Madam President, I would like to address my remarks for the next few minutes on the discussion that we have been having for the last 6 months in this body on the question of how to deal with the phenomenon of high-speed Internet access. It…
Madam President, I would like to address my remarks for the next few minutes on the discussion that we have been having for the last 6 months in this body on the question of how to deal with the phenomenon of high-speed Internet access. It is the fastest growing new technology in America, according to a New York Times article last week. We have some differences of opinion about how to proceed in terms of the taxation and regulation of this phenomenon, not only what it should be but whether the Federal Government, the State government, or local government should do it.
The leader has asked all of us who have different opinions to work together. We have tried that. We have worked hard. Senator McCain, chairman of the Commerce Committee, has been especially involved. I am grateful to him for that. Senator Allen and Senator Wyden, who have principled positions on this discussion, have worked hard to try to compromise on the issues, as have I and my colleagues, but we simply have a difference of opinion.
Now, today, we begin debating a motion to proceed and to move down a track in the Senate that, I believe, is the wrong track. I welcome this opportunity and I thank the leader for giving us a chance to have a full debate, which we will be having this week. I am confident that by the time we are finished the Senators who have had a chance to spend more time on this, and that the citizens of the country who have had a chance to understand more clearly what we are talking about, and the State and local officials who will see exactly what we are doing which might affect the future of State and local governments in America will suddenly say there is a little more to this than meets the eye and that we will come to a good conclusion.
I believe it was President Harry Truman who had on his desk a sign that said, ``The buck stops here.'' What we are about to do today and later this week with the consideration of S. 150 is to begin a series of votes about passing the buck. I looked on the Truman Presidential library Web site to see why Harry Truman, who was noted for plain speaking, liked the phrase ``The buck stops here.'' Here is what the Truman Web site says:
The saying ``the buck stops here'' derives from the slang
expression ``pass the buck'' which means passing the
responsibility on to someone else. The latter expression is
said to have originated with the game of poker, in which a
marker or a counter, frequently in frontier days a knife with
a buckhorn handle, was used to indicate the person whose turn
it was to deal. If the player wishes to deal, he could pass
the responsibility by passing the buck, as the counter
came to be called, on to the next player.
That would be my text today, if I were preaching a sermon, because we are about to vote about passing the buck. By passing the buck, if we were to do this, we would create permanent confusion about how to regulate and tax the fastest growing new technology in America--high- speed Internet access. We would create a permanent tax loophole for the high-speed Internet access industry and the telecommunications industry, and the high-speed Internet access industry, so far as I can tell, must already be the most heavily subsidized in America by Federal, State, and local laws. We would be voting for higher taxes, not lower taxes, because if you order taxes to be lowered on telecommunications or high-speed Internet access, you are raising taxes on local property taxes or local sales taxes on food or local corporation taxes on manufacturing companies that might be struggling to keep from moving their jobs overseas.
It is a big trick to say this is a bill that lowers taxes. It does create a tax loophole for one industry. But what cost does that mean? That just means everybody else pays higher taxes.
Aren't a lot of people going to be surprised if this should be enacted and suddenly they find their mayor and their Governor raising local property taxes, raising local sales taxes on food and imposing a car tax again? That is what happens. You lower this tax and you raise that tax.
Then the worst thing to me as a former Governor--and there are many in this body who have been Governors, who have been State tax commissioners, who have been mayors, who have been State treasurers, who have been local officials--the worst thing to me is we are breaking our promise about doing no harm to State and local governments, particularly on my side of the aisle, the Republican side of the aisle.
We were elected promising to do no harm to State and local governments. I will be talking a lot about that this week because I believe in that. I heard it. It wasn't just from me.
In 1994, the Republican revolution began to occur. In 1995 and 1996, we had Presidential elections. When the Republican Party gained control of Congress in 1995, the first thing it did in this body was pass S. 1.
The Presiding Officer very well knows the distinguished Senator who was the majority leader at that time. His name was Senator Bob Dole of Kansas. He carried around in his pocket the tenth amendment. He said S. 1 means no more unfunded mandates.
If we vote to put into motion S. 150 and the companion measure that passed the House, we will be imposing a massive unfunded mandate on State and local governments. We will be breaking our promise.
It is rare that the Senate has had an opportunity to do so much harm with one vote. It is very difficult to find a situation where you can cast one vote and create permanent confusion about the fastest growing technology and a permanent tax loophole for the most subsidized technology I can find. With that one vote, you could also impose higher taxes, local property taxes, car taxes, taxes on food, and sales taxes, and break your promise to State and local governments to do no harm.
There is a better way to go about this. I believe that I and my colleagues have suggested that. Senator Carper and I and a group of nine other Senators of both parties have said: Wait a minute. Let us do this a different way. There is a way we can vote to ban new taxes on Internet access for 2 years. We can provide the Senate time to consider what to do about this phenomenon of high-speed Internet access growth, and we can keep our promise to State and local governments.
Rarely has there been a chance to do so much good with one vote, and that would be to pass the Alexander-Carper compromise, or take the original moratorium of 1998 and enact it for 2 more years. That would be a vote for no taxes, it would be a vote for no unfunded mandates, and it would be a vote for time to study it. That would be the wise and prudent course. That will be the argument we will be making today.
Today, we begin a series of procedural motions--that is the way the Senate works--designed to give us a full opportunity to consider and discuss these issues.
Senators Allen and Wyden have offered S. 150 which will be coming up this afternoon. I am under no illusions about the fact we will be getting to it even though I think it is moving us in the wrong direction and along the wrong track. Senator Carper and I, and nine others, have offered the compromise I just suggested. I believe that would be the best way to go--a 2-year extension of the current ban on State and local taxing of international access. We did it in 1998. Congress did it in 2000. Congress can do it again in 2004.
By voting to extend the original moratorium on taxation for 2 more years, Members of Congress will be casting a vote against taxing Internet access--casting a vote for allowing time to consider what the best long-term solution is and casting a vote for doing no harm to State and local governments. I believe, if the House were to agree with us, we could get the legislative action we desire in this session.
I am prepared to move ahead, as I have been all year, and I have suggested for 2 years ways we could move ahead. I am for banning taxation for the next 2 years. I am willing to support that. I am for no unfunded mandates and I am for time to study. Prospects for legislative action might have been different this year, if the House of Representatives had sent to the Senate a different piece of legislation to begin with instead of sending legislation to extend the current moratorium.
Moratorium means a temporary timeout. That was the idea in 1998. Everybody said we have this new thing, the Internet. In 1998, when the moratorium was passed, I would wager that almost no one in the Congress had ever heard of high-speed Internet access. The only kind of Internet access we were using was AOL which hooks up to your dial telephone. But we said--and I agreed with this and I supported this--that we don't really understand what this is. This is new. Let us just put in a temporary timeout. Then we will decide what to do. The assumption, in my mind at least, was that as the Internet industry grew and became mature, it would pay the same taxes as everyone else. We don't say the Senator from North Carolina and the Senator from Tennessee will pay taxes which the Senator from Wyoming will not pay. We have to have an awfully good reason for that. We believe in the fair and equitable distribution of taxes.
We are talking about whether the Internet industry should pay the same sales taxes and the same kind of business taxes that everybody else is paying or whether we should lower their taxes permanently and create a great big loophole for them, subsidize them some more, and then have higher taxes for everybody else.
The House didn't send us another temporary timeout which would have been the third on State and local taxation of Internet access. The House sent over a permanent ban. But it was more than that. Instead of banning State and local taxation of Internet access--which would mean my relationship to the Internet service provider, the same as my relationship to a telephone company or a cable company or a satellite TV company--they broadened the definition of Internet access.
Whether intentionally or unintentionally, this train got on the wrong track, running completely out of control. Maybe it was because this is a very complex subject, we have a lot going on here, and not many people were paying close attention, but it got out of control.
Basically, what started out as a modest benefit to consumers, a temporary timeout while we could see what was happening, the House turned it into a permanent big tax loophole for the Internet access industry, the telecommunications industry. Then, on top of that, they turn around and send the bill to State and local governments. We do not do that much. We debate taxes all the time. We reduce taxes. Sometimes they go up, but we do it ourselves. I did not know you could do this.
I ran for the Senate the same year as the Presiding Officer the Senator from North Carolina. If I knew the Senate could do this, I might have run for the Senate promising to make a Federal law abolishing local property taxes as my way of encouraging home ownership, or I might have run for the Senate promising to pass a Federal law to abolish State car taxes as a way of encouraging transportation to work, or I might have run for the Senate promising to pass a Federal law abolishing State taxes on food because there are a lot of hungry people. But that would have been a trick on the voters. The voters would have caught up with me and said, Wait a minute, Lamar, who are you trying to fool? You cut our sales taxes, and now we will have an income tax in Tennessee. Because if sales taxes go down, this must go up.
I suppose one could say we will close a few schools, raise tuition, and cut the cost of Government. But it means lower taxes for one group of taxpayers and it means higher taxes for another. That is what we have over here.
Sometimes it has been said these figures that have been used are not accurate, so I have some detailed information for the Congressional Record. For example, the bill sent to the Senate from the House of Representatives in the name of a simple, permanent ban on the little connection we make to the Internet access would do this: One, it would put at risk $10 billion collected annually in telephone transaction taxes in the State and local governments. State and local governments collect more than $10 billion annually in taxes on telephones. If we tell them they cannot do that, what do they do? Senator Feinstein has said, and I am sure she will say later this week, she has 125 cities and counties in California that say this might interrupt 5 to 10 percent of their local budgets. We cut one tax and they raise the property tax. That is not what we are supposed to do. We promised not to do that in 1995.
There are 62 Senators serving here today who in 1995 voted to pass the Unfunded Mandates Act which said no money, no mandate. If we break our promise, throw us out. I want to keep the promise.
The first problem with the House bill is $10 billion in telephone taxes. The second problem is $7 billion annually in business taxes currently collected. I have a source from each one of these. The first is the Congressional Budget Office. The source for the $7 billion is in the Multistate Tax Commission memoranda and a letter from the Congressional Budget Office. The third unfunded mandate in the House bill, half a billion annually in business taxes currently collected on the Internet backbone. We will hear more about that this week. The backbone is the infrastructure of the Internet. The same kind of business taxes on the backbone is like business taxes on any other business. Nobody likes to pay taxes, but are we going to exempt them and make everybody else pay? Four, cost to State and local governments was $80 to $120 million. On grandfathered States--that means 11 States were permitted after the 1998 temporary timeout moratorium; there are about 16 States already taxing dial-up Internet service so they are permitted to keep doing that--that is $80 to $120 million out the window, and another $40 to $75 million in 27 States where they are taxing the part of the Internet access provided by the telephone companies, DSL.
Finally, the language of H.R. 49, the bill that came over from the House, would hurt universal service fund fees and September 11 service fees. That is very important in Alaska, rural North Carolina, and Tennessee. If there is less money in the fund, there is less money for September 11 and universal service.
This bill came to the Senate like a freight train. Nobody voted against it. It passed by consent order. What did it do? It came over wearing a dress that said, ``I am Ms. Internet Access Tax Ban.'' But it actually was $10 billion in telephone taxes, $7 billion more in business taxes, half a billion in business taxes, sales taxes of a couple hundred million a year, universal service fund fees, September 11 fees, all of that which is the responsibility of State and local governments. We say, here, you cannot collect. That is an unfunded Federal mandate of the worst sort.
Now after some discussion, the bill has gotten a little better. Senator Allard, to his great credit, has worked hard. There may be no better-humored Member of the Senate.
He and I joined in a debate at the Heritage Foundation on a minority of principle. We had a good debate and discussed the issues. He improved the bill some. There are fewer unfunded mandates.
I will be asking unanimous consent at the end of my speech to have printed
in the Congressional Record the unfunded Federal mandates in his bill, S. 150. Still, as far as I know, his bill threatens $3 to $10 billion in telephone taxes currently collected. He and I have said to each other we do not intend to do that. However, that was several weeks ago and we have been working hard to write language we agreed on that expressed our mutual intention. We have failed so far.
No. 2, his legislation continues to say to State and local governments, you cannot collect half a billion a year in business taxes that are currently collected on the Internet backbone.
No. 3, his legislation would phase out the sales taxes State and local governments are currently collecting on Internet access. So S. 150 continues down the wrong track. It continues to provide a big subsidy to the fastest growing technology already heavily subsidized.
How much does it cost the Federal taxpayer? Not a penny. Not a penny. We will send the bill to Governors and mayors and local governments and let them raise property taxes, let them raise sales taxes on food, let them worry with all the other unfunded mandates and add this right on top of it. That is what we are doing. We are passing the buck.
I ask unanimous consent at the end of my remarks I be allowed to have printed in the Record the unfunded Federal mandates on H.R. 49 first, and unfunded Federal mandates on S. 150 next.
Madam President, there is no doubt this is an unfunded Federal mandate. We can talk about that more this week. Some of my colleagues on my side have come up and said that does not sound like an unfunded mandate. I thought an unfunded mandate was when we told you you had to do something and pay for it. But if I tell you you have to stop doing something, that you cannot collect that tax, that is a cost I have imposed on you. If I and the Congress say to Governor Alexander, in Tennessee, ``Stop collecting property taxes, stop collecting sales taxes,'' then I have to go think of some other tax--lower taxes here; higher taxes there. Nothing makes local officials madder than some Member of the U.S. Senate or Congress to come up here and have some big idea and pass a law, and take credit for it--lower taxes on the Internet--and then send the bill home to them and then that same Member of Congress or Senator is usually down to the district the next weekend making a big speech about local control. Nothing gets the blood up in a Senator or Governor or mayor or county commissioner more than that, and that is exactly what we are doing.
If the Congress wants to create a big, additional tax break for high- speed Internet access, then Congress should pay for it and not send the bill to State and local governments. I think we, as Members of Congress, ought to do as Paul Harvey says, and tell the rest of the story: If we lower your taxes on Internet access, we are going to raise your property taxes or your car taxes. Sure as the world, it is going to be our responsibility. We can call this the Raising the Local Property Tax Act of 2004 or the Car Tag Act of 2004 or the Sales Tax on Food Act of 2004 or the Raise the Corporate Tax on Manufacturing and Send the Jobs to China Act of 2004. That is what we will be doing.
One of the other issues I hope we talk about this week is whether there needs to be an additional Government subsidy for high-speed Internet access on top of the billions already provided by Federal, State, and local governments.
According to the Congressional Research Service, there is already at least $4 billion in Federal tax subsidies to encourage the use of high- speed Internet access. I have a report from the Alliance for Public Technology. I will not inflict its length on the Congressional Record today, but it is filled with State and local programs to encourage the growth of high-speed Internet access--dozens and dozens of State and local subsidies, in addition to the Federal subsidy to encourage the spread of high-speed Internet access.
Why is there a need for more subsidy at all when the New York Times reported, last week, that high-speed Internet access is the fastest growing new technology in America? It is growing at an astonishing rate. According to a Congressional Budget Office report in February, the United States has the highest number of broadband subscribers-- ``broadband'' is another name for high-speed Internet access--at 19.8 million. It is probably a lot higher today.
An April 19 story from the Associated Press tells us that a new study by the Pew Internet and American Life Project has found that almost one-quarter of all Americans--more than 48 million people--have high- speed Internet access at home. This is two out of every five Web users who have it at home. The same study showed that more than half of Americans have it at work. CBO told us, last December, that 88 percent of all ZIP codes have at least one high-speed subscriber, and 29 percent have access to more than five.
In September of 2002, the U.S. Department of Commerce told us consumers are adopting broadband technologies at a faster pace than CD players, cell phones, color TVs, and VCRs during the same period in their development. CBO, the Congressional Budget Office, reported, in December of last year, that cellular phones took 6 years from their introduction to reach 7.5 million subscribers; high-speed Internet access reached 7.5 million subscribers in half that time.
Then, why do we need additional taxpayer subsidy? Why do we need to say to these folks: You pay less taxes and the rest of us will pay more? You can barley pick up a newspaper today without reading about some new initiative from the private sector offering high-speed Internet access.
According to CBO, from 1996 to 2001, the four largest telephone companies increased their investment in broadband technologies by 64 percent. Cable companies increased their investment by 68 percent in the same period.
Now, sometimes this discussion makes my head hurt because high-speed Internet access is a subject that is unfamiliar to most of us, and you almost have to warm up in order to be able to talk about it and understand the complexities of what is going on. But, in effect, it is very simple: It is just faster access to the Internet. It can be provided in lots of different ways. Your cable company will sell it to you. Your telephone company will sell it to you. There is a nice young woman who comes on your direct satellite television and she will sell you high-speed Internet access.
There is another way we might get it. There may be more. Things are changing. But your electric company may sell it to you over electric wires. There is a lot of talk about how we need to create more and more subsidy so we can reach more and more Americans, that we will have people left out. Well, thanks to the expansion of the rural electrification system in America during World War II, almost every American has an electric wire somewhere near them. Electric companies have begun to offer high-speed Internet access service.
Madam President, I have an article from the Washington Times of April 5, 2004. I ask unanimous consent that this article be printed in the Record, in the proper sequence, following my remarks.
According to this article--and we will be talking about this more this week--according to the Federal Communications Office of Engineering and Technology, having another major player--the power companies--has helped to bridge the digital divide. The power companies have the infrastructure to make broadband available nationally.
There are a lot of utilities out there that really, really
want to do this, [says the head of another firm].
It is being offered today in Manassas, VA. The city of
Manassas offers high-speed Internet access through their
electric company for $26.95 a month.
Customers typically pay $30 to $40 a month for DSL service
and $40 to $50 a month for Internet access over cable.
If we are really talking about taxes on Internet access, we are only talking about $1 to $3 a month, for most Americans, that they would save if we Senators and our fellow Members of Congress go home and say: Look at us. We just banned State and local taxation of
Internet access. Well, that will save you $1 to $3 a month. That is not what they are doing, though. They are exempting a whole industry from taxation that most industries pay. But for those who worry about whether high-speed Internet access is going to be available to every single American, it will be available from your electric company soon.
Now, there is another phenomenon we should talk about in terms of whether we need to have a subsidy. All this growth is happening, just as it should. We have a promarket economy. Traditionally, we do not pick economic winners and losers. That is what they do in Japan. They do it a lot more than we do. Our economy is stronger and better than theirs because the Government does not do as good a job, we believe, at picking winners and losers as the free market does. That is, at least, what a great many of us over here on the Republican side traditionally say, that we do not like industrial policy. We do not like picking and choosing winners and losers.
So we asked the Congressional Budget Office, Congress did, last year, about this. CBO reported to us, Congress:
[T]he broadband market is booming. . . . [N]othing in the
performance of the residential broadband market suggests that
federal subsidies for it will produce any economic gains.
Yet here we are, getting ready to spend a whole week sending billions of dollars more in subsidies to the high-speed Internet access market. Why are we doing this? To even encourage broader use of it? Well, I am not sure it will have that effect.
This is an example from the Atlanta Constitution Journal of September of a couple years ago. It is a little old, but it is good information.
In LaGrange, GA, they give away high-speed Internet access for free. So we can ban taxation. We can keep Gwinnett County from imposing a dollar tax on your high-speed Internet access in Georgia, but we won't be able to do that because they give it away for free. And what has happened? Despite the fact they give it away for free, only half the city has subscribed a year later. A lot of people didn't want it. This story tells why.
I ask unanimous consent this article from the Atlanta Constitution be printed in the Record following my remarks.
It is an interesting article. It is like a lot of other things. Just because we in Washington think everybody in America ought to have high-speed Internet access tomorrow doesn't mean they will take it, even if we give it to them. So then why should we give the telecommunications industry another big subsidy to offer high-speed Internet access to people who are already getting it free and won't take it?
Finally, just in case Congress should, in its wisdom, decide to grant an additional subsidy to high-speed Internet access, the first thing we should do is make sure Congress pays for it and doesn't send the bill to State and local governments. The House bill and the Allen-Wyden bill, S. 150, which this motion to proceed is about, expressly violate the Budget Act which was amended in 1995 by the Republican majority, enthusiastically. And President Clinton signed it. Sixty-two Senators now serving in this body voted for it, and 300 Republicans stood on the Capitol steps in late September, early October, right before the election that produced the Contract with America and the first Republican Congress in a long time, and this is what we said: Our party, no money, no mandate. If we break our promise, throw us out.
This is about the Congress keeping its promise. I have a great many speeches that say in words more effectively than I how important avoiding an unfunded Federal mandate is. Most of them were made by Members of this body. There will be an opportunity to hear those speeches again this week because they were good in 1995, and they are good in 2004.
There is one way to provide a further subsidy to encourage the use of high-speed Internet access, if we think it is necessary, that would make a lot more sense than the various proposals that have been offered so far. That, interestingly, is the Texas plan. It was the plan authored by our President, George W. Bush, when he was Governor of Texas. It is very simple. It is aimed at consumers, not big companies. In 1999, Governor Bush signed a law exempting the Texas State sales tax on Internet access up to the $25 the consumer paid each month. In other words, there is no State tax in Texas on the first $25 you pay for Internet access.
We just heard that in Manassas, VA, it doesn't cost you more than $25 to get Internet access from your power company. So you don't pay any tax on Internet access in Texas. The Governor suggested to the Congress some time ago that if Congress were bound and determined to give another big subsidy to the telecommunications and high-speed Internet access industry, do it this way. Use Governor Bush's idea; use the Texas plan. Then I would say we ought to figure out what it cost State and local governments and reimburse them for it.
It is ironic that last year we stood here and cried about the condition of State and local governments and sent a $20 billion welfare check to the States. This year we are taking credit for lowering taxes on Internet access $1 a month and sending the bill to State and local governments. I suggest if we really want to consider a Federal law that affects State and local taxation of Internet access over the long term, we ought to look at President Bush's idea when he was Governor of Texas. Then I would argue it is up to us to decide what tax we are going to raise to pay the bill, or are we going to increase the deficit or are we going to cut services, because that is precisely what the mayors are going to have to do. That is what the Governors are going to have to do, and the county commissioners are going to have to do.
If everybody would go home 1 week and ask, How would you like one more unfunded mandate to deal with along with all the others, I think they would get an earful. At least I do when I go home.
I look forward to this week. I hope this is the beginning of a constructive debate. I hope the end result is that we reject the proposal we are moving to proceed on this afternoon. Those are proposals that would create permanent confusion in this complex area of trying to deal with the growth of high-speed Internet access that would create an unwarranted additional tax loophole for one of the most heavily subsidized industries in America, the high-speed Internet access industry; that would create higher taxes because when you order taxes lowered on some people, they are going up on others; and that would break a promise this Congress made to State and local governments 9 years ago that we would do no harm, that we would not pass any more unfunded Federal mandates.
What we should be doing is what we are doing in other parts of the Congress and in the courts and in the Federal Communications Commission. The chairman of the Commerce Committee, Senator McCain, has already held a hearing about high-speed Internet access, its regulation, and its taxation, and tried to sort out what to do about it since it was not envisioned by the Telecommunications Act of 1996. The Senator from Alaska, Mr. Stevens, has said several times that he thinks we need to revisit the Telecommunications Act and do this in a comprehensive way.
The Chairman of the Federal Communications Commission, Michael Powell, has talked about the importance of digital migration, high- speed Internet access. We will be able to carry to our homes movies, e- mail, all sorts of services. It is wonderful. But when it does that, it may have the effect of wiping out 5, 10, 15 percent of the State and local tax base. We should think about that before we do that.
Among all of the principles we need to discuss, one of those is federalism, the improper relationship of strong State and local governments to the Federal Government. We should not slam through like a freight train a permanent tax loophole for this industry without carefully considering the long-term consequences to State and local governments and the parks and the schools and the universities and the health care and other services they are expected to provide.
A vote for the legislation that came from the House and for S. 150 or anything like it is a vote for permanent
confusion, a vote for unwarranted tax loopholes, a vote for higher taxes, and a vote to break a promise.
A vote for the Alexander-Carper compromise is a vote to ban taxes for another 2 years, to extend the moratorium, extend the temporary timeout. It is a vote against taxes. It is a vote against unfunded mandates because it does no more harm to State and local governments. And it is a vote for a reasonable period of time, up to a couple of years, for us to thoughtfully consider what to do.
Madam President, I am new to this body, but I have watched it for a long time. I had my first opportunity to work in it when the Senator from North Carolina and I both came to Washington a few years ago. I have great respect for the wisdom here and for the rules of this body. They offer us a chance to deliberate a little longer than our friends in the House are able to, and sometimes that is important to do. I believe it is on this issue.
I am ready to move, ready to come to a conclusion. There are at least a couple of ideas out there that will get a legislative result this week if we would like to do it. But I am not ready to vote for permanent confusion, another big tax loophole, higher taxes, and I am not ready to break our promise to State and local governments about unfunded mandates.
I ask unanimous consent to have printed in sequence following my remarks the following articles:
One is a November 4, 2003, editorial from the Washington Post. The Senator from Ohio, Senator Voinovich, brought this to our attention at that time, saying this Congress should step back from the brink temporarily, extend the moratorium, and sort this all out in a way that doesn't intrude on State prerogatives.
Madam President, I ask unanimous consent to have printed in the Record an editorial from the Dallas Morning News. ``Congress must get this right,'' it says in its last sentence, ``and a 2-year moratorium with all new Internet access fees will give Congress enough time to sort through the issue.''
Madam President, I ask unanimous consent to have printed in the Record a letter from Commissioner Loren Chumley from the Department of Revenue from the State of Tennessee. She points out Tennessee is now not taxing, not imposing a sales tax on Internet access because our State law doesn't permit it. In fact, the direction of things has been that States have repealed their taxes on Internet access. States do things like that. But this points out in very clear terms how important it is for our State, which doesn't have an income tax--how important it is for us here not to try to tell them what taxes to collect and what services to provide. Again, I ask unanimous consent that that be printed in the Record.
Finally, there are two articles which are a little long, but they are important. I know Senators and staff members will bring their attention to this subject, and we know we will be debating it for the next several days, and that truly we will be considering it for the next couple of years as the Commerce Committee wades through all of the issues surrounding digital migration and, hopefully, come to a comprehensive approach toward how we approach taxation and regulation--I hope minimal taxation and regulation, but appropriate taxation and regulation of high-speed Internet access, and how we divide that among the various governments. These are the best two articles I have found that help explain the history behind the Internet access tax moratorium bill and the issue before us.
The first is by the Center on Budget and Policy Priorities, dated March 15, 2004, entitled `` The Alexander-Carper Internet Access Tax Moratorium Bill, S. 2084: a True Compromise That Substantially Broadens the Original Moratorium.''
I point out that the leader asked us who are opposed to this to compromise, and we have. The Alexander-Carper legislation is broader than the original moratorium, and it levels the playing field so all providers of high-speed Internet access are treated the same--at least so far as the Congress is concerned--on the last mile between the user of high-speed Internet access and the provider.
I ask unanimous consent that the article's summary be printed in the Record in sequence following my remarks.
Finally, I want to offer another recent article by Harley Duncan and Matt Tomalis, from the Multistate Tax Commission, entitled ``The Forgotten First Sentence.''
The definition of Internet access is what is causing a lot of the problem here. We hear a lot about that from the Senator from Ohio and those on both sides of the issue. The problem is, the way the bill is written, it doesn't focus only on the consumer and provider of Internet access, it goes way back up the line and bans the State and local government from collecting taxes on the whole industry, and a whole variety of services that are now part of the State and local tax. Nobody wants to pay taxes on anything, but if we ban those taxes, we raise these taxes. This article helped us to clearly understand how the definition of Internet access is the problem here.
I see the Senator from Ohio, a former chairman of the National Governors Association before he was a Senator. He can speak with authority about what happened in 1994 and 1995 because he was a national leader in the movement to persuade Congress to stop unfunded Federal mandates and to pass the Unfunded Mandate Reform Act, which amended our Budget Act. He is a principled man and I am delighted to be working with him on this issue and on others.
Again, I thank the leader for setting in motion the series of procedural steps that will give us a chance to fully debate this issue this week. I thank Senator Allen and Senator Wyden for their courtesies and patience as we worked on an issue we disagree about. I look forward to a full discussion and, I hope, a temporary 2-year timeout to give us a chance to think about that which bans taxes for 2 more years, but keeps our promise and does no harm to State and local governments.
I yield the floor.
Exhibit 1
Unfunded Federal Mandates Created by H.R. 49
1. $10 billion annually in telephone transactions taxes
currently collected--under H.R. 49, the telecommunications
industry could be exempted from the collection of state and
local taxes on gross receipts taxes, sales an use taxes, and
other telecommunications transactions taxes. As the
telecommunications industry offers more and more of its
services over the Internet, more and more of the industry's
revenues could be tax exempt. Cost to state and local
governments: $10 billion annually. Source: Letter from
Congressional Budget Office, February 13, 2004.
2. $7 billion annually in business taxes currently
collected--The taxes preempted in H.R. 49 go beyond taxes on
access by customers to the Internet to include income,
property, and other business taxes levied on
telecommunications companies. Cost to state and local
governments: $7 billion annually. Source: Multistate Tax
Commission Memorandum, September 24, 2003; Letter from
Congressional Budget Office, February 13, 2004.
3. $500 million annually in business taxes currently
collected on the Internet ``backbone''--Under H.R. 49, states
could not continue to tax some business transactions such as
business-to-business transactions between Internet service
providers and telephone companies. Cost to state and local
governments: $500 million annually. Source: Federation of Tax
Administrators' Memorandum, November 10, 2003.
4. Sales taxes on Internet access currently collected--
Under H.R. 49, states that are now collecting taxes on
Internet access could not continue to do so immediately upon
the bill being signed into law. Cost to state and local
governments ``grandfathered'' by the original 1998 Act: $80-
120 million per year. Cost to state and local governments (27
states) imposing taxes on charges for the portion of DSL
Internet access services that they do not consider to be
``Internet access'': $40-75 million per year. Source: Letter
from Congressional Budget Office, November 5, 2003.
5. Universal Service Fund fees and 911 service fees--The
language of H.R. 49 would prohibit the federal government
and/or states from imposing or collecting fees on
telecommunications offered over the Internet. As telephone
service migrates to the Internet, universal service funding
and funding
for the provision of 911 and E911 service will be reduced as
traditional telephone sales revenue drops. Cost to state and
local governments: $3-4 billion. Source: Congressional
Research Service; Letter from Congressional Budget Office,
February 13, 2004.
Unfunded Federal Mandates on States (S. 150)
1. $3-$10 billion annually in telephone taxes currently
collected--Under the moratorium, states may not be able to
continue to tax telephone calls if they are made over the
Internet. Cost to state and local governments: within five
years losses in telecommunications revenues could rise to $3
billion per year; ultimately, state and local revenue loss
could be $10 billion per year. Source: Letter from
Congressional Budget Office, February 13, 2004.
2. $500 million annually in business taxes currently
collected on the Internet ``backbone''--Under S. 150, states
could not continue to tax some business transactions such as
business-to-business transactions between Internet service
providers and telephone companies. Cost to state and local
governments: $500 million annually. Source: Federation of Tax
Administrator's Memorandum, November 10, 2003.
3. Sales taxes on Internet access currently collected--
Under S. 150, states could not continue to collect sales
taxes on Internet access after the three-year grandfather
period. Cost to state and local governments ``grandfathered''
by the original 1998 Act; $80-120 million per year. Cost to
state and local governments imposing taxes on charges for the
portion of DSL Internet access services that they do not
consider to be ``Internet access'': $40 to $75 million per
year. Source: Letter from Congressional Budget Office,
November 5, 2003.
Exhibit 2
[From the Washington Times, Apr. 5, 2004]
Electric Companies Begin Offering Broadband Service
(By William Glanz)
Sean Porter's high-speed Internet connection doesn't come
through a cable-television cord, a telephone line or from a
satellite.
An electrical outlet powers the broadband connection at the
Manassas architect's firm.
``The greatest advantage is that we only need to have an
outlet to use it,'' Mr. Porter said.
Manassas is the second city in the nation, where broadband
service over power lines became commercially available. City
officials there began marketing the service in February.
Today, only about 300 U.S. consumers pay for high-speed
Internet access over power lines, but this new method of
delivering Web content could jolt the market for Internet
service.
Allentown, Pa., and Cincinnati are the only other U.S.
cities where residents are paying for the new high-speed
Internet service, but electric companies from North Carolina
to Hawaii are testing the service or plan to begin a pilot
project. Federal regulators hope broadband access over power
lines becomes widely available, especially in rural areas.
In Manassas, 60 homeowners and a handful of businesses have
Internet access through power lines. Another 1,200 homeowners
have asked to be hooked up. That's nearly 10 percent of the
city's 12,500 homes.
By the end of the year, broadband over power lines could be
available to all Manassas residents. It would be the first
U.S. city where the new technology is available to all
residents.
Internet access from power lines began to get attention
last year, when the Federal Communications Commission (FCC)
promoted it as a way to offer high-speed Internet services
for people in rural areas. The FCC also saw broadband access
from power lines as an alternative to high-speed access from
phone, cable and satellite companies that could lower
consumer prices.
Since the power grid is ubiquitous, broadband over power
lines could be available to nearly every U.S. home.
``Having another major player--the power companies--has to
help bridge the digital divide. The power companies have the
infrastructure to make broadband available nationally,'' said
Ed Thomas, chief of the FCC's Office of Engineering and
Technology.
The FCC in February proposed rules to govern broadband over
power lines. The rules aren't final, but a handful of cities,
utilities and technology companies are pushing forward.
Current Communications Group in Germantown, Md., is working
with Ohio utility Cinergy Corp. to market broadband service
over power lines in Cincinnati.
Current Communications also has a pilot project with Pepco
in Potomac to test the new Internet service.
``There are a lot of utilities out there that really,
really want to do this,'' said Jay Birnbaum, vice president
of Current Communications, a privately held firm founded four
years ago.
Main.net Powerline Communications in Reston is working with
Manassas, which owns its electric plant, to deliver Internet
content over the power lines.
Main.net and Current Communications are two of the primary
companies in a small cluster of firms that market technology
to send Internet data over power lines and make the modems
that subscribers plug into wall sockets.
Experts long have known power lines could accommodate
Internet data. Electricity travels at a lower frequency than
an Internet signal, so the two can share a power line.
Public works department employees in Manassas hook up new
Internet subscribers nearly every day.
``They're beating down our doors,'' said John Hewa,
assistant director of the city's electric utility.
That's because few people there have high-speed Internet
access, Mr. Hewa said.
``A lot of people are telling us they can't get high-speed
services where they live. There are a lot of areas where it's
not available, and they're using dial-up service,'' he said.
The FCC found in June 2003 that there were no high-speed
Internet subscribers in 9 percent of U.S. zip codes, where
about 1 percent of residents live. In another 16 percent of
U.S. zip codes, there was just one broadband provider.
The American Public Power Association, which represents
utilities, says 75 percent of its members serve communities
with fewer than 10,000 people, many of whom don't have high-
speed Internet access.
About 24 million people subscribe to broadband service,
according to Washington research firm Precursor Group.
But spokesmen for Verizon Communications Corp. and Comcast
Corp. both say they are equipped to deliver high-speed
service in Manassas.
The new broadband service in Manassas also might be popular
because the city charges $26.95 a month, less than digital
subscriber lines (DSL) or cable Internet providers. Current
Communications charges a basic rate of $29.95 a month in
Cincinnati. Customers typically pay $30 to $40 a month for
DSL service and $40 to $50 a month for Internet access over
cable.
Although the FCC is hopeful that broadband over power lines
helps lower prices and provides access to underserved areas,
Precursor Group analyst Pat Brogan isn't so sure the service
will take off because DSL and cable Internet services have
been around for years. Broadband over power lines simply
might be too late to catch up, he said.
But electric companies want to make money off their power
lines, and consumers who have been relegated to using low-
speed dial-up services are interested in subscribing to
broadband access over power lines, said Joseph Marsilii,
president and chief executive of Main.net.
``I firmly believe there is a huge market for this,'' he
said. ``I think we're on the cusp.''
Exhibit 3
[From the Atlanta Journal-Constitution, Sept. 2, 2004]
A Georgia City Decided To Provide Its Residents With; A Year of Free Internet Access. But Only Half Have Signed on. Why LaGrange Isn't More
``Wired''
(By Ernest Holsendolph)
LaGrange.--A delegation of 11 Japanese legislators came
calling on the city of LaGrange recently to learn more about
its efforts to connect every household in the city to the
Internet free of charge for a year.
The assemblymen for Gunma Prefecture were here ``to
understand the community strategy,'' said Kazuo Aikyama,
chairman of the delegation.
They aren't the first to come on such a quest.
A well-worn path to city hall on Ridley Street has seen
similar delegations from England, Canada and Bulgaria as well
as curious groups from cities and towns in the United States.
At the urging of City Manager Tom Hall and others, LaGrange
set out to provide easy access for residents to create a
``wired'' community able to interact with one another--and do
business more easily with City Hall, agencies and other
stopping points.
They would do it by connecting the homes, for free at
first, hopefully showing people how valuable the service was
and later get them to pay for subscriptions.
However, Dave McGee, a LaGrange native who is a glass
worker, was unaware of the program. ``I have heard things
about this Internet, but I don't know anything about it,''
said McGee, 47, as he walked along a side street off
Lafayette Square.
And Mable Abercrombie, who gave her age discreetly as
``over 65,'' said she had heard of the LaGrange project but
was keeping her distance from it.
``I am too busy in my garden; need to spend more time
there,'' she said over the counter of the Merle Norman
cosmetics display where she works.
McGee is an African-American, Abercrombie a senior citizen.
Each represents a group that has been a special challenge to
LaGrange's effort to bring all its residents online.
``We expected that with the service offered free of charge,
we would have big interest in communities where people had
been unable to afford Internet service,'' said Joe Maltese,
economic development director.
Instead, he said, there was an overall acceptance of nearly
50 percent--with no high interest in the southern city
communities where the black population is heaviest.
Interestingly, LaGrange recently was named one of the top
seven ``intelligent'' communities in the world by the
prestigious World Teleport Association.
In addition, LaGrange, about 65 miles southwest of downtown
Atlanta, has been cited as ``Intelligent City of the Year''
by the
association. And so, while gaining recognition for its
technological push, the distinction seems lost on a major
share of its 26,000 citizens.
Partly to keep plugging away with residents who remain
unexcited, city officials decided two weeks ago to extend the
free offer for another year.
``We have worked hard to make service relevant to people's
lives,'' said Hall, 40, the city manager of LaGrange since
1994.
Under Hall and Maltese, the city has pushed to get interest
and response, working with school officials and holding
rallies in public housing communities with U.S. Sen. Max
Cleland (D-Ga.) as a speaker. They also have advertised in
papers and on television and have mailed letters directly to
residences.
Subscribers can get the service either through cable modems
and personal computers, or they can access it via television
through the black set-top box.
Residents can use wireless keyboards, as with WebTV, to
connect to the Internet, or to special city networks where
they can learn about community activities, church events,
shopping opportunities, the weather and other information.
That's all the stuff tech-savvy people now take for granted
in the information age. But there's a problem, says Greg
Laudeman, a community information specialist with Georgia
Tech's economic development outreach program.
There is a gap, he said, between segments of society who
embrace computers and digital information, and other people.
``Early adopters (of new ideas and technology) and the
group that comes right behind them have different needs,
desires and interests than others,'' he said.
``And in a curious way, the technology companies, early
adopters start coming up with more and more that suits their
interests at the same time that others ignore it because they
do not need it, or immediately see the usefulness of it.''
Laudeman and others say the ``digital divide,'' when
examined this way may not be racial, or even economic
entirely, but more a different way people view developments.
``Many of us (early adopters) learn to value information
apart from what we do, or apart from the material or physical
things we own or use . . . we value it as a resource,''
Laudeman said, ``while other people value information only
as it relates to what they are doing.''
He added, ``It's like the world is divided between those
who enjoy talking and thinking about technology, and those
who simply use it.''
Hall and Maltese grapple with that dichotomy between groups
nearly every day.
``Some people say the service has no relevance to their
lives,'' said Hall, ``and others are just against it because
. . . well, because it is new and something they're not
accustomed to.''
Jabari Simama, who directed the establishment of community
technology centers in Atlanta, said his staff noticed also
that access alone is not enough to get response from
predominantly black, lower-income areas.
``Income may be a barrier, but it is not the only one,''
Simama said. ``Other factors that keep people from getting
involved in Internet technology include lack of reading
ability, and an absence of information they want or need.
``It's one thing to say you'll put up information about the
city or city services, but you need to put up things about
the neighborhoods and communities where people live--and that
means you must use the same focus-group approach cable TV and
others have used to reach those audiences.''
Simama's view is corroborated by a study of the Children's
Partnership, a Los Angeles-based nonprofit organization that
mostly focuses on the needs of young people. But it also
reached conclusions about reaching lower-income people.
Among the barriers to strong Internet interest in the hard-
to-reach communities, the study found, are literacy,
language, culture and lifestyle, and the ``lack of most
urgently needed local information.''
How specific might that information be? One respondent
said:
``Many of the people in the housing project where I work
want to find out about jobs they can do in the neighborhood.
If the neighborhood was more connected and mapped online,
this kind of information would really make a difference to
residents.''
The study projected that some 50 million Americans may be
inhibited by one or more of the barriers, with 41 million
specifically held back by lack of reading ability.
These are the kinds of extended considerations the leaders
in LaGrange will have to confront in the second year of
effort to get more residents involved in Internet
communication.
Among the barriers that must be scaled, are inertia among
people who see no ``need'' as well as others who are outright
suspicious.
Abercrombie, the gardener, when asked why she would not try
something that is free of charge, replied: ``Well, yes, but
what happens after the year when it's free?''
The LaGrange arrangement allows someone to try it, then to
decide what it's worth. ``But,'' she said, ``I am not sure I
want to be interested.''
She was given a computer by her son, who wanted her to
trade e-mail, but she has not done that, despite prompting by
grandchildren and others.
Patricia Graves, who works in the city cemetery office, has
been a subscriber to the Internet service for a year and
loves it.
Graves, who is black, said she enjoys e-mail, learning
about places to vacation, and just gathering information.
``I have not made a purchase yet, but I am thinking about
it,'' she said.
Asked why some of her friends had not shown the same
enthusiasm, she was candid. ``I just find many people are
just afraid of computers. And some people are suspicious of
the city and wonder why this interest in putting these
machines in their homes. Some even wonder if they are for
watching them.''
State Rep. Carl von Epps, a south LaGrange merchant, said
he does not subscribe to the city service.
``Don't get me wrong,'' he said. ``It is fine, and it is a
great way for people to get their foot in the door and learn
about the Internet, but it is not as fast as my service that
I've had for some time.''
Von Epps, who is black, said he was aware of some feelings
of suspicion and fear. ``But a lot of that will be overcome
by working more with churches and community organizations and
people the neighbors trust,'' he said. ``It's just a matter
of time.''
Madam President, I have already spoken, so if the Senators from Virginia or Delaware want to speak, I will certainly yield to them.
But I certainly congratulate the Senator from Ohio. He knows what he is talking about when it comes to State and local government. He has been a mayor. He rescued a major American city from bankruptcy. He chaired the National Governors Association. The people of Ohio know he works in a very principled way. He understands, as I believe I do, that this train is on the wrong track.
I say this to the Senators from Ohio and Delaware and then I will stop and yield to the Senator from Delaware: How much subsidy is enough subsidy? I notice, in this thick list of subsidies that States give high-speed Internet access, Texas is generating $1.5 billion of subsidy just to encourage the growth of high-speed Internet access. Then, in addition, it has already made exempt from taxation the first $25 you pay for high-speed Internet access. Now we are talking about giving further subsidies to the companies that provide that access. I don't see the sense of that.
I congratulate the Senator from Ohio, look forward to working with him, and now that I see the Senator from Delaware with whom I have enjoyed working, I yield the floor.
Madam President, I thank the assistant Democratic leader. I thank Senator McCain for his efforts over the weekend to develop a substitute amendment which we received this afternoon and which we are studying.
My hope is we have a constructive movement toward a result this week that does no harm to States, that bans State and local taxes for a short period of time, and that gives Congress time through the Commerce Committee to create a comprehensive approach.
The leadership has asked us to try to do this in an orderly way. I want to do that. I have two or three Senators to discuss that with in the next 30 minutes or hour. The Senator from California has remarks she would like to make, so I say to the assistant Democratic leader, within the next 30 minutes or hour I will have a response to him and the majority leader about how we would like to proceed.
Madam President, I congratulate the Senator from California. She represents a State that has 12 to 13 percent of all the people in our country with lots of cities and counties. She has been a leader as a mayor, as I have been a Governor. Once you get to the Senate, you are not supposed to forget what you learned as a mayor or a Governor, and what you know for sure is that if Congress comes along and says, You can't tax property in San Francisco, for example, then you are going to have to raise taxes on something else. Or, on the other hand, if they said, You can't tax automobiles in California, then you will have to raise taxes on something else.
When Congress comes along and says to California, to 118, 122, or however many, we are going to take $260 million potentially from Los Angeles, $32 million potentially from San Francisco, that is not lowering anybody's taxes. You just raise other taxes. If you say, Senator Alexander, we think you are special, you don't have to pay taxes, the Senator from California is going to have to make up what I have not paid, or someone is. If you say, We will just cut Government, we will cut services, good, maybe we should do that, but still I would be paying lower taxes and you would be paying higher taxes.
What we are talking about is a very simple idea: Should the Congress, in its wisdom, decide to give yet one more subsidy to the high-speed Internet access industry and then send the bill to mayors and Governors? I can see us having a big debate and getting all excited about high-speed Internet access. When the internal combustion engine was invented, somebody in the Senate got excited about it, or when the telephone was invented, somebody got excited about it, or when the railroad was invented, somebody got excited about it, but we did not say in order to encourage them, there may be no taxes by State and local governments on these great new inventions. Whenever we decide something is worth a subsidy, we do it ourselves, or we should do it ourselves. That is the great irony here.
Here we have one of the most subsidized technologies in America and the fastest growing technology in America. There is nothing to indicate anything is stopping it from growing. Yet we are piling on more subsidies and giving the bill to State and local governments.
I thank the Senator from California for her leadership, her directness, and her consistency. I look forward to working with her tomorrow.
I think we have achieved tonight some of what we had hoped. The Senate has rules that permit a small group of Senators to make a point. I think the point we made tonight by insisting on a cloture vote on a procedural motion, on the motion to proceed, was to speed along some new compromises.
I am glad to see the Senator from Arizona with a new compromise proposal. I have been working on one for 6 months with the Senator from Virginia.
We even made some progress, but not enough. Perhaps the proposal of the Senator from Arizona is even a step further. We received it this afternoon and I have not had a chance to analyze it, which is why we need time to do that. We will move toward that objective the leadership wants and we all want, which is to create a consensus in this body about what we should do for the time being about State and local taxation of Internet access.
What I believe and the Senator from California believes and many other Senators believe is these should be our principles: No. 1, we should take the time to give the Senate Commerce Committee and the House of Representatives time to think carefully about this new technology, high-speed Internet access, which has the potential to deliver to our homes and our offices so many services. We should think carefully about that and not deal with it in any piecemeal fashion. That is why a short-term extension of the ban on State and local taxation of Internet access is much wiser than anything permanent, and I am glad to see us moving away--not far enough yet, but away from the notion of permanent confusion, which is what would happen.
Why in the world, when the Commerce Committee, when Senator Stevens, Senator McCain, and others have said they want to look into this, would we short-circuit that by making a decision about a little bit of the growth of high-speed Internet access?
We ought to carefully look at whether there is a need for an additional subsidy to high-speed Internet access. I
will be talking about that some tomorrow. There is $4 billion of Federal subsidy already. I have a study by the Alliance for Public Technology about all of the State and local subsidies to high-speed Internet access. They may all be good things, but we should know they are there. I mentioned this earlier, that in 1995 the Texas telecommunications infrastructure fund put in motion raising taxes to generate $1.5 billion over 10 years, to basically put in high-speed Internet access everywhere. That is true in virtually every State.
I mentioned earlier today, in LaGrange, GA, they are giving it away for free and still only about half the people want it. We cannot force- feed it to people, and giving a big new subsidy to the high-speed Internet access companies is not going to make people who can get it for free in LaGrange, GA, use it if they do not want it.
While my distinguished colleagues, who have a different point of view, say it does not cost much, well, the House bill costs a lot. Up to $10 billion in State and local taxes on telephones are at risk. Up to $7 billion in business taxes the States collect today are at risk. Half a billion dollars in business taxes collected on the Internet backbone would be wiped out. Sales taxes on Internet access being collected now in 27 States, gone. Universal service fund fees and 9-1-1 service fees threatened. Now people may be listening to that and saying, great, no more taxes. That is the big trick. Do not let yourself be tricked by that, because if I run for the Senate and promise to abolish local property tax, do not people know the mayor and the Governor are going to have to raise sales tax on food to make up for it? Or if I run for the Senate and say I have this great idea, I am going to abolish the car tax in California, Virginia, Tennessee, and all around the country, hooray, that sounds good, does it not? But they are going to come up with another tax. They will raise sales tax on food or on business.
So this is real money we are talking about, and that is the second point we should be discussing in this compromise, that we do not need any more subsidy.
The third point is we should not break our promise to do no harm to State and local governments. That simply means this: If Congress in its wisdom concludes high-speed Internet access needs one more subsidy, then we ought to be big enough men and women to stand up and say, okay, we will pay for it. But what are we doing? We are sending the bill to State and local governments. At least that is the way the Governors, the mayors, and everyone I have talked to, who has carefully read the bill from that perspective, reads it.
Maybe the compromise of the Senator from Arizona moves in that direction. I hope it does. I am studying it tonight, and I will study it in the morning.
It is a great surprise to me to come to the Senate and find one of the first things we do in my first 2 years is break the promise the Republican Congress made in 1995, ``No money, no mandate. If we break our promise, throw us out.''
I would rather not be thrown out. I would rather we keep our promise. Everyone knows this is an unfunded mandate. To say we passed some unfunded mandates is like asking, why are you arresting me for this one? I robbed some other stores last week and you did not catch me.
We do enact unfunded mandates on occasion, but the Congress has done it a lot less since 1995, and it has had to stand up and be counted.
I want to make sure everyone knows what we are talking about this week is an unfunded Federal mandate and that every Democrat or Republican Senator who made a speech on the floor in 1995--and I have those speeches--or who goes back to a Lincoln Day dinner or a Jefferson-Jackson Day dinner and starts off by making a great big speech about local control is overlooking support for S. 150 because it is about adding a new cost on State and local governments and not paying the bill.
The Senator from California says it is 5 to 15 percent of the revenue base of many of her cities. The Governor of Tennessee told me it is up to 5 percent of the revenue base of Tennessee. In our State, if we take out 5 percent of the sales tax base, there will be an income tax. We do not have a State income tax because the people of Tennessee make a choice. We thought the Governor and the legislature were elected to decide what taxes we could impose.
Then finally, if we insist on this additional subsidy to encourage high-speed Internet access, why do we not follow President George W. Bush's example? Let's put in the Texas plan. It is very simple. It avoids all of this discussion we are having about definitions, all this argument we are having about whether it costs anything. What they did in Texas from 1999 when President Bush was Governor Bush was the following: They said you do not have to pay any State tax on the first $25 of your monthly bill for high-speed Internet access.
Twenty-five dollars is all one has to pay for high-speed Internet access in Manassas, VA, where they deliver it through the power company, and people can also get it through the phone company, the cable company, and from the sky through the satellite. It can be gotten from everywhere. One cannot walk down the street without somebody selling people high-speed Internet access. It is the fastest growing technology in America. The Congressional Budget Office and the Department of Commerce have told us we do not need to intervene. It does not need a subsidy. There is no economic benefit to paying more taxpayers' money for this one industry.
So why is it? Why are we suddenly running a railroad train through the Congress saying we are going to pick out this one industry? This is a country where we have had many great inventions before. This is not the first invention we have ever had, high-speed Internet access. It is a great thing. But so was the telephone. So was the railroad. So was the internal combustion engine. Now we are saying more subsidies--4 billion in Federal dollars is not enough. A whole book full of State and local subsidies is not enough. The fact that it is the fastest growing technology in America, that is not fast enough. We want to pour more money in here, and it is not really going to the consumers; it is going to the companies; it is going to the industries.
My friend from Virginia will say that is passed on to the consumer. Maybe it is. But if we are going to pass corporate taxes on to consumers, why not do it for all corporations? We have a lot of manufacturing companies getting ready to move jobs overseas. Let's lower their taxes. Let's lower everybody's taxes.
I am disappointed, to tell you the truth, that this bill is even being considered in this way. I am surprised. If I were still the Governor of Tennessee--which maybe some in the Senate wish I still were--I would be roaring and screaming about this. I would be calling my Governors on the telephone saying, What are these men and women in Washington, DC doing? If they want to decide what the taxes ought to be in Tennessee and California and Iowa, let them come home and run for Governor or mayor. If they want to give a subsidy to some company, let them pay for it; don't send the bill to us. Let them come down and figure how to keep State university tuitions from going up and how we keep from raising State and local property taxes to deal with a Federal law that requires more State aid to children with disabilities but doesn't fund it. That is what I would be doing.
I would have them on the phone tonight on a conference call and asking them to call every single Senator saying, What are you doing up there? We have a war in Iraq. We have a national economy. We have plenty of national issues without you trying to be the Governor of the home State at the same time, and if you want to be the mayor of Knoxville or Nashville or Memphis, come on home. We will share all our problems with you and you can decide what to spend and how high the property taxes ought to be.
When we take hundreds of millions and potentially billions of dollars out of State and local governments, we are raising local taxes, not cutting local taxes. We are creating permanent confusion, and we are breaking our promise.
So I am glad we had this vote tonight. I hope by coming in here and voting we encouraged some work over the weekend, and late last week. I
know Senator McCain was working, Senator Allen was working, Senators Carper and Feinstein and I were working, and I hope we have made some progress.
Tomorrow when we come in here after our lunch and begin to move to the bill at hand, I think we will have on our side--I mean those of us who oppose S. 150--that we will have upheld our part of the responsibility of keeping this Senate moving toward a conclusion. We want a result, but we want a good result.
May I say one more time what I believe a good result is. A good result is a 2-year ban on State and local taxation of Internet access so the U.S. Congress can think carefully about the migration of digital services to the Internet because of high-speed Internet access. So that is No. 1--2 years or less.
No. 2, no big subsidy to a heavily subsidized industry already.
No. 3, let's keep our promise and do no harm to State and local governments. Let's show the people of this country that when we make a promise, as we did in 1995 when we said no more unfunded Federal mandates, when 300 Republicans stood on the Capitol steps and said, If we break our promise throw us out, let's show that we mean that and not engage in rhetoric that tries to confuse the issue.
If we meet those three tests, then we can have a result. We can have one quickly tomorrow, or Wednesday, or Thursday. But if we insist on legislation here like the legislation that passed the House, that creates permanent confusion instead of careful study, an unwarranted expensive subsidy to a heavily subsidized fast-growing technology, and that does harm to State and local governments, which breaks our promises, then I am going to continue to oppose that and so are a great many of the Democrats and Republicans who joined us in the Alexander- Carper legislation.
I think this has been a successful day. I appreciate the time we have been given to debate the issue. I know Senator Enzi and others will be here tomorrow morning to continue that discussion, and I look forward to moving in an orderly way to the legislation at hand, S. 150, sometime tomorrow afternoon, based upon the decision of the leadership.
I suggest the absence of a quorum.
Mr. President, I ask unanimous consent that the order for the quorum call be dispensed with.
Mr. President, on behalf of the majority leader, I ask unanimous consent that when the Senate resumes the motion to proceed to S. 150, the Internet tax access bill, there be 2 hours and 40 minutes for debate remaining with 2 hours under the control of Senator Alexander or his designee, with 20 minutes under the control of the chairman of the committee and 20 minutes under the control of Senator Dorgan; provided further that at the use or yielding back of that time the motion to proceed be agreed to.