Floor Statements

Mr. President, today I am pleased to introduce the White Mountain Apache Tribe Rural Water System Loan Authorization Act. This legislation would authorize a Federal loan to the White Mountain Apache Tribe for the planning, engineering, and design of a dam and reservoir, which will be used to provide drinking water to the tribe.

The White Mountain Apache Tribe, which is located on the Fort Apache Indian Reservation in eastern Arizona, has approximately 15,000 members. The majority of the reservation's residents are currently served by a relative small well field. According to the tribe, well production has significantly decreased over the last few years, leading to summer drinking water shortages.

A small rural development funded diversion project on the North Fork of the White River on the tribe's reservation is planned for construction this year. The tribe indicates that when the project is completed it will replace most of the lost production from the existing well field, but will not produce enough water to meet the demand of the tribe's growing population. Consequently, in order to meet the basic drinking water needs of the tribe, a longer-term solution is needed. The most likely and best solution is a relatively small dam and reservoir located on the tribe's reservation--the Miner Flat Dam.

The legislation I am introducing today would authorize the Secretary of the Interior to provide a Federal loan to the tribe for the planning, engineering, and design of the Miner Flat Dam. A portion of the funds set aside in the Arizona Water Settlements Act for future Arizona Indian water settlements would be used to repay the loan. Although Congress specifically set aside money in the Arizona Water Settlements Act for this purpose, the money will not be available until 2013. If the tribe were to wait until then to access these funds, the cost of Miner Flat Dam would increase $5 million to $7 million a year. Therefore, providing a loan to the tribe to expedite the planning of the dam would ultimately decrease the project's costs.

Any Federal funding for the actual construction of the project would be conditioned on the settlement of the tribe's water rights claims, which would have to be confirmed by Congress. The tribe is in the process of settling its water claims in the State of Arizona, and it is my understanding that the parties involved in negotiating the tribe's water claims will likely reach a settlement with the tribe this summer. Once the parties reach an agreement, I intend to introduce legislation confirming their settlement.

The legislation I am introducing today would bring the tribe one step closer to having a reliable source of drinking water. Consequently, I urge my colleagues to support this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

The following Senators are necessarily absent: the Senator from Minnesota (Mr. Coleman), the Senator from Texas (Mr. Cornyn), the Senator from Idaho (Mr. Craig), the Senator from South Carolina (Mr. DeMint), the Senator from South Carolina (Mr. Graham), the Senator from New Hampshire (Mr. Gregg), the Senator from Arizona (Mr. McCain), the Senator from Alaska (Ms. Murkowski), the Senator from Pennsylvania (Mr. Specter), and the Senator from Alaska (Mr. Stevens).

Further, if present and voting the Senator from South Carolina (Mr. DeMint) and the Senator from Texas (Mr. Cornyn) would have voted ``nay.''

The Senator from Minnesota (Mr. Coleman) would have voted ``yea.''

Madam President, first of all, I note this legislation has nothing to do with ending our dependance on foreign oil. It does have something to do with ending our dependence on oil. In fact, what this legislation would do is make it much more difficult for Americans to enjoy the standard of living we do by making it much more costly to indulge in any consumption of energy in any form, including driving vehicles, including turning on the lights or the air-conditioning in a building. All of these things are deliberately made much more expensive in this legislation--deliberately because the point of it is to make energy consumption so expensive that we will not consume as much of it. That way the Earth will somehow not be warmed as much because we will not be consuming as much energy.

That is the whole point here. It is not about ending our dependence on foreign oil. This legislation has nothing to do with that at all.

People might ask, What is cap and trade? Why are we talking about cap-and-trade legislation? The cap and trade contemplated in this bill has the Federal Government creating something of value--carbon emission allowances--and they are equal to the cap on emissions set by the Federal Government each year. The Federal Government says: Americans, you can only drive so much or you can only consume so much electricity and the people who produce that product are going to have to pay for the right to produce the energy that you are consuming. Then, of course, they are going to pass that cost on to you.

Some of these allocations are to favored groups. Others are auctioned off. But the cost of the allowances is passed on to the consumers, as I said. And these outstanding allowances can be traded. That is why it is called cap and trade. So you have a group of speculators, then, who are able to buy some of the allowances and sell them at a profit, even though they produce nothing of value in the meantime.

While it is referred to as cap and trade, we should appreciate the fact that in reality it is very clearly nothing more than another tax on American consumers. A very good article in the Washington Post by Robert Samuelson points this out. He says:

The chief political virtue of cap-and-trade . . . is its

complexity. This allows its environmental supporters to shape

public perceptions in essentially deceptive ways. Cap-and-

trade would act as a tax, but it is not described as a tax.

It would regulate economic activity, but it is promoted as a

``free market'' mechanism. Finally, it would trigger a tidal

wave of influence-peddling, as lobbyists scramble to exploit

the system for different industries and localities.

The Congressional Budget Office itself, the nonpartisan group representing the Congress, acknowledges that businesses would pass on most of the costs imposed by a cap-and-trade system to American consumers. This would amount to a regressive stealth tax that would hit low- and middle-income families the hardest.

What does the proposal cost? According to the Congressional Budget Office, the Boxer substitute amendment before us would take out of the private sector $902 billion between 2009 and 2019. Of that amount, the Boxer substitute manages to spend all but $66 billion--$836 billion of allowances are distributed not only to favored technologies and utilities but also to buy off interests that would use funds in ways that do not decrease carbon, such as for farming practices, endangered species, Indian tribes, State governments, and to other countries for their forests.

The Congressional Budget Office considers the distribution of these free allowances the same as distributing cash, and indeed that is exactly what it is.

Over the longer term, the Environmental Protection Agency projects the amendment would redistribute $6.2 trillion from the private sector to the Federal Government by the year 2050, through these allowance auctions that energy producers and manufacturers would be required to purchase in order to be able to continue their operations--meaning continue to provide energy for us. Another $3.2 trillion would be auctioned off by States and others.

According to the administration, the nearly $10 trillion cost would make this bill the single most expensive regulation in the history of the United States of America.

If a cap-and-trade system like the one in the Boxer substitute is implemented, a number of economists believe it would add significant costs to the production side of the economy and would likely have a severe negative impact on long-term U.S. economic growth, despite having a very modest impact on worldwide carbon levels. The

cap-and-trade system is intended by design to raise the cost of gas and electricity, as I said in the very beginning. Raising the cost of gas and electricity will change people's behavior. They will use less energy and, as a result, theoretically emit less carbon. The cap-and- trade program cannot achieve its goals unless it increases the cost of energy, and the proponents do not deny this.

So when you are thinking about the high cost of gasoline today, think about the additional cost that is going to be imposed by this legislation. The proponents say it is going up anyway. You do not have to make it go up more than it would otherwise, and that is what this legislation would do.

The American Council for Capital Formation projects that under this cap-and-trade system, gasoline prices would rise from about $4 a gallon today to $5.33 a gallon by 2014 and $9.01 by the year 2030.

As I noted, businesses would have to pass on most of the costs imposed by a cap-and-trade system to their consumers. One must recognize that the demand for energy is relatively inelastic. In other words, even as prices rise, individuals find it difficult to switch to alternatives. It is very hard to engage in any activity that does not use energy. As a result, individuals would be forced to bear the cost increases imposed by the system. They might use less energy, drive less, live in colder homes during the winter, or turn off air conditioners in the summer. Those are the choices.

When individuals use less energy, they buy less, travel less, and in effect curtail overall economic activity. The gross domestic product of this country would be roughly 1 percent lower at the end of 2014 and 2.6 percent lower by 2030 under this legislation. That is a huge reduction in the economy of the United States and therefore the well- being of the American people. As economic activity slows, employers are not going to hire as many workers. In fact, employers would create 850,000 fewer jobs by 2014, and 3 million fewer jobs by 2030. My home State of Arizona would lose 63,500 jobs by 2023, roughly speaking. Ironically, this bill would become an economic stimulus for China and India, as they would meet the manufacturing demands that we could no longer produce competitively. Perhaps more striking is the cost on American household incomes.

Cap-and-trade legislation would, on average, reduce income adjusted for inflation by $1,000 in 2014 and by $4,000 by 2030. My home State residents in Arizona would see their income fall by $3,400 by 2030.

However, not everyone will bear the same burden. Cap and trade is incredibly regressive in its impact, since low-income households spend a higher fraction of their income on energy. According to the Congressional Budget Office, just a 15-percent cut in carbon emissions would cost low-income households almost twice as much as high-income households. Cap and trade reduces the after-tax income of those in the bottom fifth of the income distribution by 3.3 percent. The top 20 percent of the income distribution would see their disposable income fall by 1.7 percent.

It is important to note that the amendment of Senator Boxer claims that it would reduce carbon emissions by 66 percent by 2050 or more than four times the amount CBO estimated. Of course, we obviously believe that CBO is far more correct in its assessment. But assuming the Senator were correct, then one might expect the amendment to reduce individuals' incomes four times as much as CBO estimated as well.

Think about that--$12,000 to $15,000 reductions in income.

I mentioned before that this creates winners and losers. Part of this is based on the whims of Congress. We would have the authority to make the distinctions that would enable some people to be better off than others.

The amendment before us would redistribute $836 billion of allowances over the 2009-to-2018 period to various special interest groups. Just imagine that, Congress being in charge of redistributing $836 billion. And we are going to do that without any influence of special interests? I think not.

Robert Samuelson noted in the article I quoted from earlier:

Beneficiaries of the free allowances would include farmers,

Indian tribes, new technology companies, utilities and

States. Call this environmental pork, and that would be just

a start. The program's potential to confer subsidies and

preferential treatment would stimulate a lobbying frenzy.

Think of today's farm programs and multiple by ten.

The tax-and-spend system, in other words, would create arbitrary winners and losers. Over the life of the bill, it would give away allowances valued at approximately $3.2 trillion for auction by States and other entities.

Let me conclude with this point. While having all of this dramatic negative impact, the benefits are questionable at best. They do not meet any rational cost-benefit analysis. A recent editorial in the Wall Street Journal aptly summed up cap and trade as follows:

Trillions in assets and millions of jobs would be at the

mercy of Congress and the bureaucracy, all for greenhouse gas

reductions that would have a meaningless impact on global

carbon emissions if China and India don't participate. And

only somewhat less meaningless if they do.

So it is doubtful that a cap-and-trade system would actually accomplish the goal of reducing emissions and decreasing global temperatures.

A report released by the EPA indicates that even with a cap-and-trade system in place in the United States, there would still be a net increase in carbon emissions over the next several decades.

Indeed, other cap-and-trade efforts have been unsuccessful. For example, the Kyoto Protocol, an international cap-and-trade system aimed at controlling and reducing greenhouse gases, has largely been considered a failure. The European trading system has not only failed to reduce emissions as contemplated, it has constrained growth in developed countries and has enhanced unrestricted development in countries such as China and India.

So before we sacrifice the U.S. economy and American jobs, we need to quantify the benefits of having a relatively slight reduction in greenhouse gases, and compare it to the huge costs imposed on the U.S. economy and American families.

In sum, the amendment before us would increase energy prices, harm American families, and likely have a negative impact on long-term U.S. growth. Moreover, it is questionable whether the legislation would even make a perceptible dent in carbon emissions and decreasing global temperatures.

The following Senators are necessarily absent: the Senator from New Hampshire (Mr. Gregg) and the Senator from Arizona (Mr. McCain).

Mr. President, today I am pleased to join with Senator McCain in support of this resolution to highlight the athletic achievements of a tremendous group of young women. On June 3, the Arizona State University women's softball team won the 2008 National Collegiate Athletic Association Division I Softball Championship by defeating Texas A&M University 5 to 0. This is the first softball championship title for ASU, and the second consecutive year that a university in Arizona has brought home the NCAA Softball Championship.

The Sun Devils won the championship in an impressive fashion with considerable efforts by all. ASU beat its opponent by an 11 to 0 margin, the largest margin of victory in a championship game. Pitcher Katie Burkhart allowed only four hits during the game, struck out 13 batters and was recognized as the Most Valuable Player. Mindy Cowles and Kaitlin Cochran both hit homeruns for the Sun Devils. Jackie Vasquez, Jessica Mapes, Mandy Urfer, Rhiannon Baca, Krista Donnenwirth, Lesley Rogers, and Caylyn Carlson all contributed to the final score. Other Sun Devils making important contributions include Katie Crabb, Megan Elliott, Dani Rae Lougheed, Brittney Matta, Kristen Miller, Ashley Muenz, Amanda Nesbitt, Brooke Neuman, Michelle Nulliner, Sarah Rice, Colleen Robbins, Jessie Ware, and Renee Welty.

Coach Clint Myers led the Sun Devils to a season record of 66 wins and 5 losses and a perfect 10 and 0 mark in the postseason. Coach Myers joined ASU three years ago and has turned the ASU women's softball program into a PAC-l0 Conference powerhouse.

I salute the Sun Devils and congratulate them on a hard-earned national championship. All Arizonans, even die-hard UofA Wildcats like me, are proud of the team's outstanding achievement and wish the team success in the years to come.

The following Senator is necessarily absent: the Senator from Arizona (Mr. McCain).

The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from Arizona (Mr. McCain), the Senator from Alaska (Ms. Murkowski), and the Senator from Mississippi (Mr. Wicker).

Mr. President, the Republican side certainly intends to use the full debate time and, therefore, I object.

Objection.

Mr. President, we, too, look forward to the debate. I won't list all of the Members on our side who have asked to be recognized to speak on this bill, but obviously both sides have a lot of Members who wish to speak to the bill before we even get to the amendment process. That is the reason we want to utilize the full time that is available under the rules for that purpose, not intending to filibuster the bill. But I think it is also going to be important that we do proceed to amendments when that 30 hours is used. You will find the Republicans most anxious to go to amendments which can be offered and then debated and considered. So we will hold the other side to the proposition of getting votes on lots of amendments on this legislation.

Mr. President, might I just make one other comment in response to the Senator from California?

This is one of the most dramatic--or would be, if passed-- one of the most dramatic changes in law, as one publication pointed out, since the 1930s in terms of increasing the scope of Government. Surely we can spend 30 hours debating this important legislation. It is massive in its intent, in its goals, in its scope, and in its effect on the American people. According to the Congressional Budget Office, it would result in a tax increase on the American people of over $900 billion and a gas tax increase of 53 cents per gallon. Surely, the Senate, the greatest deliberative body in the world, can take 30 hours to debate something of this magnitude before we begin the amending process. I thank my colleagues for appreciating that point.

Mr. President, I wonder if the Senator from Texas will yield for two questions I have.

Mr. President, I absolutely agree with the Senator from Texas that we have to get to a point where we can debate and vote on alternatives to assist our veterans. It is very distressing to me to hear there are TV ads running against the Senator from Texas and against my colleague from Arizona that call into question your commitment and his commitment to the veterans of our country.

I am informed that one of the ads says:

Senator Cornyn is fighting tooth and nail against giving

adequate benefits to our troops and veterans, using it as a

wedge in partisan politics.

Is the Senator aware that language is being used in an ad against the Senator from Texas.

Mr. President, if I may just say, the Senator from Texas, as you just heard and as we all know, has been

speaking on the floor of the Senate and in meetings we have been having about this issue. He has been working very hard to find the best way to support our veterans with their educational benefits. I want that crystal clear on the record.

Secondly, is the Senator aware that there is also an ad--my understanding is it says that ``Senator McCain, as the leader of the Republican Party, must send a signal to his colleagues in the Senate that now is not the time to play politics by forcing Senators to choose between his bill and the Webb-Hagel measure.''

It seems to me that statement is exactly right, that we should not be forced to choose between one or the other, but procedurally, the way the bill comes before us, we have two choices: to vote for or against Webb; whereas if the President were to veto this bill, there is an opportunity to negotiate between the two different approaches, both of which have some merit, and get the best of all worlds.

Will the Senator from Texas comment about the process by which we might actually get the best bill to assist our veterans with GI educational benefits?

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

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

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

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

Mr. President, I say to Senator Conrad, I would say no more than 10 to 15 minutes. I will say 15, but probably I will not take that much time.

No. Mr. President, I am happy to ask unanimous consent to speak for 15 minutes, and then whatever time Senator Conrad would urge after that, subject to Senator Gregg's intercession as well.

Thank you, Mr. President.

Mr. President, let me engage in a little bit more of the sparring between the distinguished chairman of the Budget Committee and the distinguished ranking member, both of whom have had a good debate here. But I would like to add to that debate.

There is a lot of discussion here that must cause Americans watching this to wonder what on Earth is going on here when we pass a budget and that budget assumes various things, and then there are charges back and forth that you have passed a tax cut, you have not passed a tax cut, you have passed a tax increase, you have not, and so on.

Let me see if I can clarify that with what are, in fact, the real assumptions in the budget and what the Senate has and has not done.

The ranking member of the Budget Committee is correct that the budget that has passed the Senate already, and that the Senate is about to enact again, in fact, assumes tax increases which will amount to the largest tax increase in the history of the world--$1.2 trillion. Those are assumed in this budget.

Now, the chairman of the committee correctly says: Well, we have not actually passed those tax cuts. That, of course, is true. The budget is not a law, a bill that is sent to the President for

his signature so he can sign it and then it becomes law. That is not what a budget is. The budget is the document we use to frame our deliberations in the Congress for this coming year. We are supposed to stick to it. It sets an upper limit on spending. It sets the revenues that we assume will come in, and part of the revenue is based on taxes.

So what this budget does is to say we assume we are going to have taxes of $1.2 trillion more than we have today. That is what this budget assumes, and that is the largest tax increase in the history of the world.

Now, the chairman responded first by saying: Well, actually we have also included something else in this budget so you cannot say it is necessarily the biggest tax increase in the history of the world because we passed what is called the Baucus amendment, and the Baucus amendment is supposed to provide an extension of certain current tax rates that would otherwise expire in the year 2010, and if we do that, then we will not actually have that tax increase.

The answer is, that is true, were we to do that, that tax increase would not occur--at least it would not occur to that amount.

Well, we did the same thing last year. We had the Baucus amendment last year. But Congress never passed any tax relief based on the Baucus amendment. So while the Baucus amendment was in the budget, it was never implemented. The truth is, it is not going to be implemented this year either. I think everyone will acknowledge that.

So it is no answer to say the tax increases that are assumed in the budget are actually wiped off because the Baucus amendment is also a part of the amendment. The Baucus amendment is not going to be implemented this year, just as it wasn't implemented last year.

The third response the chairman of the Budget Committee made was: Well, that is true, but we actually don't have to pass the Baucus amendment until these current tax rates expire because they currently exist until the end of 2010. So we can still say we passed a tax cut, even though we haven't enacted anything, because we are going to assume existing law continues until the end of 2010.

Well, that is an odd way to argue that you have actually cut taxes. You haven't cut any taxes at all. You have done nothing but allow current rates to continue for next year and the year 2010. It is a good thing those rates are continuing; we wouldn't want them to increase. They are the Bush tax cuts that many Democrats have been very critical of. But here now Democrats are bragging about keeping them in effect for another 2 years. Well, I am glad. I am happy they are being kept in effect for another 2 years. I am worried about what is going to happen after that. The problem is this budget assumes they are going away. That is the $1.2 trillion we are speaking of.

Now, what happens to average Americans if this tax cut fails to materialize and, in fact, the tax increase actually occurs? Well, this budget conference agreement we will be voting on assumes that single people earning as little as $31,000 a year, couples making $63,000, will see their taxes go up. That is because it assumes the 25-percent bracket which kicks in around $32,000 next year for single filers, $63,000 for married couples, will go to 28 percent. Well, is this 3 percentage points a lot? Is that a big deal? Well, it is a marginal tax rate increase of 12 percent. When you add percentage points onto 25 and go to 28, that is a 12-percent increase. That means people in the 25- percent bracket--and that is people earning as little as $32,000 a year--will give the Federal Government 12 percent more of every dollar they earn over $32,000 more than they do today.

What does that mean? Well, let's look at some high school teachers in Phoenix and Tucson, AZ, my home State. In Phoenix, they make between $42,000 and $63,000 on average. So they would see a significant tax increase. How big? Well, according to calculations run by the Budget Committee, the average tax increase for this middle-income family will be more than $2,000. That may not be much to some, but it is a lot of money to the average school teacher in Phoenix. The average school teacher in Tucson makes between $38,000 and $56,000, on average. Most people think of that as middle class, not wealthy. But under this budget, they would see their taxes go up almost the same amount-- $2,000.

Small businesses, which are the backbone of our economy--that is where most of our employment is occurring today. Yet this budget conference agreement raises taxes on small businesses because all income tax brackets above the 15-percent bracket will increase, and small businesses pay on those upper tax brackets. Most small businesses--in fact, the owners of small businesses report their business income on their individual income tax returns and, in fact, over 80 percent of filers in the top bracket report small business income. So you think you are going to soak the rich by increasing the top tax bracket? Well, you are increasing taxes for the small businesses of America. That is who ends up paying the increased taxes.

According to the Small Business Administration, small businesses represent 99.7 percent of all employer firms. They employ about half of all private sector employees. They generate between 60 to 80 percent of the net new jobs annually. Increasing small business taxes will hurt our economy.

How about investors? This is becoming an investor Nation, people saving for their retirement, American seniors living off their savings. In fact, every American who saves and invests rather than spending their extra earnings will see their taxes go up under this budget.

The budget allows the 15-percent capital gains rate to go to 20 percent. That is a 33-percent increase in the tax rate. The dividends tax rate will go up a whopping 164 percent. We talked about a little bit of an increase--164 percent is not little. That is on dividends. That is what seniors get when they invest their retirement savings and get a dividend from the corporation they have invested in. That goes from 15 percent to 39.6 percent.

Why are these rates important? Because keeping tax rates low on investment income gives people the incentive to put their money to work by investing it; by investing in businesses, small and large, and it gives the businesses the resources they need to grow: to hire more employees, to buy more equipment, produce more goods and services. All this, of course, helps the economy grow; it helps produce more wealth and, by the way, it helps produce more revenue for the Federal Treasury as well.

I said we have become an investor Nation. Capital gains. Now, 45 percent of all elderly taxpayers reporting capital gains had an adjusted gross income of $50,000 or less. Rich? We are going to tax the rich here? No. We may be aiming at the rich, but we are hitting the middle class. A $50,000 income is not rich. These are our senior citizens' dividends. Mr. President, 67.6 percent of all elderly taxpayers reporting dividend income had an adjusted gross income of $50,000 or less. The same thing; these are not wealthy people. They are receiving dividends based on retirement income, and they are going to receive a whopping tax increase under the assumptions of this budget. In fact, if you look at the data for all filers under $50,000, capital gains that are $50,000 of income, 35.8 percent of the filers reported capital gains income. Forty-one percent of the filers with incomes of less than $50,000 reported qualified dividend income. So we are talking about folks who are not wealthy, who are reporting not only income but dividend income and capital gains income, getting a huge increase in their taxes because the rates on dividends and capital gains are increased under the assumptions of this budget.

As I said before, there has also been talk of not only taxes going up, but the budget chairman actually said we have actually cut taxes by about $187 billion. Now, this is--well, let's say it bears examination. The tax cut the chairman is counting is simply the existence of the law today. It is existing law. It is continuing that law. As he said before, we don't have to take any action because it is already law, and it continues for 2 more years. That is right. But it is not as if we passed a law to cut taxes. We haven't. We have left them alone. That is not cutting taxes.

This year we are going to enact a 1-year fix for the AMT because we don't want people to have to pay for that. We are going to extend the so-called tax extenders for businesses, such as the

R&D tax credit. We will do those things, but it is not as if the people should be grateful to us for cutting their taxes. That is simply taking action to make sure their taxes don't go up. It is to keep them exactly where they are. That is not a tax cut; that is protecting people to retain the existing level of taxation.

Then, the stimulus checks which make up the rest of this, they are not a tax cut either. Remember, that is what the President did when he negotiated with the House of Representatives and said: Let's stimulate the economy by giving people $300 or $600 to spend, and that money is starting to be received by Americans today.

So I don't think the Congress should be bragging about a big tax cut when, in fact, all we have done is to retain existing rates, and all we are going to do is retain existing rates. When I say all we are going to do, believe me, that is important. It is important that we not let taxes increase, but that is what this budget assumes. As the ranking member of the committee pointed out, the biggest tax increase in the history of the world is assumed in this budget, and here is the problem: Right now, Congress does not have to do anything, as the chairman of the Budget Committee said. That is true. But in 2 years, we do have to do something or else taxes are going to go up. This is not a matter of stopping a big tax increase; this is a matter of all these tax rates--the marginal income tax rates, the death tax, capital gains rates, dividend rates--all these rates that are currently in law expire, and they are all increased unless we act.

That is the assumption of this budget. That is why it would be irresponsible for us to support this budget and assume Congress is not going to do the responsible thing and stop those tax rates from increasing. That would be devastating to our economy. It is the last thing you would want to do in a time of economic downturn, and it would be the last straw for American families who are already seeing too much of their income having to go to buy gasoline, to buy a quart of milk or to buy whatever else it is they need for their families with the prices having gone up. To have a tax increase on top of that would, as I said, not only be devastating for the economy, but it would be critical to American families. Ironically, if we are concerned about revenues to the Federal Government, it is also the best way to make sure the Government doesn't collect very much revenue either, because in an economic downturn, the people don't make as much, and therefore they don't pay the Government as much in taxes.

The bottom line is this is a budget that assumes a huge tax increase. It doesn't do a thing to cut taxes. It is not something we should be supportive of. I appreciate the comments of my colleague from New Hampshire earlier in pointing out the fact it is a budget Congress should reject on behalf of the American people. Go back, do this work over again, abide by the instructions to conferees that we passed on the floor of the Senate last week, and ensure that these things can occur without raising taxes, which would be the last straw for the economy we are in right now.

Mr. President, I yield the floor to the Senator from Michigan.

Mr. President, every now and then there is an article or an op-ed in the newspaper that you find compelling by its clear logic and you want to share it with your colleagues. I wish to do that today and at the conclusion of my remarks put the full text of this op-ed in the record.

Today's Wall Street Journal carried an op-ed by David Ranson called ``You Can't Soak the Rich.'' I find it compelling because of the proposals by some that we should raise the marginal income tax rates and thereby theoretically increase revenues to the Treasury. What Ranson points out is it is essentially a law of economics that raising tax rates not only does not bring in more revenue to the Treasury based on the historic record, but it can have precisely the opposite effect because it can harm the economy and, in fact, it is the growth in the economy that produces more revenue to the Federal Treasury.

Let me quote a couple of comments from his op-ed. He said:

No matter what the tax rates have been, in postwar America

tax revenues have remained at about 19.5 percent of GDP.

Now, there is another measure. If you go back somewhat less distance, the measure is about 1 percent less than that as a percentage of GDP, but the ratio remains the same and the point he is making remains the same, which is that raising tax rates does not raise revenue. In fact, raising tax rates can hurt the economy, which then reduces tax revenue.

There is a chart in this op-ed that makes the point. The Federal tax yield, which is revenues divided by the gross domestic product, has remained close to 19.5 percent, even as the top tax bracket was brought down from 91 percent to the present 35 percent. One would think that the difference between a 91-percent top marginal rate and 35 percent would represent a dramatic difference in revenues collected. In point of fact, it has not been. He points out why a little bit later in his op-ed. He says:

The data show that the tax yield has been independent of

marginal tax rates over this period, but tax revenue is

directly proportional to GDP.

In other words, the strength of the economy.

He goes on:

So if we want to increase tax revenue, we need to increase

Mr. President, I urge my colleagues to review the op-ed and apply it to the lessons we have today. In fact, the legislation we will be taking up today increases taxes--increases the tax rate--by applying a 0.5-cent surcharge or surtax on the top marginal rate. This is going to be very destructive. Over 80 percent of the people who report that top marginal rate, report small business income. So we are going to be hurting the small businesses of this country, not the big businesses or the wealthy that the surcharge is intended to hit, and we will end up not increasing Federal revenues but actually decreasing them and hurting the economy in the process.

I yield the floor.

Mr. President, I rise to say a few words about final passage of the KIDS Act, S. 431. This bill authorizes procedures for social networking Web sites to check whether a particular email address is registered to a sex offender. The bill also includes provisions that would make it an offense to use the Internet to lure a victim and then sexually assault her, that expand the jurisdictional predicates for the child-porn possession offenses, and that make it an offense to knowingly access child pornography on the Internet with the intent to view child pornography.

Section 7 of the bill, which expands the jurisdictional predicates for offenses relating to child pornography, is of particular interest to me. I offered this proposal as an amendment in the Judiciary Committee after it was informally proposed to me by the Justice Department. The proposal addresses a problem highlighted by United States v. Schaefer, 501 F.3d 1197, 10th Circuit 2007, which dismissed a conviction for receipt and possession of child pornography because the court found that proof that an image traveled over the Internet is not sufficient to prove that the image in question moved in interstate commerce. I understand that this ruling has had a substantial impact on prosecutions pertaining to sexually abusive images of children, particularly in the Tenth Circuit.

In Schaefer, the Tenth Circuit found that evidence that an image had traveled through servers in another State could prove that the image moved across State lines. Unfortunately, this conclusion provides little help for Federal prosecutions in the State of Colorado because the largest Internet service provider in Colorado maintains all of it servers in that State. Therefore, in Colorado it is extremely difficult to get the kind of evidence required by the Tenth Circuit's decision.

It is an irony of the Internet that the more that it grows, the harder that it is to prove that an image of child pornography crossed State lines. As in Colorado, many Internet service providers are setting up server farms across the United States, so it is harder to get the requisite evidence that the images moved through out-of-State servers. Additionally, with the advent of different ways of connecting to the Internet, such as wireless, broadband, and DSL, it can be harder to trace the route that an image took across the Internet. And with certain Internet-based technologies, such as instant messaging and peer-to-peer file sharing, it can be impossible to find out to whom or from where a defendant sent or received an image.

The child pornography statutes were enacted, for the most part, before Internet and cell phone technology existed. At the time the statutes were originally written, there were really only two ways to transport this contraband: by mailing it or by physically carrying it on one's person. The statutes were drafted accordingly. Now, however, because of technological developments, Federal laws pertaining to sexually abusive images of children simply do not reach all of the crimes they could under the Constitution.

Section 7 of the KIDS Act adds the words ``affecting interstate or foreign commerce'' and ``using a facility or means of interstate or foreign commerce'' to the child pornography laws, thereby employing maximum Federal power to proscribe child pornography. The primary advantage of the ``facility or means'' language is that it accurately reflects how sexually abusive images of children are traded today, which is to say, over the Internet and phone lines. The Supreme Court and courts of appeals have long recognized that the Internet and phones are facilities of interstate commerce, regardless of whether the actual transmission goes across State lines. Finally, the ``facility or means'' language tracks that in 18 U.S.C. Sec. Sec. 1470 and 2422(b).

Thus there is already a body of case law to guide the drafting of jury instructions and statutory interpretation.

My second favorite provision in S. 431 is section 6, which makes it a crime to knowingly access child pornography with the intent to view child pornography. This proposal was brought to my attention by my colleague Senator Vitter, who persuaded me to offer it as an amendment in the Judiciary Committee. Like section 7, section 6 adapts our laws to address a new obstacle to child-pornography prosecutions that was created by changes in technology and that is exemplified by a recent court of appeals decision. The Vitter staff also provided me with the following Justice Department testimony, which explains the need for this provision and is worth quoting in full. It is the testimony of Larry Rothenberg, a Deputy Assistant Attorney General in the Justice Department's Office of Legal Policy, before the House Judiciary Committee on October 17 of last year:

18 U.S.C. Sec. Sec. 2252 and 2252A currently criminalize

various activities related to child pornography including

transportation, trafficking, and possession. Some courts have

narrowly interpreted (incorrectly, in our view) the

definition of possession so that a person would not have

violated the statute if he, for example, viewed images of

child pornography on his computer but did not save them onto

his disk drive. Even if, in his computer's ``temporary

Internet cache,'' we have a record of his viewing the images,

and thus proof that he accessed them on a website, under this

narrow interpretation, he would not be guilty of violating

the statute if he did not know that his temporary Internet

cache automatically saved the images on his computer.

Two recent cases demonstrate the need for these changes. In

United States v. Teal, No. 1:04-CR-00042-CCB-1 (D. Md.,

motion to dismiss granted Aug. 13, 2004), the Maryland U.S.

Attorney's Office prosecuted Marvin Teal, a former

administrative law judge who had prior convictions for

sexually abusing children, for possession and attempted

possession of child pornography based on his viewing child

pornography at a public library in Baltimore, Maryland.

Library police officers saw child pornography on the computer

Teal was using, arrested him, and printed out the images that

could be seen on the computer screen. Because there was no

evidence that the defendant had himself downloaded or saved anything, the District Court dismissed the case. We chose not to appeal, given the state of the law and the facts of the case.

In United States v. Kuchinski, 469 F.3d 853 (9th Cir. 2006), the Ninth Circuit vacated and remanded the sentence of an offender found with between 15,120 and 19,000 separate images of child pornography on his computer on the basis that he did not know that they were in his Internet cache. The court stated, ``There is no question that the child pornography images were found on the computer's hard drive and that Kuchinski possessed the computer itself. Also, there is no doubt that he had accessed the web page that had those images somewhere upon it, whether he actually saw the images or not. What is in question is whether it makes a difference that, as far as this record shows, Kuchinski had no knowledge of the images that were simply in the cache files. It does.'' Of course we acknowledge the Ninth Circuit's authority to interpret the law this way. However, we think the court's distinction should not make a difference under the law.

Our proposal [which is identical to Section 6 of the KIDS Act] would correct these anomalies while protecting unsuspecting persons who unintentionally access child pornography from prosecution. Specifically, the bill would amend 18 U.S.C. Sec. 2252(a)(4) and 18 U.S.C. Sec. 2252A(a)(5) to criminalize not only possession of child pornography, but also ``knowingly accessing child pornography with the intent to view it.'' That is, a person would be liable to prosecution if he purposefully clicked on a link with the intent that when the link opened, he would view child pornography. It would therefore be a two- step test that the prosecution would have to satisfy--first, that he purposefully (that is, not accidentally) clicked the link, and, second, he did so with the intent that by clicking on the link child pornography would appear on his computer screen. This test would not be difficult to satisfy in the case of people who really did want to view child pornography. Extrinsic evidence--such as the name of the link, which would probably have terms indicating that it displayed child pornography, and payment for the images--would be used to prove the violation. But in the case of an ``innocent viewer'' who accidentally came across child pornography, the two-step proof would be his protection.

I would also like to express my appreciation to the sponsors of this bill for their willingness to work with the Justice Department to address technical concerns with the bill. It is particularly important that the bill has been modified to minimize conflict with the Justice Department's forthcoming guidelines for implementation of SORNA, which serve many of the same ends as the bill. Earlier versions of the KIDS Act used terminology inconsistent with that used in SORNA, unnecessarily required that sex offenders appear in person to report their e-mail addresses, did not clearly provide the Attorney General with discretion to screen out ill-intentioned users of the checking system, limited access to the checking system to only commercial websites, and unnecessarily restricted to only the SORNA database the sources on which the checking system may rely for Internet addresses. I am pleased to report that all of these problems will be corrected in the floor amendment for the bill. While these issues may seem like technicalities, had they not been addressed they would have degraded the utility of the checking system.

The committee-reported bill also appeared to limit existing programs for helping law enforcement and parents to determine whether the individual using a particular address is a sex offender. The final Senate bill includes a rule of construction that makes clear that the bill does not limit the Attorney General's preexisting authority to allow such searches. The final bill also includes a compromise on how the Attorney General and social networking Web sites may disseminate sex-offender e-mail addresses. The compromise is somewhat complicated and merits explanation. The bill still does bar the wholesale distribution to the general public of sex offenders' e-mail information contained in the system, and further requires that the AG limit how the social networking sites disseminate the information about individual offenders that such sites receive. I understand that some Senators expressed concern that such bulk distribution of offenders' e-mail addresses would make it possible for malicious individuals to identify individual offenders' e-mail addresses and use those addresses to harass an offender. Preventing the publication of lists of offenders' e-mail addresses also will prevent offenders from using the checking system to identify each other's e-mail addresses and communicate with each other. We should not allow the system's information about sex offenders' e-mail addresses to be used in this way. The bill creates a two-tiered limit on distribution of these e-mail addresses in proposed SORNA section 121(d)(4)(A) and (B). Subparagraph (A) bars bulk distribution of offenders' addresses contained in the system to the public at large, and subparagraph (B) further requires the AG to limit how social networking sites disseminate the information that they receive. Subparagraph (A) bars both the AG and the participating social-networking sites from disseminating lists of sex-offender e-mail information that are generated through the operation of the checking system unless the information is only given to a limited set of sources with a particular need for the information, as opposed to the public at large. It does not limit dissemination of information generated from other sources, but should substantially prevent the creation of bulk public lists of sex-offender e-mail information as a result of the operation of the checking system. Subparagraph (B) complements this provision by requiring the AG to regulate how participating social networking sites use the information that they receive. It is likely that some social-networking sites will come into possession of large amounts of sex-offender e-mail information as a result of their participation in this system. It is thus important that the AG see to it that those sites do not liberally disseminate such information in a way that would allow others to create bulk public lists of sex offenders' e-mail information. Although subparagraph (B) contains no specific mandate to the AG, I trust that he will apply this provision with this purpose in mind.

In addition, I would like to address two urgently-needed reforms to our Nation's child pornography laws that are not included in this bill, but that I hope to amend onto future legislation. We need tougher, mandatory penalties for possession of child pornography, and Congress needs to act to stiffen and expand penalties for electronic- communication service providers who fail to report the presence of child pornography on their systems. The case for both of these provisions is made in the Rothenberg testimony noted above, and I quote it in full:

[W]e urge Congress to establish a mandatory minimum

sentence for possession of child pornography. This is crucial

because too many people believe that child pornography is

``just pictures'' and is not ``a big deal.'' That is wrong.

Each pornographic image of a child is the visual record of

the sexual exploitation of that child. It is not just a

picture. Every time that image is viewed, the child is

violated once again. Moreover, the demand for such images is

what fuels the physical violation of the children in these

images in the first place. Possession of child pornography is

victimization of a child and should be punished accordingly.

Unfortunately, since the Federal Sentencing Guidelines

became advisory under the Supreme Court's decision in United

States v. Booker the number of downward departures by judges

in federal child pornography possession cases has increased.

After enactment of the PROTECT Act of 2003, which restricted

in various ways the authority of courts to make non-

government-sponsored downward departures in sentences, the

rate of non-government-sponsored below-range sentences for

all offense types was about 5 percent. See United States

Sentencing Commission, Final Report on the Impact of United

States v. Booker on Federal Sentencing (March 2006), at p.

54, available at http://www.ussc.gov/booker_report/ Booker_Report .pdf. Following Booker, that rate jumped up to 12.5 percent.

Id. at p. 47. For child pornography possession offenses,

however, the rate of non-government-sponsored below-range

sentences leapt to 26.3 percent, more than twice the average

rate. Id. at p. 122. By way of comparison, for drug

trafficking and firearms violations, the rate has increased

to 12.8 percent and 15.2 percent, respectively, much closer

to the average. Id. at table on page D-5.

The increase in non-government-sponsored, below-range

sentences for possession offenses after Booker demonstrates

the need for a mandatory minimum sentence for possession

offenses. Establishing a two-year minimum sentence will be a

warning to potential consumers of child pornography, prevent

unwarranted downward departures, and forcefully express our

revulsion at this type of material. This change is contained

in section 201 of the Department's Violent Crime and Anti-

Terrorism Act of 2007 and is included as section 201 of H.R.

3156, the Violent Crime Control Act of 2007.

Our second proposal would amend an existing law that

requires certain providers of electronic communications

services to report violations of the child pornography laws.

Currently the law provides that a provider who knowingly and

willfully fails to report the presence of child pornography

images on its computer servers shall be subject to a criminal

fine of up to $50,000 for the initial failure to report and

$100,000 for each subsequent failure to report. Prosecutors

and law enforcement sources report that this criminal

provision has been virtually impossible to enforce because of

the particular mens rea requirement and the low amount of the

potential penalty. These impediments severely hinder the

needed crackdown on the presence of child pornography on the

Internet.

Our legislation would triple the criminal fines available

for knowing and willful failures to report, making the

available fines $150,000 for the initial violation and

$300,000 for each subsequent violation.

Even more importantly, the legislation would add civil

fines for negligent failure to report a child pornography

offense. The civil penalty is set at $50,000 for the initial

violation and $100,000 for each subsequent violation. The

Federal Communications Commission would be provided with the

authority to levy the civil fines under this section and to

promulgate the necessary regulations, in consultation with

the Attorney General, for imposing the fines and for

providing an appropriate administrative review process.

These proposals would make it much more likely that service

providers will exercise sound practices for weeding out child

pornography. The images are out there, too often on

commercial computer servers, and law enforcement needs to

know about them to investigate and to prosecute the sexual

predators who consume them. This amendment is contained in

section 202 of the Department's Violent Crime and Anti-

Terrorism Act of 2007 and in section 202 of H.R. 3156.

Finally, I would like to thank Preet Bharara and Lee Dunn, staffers to Senators Schumer and McCain, respectively, who have worked tirelessly to see this bill through the Senate. S. 431 is a good bill, and I hope to see it enacted into law.