Floor Statements

Mr. President, I wonder if my colleague would yield for two questions.

I thank the Senator. Mr. President, I believe at least twice the majority leader has made a comment about my colleague from Arizona, John McCain, and I wanted to see if the Republican leader's understanding is the same as mine.

The majority leader said: ``McCain says drilling is only psychological and won't make a difference.''

I have checked the actual record of what Senator McCain said. It was a discussion of offshore drilling, which Senator McCain strongly supports on the Outer Continental Shelf, and the question was whether there would be short-term relief. Here is precisely what Senator McCain said in response:

I don't see an immediate relief, but I do see that

exploitation of existing reserves that may exist--and in view

of many experts that do exist off our coasts--is also a way

that we need to provide relief. Even though it may take some

years, the fact that we are exploiting those reserves would

have psychological impact that I think is beneficial.

Now, I ask the leader: Is it correct, in your view, that what Senator McCain was saying is that while the benefits of production would take some years to achieve, there could be an immediate psychological benefit simply from the decision that we were going to do this, such as the $20 reduction in the price of a barrel of oil following shortly after the President's announcement that he was going to lift the moratorium on offshore drilling?

Secondly, Mr. President, the second question. The Republican leader said a moment ago that speculators were betting on scarcity and the majority is doing everything to prove them right.

With respect to a decision to begin production off our shores on the Outer Continental Shelf, is it the Senator's opinion that this would have a beneficial effect on drawing down the price of futures in the oil market because the decision would be seen as a commitment to produce more?

I thank the leader.

Mr. President, might I clarify? There was no objection to the assistant leader speaking as part of the Democratic time as it is now allocated; is that right?

Mr. President, I am happy to respond. I was not only clarifying his position but ensuring people understood what the majority leader said about his position was incorrect. Senator McCain does not support drilling in ANWR, but he does support drilling off our coastal shores and the Outer Continental Shelf.

Madam President, I associate myself with the remarks of my colleague from Alabama a moment ago. I will speak to the reliance of the United States on other countries around the world for too much of our petroleum and natural gas supplies and what that does to the United States to make us dependent, to cost us more money, to reduce our flexibility and actions around the world, and also the point that every time they want to rattle their sabers to create instability in the world, what that does to the markets is to reflect that instability in higher prices. So these very countries that we would like not to make so much money off their oil supplies, if they want to make more, all they have

to do is create a little trouble in the world, and it raises the price because the markets go higher for a while. I will talk about that in a moment.

I have reflected on a comment a friend of mine made some time ago. I don't mean disrespect to my friends on the other side. But he said: You know, Democrats have three approaches to every problem: Taxation, litigation, and regulation.

Sometimes we like to laugh about that because it is, unfortunately, too true. But I thought how does this apply to energy. Sure enough, it does. They, of course, tried taxation and failed, trying to raise taxes on oil companies, under the notion it would never be reflected in consumer prices we pay. But that is exactly what would happen. They tried litigation against OPEC. There is no way you can sue the OPEC countries. We ought to produce more of what we have, not tell them they have to produce more. They are pretty strained, in terms of where they are in production right now, in any event, and we are not, as the King of Saudi Arabia reminded President Bush not too long ago.

Then, the third thing has to do with regulation. It is the bill that is pending before us right now. This is the Democratic approach: Let's regulate the people who buy and sell the contracts for oil and natural gas and the like. Of course, we already have regulators--it is called the CFTC--and today we have some news that demonstrates that this body is doing its job and can do its job. To the extent that there is illegal manipulation in the market, the CFTC can stop it. They announced that, after a year of investigation, they had stopped a company that was allegedly illegally manipulating the market, and they are going to take legal action against them. The Department of Justice may be looking at it from a criminal aspect, as well.

Both Democrats and Republicans have agreed that one of the things we need to do is ensure that the CFTC has all the money it needs and the personnel it needs to continue to do the job we have given it to do, to make sure people are not abusing the process. That is the good part of regulation. The bad part would be to begin defining--as the Democratic legislation does--who good traders are and who bad traders are and not let the bad traders trade--something that was debunked yesterday in an interagency study concluded by the CFTC, which concluded that speculation wasn't the problem; that the reason for the price increases at the pump is the law of supply and demand--not enough supply for the demand that exists out there.

Today, another diversion was created. I wish to reiterate this. It involves a friend of mine, my colleague, John McCain. He was grossly misquoted this morning by Senator Reid and others, who have tried to suggest he is not for offshore drilling. I think everybody knows John McCain supports more offshore drilling. As a matter of fact, on this chart, I will quote one of many things I could refer to from his Web site. I have a great deal of information in which he makes it clear he is for more offshore production.

Among other things, in June, he said this:

Opponents of domestic production cling to their position,

even as the price of foreign oil has doubled, and doubled

again . . . every year, we are sending hundreds of billions

of dollars out of the country for oil imports, much of it

from OPEC, while trillions of dollars of oil reserves in

America go unused.

He has also said the current Federal moratorium on drilling on the Outer Continental Shelf stands in the way of energy exploration and production. John McCain believes it is time for the Federal Government to lift these restrictions and put our own reserves to use, and on and on.

He obviously supports offshore production. So why did some of my colleagues take a quotation of his, leave part of it out, and try to create the impression that he did not support it and he did not think it would do any good? He was responding to a question earlier about whether more of this offshore production would produce immediate results. All he did was to tell the truth. Here is what he said:

I don't see an immediate relief, but I do see that

exploitation of existing reserves, that may exist, and that--

in view of many experts--that do exist off our coasts, is

also a way that we need to provide relief, even though it may

take some years. The fact that we are exploiting those

reserves would have a psychological impact that I think is

beneficial.

I totally agree with him. My colleagues read this to suggest that he believes offshore production would have no benefit except a psychological benefit. As we can see, that is not what he said. But his point is also valid--``is also a way we need to provide relief,'' it will provide a psychological boost to the markets just as, in fact, President Bush's lifting of the moratorium a week or so ago on some offshore drilling caused prices to drop. Many analysts believe the drop of about $25 per barrel was much because of the President's announcement and the fact that Congress was taking up this subject with the idea that perhaps we would actually get something done.

What the speculators are doing is simply placing a bet into the future that there is either going to be enough oil to meet demand or there is not. If there is not, then they are betting the price will go up.

What Senator McCain is saying is the mere fact we would pass legislation saying we are going to produce more oil offshore would immediately have the impact on the markets to bring the prices down because they would know in the future we would have enough supply to meet our demands. John McCain was exactly correct on this, and I think it serves no purpose to misquote him and suggest otherwise.

I also note that in the House of Representatives today, legislation was defeated, as it was last week, by the Democratic majority there that is very similar to, if not identical to, legislation that was introduced by Democrats in the Senate.

For example, last week the House of Representatives defeated a provision that says where leases have been let to oil producers, if they do not drill on those leases after a period of time, then the leases come back to the Federal Government.

As you probably know, that is already the law. The bottom line is you get primarily 10-year leases. Some are shorter. You cannot obviously immediately go out and drill on every one of several hundred thousand acres, but what you do is try to figure out where it is most likely you are going to get oil and you start drilling there first and keep going until you drill in all the areas where you think there is potential. It is obviously not going to be on every acre. Whatever you haven't done in 10 years goes back to the Government. That bill failed because it is already law.

Today another bill failed that is to drain the Strategic Petroleum Reserve. This is our national security reserve of oil, in case of an emergency, for our military primarily. We need reserve so the tanks can drive, planes can fly, and the ships can sail. You don't want to reduce that to affect very briefly the price of gas in the country. They would reduce it by 10 percent. What would that do in terms of the oil supply in the country? It would reduce the oil supply by 3\1/2\ days--3\1/2\ days. If it drove the prices down at all, which I doubt would happen, it would be very temporary because everybody would know it is not a permanent solution. So it is no wonder that failed in the House. Again, to the extent that is part of the Democratic bill, it is obviously not a solution to the problem.

I mentioned I would talk briefly about what Senator Sessions was talking about, and that is the unintended consequences of not producing our own energy, even though we have it in our country, and relying on other countries to do it instead.

More than 60 percent of every dollar spent at the pump--I filled up my tank last week, and it cost me over $70, and my tank wasn't even empty when I filled it. More than 60 cents out of every dollar I paid went to a foreign country. We could keep that money in the United States if we produced our own energy.

I conclude by saying we can do ourselves a whole lot of good to take advantage of the resources that exist right here in the United States of America, reduce the cost of gasoline at the pump, and ensure our future energy security.

I hope during the course of the next several days we will have an opportunity to do that as we debate this important legislation.

Mr. President, I also have a question for the minority leader.

I am trying to understand basically the differences between the proposals that have been put forth by the majority leader and by the minority leader in terms of unanimous consent requests. As I understand it, they basically boil down to the following, and I wonder if the Senator could confirm this for me.

What the majority leader has said is there could be either one amendment--or possibly two, I am not clear--but that they would pit the two sides against each other; that is, a Democratic proposal and a Republican proposal.

What I believe the minority leader has suggested is that we engage in what Senators call the regular order, which is a process of debate and proposals for amendments which would try to build a bill with amendments that could actually be adopted by both sides--or by Members on either side, let me put it that way--rather than simply having two party positions, neither of which could win 60 votes, would fail, and therefore we would end up with nothing. What the minority leader is suggesting is a process by which both Democrats and Republicans could offer ideas--pieces of the puzzle, as it were--that could appeal to Members on both sides in such a way that a bill could eventually be built and passed to actually do something about this energy crisis and the high cost of oil; is that correct?

Mr. President, I think Senator Dole's idea of the kitchen sink approach is right on target. Maybe we will even find a way for the kitchen sink to somehow help us out here, but at least it is everything but the kitchen sink that Republicans are suggesting is the answer to our oil crisis.

There isn't just one answer. That is why we don't agree with the Democratic bill, which is simply to deal with speculators and speculation. I am going to talk about that in a moment. First, to reiterate what Senator Dole said, Republicans support a broad-based, balanced approach to this problem that recognizes there isn't one silver bullet, but through a combination of things such as conservation, such as renewable energy, such as producing a lot more oil and gas which this country has. Also, if we will simply lift the moratoria that currently preclude us from exploring for more energy, deal with speculation to the extent it exists, as well as certainly nuclear power--all of these things together can help us work our way out of the crisis. Part of it is short term, part of it is medium term, part of it takes long term. We have to look at this as a long-term problem.

I shake my head at those who say: Well, that particular solution doesn't do anything for 3 to 7 years. My answer is, of course, I have never completed a journey I didn't start. If we had completed some of the things we started years ago, we wouldn't be in the crisis we are in right now. However, we are stuck right now with one bill on the floor. Unfortunately, it is not the Republican approach, which is a balanced, broad-based approach, and includes new production, but simply the limited approach of dealing with so-called speculators.

I wish to talk a little bit about why only focusing on speculation isn't going to produce one more drop of oil, it is not going to reduce the price at the pump, it is not going to solve the problem and, in the long term, could actually hurt, and I will try to explain why.

It is propitious that yesterday a report came out that supports what I am now saying. We didn't have anything to

do with the timing, but I say it is propitious because it helps to answer questions that people have been asking. For over 3 months now the regulatory body of our Government that looks at speculation, called the Commodity Futures Trading Commission, has been testifying, and despite enormous pressure from the other side to point the finger at speculators, they have consistently said they don't think it is speculators. We believe it is the law of supply and demand, the fact that there is much more demand for oil than we are producing that is creating a problem.

Well, an interagency task force led by the CFTC and composed of staff from the Departments of Agriculture, Energy, Treasury, the Federal Reserve, the Securities and Exchange Commission, and the Federal Trade Commission all reaffirmed yesterday that:

Current oil prices and the increase in prices between

January 2003 and June 2008 are largely due to fundamental

supply and demand factors.

Furthermore, the report--and again I am quoting:

suggests that changes in futures market participation by

speculators have not systemically preceded price changes. On

the contrary, most speculative traders typically alter their

positions following price changes, suggesting that they are

responding to new information--just as one would expect in an

efficiently operating market.

The other side has ignored this CFTC analysis for a long time. I hope the new report will not be ignored, because what it illustrates is you are not going to solve this problem by trying to figure out a way to somehow regulate speculators. You have to deal with the law of supply and demand.

I tried to explain this to a younger person who was wondering what all of this debate was about, and this is the example I came up with-- or the analogy: These are investors, these so-called speculators, and what they are trying to do is to predict into the future what the price of something is going to be. Now, if they guess right, they can make money. If they guess wrong, they may lose money. They are researchers and they are looking at the best evidence they can. One of the things they look at is will there be more supply or more demand. Obviously, if there is more demand, then the price is going to go up. It is a little bit like the weatherman predicting the weather. The weatherman is a professional too and he looks at all of the research and he concludes that by this weekend we are going to have some rain. Now, he may be right, he may be wrong, but that is his job, to try to predict, and more often than not, he can predict it fairly accurately. What if we don't want rain next weekend? What if we don't think rain is a good idea? Are we going to muzzle or fire the weatherman and say: We don't want you to report this because we don't want the rain? Is that going to do any good? It doesn't do any good at all. If it is going to rain, it rains. If not, it won't.

If the prices are going to go up because Iran is rattling its sabers in the Persian Gulf, the prices are going to go up. If they don't, and the prices don't go up, it is not the speculators who make the price go up or down. The speculators are reporters. They are people who are trying to figure out what the price is going to be. They don't make it what it is; they are trying to figure out what it is going to be.

That is why the CFTC said they typically alter their position following price changes, reacting to new information. Again, it would be like trying to shut the weatherman up because we don't like the weather he is predicting. That is the role these speculators have. They are trying to predict the future and they actually help the market by setting a price that is useful to those who are trading in the market.

I appreciate that there are colleagues on the other side who are skeptical about this, but let me explain why I think it is unlikely that commodity traders actually push up the price of oil. Here is the explanation. They can only do this and drive up prices if they actually took physical possession of the product and then hoarded that, withheld it from the market.

But between 2003 and May of 2008, only about 2 percent of oil futures contracts actually resulted in physical delivery. Those are the utilities, airlines--folks like that.

If commodity index fund investors were, in fact, hoarding actual physical inventories to raise prices, one estimate suggests that they would need to fill storage tanks with more than 40 times the amount of oil currently held in the inventory at the Cushing oil terminal in Oklahoma where the West Texas intermediate oil contract is valued. Since we have not seen all of this frenzied new construction of oil storage tanks and facilities equivalent to 40 Cushing oil terminals, it is very clear that there is no hoarding occurring.

What is actually happening to supply today? Total oil stocks in the developed countries have been static. In other words, we have not been increasing the supply. A year ago, including strategic reserves, they amounted to about 4.1 billion barrels and today are at about the same level. Global demand, on the other hand, was 86 million barrels a day in 2007, while supply totaled 85.5 million barrels, creating a deficit of half a million barrels a day. As one would expect, prices are rising to reflect the fact that there is not as much supply as there is demand for the product.

I also think it is interesting that when you talk about speculators, you know the price has been going down in the last few days. I haven't heard anybody complaining that the price of oil is going down. If they are to blame for the price going up, maybe we ought to pat the speculators on the back for driving the prices down. Of course, they don't have that effect; I am being facetious. But who are these nefarious investors?

If you have a relative who is retired or a friend or someone who has a pension, you probably know a speculator. That is who is primarily investing in these kinds of funds. All investors want to diversify their portfolios to protect themselves against risk. You do that by purchasing as many different kinds of assets as you can, by investing in commodities. Pension funds and other institutional investors can protect beneficiaries like retirees from market downturns. In the current market, commodities are one of the few investments that have been actually generating positive returns. Under the legislation before us, if you declare these people bad investors or illegitimate speculators, you are going to be hurting regular investors in the market. I don't think we want to do that.

Interestingly, one of the pieces of legislation the Republicans have sponsored--the legislation called the Gas Price Reduction Act--is very similar to a bill introduced by my colleague from Illinois, Senator Durbin, who I think takes a thoughtful approach to speculation in the energy markets. Like our bill, his focuses primarily on increasing the resources available to the CFTC so it can continue to do its job and even do a better job of ensuring there is enough transparency in the system to enable it to continue to investigate and take action, if need be. With just a few modifications, I think the Durbin bill would be a good approach, as is the Gas Price Reduction Act, which Republicans have introduced, which strengthens the CFTC and makes sure it has the assets it needs to do the job we asked it to do.

In conclusion, I think everybody agrees that a stronger CFTC and additional transparency are good. I think we can all support that. It is part of that kitchen sink approach we heard talked about earlier, but it is only one small part of this. In no way are we going to see that approach drive down the price at the pump. As I said, it is little bit like the weatherman, these speculators. They find out what the price is and they, in effect, report it by their purchases or sales-- either one. But you don't improve anything by killing the messenger-- the speculator--any more than you improve the weather by shooting the weatherman.

As we proceed with the debate, I hope my colleagues will agree that while there may be a lot of good ideas--and one may be to strengthen the CFTC somewhat--that is not the answer to the crisis we face. It doesn't produce one more drop of oil or gas. At the end of the day, we are not going to be successful unless we find a consensus to enable us to produce more so that, along with using less, we can drive down the price of gas at the pump.

Madam President, might I just ask the minority leader to yield for a question?

Madam President, just to clarify one thing the majority leader said, your unanimous consent request dealt with seven specific subjects that you would like to address by amendment. The majority leader indicated that all seven of those were part of a bill that 44 Republicans had cosponsored.

I would ask the minority leader, is that correct? Specifically, did that bill that Republicans have cosponsored include LIHEAP, which is one of the amendments, a nuclear amendment, which is another amendment, or an amendment dealing with the production in Alaska, specifically

The following Senators are necessarily absent: the Senator from Tennessee (Mr. Alexander), the Senator from Nebraska (Mr. Hagel), and the Senator from Arizona (Mr. McCain).

Further, if present and voting, the Senator from Tennessee (Mr. Alexander) would have voted ``yea.''

Mr. President, I ask unanimous consent that at the conclusion of my remarks, the Senator from New Mexico be recognized.

Mr. President, I wish to go back to the discussion about the subject we want to devote a lot of attention to this week, and that is gas prices. Senator Bond spoke to that issue a little earlier. We are going to be going to that issue tomorrow. It is critical that we address this problem before the August recess in a couple of weeks.

Forty-four Republicans have cosponsored the Gas Price Reduction Act, about which Senator Bond spoke. It is a balanced approach to our energy crisis. It recognizes the need for additional production, as well as dealing with the demand side. In other words, use less, find more, and to do so here at home, to use American energy to solve this American crisis. That way we can have more control over our own destiny, a point I will be making in a moment.

The other side, though, has decided to approach this problem with a very narrow and limited approach dealing with so-called speculators. Speculators are people who trade in crude oil. There is a view that speculators actually affect the price when they buy it or sell it.

The first point I wish to make is the opposition always talks about driving up the price when speculators buy, but they never bother to mention that every time you buy, somebody else sells. So it is a little hard to see how speculators are responsible only for the increase. As a matter of fact, last week was the largest drop in oil prices ever in our history, at least in the last couple of decades, over $20. I don't think anybody blamed the speculators for the decline, or maybe I should say they didn't cheer the speculators for the decline or drop in oil prices. So it is a little odd every time the price goes up, it is the speculators' fault, but when the price goes down, well, maybe that is the market forces taking control. The reality is that for every purchase, you have to have someone who is selling.

I did think it was interesting that the majority leader was here earlier and he actually attributed that decline to the fact that we were talking about legislation dealing with speculators. I see no evidence to support that claim and, in fact, I will cite some evidence quite to the contrary in a moment. But it reminds me of a great fable writer by the name of Stephen Leecock who tells the story about the two fleas on the back of the Roman chariot. They look back and say: My, what a fine cloud of dust we are creating. It seems to me that is pretty similar to contending this speculation bill caused the drop in prices. I think we all know what it was. When President Bush announced the end of the Executive moratorium on drilling, that is when the prices went down. As a matter of fact, Joseph Trevisani, who is the chief market analyst for a company called FX Solutions, said a few days ago:

President Bush lifted the executive ban on offshore

drilling on Monday and by Friday crude prices had completed

their sharpest fall in percentage terms since 2004.

He went on to say:

Oil traders are betting that this Congressional ban on

drilling which covers 85 percent of U.S. Continental waters

will not stand.

That is the point. When we start seriously talking about eliminating the ban on production, that is when prices will go down. Why is that? Speculators are actually very smart researchers who are trying to figure out whether demand will exceed supply or supply will exceed demand some time in the future--16 months out, 18 months, 2 years, 5 years, whatever it might be. They do a lot of research to try to figure this out. It doesn't take a genius to figure out that if you have a legal ban on more production and you lift that ban, obviously you are going to potentially produce a lot more crude oil. That increase in supply will obviously affect the price because it will then exceed the demand or at least it will keep pace with demand. That is simple market economics. That is what happened last week. It illustrates the fact that while there are those who say if we increase our production, it is going to take 3 to 7 years before we will see any of that production, the mere fact that we are getting serious about doing it was enough to reduce prices. I suspect if we actually pass a law that does it, the prices will decline even further and will continue to decline as progress is made toward increased production.

The reality is that prices rise and fall depending on a lot of events that are outside our control, and we need to bring more of those decisions within our control. There is a hurricane in the gulf. Iran is rattling its sword in the Middle East. Those kinds of things cause the prices to go up because there is a suggestion that the supply may be interrupted in the future. Then by the same token, we react to good news, as occurred last week. When the President says we are going to remove the moratorium that by Executive order has been placed on production and Congress says we are considering legislation to remove the congressional moratoria as well, speculators react to that as well.

The other side, which says it is all the speculators who are to blame for the rising prices, might as well blame the weatherman for bad weather. His job is to do the research and predict what the weather is going to be. Muzzling him and saying he cannot talk about the weather is not going to create sunny days next week. Those days are going to come because of weather factors, not because the expert in the field is predicting it one way or the other. It is the same thing with these so- called speculators who are in the business of buying, whether it is for an airline or a pension fund or for whomever. Their job is to try to determine what the market price should be at any given time.

I talked about trying to gain more control of it ourselves. Unfortunately, there are a lot of producers in the world that have an interest in increasing the price of oil and have the means of doing so by simply acting badly. I am speaking of countries such as Russia, Iran, and Venezuela. In Iran, we know they have rattled their sword in the past, and that not only advances their national policy goals, but it also has a tendency to cause panic in the market and, therefore, the prices go up because there is a view there may not be an adequate supply for the demand we have.

For example, I note the fact that all of the oil through the gulf--it is not just Iranian oil; it is from the Emirates, Saudi Arabia, Iraq, and other countries. About two-fifths of all globally traded oil goes through the Strait of Hormuz, and Iran is on one side of the Strait of Hormuz. They have their ships in the area. At one time or another they have tried to interfere with

the shipping traffic lanes through the Strait of Hormuz.

For example, in June 2006, the threat of Iran obtaining a nuclear weapon created quite a stir among New York traders, and that drove the price of oil up to nearly $80 a barrel. In 2007, five armed Iranian boats approached three U.S. Navy warships in international waters, taking aggressive actions. The Pentagon described it as ``reckless and dangerous.'' The incident only lasted about 20 minutes. As a result, there was a brief spike in oil prices as soon as that was reported on

Mr. President, let me say on the point my friend from Illinois made, while there may well be room for dealing with speculation as part of the overall approach to our energy crisis today, it is clear that speculation cannot be the only or even a major piece of it. Without new production, we are destined to continue to rely on foreign sources for our oil and very high oil prices.

We will be interested in getting into the debates about the relative merits of different approaches to speculation. But let me talk about a little different angle to this than has been discussed so far, and that is not only the fact that people, when they go to the gas pump, find themselves paying very high prices for oil, which hurts their family budgets and, in many cases, businesses that have to rely on fuel, but also that it is a national security problem for the United States because of our undue reliance on these other countries.

The point I want to make today is this: A lot of these countries have the ability to actually increase the price because of the instability they can create around the world. I think of the Iranians, for example. Everyone knows that we get a great deal of our oil from the Persian Gulf region, that the Strait of Hormuz is the very narrow area

through which about 40 percent of all the oil has to go. Forty percent of the world's oil tankers have to exit the Strait of Hormuz as they are picking up their oil from the Emirates, Saudi Arabia, Iraq, Iran, and so forth. That creates an opportunity for mischief, and the Iranians have been very good at exploiting that. Whenever they rattle their saber, whenever they engage in a naval exercise in that area, or when, recently, they shoot off missiles to show everybody they can be tough guys and throw their weight around in the world, that gives the markets a lot of jitters, and we saw what happened: The price of oil shoots up.

Ironically, countries that are no friends of the United States would create great mischief if they could have an additional reason for this belligerent behavior. It drives up the cost of oil, which is where they make all their money. So they literally have the ability to help dictate the price of the commodity that sustains their economy.

Iran is not the only country. Russia actually produces more than Saudi Arabia. The United States is third. But Russia, as the world's largest oil producer--about 9.84 million barrels per day--has produced about a fourth of the non-OPEC crude oil since 2007. At today's prices, that would be about $1.4 billion per day--think about that--and over $500 billion for the year; almost $1.5 billion a day into Russia's Treasury.

As a result, Russia has been able to do some things that are not in the interests of the United States. They are rearming their military with oil dollars. That is how they are able to afford all of the new things they are doing in terms of their nuclear program, their missile program, and all of the other things they are doing that are antithetical to United States national security interests.

Moreover, they have shown no reluctance to use their oil and natural gas production as a weapon as well. When countries next to them or even far away that rely on Russian natural gas or oil do something the Russians do not like, they simply cut off the supply. And they have done this numerous times. It has much of Europe, which relies on Russian natural gas, very jittery because if you make the Russian bear mad, he cuts off your source of natural gas and, in some cases, oil. This creates a very unstable and very difficult situation for these countries, and also has the effect of driving up the price of oil and natural gas.

Because both of these products are fungible; that is to say, they can be produced all around the world and everybody around the world buys them, there is a world market for them. So even though the jitters are in the Persian Gulf or in Europe, for example, the price is reflected all around the world, and the United States ends up having to pay more at the gas pump because these countries can affect the price of the commodity they rely on to fund their government.

Recently, it happened to be that Russia shut off oil to the Czech Republic. They have shut off oil or natural gas to other countries in Eastern Europe, especially when they did not agree with the Russian position on something. They have shut off natural gas supplies during the dead of winter to countries in Eastern Europe that wanted to join NATO. Russia says: We don't like that so we will shut you off.

The Czech Republic decided it wanted to help the United States and itself to be protected against missiles. So they are helping to establish a missile defense base in the Czech Republic. Russia doesn't like it, so half of what is sent from Russia to the Czech Republic is cut off.

This is the problem of relying on other countries, not to mention a country such as Venezuela. The United States gets a good deal of its oil from Venezuela. We all know the head of Venezuela, Hugo Chavez, has done everything he can to undermine United States influence in Central and South America and does everything he can to get in the face of the United States. If he wants to affect the price of oil, all he has to do is rattle his saber as well.

In each of these cases, we have a situation where the price of the product and the availability of the product is dependent upon positions over which we not only have no control but countries that have interests very inimical to ours, and the end result is it costs more for people in the United States for a very necessary product, namely, the oil and natural gas product we use to fuel our economy. This is one of the reasons why I say it is a national security issue as well as affecting the price at the pump.

It is one of the reasons why the United States has to begin to rely less on the oil produced in foreign countries and more on oil we can produce right here in the United States. It is not well known, but the United States is the third largest producer of oil in the world, after Russia and Saudi Arabia. We have huge reserves here of which we are not taking advantage. This is one of the reasons why Republicans are insisting that any legislation that comes to the floor dealing with this energy crisis include taking advantage of the resources we have. Let's free up these resources. We have them. They can be obtained in a very environmentally sensitive way, and they can help not only to reduce the cost of gas in the United States or natural gas but also to reduce the ability of other countries around the world to influence behavior in a bad way, such as shutting off the oil or natural gas for customers of theirs or driving up the cost of oil for everybody else.

I got to thinking about this in terms of the taming of the West. One of the reasons the United States became such a great country so rapidly was that we bought land with the Louisiana Purchase. We explored the West. We took advantage of natural resources that were in this country, and we quickly became a very strong power economically. We had natural gas, we had oil, we had minerals--copper and gold and all of the rest. We took advantage of the resources that we had to become a wealthy and powerful country.

One hundred years ago, we didn't mine in a very environmentally safe way, but no one can deny that the way we produce our wealth today is with great environmental sensitivity. Everyone agrees with that. It is not any longer hurting the environment. All of this production can be done, for example, offshore or in the deep waters of the gulf in a very environmentally sensitive way. We are hoping the same thing can be done with oil shale.

So when our friends say we need to be able to deal with the commodity markets here and that is going to make a big difference, the answer is, there is a lot of dispute as to whether it will make any difference at all. But we do know something that will make a difference but it will not make a difference just in the long run, it will make an immediate difference. The decision to explore and produce right here in the United States where we know we have the resources, where we are not dependent on other people, where they cannot drive up the price because they can rattle their sabers in the Strait of Hormuz or cutting off oil and natural gas supplies as Russia has done, we can stop all of that by simply producing more in the United States where we know we have it and we can produce it safely and in an environmentally sound way.

It is like the settlement of the West, as I said, in taking advantage of our natural resources. We have always been a can-do nation. We have always said we can take care of ourselves. We don't want to be dependent on others. What we have learned today is that for depending on others, we pay a very high price, and I don't mean just a high price at the gas pump but a high price in terms of our national security as well. That is the reason we are insisting on removing some of these moratoria, strictly illegal moratoria. It is a moratorium from being able to explore for energy off our coasts or in the deep waters in the gulf or on Federal lands.

There is a big up side to the Federal Government in terms of revenue royalties, as well as to States as a result of this action. So instead of paying money to foreign countries, we can be gaining some of that wealth right here in the United States.

Bear in mind that other countries are the recipients of the payments for oil around the world, not oil companies as is the case primarily in the West. We send more than $1 billion a day, not to some oil company abroad but to foreign governments. They control the oil in Russia, in Iran, in Iraq, and so on. Let's get off of sending our money to foreign governments that are working against our interests and that can affect the price of the commodity simply

by their bad actions and rely more on the resources we have in the United States, that we know we can extract in an environmentally sensitive way, that can reduce the price immediately. That is the last point I wanted to make.

Martin Feldstein had an interesting piece in the Wall Street Journal about 2 weeks ago in which he made the point that there will be an immediate downward effect on oil prices if we simply announce that we are going to go after these resources in the United States. As a result, I urge my colleagues, when the opportunity arises and we debate this issue over the next week or so, that we support increased production in the United States for the benefit of American citizens.

Mr. President, I wonder if my colleague would yield for a question.

I would like to ask our distinguished ranking member of the committee, aren't there several well-qualified judicial nominees currently pending in the Judiciary Committee who have been denied fair up-and-down votes? For example, Mr. Peter Keisler, the former Acting Attorney General, has been rated unanimously ``well qualified'' by the American Bar Association and has earned bipartisan praise from attorneys, professors, and even editorial pages. I know the Washington Post and the L.A. Times have praised his nomination, calling him a ``moderate conservative'' and a ``highly qualified nominee'' who ``certainly warrants confirmation.'' Notwithstanding those outstanding qualifications, tomorrow, I believe, will mark 750 days that Mr. Keisler has been waiting for a committee vote.

Mr. President, might I inquire of my colleague further on that precise point?

With regard to the filling of the circuit court for the District of Columbia, we had testimony by Mr. Roscoe Howard, very recently in the Senate Republican caucus forum on judicial confirmations--this was just last Monday--that the numbers the majority relies on for that argument that the Senator identified are outdated. He noted that the Judicial Conference recently issued statistics indicating that in recent years the DC Circuit Court's docket has increased and that it has been processing appeals more slowly because of additional workload, and this has corresponded with an increase in the median wait time between the notice of appeal and disposition of a case, which, in fact, he notes is the longest since 1995.

Mr. President, just one more point.

I also note, when I heard Mr. Howard's testimony demonstrating further the need to fill this seat, he noted that Judge Raymond Randolph of the DC Circuit recently announced he would be taking senior status on November 1 of this year, which means the seat to which Mr. Keisler is nominated is actually the 10th seat on that circuit. Is that not correct?

Mr. President, again I say to Senator Specter, just to confirm my understanding here, in addition to Judge Randolph, Judge David Sentelle currently is eligible for senior status. Next year, Judge David Tatel and Judge Judith Ann Rogers will be eligible for senior status. Judge Karen Henderson and Judge Douglas Ginsburg will be eligible in 2009 and 2011, respectively. Am I correct on that?

Mr. President, it seems to me, given these facts, it is even more imperative that Peter Keisler be at least voted on, and I would argue confirmed, to the DC Circuit, and it seems to me no other reasons than purely political motivations seem to be blocking his confirmation.

Mr. President, the answer to my colleague from Iowa is yes. Mr. Steve Matthews of South Carolina and

Judge Robert Conrad of North Carolina, for example, are both impressive nominees who are exactly the kind of judges the severely understaffed Fourth Circuit Court of Appeals needs.

That is a very good question. Judge Conrad has been waiting for a hearing for 365 days. Today is the 1-year anniversary of his nomination, even though he was unanimously rated ``well qualified'' by the American Bar Association, and Mr. Matthews has been waiting for a hearing for 315 days.

Yes. I guess I would say that was then, this is now. But in addition to the ABA rating, I note that Judge Conrad in particular meets the other three criteria that Chairman Leahy has stated are his standards for quick confirmation.

The answer is yes. Chairman Leahy has said--and I think all of us would agree--that judicial emergencies should be addressed quickly. In fact, in a press release in January of last year, he stated:

There are several outstanding judicial emergencies. . . . I

hope to expeditiously address some of these emergency

vacancies in the Judiciary Committee.

Yes. Both Judge Matthews and Judge Conrad have the support of their home State Senators. In fact, on October 2 of last year, Senators Burr and Dole sent a letter to Senator Leahy asking for a hearing for Judge Conrad, and they spoke on his behalf at a press conference on June 19 that featured numerous friends and colleagues of Judge Conrad's who had traveled all the way up from North Carolina to DC to offer their support for his nomination. On April 15, 2008, Senators Burr, Dole, Graham, and DeMint sent a letter to Senator Leahy asking for a hearing for Judge Conrad and for Mr. Matthews.

I absolutely agree with that assessment. Those are the considerations that underscore my great regret that no nominees were on the agenda for the executive business meeting of the Judiciary Committee this morning.

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

Mr. President, Senator Biden has indicated that one of the pieces of business on this legislation we can take care of right now relates to an amendment Senator Thune and I offered to the bill, and then if Senator Dorgan and others have reached an agreement with us about a way to modify that amendment so that it is acceptable to all, both the second-degree and then the underlying amendment can be adopted without the necessity of a rollcall vote.

Let me describe what it is. Some of us had felt that the total price tag at $50 billion, while too high for this particular program, at least was an acknowledgment that we were willing to spend that amount of money on matters that related to needs both here in the United States as well as abroad.

Among those needs, as a result of hearings Senator Dorgan has had and Senator Thune and I have identified, as well as others, are needs dealing with Native Americans in the United States, some of which are the same in terms of water projects that we would be dealing with in this underlying PEPFAR bill, but rather than doing that all in countries of a continent such as Africa, for example, some of that would be done for U.S. citizens because of reports that have demonstrated the dire conditions that exist on some of our Indian reservations.

So the amendment Senator Thune and I proposed was to take $2 billion of the total $50 billion authorization from PEPFAR and devote it to a combination of law enforcement on Indian reservations and for Native Americans and water-related needs of our Native Americans.

Senator Dorgan wanted to further amend that by providing for some Indian health activities that could be funded by part of the amendment as well. So the second-degree amendment provides for funding of $750 million for law enforcement and $250 million for Indian health-related activities. In addition, the underlying Thune-Kyl amendment provides for an additional $1 billion authorization for water development and projects on the Indian reservations.

So the bottom line is, the $50 billion for the PEPFAR authorization would be reduced to $48 billion. Two billion dollars in authorization would go to the Indian reservations and Native American needs, and Alaska Natives as well, that I indicated. That is an agreement that has been reached as a result of Senator Thune, myself on the Republican side, Senator Dorgan, and Senator Biden on the Democratic side, but also several other Members--both Democrat and Republican--with whom we have spoken who have asked to be listed as cosponsors on the amendment or second-degree amendment before we pass it.

Amendment No. 5084

There is no indication, Mr. President, there is a need for a rollcall vote on this amendment since it has been agreed to by all. Therefore, unless there is anyone else who would wish to speak to this amendment, I ask unanimous consent that the second-degree amendment be called up for a vote.

So, Mr. President, if I could, before I thank everyone involved here, by unanimous consent, the second-degree amendment was adopted,

and we voice-voted the underlying amendment; is that correct?

OK. So, then, we need to have a voice vote on the underlying amendment as well?

Mr. President, I ask for that at this time.

Mr. President, might I just use this opportunity to also thank Senator Lugar, whom I did not mention but who was also helpful, and his staff, as well as Senator Biden and his staff, and Senator Thune, for all of his work in bringing this issue to the attention of the body, and acknowledge the groundwork that Senator Dorgan and his committee laid in order to make this possible for us to achieve.

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

I would like my colleagues' attention so I can briefly explain the amendment.

Mr. President, this will take a moment. This is a very simple amendment. We have tried to authorize $50 billion over 5 years. All my amendment says is that in those 5 years, the last year will have $10 billion authorized--in other words, one-fifth of the total. And that if there is an appropriation exceeding that amount, that there would be a point of order against it.

The reason for it is very simple. Under the current law, we have exceeded the authorization by about $4 billion, actually close to $5 billion. What that does is to affect the baseline for the following reauthorization.

All we are trying to do is to say if this is $50 billion--that is $10 billion a year. The House actually has it designated as such, the Senate does not. All I am saying is, is not even designate each year as 10, just make sure the last year is 10.

One reason for doing that is to make sure that is the baseline for the subsequent reauthorization. That is all we are trying to do. This is a very simple, very easy amendment to support. I would think those who are strongly in support of PEPFAR would agree to this amendment because it would grant further assurances about the program not having mission creep and expanding more than it should in future years, that would make some folks feel better about it.

Mr. President, I reserve the remainder of my time.

Mr. President, that is a reasonable argument. My amendment does not preclude the reasonable ramping up of the money. But what we are hoping to do is to keep the appropriation to $50 billion--actually it is now $48 billion. Under current law, at $15 billion authorized, we are spending just under $20.

In other words, the appropriations have exceeded the authorization. All I am trying to do is not prevent the internal adjustment to allow the full expenditure of the amount authorized but to prevent an appropriation above that. That is why the point of order would only apply to appropriations that exceed the authorized amount in the final year.

Mr. President, I appreciate the hard work both the chairman and the ranking member have put in. Their arguments have been made. I ask my colleagues to improve the bill a little bit by adopting our amendment.

I ask for the yeas and nays.

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

Madam President, I thank both Senator Lugar for his courtesies, as well as Senator Biden. I appreciate the fact that we have had an opportunity to make some changes in this bill which, while modest, do improve it. Senator Coburn talked about some of the more important ones. I supported PEPFAR. When the President announced in his State of the Union speech that he would request Congress to double the authorization for PEPFAR, I swallowed kind of hard but said, if it has done a good job, which we will find out, maybe that is all right.

What we have found is that at the present level of authorization--$15 billion--it has been a successful program. That is the good news. Unfortunately, when the bill was written, many of the policy provisions that made it a success were changed. That has required some amendments to be adopted to get closer to the original purpose.

Unfortunately, some policy issues remain. I wish to note that my objections to the bill relate to two primary points. First is a couple of policy issues, and second is the amount of money being authorized. I will just mention three issues. Notwithstanding the positive changes of which Senator Coburn spoke, we still have a significant mission creep. You cannot go from $15 billion--the amount authorized today--to $50 billion without having substantial mission creep. You cannot spend it all on the original purpose of the program. Indeed, we add things such as nutrition, legal aid, and others that are quite far afield from the original mission, which was primarily the treatment of AIDS patients.

Secondly, we still have the problem that it deals with far more countries, including wealthy ones, than the poor countries we should be focusing on here. Unfortunately, we were not able to constrain it to a list of more needy countries that would receive this aid.

The third policy problem, spoken about before, is the doubling of funding for the U.N. Global AIDS Fund, which has had significant problems. I think they have been well identified. It disregards U.S. policy on matters such as abortion, needle exchange, and others. While many of the policy problems have been resolved, there are still policy problems with this legislation. If the amount of money was much less than it is, this would be less significant. At $50 billion, these policy changes can be magnified. Due to the cooperation of the colleagues I have already mentioned, $2 billion of the authorization has been diverted to some needs in the United States. I am grateful for my colleagues' cooperation on that.

There is a lot we could do with money--$10 billion, $15 billion--in the United States that we have not been able to do because of a lack of funding. If we are going to commit to authorize $50 billion to deal with some difficult issues, it seems to me we could have diverted more than $2 billion of that to deal with some of our needs in the United States.

But that brings me to the second points of my concern with the bill and that is the pure sticker shock of $50 billion. We are more than tripling the current authorization of $15 billion. As we heard earlier this afternoon, I don't think there is any intention of appropriating less than that amount of money. If anything, we should be appropriating more than that. Because one of my amendments was not adopted, there is no limitation on how much money could be appropriated. So we have gone from $15 billion to $50 billion. That is a lot of money in anybody's budget--especially at a time in the United States when we are facing several crises.

I was down at the White House this afternoon with the Secretary of the Treasury. We have a crisis dealing with a couple of the mortgage holders, we have a Fannie and Freddie problem, as well as other potential liabilities that will fall on the shoulders of American taxpayers. We need to take these issues on because they are critical to our economy and indeed have ramifications throughout the world. But they all involve the U.S. taxpayers potentially picking up the tab. We don't have any choice. We need to do it. Gas prices are high.

We are going to take up energy on the floor next, I hope. That is a huge problem. People are hurting because they are paying high gas prices and high food prices also. This is not the time for us to be tripling a worthy program to $50 billion when we are facing some huge crises here at home. It seems to me we need to make sure we are in better financial condition to face those crises rather than authorizing another $50 billion in foreign aid.

Now, we will hear the argument that this is to do. Nobody denies that. The argument is not is this a good thing. Of course, it is. There is an argument about whether moving from $15 billion to $50 billion more than triples the good that is done. I have heard nobody make that argument. In fact, the only way you can spend that much money is to increase the mission beyond what it is today. The CBO--a nonpartisan office--makes the point that at a $50 billion authorization, no more than $34 billion could be effectively spent.

The point is there is only so much you can do on these programs-- especially without good policy to ensure that the money is spent wisely. There could be, and I submit will be, a tremendous amount of waste if we authorize this program at $50 billion.

So for all these reasons, but primarily and, frankly, because of the huge unmet needs we have at home and the uncertain future we have here and the things that we are going to have to do to shore up our financial system and make sure our economy can continue to operate strongly, I cannot support a bill that authorizes $50 billion in this foreign aid. Our country needs to be strong, and we need to deal with the crises here at home. We are a wealthy nation; we can afford to be a generous nation. We all want to be generous. We have supported the program in its current form.

The only question here is whether we can efficaciously go from $15 billion to $50 billion. I find the answer to that question, at this point, to be no. To be strong, we have to be strong here at home, and then we can help people abroad. Reluctantly--because I realize the President supports this program strongly--I must oppose the program. I express the appreciation of those who helped adopt one of the amendments I proposed. I think it will make a modest difference.

On behalf of taxpayers, we should not be committing to spend $50 billion at this time.

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

Further, if present and voting, the Senator from Virginia (Mr. Warner) would have voted ``yea.''

The following Senators are necessarily absent: the Senator from Tennessee (Mr. Alexander), the Senator from Tennessee (Mr. Corker), and the Senator from Arizona (Mr. McCain).

Further, if present and voting, the Senator from Tennessee (Mr. Alexander) would have voted ``nay.''

I thank the Senator from New Mexico.

Mr. President, are we currently in morning business?

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

I ask unanimous consent the reading of the amendment be dispensed with.

Mr. President, I ask unanimous consent the agreement be amended by also providing that Senator Judd Gregg would follow Senator Klobuchar.

Mr. President, it will only take me 5 minutes to describe this amendment. If we need to have debate about it later, we can certainly do that.

This is an amendment to the bill. The bill, recall, provides for an authorization of $50 billion over 5 years. If you divide $50 billion by 5 years, you get $10 billion a year. All my amendment does is to provide that, at least in the last year of the 5 years, the appropriation to fill the authorization would be limited to $10 billion. If it were more than that, there would be a point of order that would lie against that.

The reason for the amendment is twofold. First, the House of Representatives provides for an annual authorization of $10 billion per year for 5 years. The Senate bill doesn't break it down that way. We are open as to that. I am not trying to limit what the appropriations would be during years 1 through 4, but what I am saying is the fifth year would be $10 billion, exactly one-fifth of the amount authorized.

The second reason is this. Frequently in the reauthorization of legislation we take as the baseline the last year of appropriations. I want to make sure if we are authorizing $50 billion that when we get to the end of this, the baseline for the next year is at least not going to exceed $10 billion, which would be one-fifth of the $50 billion. It turns out under the existing program we have not limited ourselves to that degree of discipline. The existing law authorizes $15 billion over 5 years. You would think that would be $3 billion year. If you think that, you would be wrong. What the Appropriations Committee has done is to appropriate more money than that authorized. In the last year, the current year, for example, there is about $6 billion that has been appropriated as a result of which, over the 5-year period, the total amount appropriated is just under $20 billion. That is $20 billion appropriated for a $15 billion authorization.

All I am trying to do is to keep us honest here. If we are saying this is going to be a $50 billion authorization--I think that is way too much money--let's leave it at $50 billion. All my amendment does is to say in the last year, the appropriation to fulfill that would be limited to $10 billion. I think that is eminently reasonable.

To those who say, ``We are going to oppose all amendments to the bill, let's just do it the way it was written,'' I say think for a moment. You are going to make people feel a lot better about this if there is some discipline in our spending in furtherance of the authorization. There is some degree of skepticism, at least by some on my side, that Congress will restrain itself to the level of authorization.

This amendment doesn't go as far as the House in setting an amount every year, but it does at least set an amount for the last year. Theoretically, we could appropriate more than $50 billion. In the first 4 years you could appropriate $12 billion a year. This amendment doesn't prevent that. But I do want to say in the last year we confirm the discipline of limiting it to $10 billion.

That is the extent of my amendment. I hope my colleagues will approve it. We don't need a great deal of debate time, as far as I am concerned. If somebody wants to argue against it, I wish to have the last word and then have a vote on it as soon as is agreeable to the Members on the other side.

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).

Mr. President, reserving the right to object, Senator Grassley, on our side, is responsible for this. I am waiting to consult with him. I would ask my colleague to wait a moment on that request, and we will see if we can find Senator Grassley.

Mr. President, if we can have the time run----

Mr. President, if Senator Grassley arrives, I will defer to him, but let me make some comments. It is distressing that the effect of this bill has been misrepresented to the extent it has. There have been some very wild claims that this has to do with killing Medicare, that it has to do with punishing America's doctors, that it has to do with hurting America's seniors. This is not the language of a reasoned debate of the Senate. The bill has nothing to do with any of those things, and all my colleagues know that.

Let me describe why we are where we are today. I will take a minute to remind everyone of the promise we made to America's seniors 5 years ago. The 2003 Medicare Modernization Act achieved two very important goals. The first was to provide comprehensive drug coverage, prescription drug coverage, a very important benefit for America's seniors.

Secondly, to explain private health plan choices, similar to the options available to Members of Congress and other Federal employees. We wanted America's seniors--the Medicare patients--to have the same kind of private health insurance options for Medicare that all of us have.

Today, as a result of this plan, somewhere in the neighborhood of one-fourth of America's seniors have taken advantage of this private insurance alternative to traditional Medicare. From the beginning, I know a lot of people on the other side of the aisle didn't like that. They wanted a one-size-fits-all program, one program. Republicans said we need more choices. Seniors have been happy with the prescription drug benefit and with those choices.

The problem with this bill is it cuts both the choices for America's seniors and negatively impacts the prescription drug coverage. That is why Members on this side of the aisle have said they would like to see an opportunity to amend the bill, to try to fix the bill, to have a bipartisan bill instead. But, no, we were jammed--not once, twice, but three times: Take it or leave it. It is the partisan approach, despite the fact that the chairman and ranking member negotiated a bipartisan bill in good faith. Nonetheless, we had to revert to a strictly partisan approach.

That is what this was all about. It was never about covering the physicians to make sure they didn't take a pay cut. I doubt that there is any Senator who doesn't support the 1.1-percent increase in physician reimbursement, an increase for physicians who treat Medicare patients. We all support that. It was in the Grassley proposal, it was in the Baucus proposal, and it was in the bipartisan Grassley-Baucus proposal. So this was never about that. None of the Republicans ever opposed providing the physicians their update. It had to do mostly with an attempt that has been undertaken for many years to undercut the private insurance part of Medicare that many on the other side of the aisle have never liked. It is one of the signature

achievements of the Bush administration, and it is no wonder that the President vetoed the bill because of the fact that was hurt.

First of all, according to the nonpartisan CBO, as a result of this bill, 2.3 million seniors will be removed from their private coverage option under Medicare. That is one of the effects of this bill. Instead of all the scare tactics you have heard, I can honestly say that voting for this override of the President's veto will result, according to the CBO, in the removal of 2.3 million American seniors from this private health care option. That is not a good result.

Here is what the President's veto message personally said today:

. . . the provisions that would enable the expansion of

protected classes of drugs would effectively end meaningful

price negotiations between Medicare prescription drug plans

and pharmaceutical manufacturers for drugs in those classes.

If, as is likely, implementation of this provision results in

an increase of a number of protected classes, it will lead to

increased beneficiary premiums and copayments, higher drug

prices, and lower drug rebates.

That is the second pernicious effect of the bill. It will undermine the Medicare prescription drug plan's ability to negotiate good drug prices for seniors.

I know some on the other side were always skeptical of the ability to bring down drug prices. In fact, the Medicare Part D has reduced them precisely because of this competition in the market. This bill partially eliminates that competition. That is the reason some of us oppose the bill, and they are good and legitimate reasons. I believe the President was correct to veto the bill because of these provisions.

Five years after the Medicare passage, we are rewinding the clock, chipping away at the very plan choices and prescription drug coverage that seniors asked us to provide.

These are not pro-patient policies. Rather, the bill reduces access, benefits, and choice for Medicare beneficiaries.

In conclusion, it was a very flawed process. As we know, there was an attempt at a bipartisan solution. There are 51 Democrats and 49 Republicans. You would think that Republicans could have a say in writing the legislation. But, no, that was not to be. We were required to deal with the take-it-or-leave-it proposal of the majority.

Twice the majority walked away from these bipartisan negotiations I talked about before. When we tried to suggest, at a minimum, that we should extend existing law so that doctors would not see the reduction in their payments, we were told it was a ``phony exercise.'' It was, in fact, a good-faith effort on our part to ensure that physicians would be protected.

As I stated earlier, I support the need for a positive physician update. We all do. I know physicians in Arizona know I mean that when I say it. I have led the fight for this in past years. However, I am strongly disappointed that the Senate was blocked from a bipartisan solution, and I regret that seniors, as a result, will suffer if this legislation is adopted.

Mr. President, I never said there was a rate reduction. I said all Senators, I suspect, on both sides support not having a 10.6- percent cut in physician fees and that we all support the 1.1-percent positive update. That was never the issue.

The issue had to do with the other items I talked about. The fact that 2.3 million seniors will lose their private coverage option has to do with the way that the Medicare Advantage Program was used as an offset to pay for the additional benefits in the bill as a result of which CBO claims and believes--and I believe they are probably correct--that 2.3 million seniors will lose their private option coverage.

The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from Virginia (Mr. Warner).