Floor Statements

The following Senator is necessarily absent: the Senator from Kentucky (Mr. Paul).

The following Senator is necessarily absent: the Senator from Kentucky (Mr. Paul).

The following Senator is necessarily absent: the Senator from Kentucky (Mr. Paul).

The following Senator is necessarily absent: The Senator from Kentucky (Mr. Paul).

Mr. President, I ask the indulgence of my colleague. If my colleague could make the unanimous consent request to which I can respond, then I can leave.

Mr. President, there is objection on our side. I will object. But I do want to make a point that as a result of Senator Snowe and Senator Merkley's intercession here, our staff has talked to Senator Shelby, who says he will try to work to get it cleared and to hotline it again on our side today. So at this time, I cannot clear it, but there will be an effort to accomplish that result.

Mr. President, let me speak to some of the provisions of the National Defense Authorization Act especially concerning nuclear modernization and the implementation of the New START treaty. This is in the context of the omnibus appropriations bills that we will consider later this week, which appear to include funding reductions from the President's request for nuclear weapons modernization activities for the year 2012.

Earlier this year I introduced the New START Implementation Act because other Senators and I believed it is necessary that the Congress codify the agreement made between the President and Congress regarding the commitment to the modernization of our nuclear deterrent. Indeed, it is fair to say the Senate's support for the ratification of New START was contingent on modernization of the remaining nuclear arsenal.

One of the critical features of that legislation was the link between funding of the administration's 10-year nuclear modernization program to any U.S. nuclear force reductions in a given year. The language that appeared in the House-passed version of the Defense bill was good policy because it limited the reductions in warheads the United States otherwise would make pursuant to the New START treaty if Congress failed to provide the funding prescribed each year under the so-called 1251 modernization plan. In other words, warhead reductions were based on adequate funding.

The House language would also prohibit reduction of the nuclear stockpile hedge of nondeployed warheads until after we completed construction of the key nuclear facilities necessary to regain our production capacity. The reason for that, of course, is we have a hedge or a stockpile of these weapons that exists in the event we would need them since we do not have a production capacity right now to replace them. Until that capacity is created, probably in about a decade, we will need to continue to maintain that hedge capability.

The language that appears in the conference report now before us removes this explicit linkage, which I think is very unfortunate. The NDAA conference report addresses these concerns in some ways, though not as strongly as we originally intended. Here is what the compromise in the bill provides: First, in any year in which modernization is not fully funded, the President must report to Congress how he intends to address the shortfall and whether as a result of the shortfall it is still in the national interest to remain a party to the New START treaty. For the first time, the President will be compelled to detail his plans for U.S. nuclear force reductions over the next 5 years, which will provide Congress an opportunity to evaluate whether these reductions are in the national interest. This second provision is an important addition. Third, in any year in which the President seeks reductions in the nuclear stockpile, he must first seek from the Commander of U.S. Strategic Command a net assessment on the reductions, which, of course, puts the Commander of STRATCOM in a crucial position, and to provide that assessment to Congress unchanged. And, finally, the President must provide to

Congress any changes to the Nation's nuclear war plan and provide access to certain Members of Congress to these plans.

These are all important provisions, but without the House language, the possibility remains that we will draw down our warheads under START without adequate funding to ensure our remaining stockpile meets our requirements. As I said, this is quite unfortunate.

Let's recall why this modernization of our nuclear weapon program was necessary. The modernization program was painstakingly worked out, first within the Department of Defense, and the Department of Energy, our national laboratories, and then between the administration and Senators at the time of the New START treaty. It resulted in a 10-year $200 billion work plan to renovate our national laboratories, to extend the life of our nuclear weapons, to maintain their safety, the security and effectiveness of those warheads, and to sustain the modernization of the triad of our nuclear delivery systems, the ICBMs, bombers, and nuclear submarine force.

The plan was updated last November after a very thorough review by the Department of Defense and the Department of Energy, bringing the total 10-year funding figure to about $213 billion. There was little disagreement at the time about the need to modernize our nuclear facilities or about this amount which represented the cost over the 10- year period.

Indeed, between fiscal year 2005 and fiscal year 2010, the National Nuclear Security Administration, or NNSA, had lost about 20 percent of its purchasing power due to funding cuts. This, without the changes recommended in the 1251 report, would have been devastating to its modernization plan. Incredibly, funding for stockpile surveillance activities--these are activities which are necessary for the President to annually certify the safety and effectiveness of our nuclear warheads and bombs--had declined by 27 percent during this period of time. In other words, our ability to actually even understand what was going on in these weapons and determine whether changes had to be made was being degraded substantially. The situation was so dire that in February 2010, Vice President Biden gave a major address on the subject at the National Defense University and penned an op-ed in the Wall Street Journal that stressed:

The slow but steady decline in support for our nuclear

stockpile and infrastructure--

And then noting that again--

For almost a decade, our laboratories and facilities have

been underfunded and undervalued.

He concluded by observing that ``Even in a time of tough budget decisions, these are investments we must make for our security.''

Secretary of Defense Gates had earlier drawn attention to the neglect of our nuclear weapon complex. In 2008 he said, ``To be blunt, there is absolutely no way we can maintain a credible deterrent and reduce the numbers of weapons in our stockpile without either resorting to testing our stockpile or pursuing a modernization program.''

Of course, we have not resumed testing, which meant our only alternative was this modernization program which we then all agreed to. What is the linkage between modernization and the reductions in warheads called for under the START treaty? Well, it is pretty clear. As the President's National Security Advisor wrote to me in April of 2010, ``Support for the nuclear complex is fully consistent with and, indeed, an enabler of the nuclear reductions we seek to implement--a direct connection, in other words.

So critical was the need to reverse the decline in our nuclear weapon enterprise that the Senate included in its resolution of ratification for the New START treaty a condition No. 9, which stated:

The United States is committed to proceeding with a robust

stockpile stewardship program, and to maintaining and

modernizing the nuclear weapon production capabilities and

capacities that will ensure the safety, reliability, and

performance of the United States nuclear arsenal at the New

START Treaty levels and meet requirements for hedging against

possible international developments or technical problems.

The condition also stipulated that if appropriations are enacted that fail to meet the requirements set forth in the President's 10-year plan, then the President must tell Congress how he proposes to remedy the resource shortfall and whether the United States should remain a party to the treaty in light of such funding shortfalls.

That commitment to modernization was made explicit by the chairman and ranking members of the Senate Appropriations Committee and its Energy and Water Development Subcommittee, who wrote to the President on December 6, 2010, to express support for ``ratification of the New START treaty and full funding for the modernization of our nuclear weapons arsenal, as outlined by your updated report that was mandated by section 1251 of the Defense Authorization Act for Fiscal Year 2010.''

Despite this commitment, we are now faced with a reduction of some $400 million below the President's $7.6 billion request for nuclear weapon activity. It depends on the outcome of the appropriations process, but based upon the bill that was filed in the House last night, this appears to be the amount of reduction.

Senior officials from our national labs, the Department of Defense, and NNSA have all warned that cuts of this magnitude will delay construction activities for critical nuclear processing facilities, postpone critical life extension programs for our nuclear warheads, and could jeopardize our ability to certify the nuclear stockpile without testing.

In the words of Defense Secretary Panetta:

I think it's tremendously shortsighted if they reduce the

funds that are absolutely essential for modernization. . . .

If we aren't staying ahead of it, we jeopardize the security

of this country. So for that reason, I certainly would oppose

any reductions with regards to the funding for

[modernization].

Likewise, General Kehler, the commander of U.S. Strategic Command, told Congress that, due to the impending NNSA budget cuts, ``we've got some near-term issues that will impact us in terms of life-extension programs for aging weapons.''

What are life extension programs? These are the ways in which we can take the nuclear warheads that need working and extend their life by refurbishing them or replacing some of the components and doing other things that generally the scientists understand are critical to maintain the safety, the surety, and the reliability of those weapons over the period of time in which they are needed.

We all understand that the appropriations committees were under immense budget pressures, especially after the Budget Control Act of 2011. Full funding for nuclear modernization, though, was a priority brought about by this Nation's pledge, made in the New START treaty, to reduce the levels of U.S.-deployed nuclear weapons. As such, it should have superseded other budgetary considerations. It should have been fully funded.

Few things are more important than ensuring that our Nation's nuclear deterrent is effective and reliable, especially as those forces are reduced to lower levels by the START treaty arms control agreement. Indeed, this was the view of the House and Senate Armed Services Committees, which fully authorized the President's request for nuclear modernization.

Senior DOD officials worked to secure adequate funding for the President's 10-year commitment to nuclear modernization. Among other things, the President submitted the budget that requested the full amount of funding called for in the 1251 report, and the Department initially transferred $8.3 billion in budget authority to NNSA for weapons activities over a 5-year period, which, unfortunately, is not fully reflected in the fiscal year 2012 Energy and Water appropriations bills.

In this case, the customer, the Department of Defense, was so concerned that the Energy Department could do this work that it transferred its own budget authority to accomplish it. Yet some of that money was drained away for other purposes.

Some of the $400 million shortfall could possibly be mitigated, however, if the Secretary of Defense exercises the transfer authority that is going to be granted in this fiscal year 2012 Defense authorization bill to transfer up to $125 million to NNSA for weapons activities. This is a very small amount of money for four critical top priorities identified by the Department of Defense; therefore, if it can find the

funds, it can utilize the transfer authority that has been granted in this legislation and get that money to the NNSA to do the work that is absolutely critical next year. I will be working with the Department of Defense and my colleagues in Congress to ensure that this happens.

I express my appreciation to the chairman and ranking members of the committees and the conference committee who saw to it that this language to allow the Defense Department to transfer these funds was included.

Finally, let me mention what the consequences of the $400 million reduction could mean in the future. First, it could send a message to OMB that Congress no longer considers itself bound to the 10-year modernization funding plan. This would be a huge mistake; it would be wrong. OMB then might direct less funding in the future for nuclear weapons in fiscal 2013 and following years than originally prescribed in the 1251 plan, which would be very wrong. But the problem is that any divergence between what was deemed necessary over the next 10 years and what is actually appropriated by Congress will continue to grow-- maybe to the point where it becomes difficult to certify on an annual basis that the nuclear stockpile is safe, reliable, and effective.

Referring to such reductions, NNSA Administrator Tom D'Agostino reported this to Congress on November 2:

This is the work to make sure these technologies are the

ones that allow us to certify the stockpile on an annual

basis without underground testing. Reductions in these areas

will have a direct impact on the President today in the

ability to certify the stockpile without underground

testing.

For those who remain so opposed to underground testing, you cannot have it both ways. You cannot both oppose underground testing and prevent the Department from getting the money it needs to modernize the stockpile. We have to do one or the other. We are now $400 million below where we need to be.

A second impact: Life extension programs for nuclear warheads, already facing very tight schedules because of the delays over the years, would be further delayed and exacerbated. Warheads that are not refurbished in time are not going to be available for deployment. This would have serious consequences for the readiness of our nuclear deterrent at a future date, which, of course, could have serious implications for the credibility of our nuclear guarantees to our allies and partners.

Third, the revitalization of nuclear labs--including expensive but very necessary construction projects--will be further delayed, and, of course, costs will go up even more. Funding for science will be curtailed to support higher priority programs, thus starving the labs of important innovation and perhaps hampering recruitment of the scientists and engineers necessary to maintain the long-term viability of the nuclear weapons complex.

Fourth, this funding reduction will trigger the reporting requirement contained in Condition 9 of the New START resolution of ratification, requiring the President to explain the impact of the resource shortfall on the safety, reliability, and performance of our nuclear forces. We know what that report is going to say. It is serious. The President must also propose how he plans to resource the shortfall and, in light of the shortfall, whether and why it remains in the national interest of the United States to remain a party to New START. As a result, Members of Congress may seek to ensure, through annual defense authorization legislation, that any future New START-mandated reductions in the nuclear stockpile are tied to successful execution of the planned modernization program.

Finally, this funding reduction, which could well be a precursor to further cuts in the future, will dampen the enthusiasm of Senators to agree to any future arms control agreement. Senators who voted for New START on the basis of the 10-year modernization program will not be so easily swayed by such promises in the future.

I look forward to taking up and voting on the Defense authorization conference report. It has a lot of good things in it and some things that aren't as good. This report, as I said, is not as strong as was the House language, but it will contain some important provisions the Congress will try to enforce to ensure that the modernization of our nuclear weapons continues on schedule for the next 10 years, which is something that is critical to our future national security.

The following Senator is necessarily absent: the Senator from Kansas (Mr. Moran).

The following Senator is necessarily absent: the Senator from Kansas (Mr. Moran).

The PRESIDING OFFICER. Are there any other Senators in the Chamber desiring to vote?

Mr. President, I want to express my support for the Republican-offered balanced budget amendment, a measure I worked on with Senators Toomey, Lee, Hatch, and Cornyn, and thank those Senators for their leadership on the issue.

As Americans know, Washington has a spending problem. The Federal Government's fiscal position is unsustainable. It now borrows more than 40 cents of every dollar it spends. Indeed, our debt has climbed to over $15 trillion and will continue to grow and threaten our economy and our jobs and our way of life unless we do something about it.

Opponents say Congress should do its job. Sure, it should, but it has not. Events during the last 30 years have shown that Congress cannot be counted on to make the tough choices necessary to control spending and to balance the budget. Here is a little history. When the Senate passed a balanced budget amendment in 1982, that national debt was $1.1 trillion. In 1986, when the Senate failed by one vote to pass the balanced budget amendment, the national debt topped $2.1 trillion. By 1997, when the Senate again failed by one vote, the national debt was over $5 trillion. Today the debt is over $15 trillion. So there is no evidence that Congress has been willing to or able to reduce the debt without the Constitution requiring it.

The Republican balanced budget amendment simply requires Congress to do its job. It includes real reforms that would help the government live within its means, including having the President submit a balanced budget to Congress every year.

The balanced budget amendment does not etch rules into stone. Any of its requirements can be waived by a supermajority of the Congress; that is, if there is a real national consensus to do so. Let's remember we are in a crisis today because of deficit spending. Raising taxes and getting deeper in debt have been far too easy for Congress.

The Republican balanced budget amendment contains two key enforcement mechanisms that Congress would have to abide by. First, Congress would have to limit spending to 18 percent of the gross domestic product from the preceding calendar year. The balanced budget amendment would also prohibit spending from exceeding total revenues in a given year. Why 18 percent? Well, if the goal is to balance the budget, the only way to succeed is to limit the Federal spending to the level of revenue that the economy is willing to bear.

According to the Congressional Budget Office's August Budget and Economic Outlook, from 1991 to 2010--the most recent period of time-- revenues averaged 18 percent of gross domestic product, and that is why that number is selected.

It is notable that the Democratic alternative does not contain a spending cap. It also contains a lower threshold of votes for waiving the balanced budget amendment, which, of course, would make deficit spending much easier.

The second mechanism in the Republican balanced budget amendment is a prohibition on any bill that increases taxes from becoming law unless approved by two-thirds of a rollcall vote of Members in each Chamber. When Congress cannot get its hands on enough revenue for its spending priorities, the temptation is always to look for more revenue and raise taxes. Well, it should be more difficult to take more money from the American people and to increase the size of the Federal Government.

Moreover, raising taxes is not a productive solution to budget deficits. Not only does projected revenue usually fail to materialize, higher taxes discourage work, production, savings, and investment which all results in lower revenues in future years. So we cannot balance the budget by raising taxes.

On the issue of tax increase restrictions, the Democratic alternative again falls short. It does not contain a mechanism to make it more difficult for Congress to raise taxes. In fact, it does the opposite. It contains a provision that makes it more difficult to lower taxes collected from American job creators.

Some of our friends on the other side of the aisle will paint a doomsday scenario that they say would result from the Republican balanced budget amendment, one that would mean immediate changes and draconian cuts. That is not accurate. As we know, Congress cannot amend the Constitution. We can only propose an amendment for States to consider in a ratification process that takes a long time. If it passed, the balanced budget amendment would not become effective until 5 years after ratification by three-fourths of the States. So it is not like we have some immediate concern that next year's budget is going to suffer if the balanced budget amendment were to pass.

Let's not punt again on getting our spending under control. Let's not keep kicking the can down the road. Let's put on some real constraints so Congress will have to do its job, the job the American people expect it to do.

I urge my colleagues to vote in favor of the Republican-offered balanced budget amendment.

Mr. President, I ask unanimous consent to speak for up to 15 minutes in morning business.

Mr. President, last Thursday marked the fifth time this year the majority has initiated a vote on the so-called millionaires' surcharge--a tax that primarily affects small businesses--in order to ``pay for'' a piece of legislation. Notably, Thursday also marked the fifth time this year this tax increase failed to pass the Senate, which suggests, of course, it is being used for political purposes.

President Obama and his supporters have argued that the tax increases they support--such as the millionaires' surcharge--will not affect anyone but the wealthiest Americans, and that those people have to start doing ``their fair share'' because they ``can afford it.'' They repeat the phrase ``shared sacrifice.''

In a recent campaign speech in Kansas, President Obama took the class warfare argument to a whole new level, injecting his speech with false economic moralisms and evoking what he calls the ``you're on your own'' economics of Republicans and suggesting that the ``breathtaking greed of a few''--these are his words I am using--has been crushing the middle class. The President's object seems to be purposefully conflating all upper income taxpayers with those reckless few who helped cause the financial crisis, ignoring, I might add, those in Congress who also helped to create that crisis.

The President's rhetoric is not only wrongheaded, in my view it is irresponsible. I wish to make three points in response.

First, the President of the United States should not be pitting Americans against each other. Class warfare has no place in American debates. It is divisive, and it is unhelpful to the national discourse. It is especially unbecoming of the President, who is the only person elected to represent all Americans. He should speak for all Americans, especially in times of high unemployment and high economic uncertainty, not pit them one against each other for short-term political gain.

America is not a caste society. There is no formal class structure engrained into our way of life. The opposite is true. That is why millions of people left the old countries in Europe and elsewhere to come here for economic opportunity and to compete in our free markets.

Why doesn't the President offer encouragement about America's strengths and its future, rather than play into some Americans' fears? In other words, why doesn't he run the kind of campaign he ran in 2008--one based on unity and hope?

The answer, I am afraid, is because the President's record during the last 3 years does not inspire much hope: a massive stimulus filled with special-interest goodies, a government takeover of health care, a failed cap-and-trade agenda, an EPA power grab, and more new job- killing regulations than one can count.

Obviously, the policies of the last 3 years have not left Americans in better shape than they were 3 years ago. Indeed, about three- quarters of Americans say the country is on the ``wrong track.'' As columnist Charles Krauthammer wrote in a recent column: ``Obama has spent three years on signature policies that ignore or aggravate'' structural problems, such as

high unemployment, weak growth, vast debt, and our strained safety net and dysfunctional Tax Code.

So the President cannot run on his record. And he does not want voters to focus on how his policies may have prolonged our economic troubles or that his party controlled Washington for the first 2 years of his Presidency. His way out is to blame others.

But rather than stir up resentment and unease, I suggest the President focus on strengthening opportunity for all Americans. That gets to the second point, which addresses the assertion that upper income taxpayers are not doing their fair share. This is patently false. Let me provide a few instructive numbers.

According to IRS data, the top 1 percent of taxpayers pays 38 percent of total income taxes but earns only 20 percent of total income. In other words, the top 1 percent earns 20 percent and pays almost double that in their share of Federal income taxes.

The top 2 percent of taxpayers pays almost half of all the taxes-- 48.68 percent, to be exact. They only earn a little under 28 percent of the total income and pay almost 50 percent. So the top 2 percent are paying almost 50 percent of all the taxes. And this is not a fair share? This is not doing their part?

The top 5 percent of taxpayers pays 58.7 percent. They earn just a little over one-third of all of the income. In fact, the top 5 percent pays more than the bottom 95 percent, total. The top 5 percent pays more taxes by far than the rest of the 95 percent. And they are not doing their fair share?

The top 10 percent of taxpayers pays almost 70 percent and still earns less than 50 percent of total income--45.7 percent, to be exact.

The bottom 95 percent of taxpayers pays 41.3 percent. They earn 65.3 percent of total income. So the bottom 95 percent--this is a big chunk of American taxpayers--is earning a lot more in percentage than they are paying in percentage of income taxes.

The Joint Committee on Taxation estimates that 51 percent of all households, which includes both filers and nonfilers, had either zero or negative income tax liability for the year 2009. Such progressive taxation is, in fact, ``shared sacrifice.'' The United States has the most progressive income Tax Code of any country among developed nations. So the argument that top-tier earners are not doing enough does not hold water, and somebody needs to call the President on this false argument of his because it attempts to pit one group of Americans against the other when in point of fact the President, of all people, should be unifying Americans.

The third point is related to who actually would pay this millionaires' surcharge that the President advocates and our colleagues have been urging us to vote for yet again. This proposed tax increase will presumably be trotted out again and again. It cannot get the votes to pass, but it makes a nice political charge.

The President and his supporters claim it would only affect the wealthiest of the wealthy. Well, the fact is this tax would crush small business owners. Many small businesses are organized as ``pass- through'' entities. That means they pay their taxes as individuals. They are not organized as corporations. They do not pay their taxes as corporations. They pay as individuals.

So when the plumbing company or the air conditioning company pays taxes, that small business owner pays them as an individual and, therefore, he pays at the individual income tax rates. If you are in one of the top two rates--and 50 percent of small business income is reported in those top two rates--you are going to get clobbered by this surtax on millionaires. And these are the very businesses, the most successful small businesses, that create many of America's new jobs.

According to the National Association of Manufacturers' December 5 weekly report:

Small and medium-sized payrolls (those with less than 500

employees) accounted for the bulk of the net new jobs,

continuing a familiar trend. This was true for both the

goods-producing as well as the service-producing sectors.

There is a lot of data that shows many of these job-creating small businesses would be slammed by a millionaires' surcharge.

For example, a Wall Street Journal editorial reports that the Joint Committee on Taxation has estimated that taxpayers will declare $1.2 trillion in business income in 2013. Of this reported tax income, 34 percent would be ``on tax returns with `modified adjusted gross income in excess of $1 million.' '' As the Journal notes, that means about $400 billion in business income would be subjected to the so-called millionaires' surcharge tax.

And who pays that? As the Journal writes, the Treasury Department examined IRS data in 2007 and found 392,000 tax returns with incomes above $1 million, 311,000 of which were classified by the Treasury Department as ``business owners.'' So 80 percent of a payroll tax surcharge will fall on these small business owners. That is a direct tax on job creation. What could you think of that would do more harm to creating jobs in America than imposing a brandnew tax on the people who we hope are going to create the new jobs coming out of this recession? Remember too that taxes are already set to go up in 2013 when the current tax rates expire. On top of that, business investors will also face a 3.8-percent ObamaCare ``investment income tax surcharge'' set to begin in 2013.

How is taking money away from these small businesses going to allow them to expand and hire more workers?

John Mackey, who is the cofounder of the wildly successful Whole Foods chain, wrote an op-ed last month explaining, from his point of view, what policies can help and harm job growth. He writes:

One hundred years ago the total cost of government at all

levels . . . was only 8 percent of our gross domestic

product. In 2010, it was 40 percent. Government is gobbling

up trillions of dollars from our economy to feed itself

through higher taxes and unprecedented deficit spending--

money that could be used by individuals to improve their

lives and by entrepreneurs to create jobs.

Policymakers would do well to listen to the advice of entrepreneurs such as John Mackey about a real growth agenda. Americans are counting on job creators in the private sector to help turn the economy around by putting capital at risk and hiring new employees. Relentless class warfare and obsessing over income redistribution are not real policy prescriptions.

Mr. President, I ask unanimous consent to have printed in the Record the op-ed piece by Charles Krauthammer which I mentioned.

I thank the Chair.

The following Senators are necessarily absent: the Senator from Texas (Mr. Cornyn), the Senator from Missouri (Mr. Blunt), the Senator from North Carolina (Mr. Burr), the Senator from Oklahoma (Mr. Coburn), the Senator from South Carolina (Mr. Graham), the Senator from Nevada (Mr. Heller), the Senator from Illinois (Mr. Kirk), the Senator from Utah (Mr. Lee), the Senator from Kansas (Mr. Moran), and the Senator from South Dakota (Mr. Thune).

Further, if present and voting, the Senator from Texas (Mr. Cornyn) would have voted: nay.

The following Senators are necessarily absent: the Senator from Texas (Mr. Cornyn), the Senator from Missouri (Mr. Blunt), the Senator from North Carolina (Mr. Burr), the Senator from Oklahoma (Mr. Coburn), the Senator from South Carolina (Mr. Graham), the Senator from Nevada (Mr. Heller), the Senator from Illinois (Mr. Kirk), the Senator from Utah (Mr. Lee), the Senator from Kansas (Mr. Moran), and the Senator from South Dakota (Mr. Thune).

Further, if present and voting, the Senator from Texas (Mr. Cornyn) would have voted: nay.

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

Mr. President, I ask unanimous consent I be allowed to speak as in morning business for up to 15 minutes.

Mr. President, the reason I wish to speak is because there is a lot

of confusion around something called the payroll tax holiday. It is legislation that is likely to be acted upon by the Congress and perhaps a bill will be sent to the President before the end of this year. It is something the President is pushing very strongly to try to achieve. There are a lot of different versions of it and a lot of confusing ideas about what people support and what they do not. I wish to talk a little bit about that.

First of all, what is it? The payroll tax is the tax that funds Social Security. It is a tax that is paid on the employee's wages. Half of that is paid by the employee, half of it is paid by the employer. From the employee's standpoint, the more they pay in, the more they get out when they retire; the less they pay in, the less they get out. That is what funds Social Security.

There is a question: Why would someone not support a reduction in the payroll tax--or as it is called right now a temporary payroll tax holiday because what is being proposed is that a portion of that tax would not be paid. It represents one-third the amount of the tax an employee would ordinarily be paying that is not being paid today. The President would actually like to cut that to the point that an employee would only pay half the payroll tax liability. I understand he is going to revise his proposal and not ask there be any relief on the employer's side. What the President, therefore, is asking is that half of what an employee pays--or 3.1 percent of payroll--not be paid for 1 more year.

The first reason one should think carefully about extending this holiday is that, as I said, this is what funds Social Security. For an employee, the less they pay in, the less they are going to get out. If you are OK with that, then think about the program writ large. Social Security is in big financial trouble. We all know that. As a result, the less we put into it, then the less money there is to pay benefits for people who are on retirement.

What is happening with this particular shortfall is that we are paying for it out of general revenues. What is happening is, since we borrow 40 cents out of every $1 we spend in this country, we are going to go someplace, such as to the Chinese, for example, and we are going to borrow the money. Out of $1 that we want to spend, we are going to borrow 40 cents of that, and then we are going to put that money into the Social Security trust fund that is immediately going to be paid to somebody who is on Social Security.

What is the problem with that? Severalfold. First of all, as we said, the amount of money we put through the payroll tax into Social Security is what we are going to get back. If we put less in, we are going to get less back.

Second, because Social Security is already broke, that means the United States has to borrow the money to put back into Social Security in order to keep it going. When we do that, then there is less money in general revenues to pay for other things. So, yes, our general tax revenues and borrowing can make up for that difference in the payroll tax that is not being paid in now, but that means there is that amount of money less available for education benefits or agriculture or the Defense Department or whatever else we might be wanting to spend the money on. The fact is, if we are going to spend the same amount of money as the Federal Government and now we are increasing the amount we have to spend on Social Security, there is less to spend elsewhere.

I find it ironic that our Democratic friends in particular would think this is a good idea. I ran across something from the AARP, back in 2010. I wish to quote from it. This is a press release dated just about exactly 1 year ago, December 7, 2010, by Thomas Bethell. The subject is ``What the Payroll Tax Cut Means for Social Security.'' He quotes Nancy Altman, who is codirector for Social Security Works, which, as he said, describes ``a worst-case scenario.''

She thinks the cut could well become permanent.

If that happens, Social Security's long-term shortfall

could double over 75 years, she says, and political pressure

to downsize the program could mount. That could lead to

converting Social Security from a universal insurance program

to a welfare program, with the numerous drawbacks of programs

for the poor, including low public support.

If this scenario unfolds, says Altman, ``it's good-bye,

Social Security.''

His conclusion is ``there is little doubt that reducing the payroll tax carries a risk.''

That is the first reason I think one should be very careful about deciding that since tax cuts are usually appreciated by people, therefore, this is one we should extend, even though it is just temporary.

That brings up the second point. It can be argued this is very bad economic policy. There is no evidence this temporary tax cut has actually produced any new jobs, which is the whole idea. In fact, our economy has decelerated. In 2010, we had a 2.8-percent GDP growth. We are now down to just over 1 percent. Unemployment remains stubbornly high. In fact, I thought I would quote from a commentary of Ed Gillespie on ``FOX News Sunday.'' Yesterday, he was asked a question by Chris Wallace about the payroll tax.

First of all, 50,000 of those jobs--

Meaning the jobs that have been created now in the economy over the last month--

50,000 of those jobs are retail jobs that likely could be

temporary for the holiday season. On top of that, for every

two people who found a new job, five people left the

workforce entirely, which is part of a continuing pattern.

In fact, if the labor force today were the same size it was

when President Obama took office, the unemployment rate would

be 11 percent. So, shrinking the labor force is not the right

way to bring down the unemployment rate. . . .

The point is, a lot of people have stopped looking for jobs. That is one reason why the unemployment rate actually went down. There are plenty of economists who will tell us reducing the payroll tax is not a good way to create jobs. I am going to quote from three or four.

As taxes go, the payroll tax is a big revenue raiser and

one of the least damaging to work incentives. So cutting it

is a poor choice if jobs are the objective.

Arthur Laffer, economist, in the National Review, the last day of October this year.

Troy Davig, an economist with Barclays Capital, Reuters:

Hiring is a long-term contract and this is a short-term

stimulus.

Meaning the temporary payroll tax holiday.

Neil Dutta, an economist with Bank of America Merrill Lynch, says:

Nothing that's likely to get done--with regard to the

payroll tax--is going to have a meaningful impact in terms of

lowering the unemployment rate and creating jobs.

Bruce Bartlett, in the New York Times, is quoted in August of this year:

There is no evidence that the lower payroll tax has done

much of anything to stimulate either spending or hiring.

In the New York Post, by Andrew Biggs, some time ago now:

The payroll-tax holiday is a dubious

idea. . . .

Finally, Charles Blahous, who is a real expert on Social Security and an economic research fellow at Stanford's Hoover Institution, says:

Taking real tax revenue away from Social Security and

issuing debt in its place--the policy now in effect--is the

worst of all worlds, both for the program and for the budget.

It does not stimulate the economy, doesn't produce jobs, and it creates a budgetary problem for Social Security itself.

I also believe, the third point is, it can be bad tax policy. I note from a Wall Street Journal editorial, dated December 2--here is the beginning of it:

So here's the latest Democratic job growth plan: Pay for a

temporary tax cut that has already proven not to create jobs

with a permanent tax increase that almost certainly will cost

jobs.

That's the essence of Senate Majority Leader Harry Reid's

plan to finance a one-year payroll tax cut with a 3.25

percent tax surcharge on upper-income Americans that would

last for at least 10 years. I understand now they are

thinking about revising that for this exact reason, but

that is the point. The surtax is, in reality, a new tax

that primarily hits small business owners. They are the

ones who create the jobs. Almost all of the new net jobs

created since the 1980s are in small businesses. They

create about 70 percent of the new jobs, most of them

coming out of the recessionary time we are in.

And what does Treasury say about the people who would be hit by this surtax? Treasury estimates 392,000 returns have an income over $1 million,

and of that 311,000 are classified as business owners. So about 80 percent of the people who would get hit by this surtax are the very job creators we are hoping will invest their money into their businesses to help the economy and to create new jobs. How do you create new jobs by taking more earnings away from the very employers who are creating the jobs? So, third, it is bad tax policy.

Fourth, Democrats argue: Well, the wealthy are not paying their fair share, and this too is something that doesn't stand up to scrutiny. These are from the Internal Revenue Service. These are their tables. The top earners pay the bulk of the taxes in this country. In fact, we have the most progressive income tax system of all of the industrialized countries--all of the countries in the OECD. The top 1 percent in our country earns 20 percent of all the income--that is pretty good--but they pay 38 percent of all of the income taxes. The top 2 percent earns about 28 percent of the total income. They pay over 48 percent--almost 50 percent. They pay almost half of all of the income taxes that are paid by the top 2 percent.

Some people say: Well, what about the payroll tax? That is exactly what we are cutting here. Remember? That is what they are getting a tax holiday from paying. So you have the top 2 percent of the people paying 50 percent of the taxes.

What do the bottom half pay? It turns out the Joint Committee on Taxation estimates that 51 percent of all households had either zero or negative income liability for the tax year 2009. So you have 2 percent of the people paying 50 percent and the bottom 50 percent paying none. In fact, the top 5 percent pays a whole lot more than the bottom 95 percent combined. Think of that. In our country the top 5 percent of the earners pay a lot more than the bottom 95 percent combined.

Then the question is: Is it fair to say about the United States progressive income tax code that the wealthy don't pay their ``fair share'' when the top 1 percent pays 38 percent, the top 2 percent pays almost half of all the taxes? I think that is a canard. I am not trying to defend rich people here, but what I am saying is it is unfair to say they are not paying their fair share.

Finally, my colleague Dick Durbin--who I believe is going to be here shortly, and I hope will respond to what I am saying here--was interviewed on MSNBC on November 30. He said something that in retrospect I suspect he would say is inaccurate and would take back, but I want to quote him. He is talking about the payroll tax holiday and he said:

Jon Kyl rejected it. He said, no. There's no way we're

going to impose any taxes on the wealthy people in this

country.

Well, of course, Senator Durbin knows that we impose a lot of taxes on the wealthy people in this country. He simply misspoke. I understand he simply misspoke, but it is a manifestation of the political dialogue here of one side accusing the other of favoring the rich over the poor. Can't we ask them to contribute a little bit more? Well, if it is the IRS, we are not asking them, we are forcing them. When the top 2 percent of all of our citizens pays half of all of the taxes and the bottom half pays none, when the top 5 percent pays 95 percent of all of the taxes and 95 percent pays the rest, it is hard to say the rich are not paying taxes.

In any event, my colleague Senator Durbin, I am sure, would acknowledge that I have not said nor has anyone said, ``There is no way we are going to impose any taxes on the wealthy people in this country.'' They are paying a lot of taxes.

Finally, we extended this tax cut holiday for 1 year a year ago in December. We did that as part of an overall budget deal. The Vice President of the United States, the leaders of the House and Senate negotiated this and the President went along with it. It was part of an overall agreement in which we said we will extend all of the existing tax rates, the so-called Bush tax cuts, that is, the rates that have been in effect since 2001 and 2003. We said we would extend this temporary tax holiday from the payroll tax cut. We would extend all of those. I supported that.

Frankly, that was the right thing to do, to extend all of these existing rates. The country at that point could not have stood an increase in taxes of over $4 trillion, which is what it would have been not to extend the so-called Bush tax cuts. If we can do that again, I am all for it. I will support the extension of the payroll tax holiday. I will support the extension of the payroll tax holiday with other things being done as well. The point is there are times when it absolutely does not make any sense and there are times when it could make sense.

But because of the four other reasons I pointed out, this is what pays for Social Security benefits, it is bad economic policy, it is bad tax policy, and certainly the surtax that would fund this is something that would very much hurt small businesses and job creation. Those are reasons to be very skeptical about continuing this supposedly temporary tax holiday, and we should therefore only do it under circumstances that, in effect, override these objections, one of which would be to extend all of the taxes that expire at the end of next year--at the end of 2012, and to include this in them. That would be a good idea. It is also a good idea to ``pay for'' it; that is, to find an offset for the revenue loss here because we cannot leave Social Security holding the bag. When we borrow 40 cents of every dollar in general revenue to pay for this lost revenue, obviously, that is not a good idea. So if we can find offsets for it, that is another factor in deciding whether to do it. I believe Republicans will work to find offsets if we, in fact, are going to extend this payroll tax holiday.

Clearly, you don't necessarily need to find offsets to pay for any tax or every tax reduction. We are keeping current rates where they are, for example, when they otherwise would expire at the end of next year. Some people say: Well, that is the Bush tax cuts. That is right. Did revenues to the Treasury go down when the Bush tax rates were reduced in 2001 and 2003? No. Tax revenues--the amount of money coming into the Treasury of the United States--actually increased after the so-called Bush tax cuts. So sometimes, for economic growth reasons, keeping taxes where they are or even reducing them in some cases makes a lot of sense. In this case, however, because you are having to take it out of the Social Security trust fund, you need to replenish that money, you need to pay for it, and that is why we need to have the offsets I spoke of.

The bottom line is the payroll tax cut holiday can be a little confusing. There are some very important reasons not to do this again. It doesn't produce a good result and it can produce some bad results. If there are offsetting policies that more than overcome these bad features, then it is something I think a lot of Republicans will look to. As I said a year ago, I was willing to support the extension of it because we extended the other tax rates as well. If we do that again, obviously, it is something I would be supportive of.

I hope this helps to clarify the debate when we deal with this subject later on this week and perhaps even in the final week--that we at least hope is the final week we are here--before Christmas.

Mr. President, I note the absence of a quorum.

The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint), the Senator from Wyoming (Mr. Enzi), the Senator from Texas (Mrs. Hutchison), the Senator from Indiana (Mr. Lugar), the Senator from Florida (Mr. Rubio), the Senator from Louisiana (Mr. Vitter) and the Senator from Mississippi (Mr. Wicker).

Mr. President, yes. I would say to my colleague, unfortunately, it is the case that there probably hasn't been a major conflict in which at least some American citizen has decided to leave his country and side with the enemy.

Mr. President, yes. In fact, there is a famous U.S. Supreme Court case, Ex parte Quirin, decided in 1942, that dealt with the issue of an American citizen helping the Nazi saboteurs that came to our shores.

Mr. President, I would say to my colleague, yes. My colleague knows this case, I am confident. I think one quotation from the case makes the point clearly--in Ex parte Quirin the court made clear: ``Citizenship in the United States of an enemy belligerent does not relieve him from the consequences of his belligerency.''

In other words, if a person leaves their country and takes the position contrary, they side with the enemy, they become a belligerent against the United States, the fact that they are still a citizen does not protect them from being captured, from being held, and in this case even being tried by a military tribunal.

Mr. President, yes. I would just qualify that statement this way. A person can be subject to military custody being a belligerent against the United States, even while being a U.S. citizen, be tried by military commission because of the act of war against the United States that they committed. One could also theoretically have been tried in a criminal court. But one can't reach the opposite conclusion, which is that they can only be tried in civilian court.

Mr. President, yes. The answer to the question, short, is, yes. It is confirmed by the fact that in the Hamdi case, the U.S. Supreme Court precisely held that detention would be lawful. Of course, with the detention being lawful, the interrogation to which my colleague refers could also be taken.

Yes. Mr. President, that is the key point. There is a reason why you don't want to adopt the Feinstein amendment: It would preclude us from gaining all the intelligence we could gain by interrogating the individual who has turned on his own country and who would have knowledge of others who might have joined him in that effort or other plans that might be underway.

We know from past experience this interrogation can lead to other information to save American lives by preventing future attacks, and it has occurred time and time again. In a moment, I will put a statement in the Record that details a lot of this intelligence we have gathered. It is not as if an American citizen doesn't have the habeas corpus protection--which still attaches--whether or not that individual is taken into military custody.

The basic constitutional right of an American citizen is preserved. Yet the government's ability to interrogate and gain intelligence is also preserved by the existing law, by the status of the law that exists today. We would not want to change that law by something such as the Feinstein amendment.

Mr. President, ultimately the U.S. Supreme Court, when cases come before the Court that present these issues, determines what the law is. In this situation we have actually two specific cases, and there are others that are tangential, that do clarify what the Court believes what the Constitution would provide in this case.

Yes. One of the questions is this interplay between the executive and the legislative branch. When the legislative branch, as Congress has done here through the authorization of military force, has provided the legal basis for the administration to hold a person engaged in war against us, then it cannot be denied that that authority exists. There is a 1971 law that Congress passed that said you could hold people only pursuant to law. This was the precise holding of the Hamdi case, where the U.S. Supreme Court said they had the authority because of the authorization of military force. So the executive has that authority, the legislature has provided the basis for the authority, and the Supreme Court has upheld it by its ultimate jurisdiction.

If I might ask my colleague to yield for one other point I wish to make here.

In a criminal trial, the object is to do justice to an individual as it pertains to his alleged violation of law in the United States. In the case of the capture and detention of a combatant, someone who has taken action against the United States, the object first is to keep the United States safe from this individual's actions and, second, where possible, gain intelligence from that individual. That is the critical element that would be taken from our military, were the Feinstein amendment to be adopted.

I ask unanimous consent to have printed in the Record a statement that makes very clear where military detention is necessary: to allow intelligence gathering that will prevent future terrorist attacks against the American people.

I hope this statement clarifies in anyone's mind the point that by taking people in custody in the past we have gathered essential intelligence to protect the American people. That is the reason for the detention in the first place--A, to keep the American people safe from further attack by the individual, and, B, to gather this kind of intelligence. Nothing precludes the United States, the executive branch, from thereafter deciding to try the individual as a criminal in the criminal courts with all the attendant rights of a criminal. But until that determination, it cannot be denied that the executive has the authority to hold people as military combatants, gather intelligence necessary, and hold that individual until the cessation of hostilities.