Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a markup on Thursday, May 17, 2007, at 10 a.m. in Dirksen Room 226. Agenda I. Committee Authorization Authorization of Subpoenas in Connection with Investigation into Replacement of U.S. Attorneys. II. Bills S. 221, Fair Contracts for Growers Act of 2007 (Grassley, Feingold, Kohl, Leahy, Durbin). S. 376, Law Enforcement Officers Safety Act of 2007 (Leahy, Specter, Grassley, Kyl, Sessions, Cornyn). S. 1079, Star-Spangled Banner and War of 1812 Bicentennial Commission Act (Cardin, Warner, Kennedy). S. 1327, A bill to create and extend certain temporary district court judgeships (Leahy, Brownback, Feinstein). S. 1027, Prevent All Cigarette Trafficking Act of 2007 (Kohl, Kyl, Leahy, Schumer, Specter). III. Resolutions S. Res. 138, Honoring the accomplishments and legacy of Cesar Estrada Chavez (Salazar, Durbin). S. Res. 132, Recognizing the Civil Air Patrol (Stevens, Inouye). S. Res. 130, Resolution designating a National Day of the American Cowboy (Craig, Cornyn, Hatch). THE PRESIDING OFFICER. Without objection, it is so ordered. Select Committee on Intelligence

Mr. CONRAD. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on May 17, 2007, at 2:30 p.m. to hold a closed mark-up.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs' Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia be authorized to meet on Thursday, May 17, 2007, at 9:30 a.m. for a hearing entitled, Evaluating the Progress and Identifying Obstacles in Improving the Federal Government's Security Clearance Program.

Mr. CONRAD. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investment be authorized to meet during the session of the Senate on May 17, 2007, at 2:30 p.m., to conduct a hearing on ``Consolidation of NASD and the Regulatory Functions of the NYSE: Working Towards Improved Regulation.''

Mr. CONRAD

Mr. CONRAD. Mr. President, I will be very brief, I say to the Senator from Tennessee. I was in the Chamber when Senator Dodd was paying tribute to his father on what would have been his 100th birthday. I didn't want to let this moment slip by without telling Senator Dodd, when I was a young boy, I was up in this gallery. I don't know if it was this gallery or this one, but I was looking down and I remember seeing your father. I asked the people who were sitting with me: Who is that Senator? They said that was Senator Tom Dodd. I said: That man looks like a Senator.

Mr. CONRAD. He had that booming voice, and he had an air about him, an air of authority. It was very interesting to see others' reaction to him. You could see they had respect for him in the way he was addressed. I later, then, read a book about him. I don't think I have ever told Senator Dodd this, but I read a book about your father, about the life he had led. I remember distinctly about his being an FBI agent and the Nuremberg trials. That made a great impression on me. Then, when I came to the Senate and had the opportunity to serve with Senator Chris Dodd, I thought: You know, you couldn't be more proud. Your father, looking down on all of this--he could not be more proud than to have his son in his seat in the Senate, somebody who also looks like a Senator--but much more than that, someone who, similar to his father, commands respect from other Senators because of the quality and the character of his work. I yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent that the Senate proceed to the House message to accompany S. Con. Res. 21, the budget resolution; provided further that the motion to disagree to the House amendment be agreed to, the motion to agree to the request of the House for a conference be agreed to, and the motion to authorize the Chair to appoint conferees be agreed to; provided further that prior to the appointment of conferees, the following motions to instruct conferees be in order and that no amendments be in order to the motions: No. 1, Senator Kyl, relating to the estate tax; No. 2, Senator Gregg, relating to the extension of certain tax cuts; No. 3, Senator Conrad, alternative to Senator Gregg's extension of certain tax cuts; No. 4, Senator Cornyn, relating to the point of order on increasing tax rates; No. 5, Senator DeMint, relating to the increase of taxes; and No. 6, Senator Stabenow, relating to energy. I further ask consent that each motion be limited to 60 minutes equally divided in the usual form, that there be an additional 1 hour of general debate equally divided between the chairman and ranking member; further, that following the use or yielding back of time on each motion, the motion be set aside and that the votes occur in a stacked sequence this evening, Wednesday evening, beginning at 7:30 p.m., with no intervening action or debate.

Mr. CONRAD. Mr. President, I thank the ranking member for his courtesy in working out this matter so we can complete action on the naming of conferees today. I think we have done this in a way that will give all Senators a right to express themselves on issues that are before the conference.

Mr. CONRAD. Mr. President, I ask unanimous consent that when the items are considered for a vote, there be 2 minutes equally divided before each vote, and that after the first vote, the votes be limited in duration to 10 minutes.

Mr. CONRAD. Mr. President, it would now be in order for the Senator from Arizona to proceed with his motion. Again, I want to thank all Senators. These things are difficult. They are always last-minute considerations. But I think we have worked out a reasonable accommodation. I thank the Presiding Officer and again thank the ranking member, and I believe now Senator Kyl's motion is in order. I also thank Senator Kyl for his patience as we worked through some of these procedural hurdles that cropped up at the last minute. I say to Senator Kyl, we thank you for your patience.

Mr. CONRAD. Mr. President, I again thank the Senator from Arizona for his motion to instruct which he has offered. I ask our colleagues to resist this motion to instruct. I ask our colleagues to resist it on two grounds. No. 1, we have already provided for estate tax reform in the budget resolution that passed the Senate. I will do everything I can, as chairman of the Senate delegation and chairman of the conference, to uphold the Senate position, which is to reform the estate tax. The motion of the Senator from Arizona is not paid for. It will blow a hole in the budget. We are trying very hard to balance this budget by 2012. Our budget and what will come back from conference does balance by 2012. But if we adopt the Senator's amendment, we will not balance. Let me say what the budget resolution that passed the Senate did. All of us know, first, there is no death tax. It is good language, but it is not accurate. There is no death tax. Nobody pays a specific tax on death in America. We do have an estate tax on larger estates. In fact, in 2009, only two-tenths of 1 percent of estates will pay any tax. That means 99.8 percent of estates will pay zero. So this talk about a death tax--I am reminded of a colleague of ours who was in Missouri and was stopped by a baggage handler and he told him: You have to stop this death tax. He said: My family is so worried about that death tax. That gentlemen wasn't going to pay any death tax. Mr. President, 99.8 percent of Americans are going to pay no death tax, because there is no death tax. There is an estate tax on larger estates. Right now, it applies to estates of over $4 million a couple. Under $4 million, you pay nothing. It is going up. In 2009, the it will be $7 million a couple who will be exempt. So in 2007, the year we are in now, there is a $4 million exemption per family. You pay nothing if you have an estate of less than $4 million. In 2008, it is $4 million. In 2009, it goes to $7 million. In 2010, there is no estate tax. Then in 2011, it goes back to $2 million a couple. That makes no sense. It goes backward. It goes from a $7 million exemption in 2009 to no estate tax in 2010. In 2011, it goes back to $2 million per couple. We don't permit that in this budget resolution. We stay at the $7 million exemption per couple, index it for inflation, so as values go up, the estate tax exemption will go up. We have covered this out of the resources of the budget so we are able to balance the budget by 2012. Now, the Senator from Arizona is absolutely well-intended. He has been very persistent on this. I give him high marks for that. He is absolutely dedicated to this cause. I give him high marks for that. The problem is he doesn't pay for it. Unfortunately, what he would do is throw the budget out of balance in 2012. I think that is a mistake. In the budget resolution we have passed, beyond providing for a $7 million exemption indexed for inflation, $7 million for couples, anybody who has an estate of $7 million or less will pay zero, will pay no estate tax, which means, again, 99.8 percent of estates in our country will pay zero, nothing, not a penny. We have paid for it. In addition, we have provided a reserve fund that says if you want to go further, you can if you pay for it. The difference, the big difference we have is the Senator from Arizona doesn't want to pay for it. He wants to put it on the charge card. He wants to stack it on the debt. He wants to shove it off on our kids, let them pay. No. That shouldn't be the way we go. We have stacked up enough debt during this administration. This administration has added $3 trillion to the national debt, and if they have their way over the next 5 years, they are going to stack another $3 trillion on the debt. Where are they getting the money from? They are taking it from Social Security. That is what they are doing. They have already taken over $1 trillion of Social Security money and used it to pay other bills, and they are getting ready to take another $1 trillion of Social Security money and use it to pay other bills. If you were in any other organization and you tried to take the retirement funds of your employees and use it to pay operating expenses, you would be on your way to a Federal institution, but it would not be the Congress of the United States, it would not be the White House--you would be headed to the big house, because that is the violation of Federal law. What the Senator from Arizona is doing by refusing to pay is he is going to take the money from Social Security. He is going to take Social Security money and use it to pay other bills. I think that is a mistake. We have provided for fundamental estate tax reform in the budget. We ought to continue to support that, but we paid for it. Let's not go back to the bad old days of doing things around here and not paying for them. I thank the Chair and yield the floor.

Mr. CONRAD. Mr. President, let me correct one matter of history here. The Senator from Arizona says this bizarre circumstance with the estate tax ending in 2010 and then coming back in 2011 with lower exemption amounts is the fault of the Democrats. Whoa, whoa, whoa, whoa. That is a whopper. That is a double whopper. As the Senator knows, we weren't in charge when that tax policy was put in place. Our friends on the other side were in charge. They controlled the Senate, they controlled the House, they controlled the White House. They wrote this tax policy. Why? They did it because they wanted to put more tax cuts into the bill than they could afford, so they played an old Washington game and an old Washington trick. They sunsetted their tax provision at the end of the period to reduce its cost. They are the ones who constructed this monstrosity. It is their responsibility, and we are fixing it. We are fixing it in this budget resolution and we are paying for it. That is a fundamental American value. I thank the Chair.

Mr. CONRAD. Mr. President, look, let's be absolutely direct with those who are watching and with our colleagues. Democrats did not construct this estate tax charade that takes us up to a $7 million exemption in 2009 and then goes to no estate tax in 2010 and comes back in 2011 with a $2 million exemption. That was a construction totally and completely of our friends on the other side of the aisle. The Senator says we did not support the tax cuts that were disproportionately extended to the wealthiest among us and that plunged us into debt. He is absolutely right, we did not. Unfortunately, it has proven to be extraordinarily expensive to this country. We will pay for this for a very long time because the debt of the country exploded as a result of that policy. Look, we supported tax reductions; we supported a more modest package of tax reductions--about half as much as they passed--and reserved the rest of the money to strengthening Social Security, getting us back into a situation where we weren't raiding the Social Security piggy bank around here to pay other bills. I am proud of that. We did the right thing. I am happy to yield 5 minutes to the Senator from Florida.

Mr. CONRAD. Does the Senator wish to talk on the estate tax matter?

Mr. CONRAD. I thank the Senator from New Hampshire for his courtesy.

Mr. CONRAD. The Senator is entirely correct. As a valuable and valued member of the Senate Budget Committee, he knows, with great precision, how difficult it was to put this package together. He also knows if we go the route of Senator Kyl, we will jeopardize the middle-class tax relief that is in this resolution. We provided full relief for the marriage penalty. We provided full relief for the 10-percent bracket. We provided full relief for the child tax credit. If Senator Kyl's amendment is adopted, one of two things will happen: It will reduce the funds available for the middle-class tax relief to transfer the money to the wealthiest among us or it will stick it on the debt. There are only two possibilities. I think it would be unfortunate to do either. I think it would be a mistake to reduce the middle-class tax relief in our budget resolution. I think it would be a mistake to reduce the child tax credit. I think it would be a mistake to reduce the cut in income taxes that are provided for by the 10- percent bracket. I think it would be a mistake to reduce the marriage penalty relief that is here in order to stack more benefits on the estate tax or to put it on the charge card and add it to the debt.

Mr. CONRAD. Mr. President, I ask unanimous consent that the following remarks of Mr. Nelson of Florida be moved so as to not interrupt the flow of debate.

Mr. CONRAD. Reserving the right to object, one thing we have to do is make sure we have the time figured out because we have an hour on the Kyl matter. I will want some time to respond to the Senator's comments, and Senator Thune wants to apparently talk about the Senator's motion. So we would be reserving our time on the Kyl motion while we go next to the Senator's motion?

Mr. CONRAD. It will all wash out. Let's do that.

Mr. CONRAD. Mr. President, this is the most amusing chart that has been presented in the Senate this year. The biggest block of the Senator's chart is about alternative minimum tax relief. He is talking about the Gregg amendment. Read the Gregg amendment. There is no mention of alternative minimum tax relief. That chart--I am glad he is taking it down because it is a complete concoction. It has no relevance to anything that is being suggested here. The Senator says the biggest tax increase in history--not true. There is no tax increase in the proposal before us. Here are the facts. The President, when he produced his budget, said, through his agency of Office of Management and Budget, an agency he completely controls, that his budget would produce $14.826 trillion of revenue over the next 5 years. That is what the President said his budget would do. What does the budget I have presented do, according to the Congressional Budget Office? It produces $14.827 trillion of revenue. That is $1 billion of difference on an almost $15 trillion base. And they are talking about the biggest tax increase ever? Come on. It is a great speech. It is the same speech the Republicans have delivered for 20 years. They are so used to it, they keep giving it. It doesn't matter what the facts are or what the budget is before us. There is no big tax increase that is in this budget. In fact, there is no tax increase that is contained in this budget. I don't know what the Republicans are going to say next year when there has been no tax increase, after all these speeches about the biggest tax increase in history. What are they going to say? I can hardly wait until next year. I am looking forward to that. There is a little more revenue in our plan. As I say, the President said his budget would produce $14.826 trillion of revenue. The CBO says ours will produce $14.827 trillion. That is virtually no difference. On a straight CBO score, apples-to-apples comparison, there is a 2- percent difference between our budget and the President's budget. Our friends on the other side come here with no budget--none. They have no budget for the country this year. Amazingly enough, they had no budget last year. They never agreed on a budget. They never agreed on a budget the year before. So they come here complaining about a budget that actually will exercise some discipline. It is pretty easy to be here with no budget, but of course they produced no budget when they controlled everything. They controlled the House of Representatives, they controlled the Senate, they controlled the White House--no budget. It is no wonder the debt is up, up, and away. According to a CBO analysis of the two budgets, the President's budget and our budget, there is a 2-percent difference in revenue. How could you get 2 percent more revenue with no tax increase? That is a good question. That is a fair question. I submit it is pretty easy to do. First, we have a tax gap in this country that the Internal Revenue Service says in 2001 was $345 billion. Today that tax gap, I believe, is in the range of $400 billion a year. That is the difference between what is owed and what is paid. To collect taxes that are already owed is not a tax increase. That is simply insisting everybody pay what they legitimately owe. That is the first place we ought to look. Now $400 billion a year times 5 years of this budget is $2 trillion. We would only need 15 percent of that to get the revenue that is called for in this budget with no tax increase. But it does not stop there, because the Permanent Subcommittee on Investigations says we are losing another $100 billion a year to offshore tax havens. I have showed this building before. This building is in the Cayman Islands. It is a five-story building. This building is the home to 12,748 companies that say they are doing business out of this building. That is the most efficient building in the world. Are they really doing business out of this little building? Twelve thousand companies? No. They are engaged in an enormous tax dodge out of this building. We ought to shut that down. That is $100 billion a year, according to the Permanent Subcommittee on Investigations. It does not stop there. Here is what the Permanent Subcommittee said: Experts have estimated that the total loss to the Treasury from offshore tax evasion alone approaches $100 billion per year, including $40 to $70 billion from individuals and another $30 billion from corporations engaged in offshore tax evasion. If our friends on the other side of the aisle want to protect these abusive tax havens, let them do it. Let's see what the American people say about that. Let's see what the American people think about having wealthy individuals and wealthy corporations avoiding what they legitimately owe in this country by going off to these tax havens and claiming they are doing business out of this five-story building down in the Cayman Islands--12,700 companies--come on. It doesn't end there. I say go onto the Internet. If you wonder whether this thing is real on tax havens, enter in ``offshore tax planning,'' Google it, and what do you get? You get 1,260,000 hits. What do you find out there? Here is my favorite: Live worldwide on a luxury yacht, tax free. That is what our friends over here are defending. Live worldwide on a luxury yacht, tax free . . . Live tax free and worldwide on a luxury yacht . . . Moving offshore living tax free just got easier . . . Live tax free and worldwide on a luxury yacht--exciting stuff. Indeed it is. It is costing us $100 billion a year, and it doesn't end there. We have these other scams that are going on. I guess this is my favorite. This is a sewer system. It is a sewer system in Europe. What does that have to do with the budget? It turns out it has a lot to do with the budget. Why? Because we have now learned through an investigation that wealthy investors, corporations in the United States, have bought European sewer systems and are depreciating them on the books in the United States to reduce their tax obligation here and then leasing them back to the countries that paid for them in the first place. This assertion that there is a big tax increase here is mumbo jumbo. There is no tax increase here. Yes, we do have modestly more revenue, 2 percent more--although in the President's estimates we have virtually no change in revenue. But let's take the CBO numbers we use here in Congress. We have 2 percent more revenue. We say let's go after the tax gap, let's go after these tax havens, let's go after these abusive tax shelters. My colleague from New Hampshire talked about the explosion of tax revenue, but he didn't tell the whole story. He didn't go back to when this story started, in 2000, because here is the whole story. The revenue of the United States back in 2000 was just over $2 trillion for the year. Then we had big tax cuts put in place in 2001 and revenue went down. Revenue went down the next year. Revenue went down the next year. Revenue stayed down in 2004--which is the fifth this year. Revenue stayed down in 2005. Only in 2006, 6 years later, did we get back to the real revenue base we had all the way back in 2000. Is it any wonder the debt of the country exploded? Is it any wonder? When they talk about the extraordinary economic performance of this administration, that is not the record I see. Let's compare it to the previous administration. The previous administration, in the first 75 months, produced 18.7 million new jobs. This administration in the same period of time: 5.2 million, less than one-third the job creation of the previous administration in the same period. But it doesn't end there. If you compare this economic recovery to the nine recoveries since World War II, here is what you see. On job creation, the dotted red line is the average of all of the recoveries, the major recoveries since World War II. That is the dotted red line, job creation. The black line is this recovery. It is lagging 7 million private sector jobs compared to the average recovery since World War II. That is job creation. On business investment, again the dotted red line is the average of the nine largest recoveries since World War II. The black line is this recovery. In every one of these you see the same pattern: This recovery is tepid compared to every one of the other major recoveries since World War II. Here on business investment we are 69 percent below the average recovery. It doesn't end there. If you look at revenues, revenues lag by $127 billion, the average of the nine major recoveries since World War II. If you look at real median household income--why is it our friends on the other side talk about how good things are, yet the significant majority of the American people say things aren't so good? The big reason is people at the top, all of us, we have done very well. The people at the top in this society--and, of course, there are many who are far above us who have done really well. But you know the majority of people in this country have not done really well. Their position has stagnated. For many of our countrymen, their position has dropped. And this shows it. Here is real median household income from 2000--it was $47,599--to today, it is $46,326. That is why people, when they are asked, say they don't see this economy performing in the splendid fashion described by our friends on the other side. It has been splendid for the top 1 percent in this country. The top 1 percent has seen an explosion of their income. They have also enjoyed a disproportionate share of the tax cuts granted by our friends on the other side. That is what has happened.

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. Well, the Senator asked the witnesses before the committee. They seemed totally flummoxed by the question. It was pretty amazing. Here we have this building in the Cayman Islands, this five- story building. We have got 12,748 companies that claim it as their home. Now, why did they do that? They do it because the Cayman Islands has no taxes. So guess what they do. They have subsidiaries in the United States that report no earnings in the United States. Then they sell to a subsidiary in the Cayman islands at a reduced price, and they show their profits in the Cayman Islands. When I was tax commissioner, I found this kind of tax abuse going on repeatedly. It was quite amazing. This was 20 years ago that companies were engaged in this kind of activity. It has absolutely exploded. That is what the Permanent Subcommittee on Investigations is telling us, that we are losing $100 billion a year to this kind of scam. Of course, the abusive tax shelters are on top of that. The tax gap, the difference between what is owed and what is paid, is on top of that. But when you ask the relevant officials: Have you audited these companies to see if they really are doing business out of this building? Well, you got sort of--they were sort of in a trance. They had no answer. I would say let's go after these people who are not paying what they owe legitimately and fairly in this country.

Mr. CONRAD. Let me make one other point, if I can, that is with reference to the Gregg amendment. I will provide an alternative that insists on the tax relief that is provided in the budget resolution and asks our Senate conferees to fight for the tax relief that is provided. The tax relief that is in the budget resolution that passed the Senate provides for every dime required to extend the middle-class tax cuts, the 10-percent tax bracket, the child credit, the marriage penalty relief. Every dime of those middle-class tax cuts is provided for in the resolution that passed the Senate. In addition, we provided for reform of the estate tax, to have $7 million a couple exempt from any estate tax. We index it for inflation. That will exempt 99.8 percent of the estates in America from paying any estate tax. In addition, we provided for extension of the adoption tax credit, the dependent care tax credit, the treatment of combat pay for purposes of the earned-income tax credit. In addition, we insist that the Senate conferees support section 303 of the Senate resolution that provides for additional tax relief, including extensions of expiring provisions and refundable tax relief provided that such relief would not increase the deficit over the period of the total fiscal years 2007 to 2012. In other words, we provide for all of the middle-class tax relief. We provide for estate tax reform. We provide for the appropriate treatment of combat pay. We provide for the dependent care tax credit, the adoption tax credit. And we say: You can have other tax relief if you pay for it. There is an interesting idea. Start paying for things around here. The difference between my amendment and the amendment of the Senator from New Hampshire is he puts another $250 billion on the charge card, adds to the debt, sticks it on our kids. We say: No, let's start paying for things. That is the difference. We insist on the Senate position that any additional revenues meet these tax policies that are achieved by closing the tax gap, shutting down abusive tax shelters, addressing offshore tax havens, and without raising taxes. That is the resolution that passed this body. That is the resolution that is before the conference committee. It does not raise taxes by one thin dime. Motion to Instruct Conferees Mr. President, I call up my motion.

Mr. CONRAD. Mr. President, I yield the floor.

Mr. CONRAD. Under the rules, it has to be a question. We will permit a very generous reading of the rules.