuming the money is there--you will go back up to 95 cents like everyone else.

In 2004, the State of Arizona, which is in the dark blue, would get a little bit more--it gets 90.5 cents. That is what is guaranteed. In 2005, we get 90.5 cents. In 2006, we get 90.5 cents, as well as in 2007. In 2008 it goes up a little bit but is still under 91 cents. Then if there is enough money in 2009, hopefully we get to go back up to where everyone else is, guaranteed 95 cents.

We just took a State perhaps roughly comparable to Arizona, and this State happens to be Missouri, but I could pick any number of States that illustrate the same idea. Missouri, on the other hand, is guaranteed 95 cents each one of these years.

Here is the point: During this 5-year period of time--because there was not enough money, some State had to sacrifice or be sacrificed and that happens to be my State of Arizona. I don't like that, and I don't think it is fair. I would have rather had, in this case, Missouri brought down to 93 and raise Arizona up to 93 rather than taking some all the way up to 95 and leaving the rest of us down at 90.

My colleague from Oklahoma says, but you are getting a substantial percentage increase and even a dollar increase, because you are growing so fast. That is true. But in terms of the total amount of money Arizona would lose during this period of time, it is over $160 million. So during this 5 years, Arizona will lose out on over $160 million it would have received if it had been treated the same as the other States and gotten the base of 95 cents.

Remember, there are a lot of States that are way up here that are getting over 100 cents, 110 cents; some are getting several dollars back. I will not name names.

The bottom line is some States are treated very well and States such as my State of Arizona are not treated so well. I obviously cannot be expected to support a bill that picks on a few States such as mine and says, look, we just did not have enough to go around so you have to be the one that does not get paid what everyone else gets paid. We are sorry; be happy with the fact you are getting more money than you have ever gotten before.

My answer is, we are growing faster than anybody and therefore, of course, we are getting more money than we got in the past, but we are not getting the same relative amount other States are. We are not getting 95 cents on our dollar contributed. We are still stuck down here at this 90.5 cent level. That is not fair.

I want to be clear about this. My opposition to this legislation is based upon the first two points I made. It is too much money and we are going to fund it now out of general revenues rather than the highway trust fund, as a result of which there will be no logical constraint on how much we spend in the future. At least pegging it to what we received in Federal gas revenues in the past was a break-loss, a check and a balance, and it prevented us from going beyond that amount of money. But once you begin to dip into the general treasury, there is no logical end to how far you can dip. As I said, you could double the amount of increase the administration has asked for, you could go to over 40 percent increase and say, we are just going to make part of that up through general revenues. Why not 50 or 60 percent? There is no logical end once you get away from the highway trust fund. That is why I oppose this bill.

The sponsors of the bill were not able to equalize the States, as hard as they tried, in terms of the funding formula, and therefore there are some Members from some States that obviously have to point this out, have to demonstrate the unfairness and inequality of it and ask the bill be amended to provide a more fair result.

The amendment I spoke of that funds the bill at $256 billion over 6 years does not address this problem. So I make it clear, the amendment I have offered that allows people to vote for an amount in the highway spending that is consistent with the President's budget request does not fix this. I am willing to support that amendment. I am willing to send the bill to conference with that amount of money, but I am also hopeful my colleague from Texas will be offering an amendment tomorrow--has filed it and will offer tomorrow--that will to some degree at least fix this problem for those states such as Texas and Arizona which are not guaranteed the same 95 cents everyone else is guaranteed.

I am hopeful we will be able to vote on that and support that tomorrow.

There are other amendments which I will speak to later, one that my colleague Senator McCain has offered that represents a good compromise in the way we fund highway revenue and reimburse the States. We will talk about that tomorrow. There may be an additional amendment offered tomorrow we will want to support.

I am hoping I will have a chance to vote on these tomorrow. The way this bill has procedurally come before the Senate, we will vote on a cloture petition tomorrow at 9 o'clock. That is a vote which presumably will pass. It means we then have only 30 hours of

debate on the bill and opportunity to offer amendments and have those amendments voted on. My understanding is there are over 400 amendments that have been filed. On a bill of this importance and this magnitude, I don't think it is right we only have 30 hours to dispose of 400 amendments. It obviously cannot be done.

I ask for my colleagues' understanding that when this debate begins after the cloture motion is approved tomorrow--assuming it is--we will have an opportunity to offer these amendments, have a brief period of time to discuss them, have a vote on them, and go on to the next amendment. It is not my intention to try to garble up the works or slow things down. I hope we can speed things up to the point we can get these amendments considered within that period of time. If not, because there are actually two different cloture motions here, we may have to have a second cloture vote and then have another 30 hours so we can continue to try to get the amendments adopted. That is something we are just going to have to work through. I ask for my colleagues' cooperation so that perhaps we can avoid that second 30 hours. But if necessary, obviously, we will have to use that.

Now, if there are questions or refutation of anything I have said, I am happy to hear that and I can stay for a few minutes to try to answer or respond to questions.

If my colleague from Oklahoma would like to speak, I yield the floor to him.

Exhibit 1

Executive Office of the President, Office of Management

and Budget,

Washington, DC, February 11, 2004.

Statement of Administration Policy

s. 1072--safe, accountable, flexible, and efficient transportation

equity act

The Administration supports enactment of a six-year

highway, highway safety, and transit authorization bill and

procedural efforts that would limit consideration of

extraneous amendments and bring the bill to an up or down

vote. Such a multi-year authorization would provide States

and localities with predictable funding that enhances long-

term transportation planning. The Administration's proposal,

as modified by the President's FY 2005 Budget, would provide

$256 billion over six years, an historically high level of

investment for highways and transit. This proposal represents

a $45 billion, or 21 percent, increase over the

Transportation Equity Act for the 21st Century (TEA-21), the

six-year bill enacted in 1998.

The Administration believes that surface transportation

reauthorization legislation should exhibit spending restraint

and adhere to the following three principles: (1)

transportation infrastructure spending should not rely on an

increase in the gas tax or other Federal taxes; (2)

transportation infrastructure spending should not be funded

through bonding or other mechanisms that conceal the true

cost to Federal taxpayers; and (3) highway spending should be

financed from the Highway Trust Fund, not the General Fund of

the Treasury. All spending for highways should be authorized

and appropriated from the Trust Fund and derived from taxes

imposed on highway use, thereby maintaining the link between

Trust Fund revenues and highway spending.

However, the bill pending before the Senate authorizes:

$262 billion on highways and highway safety, which is $50

billion above the President's request, and $56 billion on

mass transit, which is $12 billion above the President's

request. In total the Senate bill authorizes $318 billion in

spending on highways, highway safety, and mass transit over

the next six years, a full $62 billion above the President's

request for the same period.

The Administration's proposed authorization level of $256

billion over six years is consistent with the three

principles listed above. We support a responsible six-year

bill and support many of the provisions contained in this

legislation. However, we oppose S. 1072 and the pending

substitute because their spending levels are too high and

they violate these principles discussed above. Accordingly,

if legislation that violates these principles (such as this

legislation, which authorizes $318 billion) were presented to

the President, his senior advisors would recommend that he

veto the bill.

In addition, the Administration opposes inclusion in a

surface transportation bill of unrelated provisions regarding

Amtrak. Any legislation regarding the future of Amtrak should

be considered separately and should provide for meaningful

reforms, such as those proposed by the Administration. If

surface transportation legislation containing such provisions

were presented to the President, his senior advisors would

recommend that he veto the bill. The Administration wants to

work closely with Congress to achieve an acceptable bill

and recommends attention to the following areas.

Safety. The Administration appreciates the creation of a

new Highway Safety Improvement Program (HSIP) and a strong

safety belt incentive program, but believes the bill should

also require States that have not enacted primary safety belt

laws or achieved safety belt use rates of 90 percent to spend

no less than 10 percent of core highway safety construction

HSIP funds on behavioral safety projects eligible under the

Section 402 program. In addition, the Administration opposes

limiting a State's flexibility to use HSIP funds by requiring

mandatory set-asides for rail-highway grade crossings or safe

routes to schools. The Administration believes that several

programs of the National Highway Traffic Safety

Administration (NHTSA) should be consolidated and a portion

of those funds should be used to reward States that

aggressively reduce fatalities in the manner proposed by

Section 2001(a) of the Administration's proposal. Also,

language similar to that included in the Administration's

proposal on providing for NHTSA-administered highway safety

data grants should be added to help States improve their data

to reasonable standards.

Environmental Provisions. The Administration opposes

substantially broadening the list of eligible projects for

Congestion Mitigation and Air Quality (CMAQ) funding because

many of these new projects would have minimal air quality

benefits. Eligibility for CMAQ funds should be limited to

projects that achieve air quality benefits, particularly

because the number of Clean Air Act nonattainment areas,

which need this type of funding, will increase. The

Administration believes that the bill should improve project

delivery while protecting our environment. The bill should

include a 180-day statute of limitations for legal challenges

following final agency approval of highway and transit

projects. This limit is necessary to reduce litigation

uncertainty that can impede project development for years.

The bill should also avoid adding new requirements to the

transportation planning process, and integrate the

transportation planning process with other environmental

review processes to reduce redundancies.

With respect to project review under the National

Environmental Policy Act, the bill should clarify the

authority of State and local governments to be joint lead

agencies, with the U.S. Department of Transportation, in

preparing environmental documents. The Administration also

notes that section 1511 is inconsistent with the President's

proposal is SAFETEA, and encourages the Senate to adopt the

President's proposal.

The Administration also believes that the bill should

clarify standards pertaining to public park and recreational

lands, wildlife and waterfowl refuges, and historic sites--

commonly referred to as ``Section 4(g).'' A clarification of

the Section 4(f) definition of ``prudent'' is needed to

forestall confusing standards applied unevenly by the Federal

Courts of Appeals. In addition, the bill should address the

overlap between Section 4(f) and Section 106 of the National

Historic Preservation Act to decrease project delays and

uncertainty.

In addition, the Administration believes that the bill

should not include a mandatory two percent set-aside from the

Surface Transportation Program (STP) to support a highway

stormwater discharge mitigation program. Stormwater discharge

mitigation costs are already eligible under STP.

New Regulatory Mandates. The Administration strongly

opposes the numerous mandated rulemakings for NHTSA and the

FMCSA. These provisions predetermine timetables and

outcomes without adequate grounding in science,

engineering and proof of net safety benefits. By

prescribing specific requirements and mandating

priorities, these provisions will delay or interfere with

ongoing safety initiatives and may have the unintended

consequence of redirecting agency resources away from

programs that will do more overall good for safety. The

Administration also objects to the inclusion of: (1)

costly and burdensome provisions of the bill requiring

FMCSA to issue medical certificates to 6.5 million

commercial drivers while limiting the performance of

medical examinations to physicians alone; and (2) the

bill's expansion of hours-of-service safety exemptions.

Financing and Freight Mobility. The Administration

appreciates the bill's expansion of the Transportation

Infrastructure Finance and Innovation Act (TIFIA) loan

program by lowering the project threshold and broadening the

list of eligible projects to include freight projects.

However, the Administration opposes removing the TIFIA

program requirement that a borrower have a dedicated source

of revenue for repaying its TIFIA loan. Likewise, the

Administration opposes allowing railroads to use Federal

grants to pay the credit risk premium or repay Railroad

Rehabilitation and Improvement Financing loans.

The Administration supports amending the bill to give

States the ability to manage congestion and raise additional

revenue by allowing drivers of single occupant vehicles to

use High Occupancy Vehicle lanes by paying tolls. The

Administration also supports amending the bill to provide

States flexibility to implement variable tolls on interstates

for congestion management or air quality improvement

purposes. In addition, the Administration supports amending

the bill to incorporate the Administration's proposal to

amend the Internal Revenue Code to permit the issuance by

State and local governments of ``private activity bonds'' for

highways and surface freight transfer facilities.

Public Transportation Programs. Aside from concerns about

overall funding levels,

the Administration is pleased that the bill includes

provisions to improve human service transportation

coordination and expand the ``New Starts'' program, but is

disappointed by the omission of a performance incentive

program to reward transit agencies based on increases in

transit ridership.

Accountability and Oversight. The Administration is pleased

that the bill includes stringent project management and

financial plan requirements which were requested by the

Administration. Improved accountability and focused oversight

by the Federal Highway Administration will help maximize the

effective use of available funds.

Funding Firewalls and Guarantees. The Administration

supports a separate category or ``firewalls'' for determining

the level of spending from the Highway Trust Fund, but only

in the context of the Administration's proposal for annual

statutory limits on discretionary spending. In addition, the

Administration does not propose the creation of ``firewalls''

for general fund spending on such critical areas as defense

and homeland security, and therefore opposes such treatment

for general fund spending on mass transit programs.

Byrd Test Change. The Administration opposes weakening the

Byrd Test to compare spending authority to current resources

plus for years, rater than two years, of estimated future

revenue. The Byrd Test was established at the creation of the

Highway Trust Fund in 1956 to ensure that future revenues

would be sufficient to cover outstanding spending

authority. The Byrd Test has been successful in ensuring

the Highway Trust Fund's solvency for nearly 50 years, and

modification could allow levels of spending that cannot be

sustained by estimated revenues to the Highway Trust Fund.

Park Roads. The Administration supports the funding level

for park roads, but opposes the provisions of section 1806 of

the bill that establish a park funding priority system that

would reduce the Administration's ability to implement the

President's Park Legacy Program. Allocation of park road

funding should be consistent with the sound asset management

approach on which the President's Park Legacy Program is

based and which is currently used by the National Park

Service, in a manner that will best address the needs of all

parks, not just a few.

Cross-Border Transportation. The Administration opposes the

bill's provisions defining foreign trucks and buses engaged

in the cross-border transportation of cargo and passengers

into the United States as ``imports.'' Existing statutory

provisions already address cross-border transportation

safety, and the revised definition would significantly

disrupt the almost $2 billion daily cross-border movement of

goods.

MAGLEV. The Administration opposes the continued

authorization of funding for Magnetic Levitation

Transportation Technology Deployment (MAGLEV). The

Administration's SAFETEA proposal did not seek funding for

MAGLEV and believes funds can be better spent investing in

the Nation's public transportation systems.

Budget estimates and enforcement

This bill would affect direct spending and receipts. It is

critical to exercise responsible restraint over Federal

spending in a manner that ensures deficit reduction and the

Administration looks forward to working with Congress to

control the cost of this bill. The Budget Enforcement Act's

pay-as-you-go requirements and discretionary spending caps

expired on September 30, 2002. The President's FY 2005 Budget

includes a proposal to extend the discretionary caps through

2009, a pay-as-you-go requirement that would be limited to

direct spending, and a new mechanism to control the expansion

of long-term unfunded obligations. OMB's cost estimate of

this bill currently is under development.

Madam President, I ask unanimous consent to print in the Record the Statement of Administration Policy dated February 11, 2004, and also, though I did not quote from it, an editorial of the Wall Street Journal entitled ``Road Kill,'' and the date is February 10, 2004.

Madam President, if I could ask my colleague from Oklahoma a question, I appreciate the relative dollars received by States such as his and mine. I would just ask one question: Does the State of Oklahoma, under this policy, receive 95 cents in each of the next 5 years, and does the State of Arizona receive 90.5 cents for every dollar we send in?

I thank the Senator.

Mr. President, I wish to respond to a few of the comments our colleague from North Dakota has just made. I begin with the proposition that it does help to have been on the Senate Intelligence Committee or to be a member of the committee today to conduct a more thoughtful, reasoned discussion of this debate than has generally been characterized by the media accounts.

People in the media tend to try to capsulize everything in an attention-grabbing headline way when in fact intelligence is a very complex, difficult proposition that needs to be handled and approached in the most cautious and careful manner.

I think it is important for those people who have been on the committee or, as the Senator from Missouri sitting next to me noted, currently just received briefings as a member of the committee--it is important for them to be able to respond when comments have been made such as those just concluded.

David Kay did not say we got it all wrong. I invite anyone who would like to bring to this floor a quotation from David Kay that says ``we got it all wrong'' to do so. He did not say that. I know that is what opponents of the Bush administration wish he had said, but he didn't say that. Let me quote to you some of the things he did say.

He was asked a question by Senator McCain testifying before the House Armed Services Committee:

You agree with the fundamental principle here that what we

did was justified and enhanced the security of the United

States and the world by removing Saddam Hussein from power?

David Kay:

Absolutely.

But then Senator Kennedy asked a question that kind of got to some of the points our colleague from North Dakota just made. He asked:

Many of us feel that the evidence so far leads only to one

conclusion: that what has happened was more than a failure of

intelligence, it was the result of manipulation of the

intelligence to justify a decision to go to war.

David Kay:

All I can say is if you read the total body of intelligence

in the last 12 to 15 years that flowed on Iraq, I quite

frankly think it would be hard to come to a conclusion other

than Iraq was a gathering, serious threat to the world with

regard to WMD.

That is exactly the conclusion that other Members of this body articulated. I won't quote names, but I remember several of my colleagues, including a Member on the other side of the aisle, saying pretty much the same thing.

President Clinton said almost exactly the same thing. In fact, in 1998, we overwhelmingly passed a resolution in this body authorizing President Clinton to take action to remove the Saddam Hussein regime in Iraq precisely because of this. The intelligence that existed then, that existed before then, and that existed before our most recent conflict with Iraq all verified what David Kay said was true.

So far from saying that we got it all wrong, David Kay is saying we were perfectly justified in taking the action we took. Part of getting it all wrong would have been the information that we had regarding the violations of the U.N. resolutions. What did David Kay think about that?

He said:

In my judgment, based on the work that has been done to

this point of the Iraq Survey Group, and in fact, that I

reported to you in October, Iraq was in clear violation of

the terms of Resolution 1441. Resolution 1441 required that

Iraq report all of its activities: one last chance to come

clean about what it had. We have discovered hundreds of

cases, based on both documents, physical evidence and the

testimony of Iraqis, of activities that were prohibited under

the initial U.N. Resolution 687 and that should have been

reported under 1441, with Iraqi testimony that not only did

they not tell the U.N. about this, they were instructed not

to do it and they hid the material.

Iraq was in clear and material violation of 1441. They

maintained programs and activities, and they certainly had

the intentions at a point to resume their program. So there

was a lot they wanted to hide because it showed what they

were doing was illegal. I hope we find even more evidence of

that.

This is what David Kay actually said. One of the arguments made was that, somehow or other, the CIA and our intelligence community were pressured by the Bush administration to somehow modify the intelligence to suit their nefarious purposes, the implication being that the administration wanted to go to war and needed to somehow manipulate the intelligence to reach that conclusion.

Here is what David Kay said about that:

And let me take one of the explanations most commonly

given: Analysts were pressured to reach conclusions that

would fit the political agenda of one or another

administration. I deeply think that is a wrong explanation.

And never--not in a single case--was the explanation, ``I was

pressured to do

this.'' The explanation was, very often, ``The limited data

we had led one to reasonably conclude this. I now see that

there's another explanation for it.'' And each case was

different, but the conversations were sufficiently in depth

and our relationship was sufficiently frank that I'm

convinced that, at least to the analysts I dealt with, I did

not come across a single one that felt it had been, in the

military term, ``inappropriate command influence'' that led

them to take that position.

Some people in saying, well, maybe we didn't get it all wrong, but what was the real state of intelligence here and did it comport with what we thought we knew--I thought the colloquy between Senator McCain and David Kay at this hearing was most interesting.

Senator McCain:

Saddam Hussein developed and used weapons of mass

destruction; true?

David Kay:

Absolutely.

Parenthetically, I would note, this is not an answer from a man who is saying we got it all wrong because, remember, the allegation had been that Saddam Hussein had developed and used weapons of mass destruction. So he didn't say: We got it all wrong. He said: Absolutely.

Senator McCain then:

He used them against the Iranians and the Kurds; just yes

or no.

David Kay:

Oh, yes.

Senator McCain:

OK. And U.N. inspectors found enormous quantities of banned

chemical and biological weapons in Iraq in the '90s?

David Kay:

Yes, sir.

Senator McCain:

We know that Saddam Hussein had once a very active nuclear

program.

David Kay:

Yes.

Senator McCain:

And he realized and had ambitions to develop and use

weapons of mass destruction.

David Kay:

Clearly.

Senator McCain:

So the point is, if he were in power today, there is no

doubt that he would harbor ambitions for the development and

use of weapons of mass destruction. Is there any doubt in

your mind?

David Kay:

There's absolutely no doubt. And I think I've said that,

Senator.

There is one final thing I would like to talk about that David Kay actually said. Senator Clinton asked him a question at that hearing as follows:

I think that rightly does raise questions that we should be

examining about whether or not the U.N. inspection process

pursuant to 1441 might not also have worked without the loss

of life that we have confronted both among our own young men

and women, as well as Iraqis.

David Kay:

Well, Senator Clinton, let me just add to that. We have had

a number of Iraqis who have come forward and said, ``We did

not tell the U.N. about what we were hiding, nor would we

have told the U.N. because we would run the risk of our

own''--I think we have learned things that no U.N. inspector

would have ever learned given the terror regime of Saddam and

the tremendous personal consequences that scientists had to

run by speaking the truth. That's not to say, and it's not

incompatible with the fact that inspections accomplish a

great deal in holding a program down. And that's where the

surprise is. In holding the program down, in keeping it from

break out, I think the record is better than we would have

anticipated. I don't think the record is necessarily better

than we thought with regard to getting the final truth,

because of the power of the terrorist state that Saddam

Hussein had.

The bottom line is that David Kay recognizes that, while the U.N. inspectors found certain things, the inspections that he performed were even more helpful because of the pressure that the Iraqis had been under when Saddam Hussein was in power. But what David Kay said--if you read all of the rest of the testimony--was basically this: There are many things we found about Saddam Hussein's weapons program. We even found some weapons, and we talked to a lot of Iraqis who told us that he had every intention of reinitiating the programs once the sanctions were lifted. Everything was in place for him to do that.

The thing that puzzled David Kay is that we had not found the stocks of chemical weapons, primarily. We knew that he had artillery shells, some of which were filled with chemical agents, and others that could be filled with chemical agents, and that he had large stocks of those agents, as well as some biological agents.

How do we know that is true? Because the Iraqis admitted that and the U.N. inspectors confirmed it. He admitted it in 1998. He never explained what happened to those stocks thereafter.

Now, one would think that when he admits that he has the stuff--and we know that he used that same kind of weapon before--that if he doesn't prove to us that he got rid of it--in fact, he offers no explanation about where it is--you have to assume that he hasn't. It would be imprudent to assume otherwise.

So to suggest that David Kay came back and said, no, we got it all wrong, that is wrong. What he puzzles about was why we had not found this stock of artillery shells.

Before the military activity was taken, all of the Senators were invited every day at 9 o'clock to go to the secure area of the Capitol to visit with the general and CIA people who briefed us on the status of the war. Every morning, if colleagues will remember, one of the things they briefed us on was how close our troops were getting to the red line--that line around Baghdad--where we had information that artillery with chemical shells could be lobbed against our soldiers. We did everything we could to stop that. We bombed warehouses of artillery, and we were trying to take out the command and control that would issue the orders. We dropped millions of leaflets on the military commanders of the Iraqis, saying they would be war criminals if they carried out orders to fire those artillery shells against our troops.

We were surprised when we took the Baghdad Airport and they had not fired the artillery shells. We thought they were going to use them. We went to a lot of trouble to take them out. Maybe we took them out. Maybe we ruined their plan with command and control. Maybe they had gotten rid of them by then. Maybe they buried them or sent them to Syria.

Secretary Rumsfeld testified yesterday that there are about five different scenarios that could explain why we have not found the artillery shells so far. David Kay says he is not sure we will ever find them, or that they existed on the day we went to war against Iraq. Maybe they had been destroyed, although you would wonder why Saddam Hussein didn't tell anybody about it. Maybe they were sent to other countries or maybe they were given to terrorists. That would be a terrible thing, but we don't know.

Obviously, we had no evidence that they no longer existed. At one time, they existed. So it is far from David Kay saying we got it all wrong; he is saying that we got it all right, except--and I am paraphrasing here--for the fact that we cannot explain what happened to those weapons, and he wonders whether they existed when we went to war.

What does George Tenet have to say about it? Our colleague says that George Tenet's comments were defensive. Maybe they were a little defensive. If you have been the subject of attack for several weeks about how you got it all wrong, you would be defensive, too.

I found his speech today to be a very interesting presentation, a careful presentation about what, in fact, we knew, why we knew it, and why it would not have been prudent for us not to take action on it. I thought this to be particularly interesting.

One of the things that he said was:

To understand a difficult topic like Iraq takes patience

and care. Unfortunately, you rarely hear a patient, careful,

or thoughtful discussion of intelligence these days. But

these times demand it because the alternative--politicized,

haphazard evaluation, without the benefit of time and facts--

may well result in an intelligence community that is damaged

and a country that is more at risk.

I don't find that defensive. Rather, I find it an attempt to try to put this discussion into a thoughtful, careful way of analyzing where we were right and where we were wrong, and how to make sure we are as right as possible in the future. He went on to say:

By definition, intelligence deals with the unclear, the

unknown, the deliberately hidden. What the enemies of the

United States hope to deny, we work to reveal. The question

being asked about Iraq in the starkest terms is, were we

right or were we wrong? In

the intelligence business, you are almost never completely

wrong or completely right.

He goes on to detail the information we had about the missile program of the Iraqis. I would like to say to colleagues, with respect to the missile program, it appears that we got it right. He talks about what we thought we knew, what he told the President we thought we knew, and what we believe is the case of our military actions. And with respect to their efforts to develop missiles that were in violation of U.N. resolutions, they appear to have gotten that pretty well right.

His conclusion on that was this, and I will quote it:

My provisional bottom line on the missiles: We were

generally on target.

He says that because he urges us to consider the fact that there is still a great deal of information left to be discovered in Iraq. They are nowhere near complete in their effort to try to find what Saddam Hussein had and to analyze how dangerous it was.

With respect to that general proposition, I want to quote this:

And to come to conclusions before the war other than those

we reached, we would have had to ignore all the intelligence

gathered from multiple sources after 1998.

He detailed many here. He said:

My provisional bottom line on missiles: We were generally

on target.

Regarding the unmanned aerial vehicles, he said:

My provisional bottom line today: We detected

the development of prohibited and undeclared unmanned

aerial vehicles. But the jury is still out on whether Iraq

intended to use its newer, smaller, unmanned aerial

vehicle to deliver biological weapons.

With regard to nuclear weapons, he said:

My provisional bottom line today: Saddam did not have a

nuclear weapon, he still wanted one, and Iraq intended to

reconstitute a nuclear program at some point. We have not yet

found clear evidence that dual-use items Iraq sought were for

nuclear reconstitution. We do not yet know if any

reconstitution efforts had begun. But we may have

overestimated the progress Saddam was making.

That is in contrast to what he said before the first gulf war when he noted that that colored the way they approached their analysis with respect to his nuclear program.

Then, with respect to a biological program, he said:

My provisional bottom line today: Iraq intended to develop

biological weapons. Clearly, research and development work

was underway that would have permitted a rapid shift to agent

production if seed stocks were available. But we do not yet

know if production took place. And just as clearly, we have

not yet found biological weapons.

Finally, with regard to the chemical weapons, he said:

My provisional bottom line today: Saddam had the intent and

capability to quickly convert civilian industry to chemical

weapons production. However, we have not yet found the

weapons we expected.

I will quote a little more on this point:

I have now given you my provisional bottom lines, but it is

important to remember that estimates are not written in a

vacuum. Let me tell you some of what was going on in the fall

of 2002.

He proceeds to detail several kinds of sources that came to the attention of the intelligence community, sources which provided information which no rational intelligence leader would have ignored: Saddam Hussein calling together his nuclear weapons committee--I am not going to go into all of this detail. He quotes, ``A stream of reporting from a different sensitive source'' that caused the intelligence community to advise the President, the Vice President, and others that they believed Saddam Hussein was actively trying to pursue these programs.

He said:

So what do I think about all of this today? Based on an

assessment of the data we collected over the past 10 years,

it would have been difficult for analysts to come to any

different conclusions than the ones we reached in October of

2002.

That is what George Tenet said. You can say he is being defensive. I say it is important for George Tenet to speak out and to explain to the American people how difficult it is to get intelligence, what we thought we knew at the time, what he advised our leaders of, what we think we know today.

He also noted the fact they have instituted efforts internally to try to discover why they didn't know things perhaps they should have known, how they can do it better in the future.

When you combine that with what David Kay said about the fact there was no evidence that our leadership in any way pressured our intelligence community to come to different conclusions, you have to stand up to the people who gathered this intelligence and presented it to the leaders. They maybe didn't get it all right, but they did their best. And with respect to our leadership, there is no reason to believe they didn't treat this information with the utmost of seriousness and honesty; that they presented it to the American people, exactly as George Tenet said today. They presented it in an honest way and that it would have been irresponsible of them to have acted any differently, to have presented it any differently given the information that had been presented to them.

I think that had the President, knowing what he now knows and all of this would eventually come out even though a lot of it is classified information, if the President had not taken action and, God forbid, something had happened, a lot of people on the Senate floor, in the Senate, around the country, and certainly pundits would be saying: Why did President Bush ignore these warnings? Why did he ignore what the intelligence community came up with?

There are some people who are saying that with respect to the attack of 9/11 when the President had virtually nothing, in fact, when we had obviously no reason to believe that on September 11 there would be an attack from the airliners that would be used by the al-Qaida terrorists, and yet with virtually nothing to go on, people are saying the President should have known and done something about it.

With all of the evidence we had about Saddam Hussein and all of the evidence with regard to Iraq, to have ignored that would have been absolutely irresponsible. My colleagues who are criticizing him today for acting would then be criticizing him for not acting, I believe.

In a political season, you are darned if you do and darned if you don't. We understand that. But I think it is important, as George Tenet asked us to do, especially for those of us in the Senate, especially those of us who served on the Intelligence Committee, to urge people to approach this subject from a sober, careful, nonpoliticized point of view because lives are at stake.

We make decisions and the executive branch and military make decisions based upon our intelligence. We have to make sure that the way we restructure intelligence, the funding decisions that we make, and the other things we do are not based upon quick judgments, on political judgments certainly, but rather are based upon a calm analysis, a reflection based upon perspective and certainly an understanding of the difficulties that the intelligence community faces.

When you do all of that, I think you can come to no other conclusion than what David Kay came to, that George Tenet said, the President, the Vice President, Secretary Powell, before the United Nations, that there was a problem here that could not be ignored.

It would be absolutely wrong for anybody to suggest today that we got it all wrong and that for some reason that is President Bush's fault and certainly not for anyone to suggest that somehow or another our leadership misled the American people in order to go to war. That would be the absolute height of irresponsibility. No President, Republican or Democrat, I can think of would ever do such a thing.

I am disappointed that some--and I am not referring to anybody in this body at this point--that some people would actually suggest that would be the case. But when we talk about the intelligence the way it has been discussed here today, it leads to that kind of conclusion. I think that is unfortunate.

I urge all of my colleagues to try to discuss this in a relatively impassioned way, a carefully constructive way so working together we can craft the kind of policies that will provide for our security in the future, protection of the American people, and certainly the protection of the people we send into harm's way to protect us.

Will my colleague yield for one moment on that?

I really do appreciate that. I think what the Senator referred to and what he read was that Mr. Kay said: We all got it wrong. But he did not say: We got it all wrong.

Go right ahead and read that again. That is the distinction I would make. We did get one thing wrong. We cannot find the weapons.

Could we have regular order?

Mr. President, I express my appreciation to the assistant minority leader for that request.

Mr. President, I think we need to respond to some of what has been said here this morning because the implication is very disturbing. It is not just that some of the intelligence of the United States--and by the way, all of the other intelligence agencies around the world might not have been totally accurate--but that somebody might have been misleading us. That is the charge. That is the implication. It leads to this notion we could not trust the President to look into what might have been wrong with the intelligence, that there is a ``shadow of suspicion'' here.

Well, the shadow of suspicion is being cast by our colleagues on the other side by the innuendo that is throughout the comments they have been making here this morning and that we have read elsewhere. I think that is a very bad thing. Especially when our troops are fighting abroad trying to win this war on terror, to suggest that not only is the intelligence we are gathering not entirely accurate but that there were deliberate attempts by people in the administration to mislead the American people, and to mislead the Congress, that, I think, is what is very disturbing.

What are some of the strains of that? I heard one of them on the radio this morning: Well, Vice President Cheney went down to the CIA and talked to them. He must have been trying to intimidate them to come up with some preordained conclusion to sort of cook the books a little bit.

There is no evidence of that whatsoever. David Kay has discounted that as a possibility. Nobody from the intelligence agencies, under questioning, has suggested that was the case.

Indeed, the question is, if the Vice President had not gone down to the intelligence agencies and asked the tough questions of the CIA people, and said, are you sure you are correct about this, then our friends on the other side would be complaining the administration did not even bother to doublecheck the information. So when politics are involved, you cannot win. But I do not think we should allow these suspicions from the political side of things to dictate the kind of action we take.

Another question: Secretary Powell went to the CIA. I think he spent something like 3 days with them, with these people going over and over and over the evidence, saying: Are you absolutely certain of this? And remember, before he made his presentation to the United Nations, he took some of the material out, some of the material he did not think was verifiable, that they could not nail down well enough. He wanted to make sure what he took to the United Nations was solid.

The Vice President and the Secretary of State are not the only people who have been involved. We have intelligence from other countries, such as the Israelis, the British. We have the United Nations itself, and the inspectors who came back with their reports.

At the end of the day, the reason why the international community passed resolutions asking for Saddam Hussein to comply with his commitment to come clean on what he had was because the whole world thought he had these weapons of mass destruction.

Now, since then, we have not been able to find everything. We have found some things. But one of the things we have not found are the chemical artillery shell warheads. We thought those were going to be used against our troops. Every day the war occurred, we were briefed on the so-called red line, the point at which we thought the Iraqis were going to shoot artillery shells with chemical weapons at our troops. Our troops had to put on all the heavy equipment in order to try to fight through that if, in fact, the attack occurred, and there was some surprise when it did not occur. We had to, of course, bomb the warehouses we thought it was in. We bombed the artillery pieces. We sent millions of leaflets to the commanders saying: Don't you dare fire chemical weapons at our troops or we will take you before the criminal court when this is all done. We disrupted their command and control, and we thought that is what prevented them from firing those artillery shells. But the point is, we thought they had them. We thought they were going to be used against our troops.

This was not a matter of the President or the Vice President or anybody in the administration trying to mislead anybody. Maybe the intelligence was not entirely accurate, but I urge my colleagues on both sides of the aisle, in conducting this debate, to try to do it from the higher plain, not from the suspicion that the President of the United States is trying to deliberately mislead the American people, but to acknowledge maybe there was something wrong with part of our intelligence and that is worth looking into.

That is precisely what the President has said he wants to have done because obviously he is just as concerned about this as anybody else is. It is for that reason he has asked for an investigation into the intelligence to find out whether it was correct, if it wasn't, why not, and what can we do about that in the future.

I urge my colleagues, in conducting this debate, let's do so from a higher plain than one in which we sow the seeds of politics and blame and suspicion, as has been done around here. We can conduct this debate on a much higher plain than that.

Mr. President, Penn State and the University of Oklahoma have had their share of victories and now it is time for somebody else to have their fair share.

I appreciate the hard work of the chairman, the Senator from Oklahoma. I make it very clear I join those who recognize the need for improvement of our highways. There is not a road in my State that could not stand some improvement. As a very fast growing State, Arizona needs to add to our highway miles.

I appreciate the fact that there is a need to create jobs, and highway construction certainly can help to create jobs in this country. However, it has always been the case that we prioritized because Members would literally ask for everything they could possibly get in the way of funding for their States. We have had to set limits. There is, after all, a limit on the amount of Federal revenue available for all good projects. Certainly, highways are no more important than education or health care or national defense or many of the other categories which also compete for the Federal dollar.

So while we acknowledge there is a need for a highway bill and that can have some jobs benefits, that should not be the driving force in terms of the competition with dollars for other worthwhile projects. We have to set a limit, particularly in this case where we have over a half trillion dollar deficit, according to the OMB; we have to be clear we do not spend more than we are taking in.

The reason this is a bad bill, and why I oppose it, first, it spends far too much money. Second, it spends more money than we collect in revenues from the gas tax. Third, it is very unfair to States such as mine, which are donor States. Arizona has always contributed far more than it has gotten back, and under this bill that gets even worse for the next 5 years.

Let me discuss each of those items very briefly. We start from the premise that we do need highways. We also have a huge budget deficit. Therefore, we have to clearly be sensitive about the kind of bill we pass. In this regard, the Secretary of the Treasury, Secretary Snow, and the Secretary of Transportation, Secretary Mineta, yesterday notified the Senate that they would recommend a veto of this bill if it raises the gas tax or other Federal taxes or draws money from the general fund. They wrote that the bill ``should not use any mechanism that conceals the true costs to Federal taxpayers. Highway spending should be financed from the highway trust fund, not the general fund of the Treasury.''

The bill before the Senate violates this principle in a significant amount, by billions of dollars. Therefore, if my Senate colleagues insist on going down the road of passing a bill that violates the principles that the President has laid out, we risk having the President veto this bill. At a time when we have this large Federal budget deficit, it seems to me we ought to be joining with the President in trying to prioritize our spending and constraining it to at least the amount of revenue we take in, a balanced budget approach. That is the way we have done it in the past, and that is the way we should do it now.

Just the highway portion--and I make it clear there is a mass transit portion of this bill that has not gotten out of the committee of jurisdiction, the Banking Committee, and in terms of funding it is in the neighborhood of $50 billion; it could be more or less and I do not mean to be tied to a specific figure, $49 billion or 50 billion; I will leave that part out of the discussion because that part is not complete until we know the actual numbers--but the highway portion, the amount the Federal Government has to spend over the next 6 years, is $231 billion. This is what the Bond-Reid amendment from last year in the budget resolution called for the Senate to fund. The House is looking at a number far higher than this. I even heard today that some people in the administration are looking at a number above this.

In any event, the number that the Finance Committee yesterday raised revenue for was $231 billion. I sit on the Finance Committee and our job is to try to figure out what kind of revenues we are getting, and therefore, whether we could pay for $231 billion of highway funding. What we learned was that the gas tax, the use tax, that funds highway construction, is only going to bring in $196 billion during that same period of time. So the bill that the Senate said we should try to fund exceeds the amount of revenues by $35 billion.

Now, there are four choices. We can reduce the amount we had hoped to be able to spend last year when we did not have this big Federal budget deficit number staring us in the face, and now that we know the size of the deficit, acknowledge that we were just a little bit too optimistic last year; we were a little bit too forward leaning, shall we say, and trim back to suit the revenues that we are actually going to be collecting. That is the first thing we could do. That is what we should do and what any family would have to do.

Because we are the Federal Government, we could raise taxes to make up that difference. I don't think that will happen. The President says he would veto the bill if that happened.

We could just go into greater deficit. But on both sides of the aisle I think

that would be met with great opposition. We do not want to increase the size of our Federal budget deficit.

That leaves the other alternative, and that is to take money from other areas in the budget and apply it to highways, to take general revenue funds, funds that might be spent on defense or homeland security or education or medical care, for example, to take that money away from those programs and spend it on highways instead. That is what is being proposed.

But it gets worse because the effort that is undertaken here is to confuse the American taxpayer into thinking that it is highway-related revenues. It is not. What the Finance Committee concluded yesterday was that we could legitimately come up with--and I acknowledge this and hope to construct the addition of the funds--that we could come up with about $214 billion in revenues that was, in fact, legitimately connected, money that was connected to highways or to the trust fund.

For example, there is $196 billion from gas taxes. There is an argument that we should be able to count the interest earned on the trust fund balances as part of the trust fund that is currently deposited in the general fund. Most would say that we can legitimately transfer that from the general fund and put it into the trust fund and call that trust fund money, and I agree with that.

I will not get into detail, but there are four or five other areas like that. Some might be a little questionable in some people's eyes, but at least in my view, you could justify $214 billion in revenues, in real money, being transferred from the general fund to the trust fund, but which we could legitimately contend should not belong in the general fund, it should belong in the highway trust fund. That is $214 billion. That leaves a $17 billion deficit. That is just on the amount we were trying to mark up of $231 billion.

So how do we make up the other $17 billion? By sleight of hand, which is why I voted against the bill. We came up with phony money, money that does not really exist but which, for the purposes of paying for this bill, we are going to count in an accounting technique.

There are two key pieces: one $9 billion and the other $8 billion. The $9 billion fund comes from something called the ethanol exemption. The gas tax is 18.4 cents but for ethanol we give a 5.2-cents-per- gallon exemption. We say you do not have to pay that tax. The Finance Committee bill proposes to convert this exemption into a tax credit. But under the new system, even if the money comes in, it will be sent right back to the taxpayer when they seek a refund for it, when they seek to apply for the ethanol tax credit, so the net result is that, even though the Government may collect the money for an instant, it goes right back to the taxpayer who paid it and there is no money, then, to be put in the highway trust fund. So what we have is the Government will collect 5.2 cents it does not currently collect, it will theoretically send that to the taxpayer, and as soon as the taxpayers ask for the refund of the credit, the general fund of the Treasury sends the money back. So no new money has been raised. We collected it; we gave it back. But in the meantime, through an accounting gimmick, we say that the trust fund is 5.2-cents-per-gallon richer. And that amounts to $9 billion over this 6-year period of time. But there is no new money. So that is fraudulent. It is wrong for us to suggest we are actually paying with real money for that part of this bill.

The other is called the fuel tax exemption, and it relates to an exemption that is provided to tax-exempt entities, such as cities and States and schools and churches. They do not pay the gas tax. They receive either a full or a partial exemption from the gas tax.

So the Finance Committee bill just credits the highway trust fund as if it had received those taxes, even though the funds will never have actually been received. That is $8 billion over 6 years. It reminds me of that old riddle Abe Lincoln used to ask. He said: If you call a tail a leg, how many legs does a dog have? And he would always fool the kids, and they would say five. And he would say: No, four. Calling it a leg doesn't make it a leg.

Well, calling this money part of the trust fund does not make it part of the trust fund because it is not ever going to be collected. It is an accounting gimmick. So when the Secretary of Transportation and the Secretary of Treasury write in the letter that they are going to recommend a veto of the bill if it uses mechanisms that conceal the true cost to the Federal taxpayers--they go on to say: Highway spending should be financed from the highway trust fund, not the general fund of the Treasury--I think this is exactly the kind of thing they had in mind.

How does the General Treasury make up this $17 billion? You cannot pay for highway construction with fake money. You have to pay with real money. So you take that money out of the general fund and you somehow have to make that up in the general fund. Do they make it up with a highway user fund or fee? No. Instead, there are a series of tax changes that have nothing to do with highways. Some close down abusive corporate tax shelters, the kind that Enron had used. And there are some other kinds of changes like that--nothing that has anything to do with transportation or highways. Some of these tax changes, by the way, are actually good tax changes and, in fact, we should make the changes, but they should be used to fund other things in general revenue that are traditionally funded by such mechanisms. They should not be transferred from the general fund to the highway trust fund, thus breaking a precedent that has held ever since the beginning of highway transportation.

My view is we should be very clear that by breaking this precedent, by using the general fund against what the Secretary of Treasury warned us, that we would be opening up the possibility that the highway fund or highway spending would be basically unconstrained by any mechanism whatsoever. It would be a honeypot of projects and ways for Members to go home and brag about how much they brought home to their States or their districts with no financial constraint because no longer would it be pegged to the amount of revenues we received through the user fees, from the people who actually used the highways.

So if we go down this road, I think there will be no end to the claim we will make on general revenues for highway projects. And I think it is a very bad precedent for us to undertake.

So, first of all, we are spending too much money. Secondly, we are not funding it in the proper way. We are now going to be spending general revenues to fund the deficit.

The third thing I want to say is that this is not fair to some States. You might imagine that one of them is my State. I am going to describe this very briefly. And with the indulgence of the chairman of the committee, since our offices are closed down right now, I do not have access to the specific information which I wanted to bring to the floor. I am going to say this generally, and then, when we have access to that data, I will come back to the floor with the specific information.

But a bit of history: Arizona has always been a donor State, meaning that Arizonans send a dollar in tax revenue for highways to Washington, and we get back 70, 80 cents. In the last few years, we have gotten 90.5 cents. Just a few years ago that was 83 cents, as I recall.

A lot of the donor States put their foot down and said: Look, we, at least, ought to get 90 percent of what we send. And that is when the 90.5 cents was put into effect. Arizona is a fast-growing State, the fastest growing State in the Union. We have huge new infrastructure needs, including highways. We have large areas of Federal land. Only 12 percent of the land in our State is privately owned. The rest is owned by a governmental entity. We have huge border infrastructure financing requirements. We are now trying to build a new bridge over the Colorado River, below the Hoover Dam, with our sister State of Nevada. We have huge expenses with our highways.

Yet instead of getting back an amount of money that would be commensurate with those needs, Arizonans send a dollar to Washington and get back 90.5 cents.

When the debate about the new highway bill began, we had some thought that perhaps we would finally get to

the point where we could be treated fairly relative to other States. But, unfortunately, this was not to be the case. In a very general way, what happened was this: The Senator from Oklahoma, and others, with very good intentions, said we want to try to bring all of the States we possibly can up to 95 cents on the dollar. And they set out to try to do that.

But what they soon learned was there are some States with needs growing so rapidly, with populations growing so rapidly--States such as Arizona, Texas, Colorado, Florida, the fastest growing States--these States are growing so rapidly that it would cost a lot of money to be fair to them. In other words, we are behind the other States now. We are donor States, and to try to bring us up to parity with those States would cost a lot of money because we are so far behind.

Now, if we had been treated fairly in the past, this would not be a problem because, presumably, we would be like everybody else--right around the norm. But we have not been treated fairly in the past, which is why we are so far behind.

Now they are saying: Because you are so far behind, and it would cost so much to let you catch up, sorry, we are going to take care of everybody else, but you all have to stay that far behind for 5 more years. That, I suggest, is not fair.

Now, it might have been fair to say to folks: Look, we can't get to 95 cents on the dollar. Maybe we can get to 93.5 cents for all of the States. I don't know what the exact number was--93, 94, perhaps, somewhere in that neighborhood. If all the States had been brought up to the same level, then that might be where it is--92, 93, 94, somewhere around in there. But, instead, they decided to go to 95 cents for most of the States, and then, for four or five of the States they say: Sorry, we are not going to bring you up to speed for the first 5 years of this program. Perhaps in the sixth year we will try to get you to 95 cents.

Well, in the meantime, every one of those 5 years the gap will grow wider. And because our populations are growing, because our infrastructure needs are increasing disproportionately to these other States, because we have been behind for so many years--and, therefore, have a backlog that a lot of the other States do not have--instead of gradually being brought up to where the other States are, we are basically being left in the dust. That is not fair.

Now, if you only do that to about five States, you can still guarantee your bill gets passed because you do not need their votes. This is all about vote counting. This is the way the highway formula was always developed. And I commend my good friend and colleague, the chairman of the committee, for noting the fact that in the past that is the way the formula has been derived. That is why his State and mine and a lot of others suffered for a lot of years.

But I suggest that since there now seems to be a will to make things right--again, I commend him for that--that we should make it right for everybody, not just for those States where we can afford to make it right. In fact, I would argue that we really ought to start with those States that have been on the short end of the stick all these years. We should start with the States that are the furthest behind, start with the States, such as Arizona, that have so much further to catch up.

If we have money to add to the amount of money that donor States get, why shouldn't we start with those States that have the biggest population growth and infrastructure needs and have received relatively, therefore, the smallest amount of money in the past?

Well, I guess you only get 8, 10 votes out of those States, so we start from a different premise. I do not think it is fair. That is the third reason I have to oppose this bill and why my friends in Arizona are basically saying to me: We can understand why we have to spend more money on homeland security and fighting the war on terror and on fighting in Iraq, and so on. We can understand why there are some other big needs that perhaps could get an increase in funding, such as education and the Medicare prescription drug bill last year. But we will be darned if we are willing to continue to send our money to Washington to be spent by other States when we have such large needs here. And they basically tell us, because you have so many needs, we cannot afford to bring you up to speed with everybody else and, therefore, you are going to have to wait 5 years.

I cannot go back to my friends in Arizona and say: Gee, I am sorry but that is just the way it is in Washington; they expect me to do something about it.

So I hope my colleagues who support this bill will indulge me, and those others, and put themselves in my place and ask what they would do if they were in this position and not give us too hard a time when we ask questions that may be difficult and make sure that from a parliamentary point of view, we use all of the options we have to try to convince our colleagues the bill should be made more fair than it is.

I would be happy if all of us received less money by reducing the top number of this bill down to an amount we can afford, say $214 billion, or to simply reauthorize the existing spending levels for 1 year until we can go back and get this formula right. I would favor either of those two solutions today. I raised them both in the Finance Committee yesterday. Both were defeated. But I would opt for either one of those.

What I can't agree to is a bill that spends far too much money, funds it with general revenues for the first time, and is blatantly unfair to States such as Arizona.

Will the chairman yield?

As to the first items you mentioned, we are in total agreement. Those were items that should have been added to the trust fund, and they make up the difference between the $196 billion in gas tax revenues and the $214 billion. So there is no disagreement there. But as to the last two items, you could argue that the schools and churches and States and cities should have been paying the gas tax all along and that if they do pay it, it should go to the highway trust fund. That is true. You can argue that. But we are not going to collect it from them. We are not going to make them pay.

I suppose what you could say is, from now on churches and schools and cities and States have to pay the gas tax. And when they pay it, it should go to the highway trust funds. We are not saying that. We are going to deem that they have to pay it, but they don't actually have to pay it. There is no real money there. It is the same thing with the gas tax credit on ethanol. There the tax is actually going to be collected but then remitted. So the Government has it for a few days, but when they apply for credit, it goes back. Once again, we are going to credit the trust fund with the money, but it doesn't in fact get the money.

That is why the Finance Committee had to use creativity in finding these other corporate loophole closings and applying the revenue derived from that to make up the difference in the $17 billion or so. So it is not revenue we should have been collecting all along and putting into the highway trust funds. You can argue whether we should have been collecting it or not, but it is not revenue we are going to be collecting in the future from the cities and schools, for example. We are going to have to get it from the corporate loopholes.

I ask the chairman to yield. This has to do with the chart you showed and the percentage increases. When you talk about percentage increases, I start to smile. You can always make a point with a percentage. I can remember when I was an associate in a law firm and I would be making, let's say, a salary of $25,000 a year. The senior partner was making $150,000 a year. We both get a 3-percent increase in our salary and he would say: That is fair. In fact, I will tell you what; I will take a 3-percent increase and I will give you a 4-percent increase.

At first, I would say that sounds all right. Then I said, wait a minute, you get 3 percent on $150,000 and I get 4 percent on $25,000. I think the gap is widening, not narrowing here. When I got to be more of a senior person in the law firm--and certainly with my Senate staff now, I always try to give the people at the bottom a higher percentage. Otherwise, the gap continues to widen. We see on the chart here how bad the pink or red numbers are, where Arizona is today. I appreciate you pointing that out. It is deceptive to suggest that since we are going up, we ought to be happy.

In terms of real dollars, the States that have collected more money in the past than Arizona, which have been donee States and haven't had this huge gap, are making far more in terms of the collections each year than Arizona will. You can show that it is going up, but the averages don't help Arizona. It is like the saying, how deep is the Mississippi River? The average is 6 feet, but if you get in the middle, you are in very deep water. Averages really don't count.

I would rather be the $150,000 senior partner getting a 3-percent increase than a $25,000 associate getting a 5-percent increase. That is, in effect, what Arizona is being offered.

Mr. President, I criticize the product. I do not criticize the chairman or other members of the committee. I know this is hard. Everybody is looking out for their own States, obviously. You cannot be fair to everybody and everybody's view. I appreciate that. So the comments are, I hope, in no way to be considered a reflection on the good faith of the people who are trying to do the work. My point is that I cannot stand here and represent the interests of my State with the kind of unfairness that I think is inherent in the bill, and that is simply, as the chairman said, something on which we are going to have to disagree.

I thank the chairman.

Mr. President, I will respond to my colleague from Illinois. First, regarding the budget deficit, and comments made earlier regarding intelligence issues, I will find it interesting to see whether those who are so concerned about the Federal budget deficit will back up their words with actions by voting against runaway spending.

Alan Greenspan, head of the Federal Reserve, says the biggest problem is that Congress cannot restrain its bad spending habits. So for colleagues such as the Senator from Illinois--will they vote against the $30 billion in subsidies in the energy bill? Will they vote against twice that much in unpaid for highway funding--that is to say, unpaid for in the highway trust fund? It will be interesting to see how those who complain about the deficits actually vote when it comes to adding to the deficit.

Remember that last year, when we had a whole series of votes, when the Republican majority finally got a budget passed, we had to defeat a whole series of amendments by our Democratic colleagues--we usually got 51 or 52 votes--because almost all of the members of the Democratic Caucus voted in favor of spending more money in these amendments. We defeated something like $88 billion in spending amendments offered by our Democratic colleagues. Thank goodness we did. That amounted to over a trillion dollars in savings over the 10-year period of the budget.

So for my Democratic colleagues to complain about spending and budget deficits and then go on and vote for the projects that they can brag about back home, I think that at least is--shall we call it a dichotomy, in any event.

What about this business of tax cuts for the wealthy? Actually, I have some statistics here which I think are interesting. It shows that the reduction of the tax rate, the top marginal rate--these are the ``wealthy'' that our Democratic colleague spoke about--actually, mostly helps small businessowners, the very people who create the bulk of the jobs in this country.

You cannot have it both ways, my friends. You cannot complain on the one hand that we are cutting taxes for the people who create the jobs and then complain we are not doing anything to create jobs. That is just exactly what the tax rate reductions on the highest marginal rate accomplished. About 78 percent of that savings went to small businessowners. These are the people who pay at the top individual rate. They are subchapter S corporations or partnerships; we call them flowthrough entities, which pay at the top individual tax rate. They are small business employers. Sixty-two percent of the income tax filers in the top bracket are small businessowners, and 98 percent of the companies are small businesses.

According to the Small Business Administration, 75 percent of all of the new jobs are created by small businesses, which would suggest that small businesses created over 2 million of the 2.8 million jobs added since the start of 2002. How were these small businesses able to create those jobs? They had the capital to invest to do so. How did they get the capital? We cut their marginal income tax rates. Again, they received, by far and away, over three-fourths of all the relief that went to the top filers, the small businessowners, by cutting that rate.

Tax cut for the rich? No. It was for the small businessowners to create the jobs that have gotten our economy moving again.

Let's recall who actually pays the taxes in this country. These are Internal Revenue figures, I might add. The top 1 percent of taxpayers pays over a third of all of the taxes. One-third of all the taxes are paid by 1 percent of our population. The top 5 percent of the taxpayers pay over half, 53.4 percent. So just the top 5 out of 100 are paying more than half of all the income taxes in the country. The top 10 percent pay about 65 percent--in other words, almost two-thirds.

How much does the top 50 percent pay? Ninety-six percent. In other words, the bottom 50 percent of taxpayers in this country pay less than 4 percent of the taxes. So divide the taxpayers in this country into two parts. One of our Democratic colleagues running for President is fond of saying there are two Americas out there: the wealthy and not so wealthy.

Let's take the top 50 percent and the bottom 50 percent. The top 50 percent is paying 96 percent of the taxes, and the bottom 50 percent is paying less than 4 percent of the taxes. Naturally, if we are going to give a tax cut to taxpayers, you are going to be cutting the taxes of those who are paying most of the taxes. But I wouldn't call these people all rich.

As a matter of fact, if you look at the categories, the top 50 percent makes $28,528. I wouldn't call that rich. How about the top 25 percent? We ought to be getting into the rich category here: $56,000 income a year. Raising a family of four, that is not exactly a big income these days. You can get by on it, but I wouldn't call those people wealthy or ``the rich.''

I think we have to be a little bit careful. And I know my colleagues wouldn't do this, but there are those outside this Chamber who would demagog this issue saying it is all about dividing America between the wealthy and the deserving, the so-called middle class.

We appreciate the fact that America is made up of every stripe of folks, and they all contribute in one way or another, but when it comes to creating jobs, it turns out if you reduce the highest marginal rate, which is what we did, what we have done is to reduce the rate for small businesses which have created the jobs that have gotten the economy going again. That is the effect of the tax relief that was recommended by President Bush and this Congress approved.

I suggest we give a little credit to the President for helping to stimulate the economy, create jobs, provide economic growth that is unparalleled. We had over 8 percent growth in the third quarter last year, and 4 percent in the last quarter. The stock market is doing very well.

It seems to me the message ought to be one of hope; that we have turned this recession around; that we have reduced taxes. As a result, we are creating jobs and actually things are looking pretty good.

If our Democratic colleagues would like to help us keep a lid on spending, then stop voting for every amendment that spends more money. It is pretty much that simple, Mr. President.

Mr. President, with respect to the other subject which I wish to briefly deal with, this afternoon several of our Democratic colleagues have criticized the President and the administration and invoked the name of David Kay, a weapons inspector, to make the point that they claim proves the administration somehow misled the American people and the rest of the world in making the case for taking military action against Iraq. That is not true. I think it is time people start quoting David Kay properly to see just exactly what he said. I am briefly going to do that.

I have a few excerpts from his testimony before the Senate Armed Services Committee on January 28 of this year. Senator McCain asked him this question:

[Y]ou agree with the fundamental principle here that what

we did was justified and enhances the security of the world

by removing Saddam Hussein from power?

David Kay:

Absolutely.

Senator Kennedy asked this interesting question:

Many of us feel that the evidence so far leads to only one

conclusion: that what has happened was more than a failure of

intelligence, it was the result of manipulation of the

intelligence to justify a decision to go to war. . . .

David Kay responding:

All I can say is if you read the total body of intelligence

in the last 12 to 15 years that flowed on Iraq, I quite

frankly think it would be hard to come to a conclusion other

than Iraq was a gathering, serious threat to the world with

regard to WMD.

And WMD, as we know, is weapons of mass destruction.

How about its violations of the United Nations resolutions? Somehow the impression has been created that maybe it was just a fraud, that Iraq

really wasn't in violation of those resolutions, that somehow the weapons of mass destruction never existed. Here is what David Kay said:

In my judgment, based on the work that has been done to

this point of the Iraq Survey Group, and in fact, that I

reported to you in October, Iraq was in clear violation of

the terms of Resolution 1441. Resolution 1441 required that

Iraq report all of its activities: one last chance to come

clean about what it had. We have discovered hundreds of

cases, based on both documents, physical evidence, and the

testimony of Iraqis, of activities that were prohibited under

the initial U.N. Resolution 687 and that should have been

reported under 1441, with Iraqi testimony that not only did

they not tell the U.N. about this, they were instructed not

to do it, and they hid material.

Going on:

Iraq was in clear material violation of 1441. They

maintained programs and activities, and they certainly had

the intentions at a point to resume their program. So there

was a lot they wanted to hide because it showed what they

were doing was illegal. I hope we find even more evidence of

that.

Mr. President, if we are going to be quoting David Kay and talking about the state of our intelligence, go to the transcript and present a more fair and balanced picture than has been done today.

Mr. President, it is my understanding that I have 7\1/2\ minutes to speak to the amendment which I have offered.

Let me point out what we are doing here and then explain the very modest amendment I have offered which would not undermine the pension guarantee for employees.

The basic problem we have is that the Treasury note that was used to calculate the payments that companies make to the fund to guarantee pensions for their employees is no longer being issued, so some substitute had to be found. The underlying bill uses the 30-year Treasury note as that substitute. I think everybody agrees that needs to be done on a temporary basis.

There was a deficit created in the pension fund because companies were not paying in the appropriate amount during the period of time that the Treasury note was not being issued. As a result, the fund accrued a deficit. It is over $11 billion. So companies are being asked to pay in a deficit reduction contribution to make sure that the fund has the money that is required to ensure that employees will receive their benefits.

Ironically, it is the proponents of the amendment that are undercutting the fund because what they are saying is not everybody will have to pay their fair share into the fund to guarantee payments to employees; that for a couple of steel companies and a couple of airlines, they will not have to make the full deficit reduction contribution. Instead, in the first year, they only have to pay 20 percent of what is required. In the second year, they would only pay 40 percent of what is required. That, obviously, is going to mean, for those companies, they are not paying in what they should be to ensure that their employees are fully covered.

All my amendment does is say that given the fact that in this situation an employer is not paying in the full amount, the pension guaranty board should not be on the hook for benefits that are accrued just during this period of time. So what we say is that if a business takes advantage of this special rule, and if it fails during the 2-year period that this is in effect or 2 years thereafter, then all of the benefits that accrued during that period of time would not be guaranteed by the board. In other words, the corporation would have to hold harmless the pension guaranty board.

If we don't do this, then the prediction that the board members who are in charge made in their recent letter would potentially come true. The Pension Benefit Guaranty Corporation has three board members: The Secretary of Treasury, the Secretary of Commerce, and the Secretary of Labor. They wrote a letter to Leader Frist on January 22 and this is among the things they said:

We believe that H.R. 3108 would best protect pensions and

pensioners if passed free of any provisions to alter the

Deficit Reduction Contribution rules.

The underlying amendment does, in fact, alter the deficit reduction contribution rules.

Specifically, it would be irresponsible to amend the

interest rate bill with any additional provisions that would

significantly further exacerbate systemic pension plan

underfunding.

Obviously, if you don't require all of the companies to pay in their fair share, you are, in fact, undermining the fund. They conclude by saying:

If H.R. 3108 were amended to do so, we as the PBGC board

would recommend that the President veto the legislation.

My point in mentioning this is to note that it may be that the amount of money we are talking about would not be interpreted as significantly underfunding. That would be the hope because if it would be, then I don't think any of us would be happy. But what I would suggest is that as a way of ensuring that the impact is minimized, my amendment should be adopted. It is very minimal. It simply says for those companies, if any, that choose to take advantage of this special waiver from the deficit reduction contribution, if they fail during this 2-year waiver period, then only the benefits that are accrued during that period would not be covered. That is to say, they would have to hold harmless the pension guaranty board for that amount of money.

The reason is obvious: They are not paying in. They should not receive the benefit of the guarantee. If they want to receive the benefit of the guarantee for those benefits, then pay in their fair share. Obviously, they are totally covered for all of the benefits accrued up to that date because they paid in up to that date. So we are basically saying: If you choose as a corporation to take advantage of this waiver and not pay in what everybody else has to pay in, you should be on the hook for that amount of money. You should not ask the taxpayers or your rivals in business, your competitors, or the board to try to make up that difference.

The reality is, we are not talking about a great deal of money. The principle is important and would help to make this underlying amendment a little bit more palatable to some of us on this side and to the administration.

I yield to the Senator from Oklahoma.

Mr. President, if I may correct one aspect. Theoretically, a new employee would be a new benefit, but the reality is that since the accrual or the benefit is usually a 3- to 5-year time period, new employees would not in fact be covered.

Mr. President, that is one of the purposes of this. To be clear, technically, a new employee would be counted, but since the benefits don't accrue for 3 to 5 years anyway, it probably would be de minimis.

I urge my colleagues to support the Kyl amendment.

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

Mr. President, I have an amendment No. 2236 at the desk.

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

Mr. President, I will describe the amendment briefly, the reason for the amendment, and set the stage here. Of course, the pending business is H.R. 3108, a bill the House passed, dealing with the requirements for businesses to pay into the pension fund to ensure that all of the promises they have made to their employees about pension benefits being there will in fact exist when the time comes.

What has happened is some Senators have offered an amendment to that bill which would provide what we call deficit reduction contribution relief. Deficit reductions are the amounts of money the companies are supposed to pay into the fund to ensure the fund will be able to compensate any employees on the pension that has been promised to them. We have had a deficit in that pension over the last few years because of the way the amounts due were calculated. That is being fixed. But in the meantime there has to be some kind of makeup payment to account for the deficit that has been created. This deficit reduction contribution will do that.

The problem is some specific industries are seeking relief from that so they don't have to pay in as much money. They are asking in effect for a waiver of the requirement that they pay this money into the pension fund so their employees will be able to collect when the time comes. Their argument is they don't have enough money. That should be our first clue that there is a problem. If they don't have enough money to pay their employees what they are due, we probably should not dig the hole any deeper by allowing them to continue to make promises and not pay into the fund what is necessary for them eventually to pay to their employees.

Some of the Senators have decided what we are going to do is grant a 2-year partial waiver just to certain airlines and two steel companies. One of the airlines, it is said, cannot afford to pay the premium that would be required, or the bond payment that would be required, if they sought a general waiver from the Treasury Department, which you can do. If you are having trouble making your payments, you can go to the Secretary of the Treasury and meet certain requirements and say I would like to have a general waiver. That could be granted. This company apparently doesn't even have the money to pay for the bond that would be required in order to seek that relief. But they are asking us to believe if we will just bail them out for 2 years, everything will be fine; they will have enough money, and the Government won't have to make up any of the difference.

The concern I and others have expressed is this partial waiver is going to result in the Government letting these companies off the hook, paying less money into the fund than is necessary, and a couple years from now, if they don't make it financially, it is the taxpayers who will be on the hook for that difference because we have not had them pay the full amount. In fact, they are only going to have to pay 20 percent of their obligation next year and only 40 percent the year after that. So it is a 2-year waiver of almost the entire amount.

I would say this ought to be of concern to us. I don't think it is a good idea to grant this waiver, and the three key people in the Bush administration who sit on the board that oversees this have said they would recommend a veto to the President if this deficit reduction contribution amendment causes any greater strain on the board to make payments.

What I have done is offer one amendment, and this is the second amendment, both of which will reduce that strain just a little bit, hopefully enough so the Bush administration will not veto this legislation, should it end up passing.

I urge colleagues, those who agree with me that this whole deficit reduction contribution waiver is not a good idea and those who think it is a good idea but might be a little bit concerned the administration might veto the bill over that provision, to support my amendments because they are designed to close the loophole a little bit so that at least the companies that are taking advantage of this 2-year waiver cannot take unfair or undue advantage of it.

Let me describe what the amendment specifically does. The amendment, which I have just offered, provides that a company which seeks to take advantage of this special waiver, where you would only have to pay 20 percent next year and 40 percent the year later, then would not, at the end of the 2-year period, also then be able to go to the Secretary of the Treasury and say: Now we want a general waiver. The law currently provides for a general waiver, and if you want a general waiver, you can apply for it.

This special waiver that is being granted is designed to be a substitute for the general waiver, not where you would add one on top of the other. I think it is a perfectly reasonable request.

I would ask, if anybody is against this, why? Is it because, after the 2-year special waiver, they then want to seek a general waiver? The question then would be, if that is the case, why don't you seek a general waiver right now?

I think it is a perfectly legitimate amendment. It obviously doesn't upset the whole process. The deficit reduction contribution amendment that has been offered will still be permitted to go forward, but what I would call a little bit of a loophole would be closed so the company that gets this 2-year holiday date from making their full DRC payments would not then afterward also be able to apply for a general waiver under the provisions of law that already permits that to be done. It is very simple.

By the way, just a word about the general waiver. You can apply to the Treasury Department for any or all of the normal required contributions to the pension fund, and the only part of the contribution Treasury cannot waive is an amortization payment of a previous funding waiver, which makes sense. To receive a waiver, a company must show there is substantial business hardship, which these companies all allege; that it is temporary, and they make that point: We are going to be healthy in 2 years, they say. Good. And it is reasonable to expect the plan cannot continue unless the waiver is granted. In other words, if they can't continue to pay into the pension fund unless a waiver is granted, as I say, a bond can be required of the Secretary to show their good faith.

I think it is a perfectly sound amendment. Those people who don't like the DRC waiver, like myself, and those who do should support the amendment.

For those who do like the waiver, it doesn't hurt the companies they are seeking to help, and it might actually prevent the bill from being vetoed by the President.

Let me tell you what I have in this regard. I understand my colleague from Illinois, Senator Fitzgerald, has already submitted into the Record this letter, so I will not do it, but I would like to make reference to the letter, dated January 22, 2004. It is on the letterhead of the Pension Benefit Guaranty Corporation, which is the Federal entity that guarantees Federal pensions. It is to Leader Bill Frist, and it is signed by Elaine Chao, the Chairman of the Board of Directors, John Snow, director, and Don Evans, director. You might also recall that Elaine Chao is Secretary of the Department of Labor; John Snow is Secretary of the Treasury; and Don Evans, of course, is Secretary of Commerce. These three important members of the Cabinet are the three board members of the PBGC or the Pension Benefit Guaranty Corporation.

What they said in their letter to Senator Frist, among other things, is this:

The PBGC reported a record single-employer program deficit

of $11.2 billion through the end of 2003--

One of my colleagues earlier said there was a $20 billion surplus in their fund. This letter from the directors notes an $11.2 billion deficit. They point out:

three times larger than any previously recorded deficit. Last

year, the General Accounting Office added the PBGC's single-

employer pension program to its ``high risk'' federal program

list. In addition, the PBGC remains exposed to $85 billion in

pension underfunding in single-employee plans sponsored by

financially weak employers. The PBGC also reported the first

multi-employer program deficit in two decades.

What this means is that the PBGC, which is the guarantor of employers' pensions, is in very bad financial condition--a $11.2 billion deficit. It is in the high-risk category of Federal programs. That means that if we add to the risk by reducing the amount that employers pay into the fund, then we are increasing the risk that taxpayers will have to bail these companies out because the fund will not have enough money to make the payments.

It is a little surprising to me that people who ordinarily like to present themselves as on the side of employees would be taking the sides of the employers here saying: Let's let them off the hook so they don't have to pay as much into this fund for the pensions of their employees.

The fund exists for the employees, and I would like to be sure there is enough money in those funds to ensure the employees are paid. But when we relieve the companies of paying their full obligation, we are creating a risk that the employees are not going to be paid.

The answer of the bill sponsors is: We will have the Government pick up that risk. After all, that is the job of the Pension Benefit Guaranty Corporation. The directors of the Corporation are saying: We are in financial trouble. We don't have enough money to do this. So guess who is going to have to make up the difference. You guessed it: our constituents, the taxpayers.

Haven't we heard a great deal recently about the fact the Federal Government is spending too much taxpayer money and we have to start reining in how much we spend? Right now we are committing to spend a whole lot more because the board that backs up the pension funds is in a deficit situation. The companies that are seeking relief say they don't have enough money to cover the obligations to which they have committed. That leaves only one party to make up the difference: the taxpayer. And that means either they pay for it in taxes that we collect or we have to go out and borrow it. Nobody likes the size of the deficit.

Mr. President, I say to my colleagues, those of you who are supporting this bill and this amendment--not my amendment but the underlying amendment--are guaranteeing that we are going to have a bigger deficit, more taxpayer funding of an obligation that corporations took on because the corporations don't have the money to do it themselves.

This amendment is asking that we relieve them of the full 100 percent of what they are supposed to pay in; that for 1 year, they only pay in 20 percent, and for the other year they only pay 40 percent of this makeup payment, this deficit reduction payment that is required to make up the full amount. We are doing it because they are pleading that they don't have enough money.

My observation is, when you are in a hole, the first thing you do to get out of it is to stop digging.

Today's edition of the Washington Post makes the same point. I understand Senator Fitzgerald also put this in the Record. But let me quote a couple lines from this editorial called ``Pension Perniciousness'' from the Washington Post today. They point out:

Not for the first time, Congress has muscled up to an

important problem, taken a good long look at it and resolved

to make it worse. The problem is the vast hole in the

nation's corporate pension schemes, and the perverse rules

that helped create them.

Then it talks about the bill that has been introduced by our colleagues ``to reward the hole diggers with what amounts to a $16 billion loan from taxpayers.'' That is why I say we are already in a hole. This old rancher friend of mine from Apache County said, if you are in a hole, the first thing to do to get out is to stop digging. We are digging the hole even deeper because instead of the companies trying to fill this hole, we are going to have a deeper hole with greater taxpayer exposure as a result.

They point out in the Washington Post editorial:

To pay for these future benefits--

That are promised to employees--

employers are supposed to put sufficient money into a pension

fund; the problem is they often don't. The gap between money

put aside and money needed in the underfunded pension plans

comes to an enormous $350 billion. When companies go bust,

the Pension Benefit Guaranty Corp., the Government-backed

entity that insures pensions, gets saddled with plans that

are in deficit. As a result, the PBGC itself has a deficit of

$11.2 billion, which taxpayers may have to plug eventually.

And then, down toward the end of the editorial, they say this:

There is, as Congress is demonstrating, no political

constituency for fixing this problem. Weak companies with

underfunded pensions lobby lawmakers for permission to

continue their imprudence; labor leaders from those same

firms lobby lawmakers in the same direction; nobody is on the

other side. In the deal currently being cooked up, a group of

hard-pressed companies led by the steel industry and the

airlines will be given a special break for two years; if any

of these firms goes bust in the meantime, the public will end

up shouldering the deficits, which is why the congressional

measure amounts to a taxpayer loan.

In the letter to leader Frist from the Pension Benefit Guaranty Corporation directors, the three Secretaries I mentioned earlier, are these two points. I quote now:

Pension underfunding threatens workers and retirees, who

depend on the defined benefit pension system to be

predictable and reliable. If the Congress urges firms to

underfund their pensions by substantially weakening funding

requirements, retirees could face pension cuts when a firm

terminates its defined benefit pension plan.

We believe that H.R. 3108 would best protect pensions and

pensioners if passed free of any provisions to alter the

Deficit Reduction Contribution rules--DRC rules.

Specifically, it would be irresponsible to amend the interest

rate bill with any additional provisions that would

significantly further exacerbate systemic pension plan

underfunding. If H.R. 3108 were amended to do so, we as the

PBGC board would recommend that the President veto the

legislation.

By the way, they note that the Office of Management and Budget has advised that this letter is consistent with the administration's program.

What you have here is a pretty firm warning from the key Secretaries in the Bush administration, the people who sit as directors on the board here of the Pension Benefit Guaranty Corporation, that if the underlying amendment that is proposed here passes, and it significantly ``further exacerbates the systemic pension plan underfunding''--which I think it is hard to argue would not occur--they would recommend a veto of this legislation.

The two amendments I have offered--the one I offered Friday which would hold the PBGC harmless for obligations incurred after this, that would be incurred during the time of and for 2 years after this DRC waiver plan, and the amendment I offered today which simply provides that a company that takes advantage of this DRC waiver not be able to apply also for a general waiver--these two amendments should make the DRC amendment slightly less

onerous. It may be enough for the administration, then, to decide to allow the amendment to go forward and not recommend a veto.

But I am afraid if my two amendments--both of which I think one could argue are not harmful to the companies but they might be just enough for the administration to conclude that it is willing to allow these to go to the President without a recommended veto--don't pass, one of two things will happen: Either the President will veto the legislation or, if he doesn't, the taxpayers are going to be required to make up a fairly large amount of money when these companies decide they can't make it in the long run.

I hope my colleagues will give consideration to this. It is my understanding that perhaps, after the lunches tomorrow, somewhere in the 2:45 timeframe, we may have a vote on these two amendments. We will have about a half-hour to discuss the two amendments, so anybody who has missed the discussion, the robust debate we are engaged in here, will have an opportunity to at least hear both sides of the argument and then we will vote on these at 2:45 tomorrow.

Again, I reiterate, I can argue that the DRC waiver that is being proposed here by the Senator from Iowa, the Senator from Montana, the Senator from New Hampshire, and the Senator from Massachusetts greatly jeopardizes the financial stability of the PBGC; the granting of a 2- year waiver of most of the payment obligations into the fund is a bad idea. I think a lot of our colleagues agree to that.

What I am saying is, even if you don't agree with that, if you support the two steel companies or the two airlines--I think there are two or three airlines that want to take advantage of this--if those are your constituents and you need to support them here, you need to try to give them some relief so they don't have to pay as much money in over the next 2 years--I understand why you would have to do that. But I would argue, A, don't saddle everybody else with that and, B, if you really want it to go into law, it would be important to make sure the President doesn't veto this legislation. Three Secretaries have already given you a pretty good idea this is what they are going to recommend if this DRC waiver is actually adopted by the Senate tomorrow.

What I am suggesting is that you can ameliorate the effect of that just a little bit by adopting these two amendments. One would ensure that, as I said about the amendment today, there are not going to be any additional waivers granted. The waiver you get for 2 years is it; You don't add a general waiver behind that. I think that is consistent with the intent of the authors here. I certainly hope they will be willing to support that. And, second, the Pension Benefit Guaranty Board would be held harmless for obligations that were incurred once a company began to take advantage of the special waiver provisions. That is only fair.

I hope my colleagues will support both of these amendments. Take a look at the Washington Post editorial of today. Certainly take a look at the letter from Secretaries Chao, Evans, and Snow, and consider whether a very slight amendment to the underlying amendment would not be appropriate in order to preserve the intention of what they are trying to achieve.

I appreciate the earlier comments from my colleague from Illinois, Senator Fitzgerald. I think he hit the nail right on the head. I note one of the airlines seeking to take advantage of this has reported a huge amount of cash on hand, over a couple of billion dollars of cash on hand. Yet it is saying it doesn't have enough money to make these modest payments into this fund. It seems to me either that corporation could apply for a general waiver, which it could get today, or it can afford to make the payments into the fund. It should not be up to the taxpayers of this country to be bailing out a company in that kind of position.

I urge my colleagues to think very carefully. We have just been home talking to our constituents, talking about their concerns about deficits, about the role the taxpayers are going to have to pay funding new spending of the Congress. Yet the very first thing we do this year out of the box is take on an additional liability that will, in fact, add to the debt if we have to make up the payments to the Pension Benefit Guaranty Corporation because companies that took advantage of this special waiver decided they could no longer remain in existence or went bankrupt.

I hope my colleagues will support these two amendments. I will discuss them again tomorrow right after the lunches.

At this time I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of S. Res. 291, which was submitted earlier today.

Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to the matter be printed in the Record.

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

Mr. President, I have a second-degree amendment at the desk.

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

Mr. President, let me describe briefly what the background of this amendment is and what the amendment will do--the effect of the amendment is actually quite simple--and then I will discuss the reasons for it.

As you are aware, the background of this legislation is the House- passed bill, H.R. 3108. An amendment to that bill has been offered by the chairman of the Finance Committee, the ranking member, and others that would make some corrections to the House bill, H.R. 3108 and, among other things, provide for a partial waiver of some payments that otherwise would be made into the fund that helps to guarantee the pension benefits of employees.

We are aware of the fact that the Federal Government has undertaken a responsibility for ensuring that pensions which are funded by employers will actually be there when the employees need to collect on those pensions. But in some cases, corporations run out of money, go bankrupt, go out of business, or otherwise can't meet these obligations. In that situation, the Federal Government has to step in and has agreed to do so under certain terms through the Pension Benefit Guaranty Corporation. As a result, we have an obligation to ensure that the funding for these contingent liabilities is secure. Part of the way we do that is to ensure that the employers that make the obligations to their employees pay in enough money to be able to pay for the benefits they have promised.

The problem is that some of these corporations are not in very good shape. As a result, there is a fear that they are not going to be able to make the contributions they need to make in order to pay the benefits to their employees when the time comes.

As a result of this concern, what we have done is to say these corporations need to make some catchup payments to ensure the money will be there. This is necessary in part because of a technical problem in the way that the funding was fixed based upon a U.S. Government security that is no longer issued, as a result, we are having to substitute a different basis for the payment which will be a blended corporate bond rate, a technicality, but that is going to be the basis for a couple of years of contributions for corporations until another method is devised.

In the meantime, corporations whose pensions are underfunded are being required to make up some of these contributions, and it is called the deficit

reduction contribution, or the DRC, to reduce the deficit that has been created and that we need to make up if the money is going to be there for the employees when it comes time to collect their pensions.

This deficit reduction contribution, according to the amendment offered by Senators Grassley, Baucus, Gregg, and Kennedy, as I understand it, would apply to those entities that are 90-percent funded or less. In other words, where the plan does not fund its benefits at 100 percent, can't pay 100 percent, it can only pay 90 percent or perhaps even less. So for those entities that are in this kind of financial shape, they are going to have to make a deficit reduction contribution, a special catchup contribution.

Under the amendment, they are going to actually be given a waiver of part of this contribution. The idea is that they can't afford to make the full contribution; therefore, we are only going to make them pay part of it. In fact, we are going to waive 80 percent under the amendment--80 percent of this obligation--in the first year and 60 percent of the obligation in the second year. That means they are only making 20 percent in the first year and 40 percent in the second year of the obligation they have. These are corporations that are in difficult financial condition right now and cannot pay the full 100 cents on the dollar that their employees would be entitled to when those employees attempt to collect their pensions.

We clearly have a difficult situation here. The purpose of the amendment, obviously, is to have them pay something in and try to stay economically viable in the meantime. The concern, of course, of the Pension Benefit Guaranty Corporation and others is that all we are doing is digging the hole deeper or, in effect, throwing bad money after good is another way of putting it.

What we are doing is giving companies that might well fail a chance to incur further obligations, not pay for those obligations, and then put the taxpayers at risk for the additional obligations incurred during this 2-year period of time. That is the risk. That is the concern we have.

Clearly, if that transpired, there would be several losers. In the first place, this partial waiver would be harmful to the workers themselves because they jeopardize the expected pension benefits, especially for those workers who are supposed to receive larger pensions than the Pension Benefit Guaranty Corporation will actually guarantee.

One category of people is airline pilots, for example. So companies should be required, in my view, to fund their pension promises to their employees. They should not be excused from these promises because, in effect, what they are doing is making bargains that are easy to make with unions and with others, promising to make payments, and then saying: We are sorry, we can't make them, but we would like to have the Federal Government bail us out.

The Pension Benefit Guaranty Corporation right now estimates $400 billion in unfunded liabilities. That is a lot of money to be backing up. Last year their deficit was $11.2 billion.

The amount of the waiver we are talking about is about $16 billion in benefits. So according to the relief that is being granted by this partial deficit reduction contribution waiver, the PBGC, or the Pension Benefit Guaranty Corporation, would lose about $16 billion worth of funding relief. That is money that obviously may be required at some future date but will not be there because we are not asking these companies to pay in that amount of money.

Another loser: We think it is unfair to the healthy plans, to those corporations and employees who have actually been part of businesses that have paid attention to their economics, have ensured they are putting enough money into their pensions to fund the benefits that their employees are due.

If the underfunded plan fails to pay the amount they are supposed to and the insurance premiums then go up, the healthy plans are the ones that end up paying that difference. I believe it is unfair to excuse these companies that have made the promises and then not require them to go ahead and pay that money and fulfill their promises.

It is also unfair to competitors. Stop and think about an airline, for example. I feel this may well be the situation because the waiver is granted to certain airline companies that need it, allegedly, and to a couple of steel companies. It is a very selected kind of waiver. The competitors of the airlines--the airlines that have been trying to watch their pennies and not overcommit themselves in their pensions-- will be at a disadvantage. They have made their commitments to employees. They have paid the money into their pension plans to make sure they can pay those commitments to employees, and now their competitors, that maybe have overpromised or are now going to be underfunding, will be able to take that difference and apply it to other aspects of their business to compete with the airlines that have done a good job.

There is nothing that says they cannot take the difference and undercut the other airlines in terms of their fare structure. That could easily happen, and there is nothing we have here that precludes that from happening. That is a very big concern I have.

We should not be playing favorites, one company against another, in a particular business, and the airline business is certainly one in which this might apply. In effect, it is a backdoor bailout for some companies, those who have not been able to fund the benefits they have promised to their employees. It seems to me, therefore, another potential loser are the competitors of the airlines we would actually be benefiting here. Finally, it is a big loss to the American taxpayer if the taxpayer ends up on the hook for these deficits.

As I said, the PBGC reported a deficit of $11.2 billion in its single-employer insurance plan for fiscal year 2003, which is a record deficit. Even though it estimates it will have assets sufficient to meet obligations for the foreseeable future, the PBGC estimates the sum total of all the single-employer pension plan underfunding amounts to about $400 billion, and it is Congress, meaning Congress on behalf of all U.S. taxpayers, who will be held responsible to bail out the Pension Guaranty Board rather than to allow the entire insurance system to collapse.

In my view, these waivers are the wrong thing to do for the employees, for the competitors, for the system, and certainly for the American taxpayer. Companies that habitually underfund plans should not be bailed out at the expense of others. I think the primary reason we are even thinking about doing this is because at least one of the companies that would be eligible simply cannot post the security or the bond that is required to obtain a general funding waiver from the Treasury Department.

Let me make a point that in the law there is already an ability of these companies to seek a waiver. It is the general waiver authority that can be sought from the Treasury Department. To do that, you have to prove some things. You have to post a bond and you have to prove some things to the Department of the Treasury. Why can't these companies go through that process? Why do they need special relief from the Congress to bail them out? Is it too much to ask that they just follow the current law and apply for the regular waiver as they have the right to do today? It seems to me that would be the appropriate way to handle this.

We have the amendment before us, and the reason I have offered this second-degree amendment is at least in one small way it limits the liability of the taxpayers should things go wrong. That is the purpose for this amendment.

Now what is it? It is called a hold-harmless provision. What it says is the PBGC, the guaranty board, would be held harmless for any benefit accruals that occurred during the waiver period--the waiver period is 2 years--or that occur 2 years after that. If a plan fails during this DRC waiver period, or within 2 years after the waiver period, then the PBGC would only have to fund the benefits that accrued up to the time the waiver was claimed. It would not have to finance any benefits that accrued after the waiver was claimed. If you stop to think about it, this makes very good sense. It is obviously important to protect the going businesses, the healthy plans, and the taxpayers with this kind of hold harmless.

One of the big dangers with this waiver of these companies that are not funding their pensions adequately is

these plans claiming the waiver are going to fail, anyway. The whole point of doing this for them is they are very close to failing, and the argument made on their behalf is they are about to fail. You do not want them to fail, do you? You do not want the Government to have to make good on all of these pension guarantees. Let's keep going for a little while longer, and if we waive the pension benefit they have to pay in, the amount of the contribution they have to pay in, then maybe they can stay in business a little longer.

Well, maybe they can; maybe they cannot. That is a big gamble we are taking. What we are saying in the legislation is, all right, we will try to help keep you afloat for another couple of years, but if you fail during that period of time or within 2 years of that period of time, we should not be on the hook. We are doing our part to bail you out, but we are not going to pay all of your past benefits, all of the benefits that have accrued to date, plus the benefits you accrue from now forward by virtue of the fact that we have put in the money, or conversely we have granted a waiver to you so you can stay in business during this period of time.

We would in effect be saying we will help you stay afloat to incur new benefits that then we are going to pay for, and it would be unfair for the taxpayers to be on the hook for that. So this hold-harmless provision would mitigate this potential. It would limit the drains on the healthy plans. It would limit the amount of the money the taxpayers would be on the hook for, and I think it is eminently fair. It seems to me to be impossible for these companies to argue that not only should they have this special benefit nobody else has, that gives them an advantage over their competitors, that keeps them in business a little while longer, not only should they have that and put at risk for the American taxpayers that they are going to have to get bailed out, but also during this period of time that they are trying to get back on their feet charge the taxpayers with the new benefits that are accrued during that period of time. That is what the hold harmless is designed to try to protect against. We will take care of the benefits you have incurred up to now, but nothing incurred from now forward during this 4-year window of time. That seems to be eminently reasonable to me, and what I hope is that even though this will not be voted on until probably next Tuesday, my colleagues could take a look at this, consider whether it is worth supporting, and perhaps we could--I will not even call a rollcall vote if Members are willing to support the amendment and we can prevail on it, but I do insist we get this passed.

There is another amendment I will file, but I do not intend to send to the desk at this time, that I think would further strengthen the situation so it is not quite as big a potential drain on the taxpayers. It has to do with the fact that I think it totally reasonable to ask these companies if they are going to ask for this waiver today that that be it, that they not be asking for any more waivers in the future.

The other idea I have that I will perhaps offer later is a plan that accepts this DRC funding waiver we are offering in the original amendment would then not be able to apply for a general funding waiver for 2 years after the waiver period ends. Otherwise, all we are doing is essentially postponing the inevitable. If they intend to file for a general waiver after 2 years, they can clearly file for a general waiver today. If they think they can prove the case that they need to get that general waiver from the Department of the Treasury in 2 years, then they could do it today.

In effect, under the manager's amendment, they have a 2-year holiday for making their full DRC payments, which are designed to bring their plans into full funding. I believe it would be inappropriate to allow a plan that claims this 2-year DRC waiver at the end of that period to then seek the general waiver for 2 more years, and would note the fact that the companies that apply to the Treasury for this have to show there is a substantial business hardship--they ought to be able to show that--that it is temporary. If it is not temporary, then I do not know why we are throwing taxpayer money at the problem in the first place.

It is reasonable to expect the plan cannot continue unless the waiver is granted. That is in effect what at least one of these companies has been telling Members of Congress that they have to have this relief or else they are not going to be able to stay in business. At that point then the Secretary of the Treasury can demand of them some security, some kind of bond, and grant this waiver.

I do not know why that general authority in the statute today is not adequate to take care of this problem and why we have to grant this specific waiver. It seems to me if we grant this specific waiver, then it is not unfair to ask them to commit to us that they are not going to seek additional waivers after that.

But, again, that is something that I think makes sense. I may offer that amendment later. But the amendment that I do offer, which I think is eminently reasonable and which I cannot imagine my colleagues would not support, is simply an amendment that would hold the taxpayers harmless for events that occurred during the period of time this specific waiver is in effect, and for a period of 2 years after that.

I conclude by saying I think we are on a bit of a slippery slope with this entire approach. It was entirely appropriate for the House of Representatives to focus on the need for some kind of temporary substitute formula for contributions because the old formula clearly couldn't work anymore. The Government was no longer issuing the securities on which the formula was based.

There were different choices we could have made. I thought the Treasury Department had the best solution, but that solution would have required the companies to pay in more money than they were willing to pay in. That probably is the most fiscally sound. But what was decided on as a compromise was this temporary corporate bond rate. I do not think that is enough to assure the corporation pension benefits will be secure, but that is what is before us.

By itself, I would be willing to support that for a couple of years. But what I am not willing to support is this waiver of the payment for just two companies in one business, steel, and certain airlines that say they need it and for some reason don't want to go the general waiver route. I think this is entirely too generous.

But if we are going to do that, then I say at least let's ask for a ``hold harmless'' during the period of the waiver and for a period of 2 years afterward so at least we, the taxpayers, are not liable for new benefits accrued during this period of time that we are trying to help these companies out. That, I think, is the least we could expect.

I hope we will have a chance to visit a little bit more on this with colleagues when they are here on Tuesday or perhaps on Monday morning, and we can have a vote at that time. Therefore, for the time being, that is the extent of my discussion on this particular amendment.

Mr. President, seeing no other Member here, I suggest the absence of a quorum.

Mr. President, today I discuss the energy conference report, and begin by commending the Chairman of the Senate Energy and Natural Resources Committee for his tireless work to pull together such a comprehensive measure. The energy conference report attempts to improve our Nation's energy supply and reliability, and for that it should be praised. Unfortunately, it also contains numerous provisions that will distort competitive markets for energy through subsidies, tax breaks, special projects, mandates and, last but not least, outlandish amounts of Federal spending.

Mr. President, I have been particularly interested in the provisions in the electricity title that are designed to restructure our electricity markets. Some of my colleagues have been tempted to move immediately to completely unregulated electricity markets; others favored imposing a more stringent regulatory regime as a result of problems in California.

Representing Arizona, I was well aware of the problems stemming from the California energy crisis, but cannot agree with those who say the solution is to return to a command-and-control regulatory structure. I continue to believe that the most efficient way to allocate resources is through competitive markets. The chairman has done an admirable job of trying to encourage competitive markets while making sure that consumers continue to pay the lowest possible price for energy resources.

There are several provisions in this bill that hit the right balance for our electricity policy. The legislation repeals the Public Utility Holding Company Act of 1935. As we all know, our energy markets have evolved significantly since the era of the Great Depression. State regulators are smarter, more well-equipped, and able to protect consumers from the ills that gave rise to the Public Utility Holding Company Act of 1935 nearly 70 years ago.

I am also pleased that the conference report has found the right balance with respect to delineating the jurisdictional reach of the Federal Energy Regulatory Commission, FERC. As a Senator from the West, I've been frustrated by FERC's effort to impose a mandatory ``Government knows best'' one-size-fits all standard electric market design, or SMD, on all regions of the Nation. This proposal has drawn severe criticism from the West and other regions of the country, as being unworkable and potentially disruptive to the functioning of our vital electricity infrastructure, all to the detriment of consumers. This criticism comes from a broad spectrum including State regulators, industry representatives and consumer groups, all of whom express concerns about the inflexibility of the SMD requirements, the untested nature of many of them in regions without a history of RTO operations, and the potential cost burdens on electricity consumers.

Normally, one would have expected an agency like FERC to respond to such comments at a minimum by delaying its SMD proposal, or proposing a more measured approach, both in scope and mandatory application. Instead, FERC has indicated it will proceed with the fundamentals of SMD. As a result, Congress has been forced to take the unprecedented step of mandating a pause in SMD, through 2006, to enable those involved in this critical industry to assess how to proceed. It is unfortunate that Congress must, in effect, admonish a Federal agency in this way; but we have an obligation to see that an agency Congress created proceeds in the deliberate and thoughtful manner that the issue demands.

I hope that FERC follows both the spirit and the letter of this law. The Senate will be watching to make sure that FERC does not move forward on SMD by changing its name to WMP, or using a different legal basis, such as just and reasonable rates, rather than discrimination. Change your agenda, FERC. Don't waste our time by forcing us to save the electrical industry from your zeal to regulate, whether with a standards of conduct rulemaking, a supply margin assessment test, or a yet to be designed mistake.

For example, the standards of conduct rule, as proposed during the SMD development period, represents a direct attack on the internal organization of vertically integrated utilities. Before the proposed rule is finalized, it must be amended to eliminate elements that parallel the SMD proposal. The assertion of jurisdiction over retail sales of vertically integrated utilities is clearly within the scope of

Mr. President, the majority leader, Senator Frist, joins me in this

explanation of why the conference agreement on the Medicare Prescription Drug and Modernization Act of 2003 does not allow increased importation of drugs from outside the United States. Our explanation provides important background information on this largely misunderstood issue that is vital to the health and safety of Americans.

Under current law, the Federal Food, Drug, and Cosmetic Act establishes a system under which prescription drugs must be approved by the FDA and properly labeled, packaged, tested, stored, and distributed pursuant to FDA regulatory requirements. This is the finest and most effective system in the world for ensuring drug safety, effectiveness, and quality.

To protect American consumers by ensuring the integrity of this system, the law generally prohibits the importation of prescription drugs. Section 801(a) of the Act prohibits importation of drugs that are unapproved, adulterated, or misbranded. Virtually all prescription drugs manufactured overseas for distribution in foreign countries fail one or more of these standards and, therefore, cannot legally be imported into the United States. It is important to note in this regard that just because a drug is manufactured in a facility that is subject to FDA inspection does not mean that the drug meets FDA approval or other requirements. Different countries have different manufacturing, testing, labeling, packaging, and other requirements from those imposed by the FDA, and in fact the composition of the drug product itself may vary from country to country. Manufacturers may use a single facility to manufacture a drug for several different countries, but they must vary their processes to ensure that each drug lot will satisfy the requirements of the intended destination country.

Some drugs available overseas are manufactured in the United States and then exported. Section 801(d) of the Act prohibits the importation--sometimes called reimportation--of these drugs. Congress added section 801(d) through the Prescription Drug Marketing Act in 1988 to close a loophole under which counterfeit and substandard drugs were being brought into this country. There is an exception to this prohibition for the original manufacturer, who is part of the U.S. system and subject at all times to FDA authority and oversight. The manufacturer's own importation of drugs that have never been outside its control is comparable to shipments between its manufacturing plants and warehouses within the United States, and is completely different from the importation of drugs that have been placed into the wholesale and retail distribution systems of foreign countries, where they are no longer subject to FDA jurisdiction.

In 2000, Congress authorized an additional exception to section 801(d) in the Medicine Equity and Drug Safety Act. This law added a new section 804 under which pharmacists and wholesalers would be permitted to import drugs from a list of designated countries, including Canada and the countries of the European Union. In order to protect American consumers, Congress provided that section 804 would not become effective until the Secretary of Health and Human Services demonstrates to Congress that its implementation will ``pose no additional risk to the public's health and safety'' and will ``result in a significant reduction in the cost of covered products to the American consumer.'' Secretary Shalala and Secretary Thompson both concluded that they could not make this demonstration.

FDA has a written policy under which it permits an individual to import a small quantity of a prescription drug for personal use, but only if the drug is not available in the United States. This policy is intended to allow seriously ill patients to obtain unapproved drugs to treat potentially life-threatening and similar conditions for which adequate treatment is unavailable in the United States. It does not apply to importation of drugs that are approved in the United States or to any commercial activities, such as Internet or print advertising or importation by persons other than individual patients. Moreover, even importation within the four corners of this policy remains technically illegal; the policy represents only a reasonable and limited exercise of FDA's enforcement discretion in the interest of individual patient treatment.

A final, and important, legal requirement is that a prescription drug can only be dispensed to the patient based on a valid prescription. Otherwise, the drug is misbranded and cannot be imported, or shipped domestically. There is extensive evidence documenting the fact that many foreign interest sites ship drugs without requiring any prescription at all, or with an invalid prescription based on a perfunctory questionnaire and without any genuine medical examination-- co-signing of prescriptions by foreign physicians who have no relationship with the patient does not meet the legal requirements and presents serious risks, as both U.S. and foreign authorities have made clear. These activities put patients at risk by taking the licensed healthcare professional out of the process for deciding whether to initiate or continue treatment. Prescription drugs are classified as such because they cannot safely be used by laypersons without proper professional oversight. Drug importation commonly violates this basic safeguard.

Despite the existing prohibitions on drug importation, the volume of importation activity is growing as foreign pharmacies and domestic storefront facilitators advertise for business, and state and local governments and others explore ways to direct American consumers to foreign sources for their needed medicines. All of these activities are illegal, and they pose threats to our health and safety.

According to the FDA, imported drugs are too often unapproved, contaminated, counterfeit, and contain different ingredients from those required under agency regulations. These are not mere theoretical concerns. A recent series of spot inspections conducted jointly by the FDA and the U.S. Bureau of Customs and Border Protection found that 88 percent of more than 1,000 examined drug packages contained unapproved drugs and that they could pose ``clear safety problems.'' These included an unapproved blood thinner that could cause life-threatening bleeding; unapproved epilepsy, thyroid, and diabetes drugs that could cause life-threatening side effects; drugs that have been withdrawn from the U.S. market because of safety concerns; animal drugs not approved for human use; drugs with dangerous interactions; drugs improperly packaged in sandwich bags and tissue paper; and controlled substances. In another case involving a Web site purporting to ship FDA-approved drugs from Canada, a patient received an unapproved seizure medicine manufactured in India. In another case involving a U.S. storefront operation, the Web site shipped unrefrigerated insulin, which can degrade without changing its appearance and thereby put insulin-dependent diabetic patients at risk. Other examples abound, including deaths from overdoses of drugs obtained from foreign Internet sites, as documented in a recent press report of a year-long investigation into illegal drug importation, counterfeiting, and distribution.

Another recent study also concludes that drug importation increases the risk of terrorism against the United States. Huge volumes of packages, only a miniscule fraction of which can be inspected, present an inviting target for the deliberate introduction of contaminants and poisons. Last year, in the Public Health Security and Bioterrorism Preparedness and Response Act, Congress gave the FDA substantial new powers to protect the safety of the food supply against terrorist threats. FDA has been implementing this law through new rules requiring advance notice of food importations and similar measures. Imported drugs present comparable threats, yet there is neither an analogous set of prior-notice requirements nor adequate inspection resources to enforce existing legal standards.

Proponents of loosening the existing standards for drug importation have argued that we can rely on the Canadian drug regulatory system to ensure the safety of drugs exported from that country to the United States. This is simply wrong. Section 37 of the Canadian Food and Drug Act provides that it does not apply to exports. In a recent letter, the Canadian government made clear that it ``has never stated that it would be responsible for the safety and quality of prescription drugs exported

from Canada into the United States.'' Health Canada also has described its concerns with cross-border Internet pharmacy sales as relating to the health of Canadians themselves as it should be.

While we have no doubt that the Canadian system works for Canadians, FDA Commissioner McClellan has made clear that purchases of drugs by Americans from Canada present entirely different concerns:

Buying between the U.S. and Canadian systems is not the

same thing as buying within each system. The U.S. and Canada

do not have integrated systems for taking timely action to

protect consumers in the event of a safety problem involving

an illegally imported drug in the U.S. Protections to assure

the appropriateness of a prescription, such as requirements

for physician contact and monitoring, may differ. And each

country has only limited resources to devote to their

existing systems for assuring drug safety for their own

populations, let alone to assuring the safety of an expanded

scope and volume of drug imports. For example, Ontario,

Canada's largest province . . . , has exactly one

investigator tasked with policing all pharmacy operations

there. . .

In addition, as also documented by the FDA many drugs purporting to come from Canada actually were manufactured in Third World countries and either transshipped through Canada or shipped directly from those countries to the United States, in either case without any oversight from Canadian health officials. Such transshipment is becoming increasingly common, with Canadian sites now obtaining their products from countries such as Bulgaria, Argentina, and Pakistan for sale into the United States.

Importation supporters also have suggested that anticounterfeiting technologies can be used to assure the safety of imported drugs. This, too, is a false promise. Optical anticounterfeiting measures are used in our paper currency, yet they have proven inadequate. Even the new $20 bill, which incorporates multiple anticounterfeiting measures, is being counterfeited less than a month after its introduction. Counterfeit drugs, of course, present far greater concerns. The FDA is exploring anticounterfeiting technologies for drugs but, as Commissioner McClellan has made clear, ``there isn't any magic bullet available today,'' and these technologies are ``no substitute for a comprehensive, multi-part system for assuring the safety of the actual drug product.'' Moreover, even the ineffective anticounterfeiting technologies that are available would be very expensive, raising drug costs by an estimated $2 billion in the first year alone.

Finally, the question of legal liability for adulterated or counterfeit drugs remains unresolved. American companies should not be held legally responsible for drugs they did not manufacture, or that were adulterated after leaving their control or that they manufactured to comply with foreign country requirements rather than for sale in the United States. The U.S. Government should not be held legally responsible for drugs that it did not actually test and approve, or that were adulterated after the approval process was complete and the drugs were no longer subject to FDA oversight.

In short, drug importation presents a wide range of serious safety concerns. We cannot meet these challenges merely by writing prohibitions into the law. The law already requires that drugs be FDA- approved, yet it is abundantly clear that unapproved and other violative products are streaming across our borders every day. Changes in the law to relax the current prohibitions on importation will only increase this cross-border traffic and, in the absence of new legal protections and new resources to effectively to enforce them, increase the threat to the American public.

The United States has every right under our international agreements to enforce legitimate regulatory requirements relating to the health and safety of our citizens. There is no question that the drug importation provisions of the Federal Food, Drug, and Cosmetic Act meet this standard.

Canada and other foreign countries impose price controls on pharmaceuticals as part of their high-tax social welfare systems. No reasonable concept of free trade requires that our country open its borders to drugs whose prices are kept artificially low under these systems. In fact, a leading scholar and supporter of free trade rights, Professor Richard Epstein of the University of Chicago Law School, has described drug importation as ``a perversion of the basic principle of free trade.''

Pharmaceutical price controls are a trade issue that must be urgently addressed by our government so that foreign countries and their citizens bear a fair share of research and development costs for new medicines. Price and access controls imposed by foreign countries constitute trade barriers within the meaning of our existing trade laws, and we urge the administration to use the full extent of its authority in bilateral and multilateral negotiations to remove these barriers for the benefit of all Americans. In fact, the legislation we consider today requires the U.S. Trade Representative to develop a strategy for negotiating the elimination of price controls and requires timely Congressional briefings on the subject.

Drug coverage, particularly for Medicare beneficiaries as established by this bill, is the most important step we can take to ensure access. For those without coverage, drug importation imposes only great risks and offers little or nothing in the way of savings.

There is no evidence to suggest that drug importation actually will save money for American consumers. As the FDA has stated, ``it is likely that the intended cost-savings for consumers would be absorbed by fees charged by exporters, pharmacists, wholesalers, and testing labs.'' This is confirmed by the European experience with parallel importation, which demonstrates that the only real beneficiaries are middlemen in the distribution chain, not the ultimate consumers. Recent experience in Canada also makes clear that Canadians will act to protect the integrity and availability of drug supplies for their own citizens if these are threatened by importation, which will lead to higher prices for imported drugs--as well as increased transshipment from third-world drug supply sources, as discussed above.

In any event, claims of enormous cross-border price differentials are widely exaggerated because they do not reflect intelligent comparative shopping or appropriate adjustments for currency and standard-of-living differences. Surveys of legitimate American pharmacy Internet sites and retailers show that substantial discounts can be obtained right here in the United States, with full confidence in product safety, quality, and integrity.

The myriad of questions and concerns we have raised here explain why, rather than allow importation of drugs, this legislation calls for a comprehensive study of the risks and benefits of importing drugs and of how trade negotiations can be used to begin bringing down price controls, so that Americans and everyone else in the developed world share fairly in the costs of drug research and development.