K. Conaway

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, the gentleman mentioned a couple of things that I would like to flush out. You mentioned the phrase ``Big Oil.'' It is used as a pejorative, of course. But under the Democrats' H.R. 6 they passed 11 days ago, Big Oil is defined as any C corporation exploring for oil and gas, any C corp. That includes ExxonMobil, all the way down to the smallest C corp, and that is tax phrase, for those out there that might be listening. But it is any C corp that has now got a tax rate that went from 32 to 35 percent, if this H.R. 6 sees the light of day from the Senate, and with the President signing it. So Big Oil includes a lot of folks, hardworking men and women who try to make a living in the oil business. When I ran for Congress 3 years ago, I ran under the idea that being a CPA, being a business man, that that viewpoint was underrepresented in Congress. I did not have any empirical data to substantiate that, but it seemed to be the case. And once I got here, though, I had discovered that there are an awful lot of our colleagues who really do not understand how hard it is to make money, that finding a product that you can sell to somebody else, and having bought or built that product for less than what you sell it for, and all of those kinds of things that go into making money is hard to do. There are an awful lot of our colleagues who simply do not appreciate how hard that really is. So when they talk about tax increases or taking money away from hardworking folks, they do not understand the impact that that has. One of the other things you mentioned, and you and I share districts where oil and gas are a major piece of the business, is how rugged and resilient and self-reliant these oil and gas guys are. We hit them with a tax increase 11 days ago. One of the things we talked about in the lead up to the debate to try to convince our colleagues on our side of the aisle and the other side of the aisle that this was not really a good idea is this idea that if you reduce the amount of money that is going into increases in domestic production, then you will lower domestic production. I think everybody agrees on that we ought to be less dependent on foreign oil and foreign natural gas. That phrase rolls off every tongue in this Chamber. The truth of the matter is from where we are today to that point is a decade-long journey. And that decade-long journey is going to be driven with cars and trains and airplanes using fossil fuels. So to the extent that we can increase domestic production, it seems to me logical that that would reduce the amount of foreign crude that we would have to import. And while it is difficult to exactly understand what the impact will be on those oil and gas C corporations with this tax increase they got 11 days ago, logic will tell you, if you spend less money in the exploration for crude oil and natural gas domestically, you will get less of it. That is just the mechanics. I think that is a pretty easy thing to say. I appreciate my colleague coming here tonight from Oklahoma, sharing with us his thoughts on tax increases. I would now like to recognize my colleague from Pennsylvania who is actually the moving force behind these weekly hours. It is my pleasure this week to replacing him here in the well, but Bill Shuster from Pennsylvania has got some thoughts.

Mr. CONAWAY. Mr. Speaker, we come to the House tonight to talk about a variety of things, most of which we will deal with taxes and the impact those taxes have on good, hardworking men and women across this country. But I did want to respond just a little bit to what the previous speaker bragged about. She went through a long litany of good things that happened this weekend, which I certainly agree with everyone's right to do what they did and to express themselves and to come to this Capitol and make those statements. She did leave out one minor issue, though, and that is that some of the antiwar protestors brought spray paint with them. And they came to this Capitol, this hallowed ground, the center of liberty for the world, which looks to this Capitol building for that; and those folks brought spray paint, and they painted the walls. They spray painted anarchy signs and anarchy slogans on the walls of this Capitol, which I think defacing public property under any circumstance ought to be wrong. That is wrong. What else is wrong is the fact that the Capitol Hill Police were told to allow that conduct to go on. And there were reports in one of the scandal rags today that the police's reaction to that was that they were disgusted. They were livid about the fact that they were forced to allow these anarchists to deface this public property, this building, which all of us serve in. Most of us serve very proudly here. So not all of the folks who came this weekend conducted themselves the way that they should have, and there was a problem with that. And, hopefully, we will learn what the responsibility of the Democratic leadership was, what their role was in overriding what the Capitol Hill Police's natural and normal reaction would have been. Where did that come from and who told them not to stop that? We hope that we get some answers to those questions over the next coming days, because it is a serious issue when people are allowed to deface this building. But let us talk about taxes. As our sign shows here, we are 1,433 days away from a staggeringly large tax increase. The first year I think it will be $250 billion of taxes. In 2011, we will get an immediate bump. The Democrats simply have to do nothing. In the 109th Congress, Lou Dobbs and others accused us of being a ``do-nothing Congress.'' Well, you can put that label on the coming tax increase, because the Democrats simply have to do nothing over the next 4 years, and that is exactly what is going to happen. Built into the current law, the current Tax Code has a drop-dead date of December 31, 2010, in which the changes made to the estate tax will expire and the other provisions of the 2001/2003 tax reductions will also expire. So if the Democrats do nothing, then we are 1,433 days away from that major increase. We are only 11 days since the last tax increase by the Democrats. And that was on Thursday a week or so ago where they increased taxes on the oil and gas business in this country, and we have talked about that some as well. We are going to have several speakers tonight, and the first one that we are going to yield time to is my good colleague, John Sullivan from Oklahoma.

Mr. CONAWAY. I thank you. Let's go to another colleague of ours from Georgia. Dr. Phil Gingrey is an OB/GYN doctor, a provider of professional services for most of his career. And while all of us have great respect for physicians, at their core they run small businesses and maybe big businesses. But at its core the practice of medicine has to be a business, because he and his colleagues have to make money, they have to be able to pay their payrolls, they have to be able to buy the supplies for their offices, and all of those employees and provide benefits and all the things that they do. So in addition to providing I suspect outstanding professional care over a long, long period of time, and maybe he will share with us the number of babies he helped deliver, he is also a businessman. And in my book, that is a good two hats that he has worn over these years. So let's hear tonight from Dr. Gingrey.

Mr. CONAWAY. If the gentleman would yield for a second. I suspect that comment is made about their other business decisions. Running their practices, they are great business persons; but maybe in the oil business, they may not be as good.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I rise today to commend the Richland Springs Coyotes football team for winning the 2006 Six-Man Division 1 State Champions and the Sports Illustrated six-man football poll national championship. With its second national crown in 3 years, Richland Springs becomes only the third school to achieve such an honor. Playing before a record crowd of 12,000 fans at Abilene's Shotwell Stadium, they defeated the Rule Bobcats by a score of 78-58, finishing the year with a perfect 14-0 record. The Coyotes broke the 1988 record for the highest score in a championship game and amazed the fans with their speed and skill by recovering the on-side kick to open the game. Six-man football has a long history in Texas. From its beginning in 1938, Texas now has over 102 public schools and as many as 60 private schools continuing this proud tradition of six-man football. I want to recognize the tireless efforts of Coach Burkhart, Coach Ethridge, Coach Dodson, and Coach Rogers for the national and State titles that they have brought to Richland Springs. I also want to recognize members of the team: Coey Smith, Jeremiah Ramirez, Cason Fikes, Houston Burleson, Mark Williams, Haustin Burkhart, Kevin Larson, Shelby Smith, James Farris, Nigel Bates, Mitchell Jacobson, Andrew Fowler, Chevy Saldivar, Tyler Ethridge, Richie Daniels, Adrian Avila, Bobby Borders, Khalid Khatib, Patrick Couch, Genero Hernandez, Randy Couch, Daniel Barrett, Abraham Ahumada, Branch Vancourt, C.J. Finke, Dean King, Dean Charriez, Jesstin Fox, and Ryan Soto. I congratulate the Richland Springs Coyotes on their national and State championships and wish them the best of luck next season.

Mr. CONAWAY

Mr. CONAWAY. We said it, our guys said it, but today was a particular one where our good colleague from Maryland just seemed to pooh-pooh the idea that there were some flaws in this bill that we did not need to worry about because we are the House of Representatives. I challenge that. We are the House of Representatives, and what we do here is important. I do not know that what we say here is of particular importance, but what we do here is important. I appreciate being with you tonight.

Mr. CONAWAY. If the gentleman would yield, not only did they kick them out, but they have now defined all workers in the oil and gas industry as foreign workers. Isn't that the effect? Every one of these jobs are no longer American manufacturing jobs, but get the same treatment that the jobs for foreign workers. I know my colleagues in the oil business in West Texas are not excited about that. I yield back.

Mr. CONAWAY. Mr. Speaker, I appreciate the gentleman from Pennsylvania's hosting tonight and allowing me to participate in it. Let me kind of flesh out what our good colleague from Kentucky said about the mechanics of those impacts on tax increases. He talked about a variety of manufacturing and some service industries who may or may not be directly impacted by section 199, but here are the mechanics of what happens: The small E and P companies, the exploration and production companies, those companies that are out there trying to find crude oil and natural gas, on average in 2005 spent 617 percent of their profits. In other words, for every dollar that they earned, they spent $6.17 reinvesting in the ground. And here is how they are able to do that: if you are a successful oil and gas finder, you find reserves in the ground that have a value. The value is based on the price and the length of time you expect it takes to get that crude oil and natural gas out of the ground; the lifting costs, depending on what that costs; lease operating expenses. All those expenses go into that, and they make a reasonably scientific guess as to the future value today of those reserves in the ground. Proved oil and gas reserves. In other words, you take the life of that well, those cash flows. You discount that back to today's number, and that creates a value that in many instances these E and P companies go to the bank. They take the reserve report that shows that they have got a cash flow stream over the next 10 years, as an example, to their banker, and they say, Mr. Banker, we want to borrow against those reserves because we want to replicate what we have done. We want to put those dollars that we borrow from you back into the ground to find additional reserves for oil and gas or develop additional wells that are currently in the proved undeveloped category that they will continue to expand our reserve base, in other words, continue to expand the cash flow stream that we are going to earn as that oil and natural gas is produced over the next 30, 40 years, whatever the life of the well is, 10 years, 5 years, whatever the economic life of that well may be. The large companies, to my recollection off the top of my head, reinvest about 175 percent of their profits. So everybody in the exploration and production food chain spends more money than they make going back in the ground. So this tax increase that this Congress, and some of our good colleagues on the Republican side joined in, passed last week, a mere 4 days ago, what that does is it reduces the cash flow, reduces the profits of all of these companies. And as you reduce those dollars, like in the small E and P company, if you reduce them a dollar, you have really cut expenditures in the oil business by $6. So for every dollar of taxes that are increased as a result of this action, we have eliminated $6 out of the reinvestment in the ground. And it is that reinvestment that my good friend from Kentucky was talking about, because that money goes to all of these suppliers, goes to all these subcontractors, goes to all the folks who actually do the work and try to find this business. So when that doesn't happen, then there is less work for them to do. There is less need for employees, less of everything. So just the mechanics of the tax increase has that effect. Here is the twisted logic that our colleagues on the other side have used, and I have been thinking about this for all of last week when we found out what that bill was going to do, as well as over the weekend. I think one of the things we can all agree on is that we want to be less dependent on foreign sources of crude oil and natural gas, sources that we pay our good hard-earned money for. These are foreign sources. So all of us agree on that. The road forward or how we get that done is a multidecade journey. While we are on this journey, it would make sense to me that the more domestic production we can produce, the more domestic barrels, the more domestic Mcf of natural gas that we produce means that that offsets or reduces in and of itself the crude oil and natural gas that we are importing. So the logic that our good colleagues used last week was if we can reduce the domestic supply of crude oil and natural gas, then we have also reduced our dependency on foreign crude natural gas. Well, that doesn't make any sense. I grew up in Odessa, Texas, and I am just a country boy from west Texas and grew up in the oil fields. That is twisted logic. It does not make any sense whatsoever. It would seem that we would want to promote the production of domestic supplies so that we could increase the domestic supply and therefore offset, in some small way, the need for foreign imports. Now, that does make sense. So a bill and a mechanics that reduces directly the domestic production seems awfully weird to me and a convoluted logic that I have been unable to kind of work my way through that. Now, you and I and many of our colleagues have stood at these microphones and bemoaned the fact that that happened. Will we be able to point specifically at last Thursday's vote 5 years down the road and say, okay, had we not had that tax increase, had we not abrogated those contracts, if we hadn't done the things that the Democrats decided were in the best interests of this country, production would be some percentage greater than it currently is? We will not have that analysis. We just won't be able to do it, partly because the industry that we hit upside the head with a big old stick last week is incredibly resilient. These are tough, independent, self-sufficient folks, and whatever hand they are dealt, they are going to go back to the drawing board and try to find domestic crude oil and natural gas. That is what they do. We have just simply made their job harder. We are going to force them to do a little bit less of it, or we are going to force them to go to other sources for their backing. But whatever it is we did, it will have an impact on the volume of crude oil and natural gas produced in this country over the next decades. The bad news is we won't be able to quantify that. We won't be able to come to these microphones and say, as many of our colleagues did over the last 2 years, I told you so, Monday morning quarterbacking. We are telling you ahead of time that this will happen, and we will be more dependent on foreign sources of crude oil and natural gas than we would have otherwise been, and that is really the differential here. We didn't have to be that dependent. We are going to be dependent on it, but we could have helped ourselves just somewhat by every increased barrel of crude oil produced and every increased Mcf of natural gas produced domestically and whether those restrictions come and where we can explore for crude oil and natural gas, the resources that companies have available to them after they comply with all of the regulatory schemes and the tax schemes that we have put in place. And just to whine the most, the contracts we abrogated last week, you saw some of the estimates of why that is important to the folks on the other side, which is that money stolen from those oil companies is big dollars. The leases signed in 1998 and 1999 when the price of crude was 10 bucks a barrel, when that seemed to make sense, if it did at that point in time, it takes 5 or 6 years to get that crude oil to market, as it were. By the time you get the rigs put in place and all the things that have to go on when you drill in deep water, it takes awhile. And now we are beginning to see the fruit of all that hard work, the fruit of the risks taken by those companies. There is a particular company I am aware of that, along with one of the major oil companies, has recently discovered what looks to be a very large oil discovery in the gulf, and it is off of one of those leases in which they were incented to buy and pay the lease bonus on at a time when it really didn't make a lot of economic sense, 10 bucks a barrel. They are estimating the cost to themselves, if this process that went through last week is sustained, that it will cost that one company $1 billion. And as you mentioned earlier, 41 percent of the stock is in individual retirement accounts. But I wonder if you picked up in addition to retirement accounts mutual funds owned outside of retirement accounts, individuals who owned stock directly in these oil companies. My guess is the percentage ownership would be much higher than the 41 percent.

Mr. CONAWAY. That is right, separate and apart.

Mr. CONAWAY. The property tax base.

Mr. CONAWAY. I thank the gentleman. I think it is Money Magazine every year or so runs a contest where they will present a set of facts, the same set of facts to a variety of tax preparers. And it is interesting the variety of taxes due number that comes up. You would think, the same facts because everybody is working off the same codes, the same set of regulations, that all these tax return preparers would come up with the same answer. But it is very rare that even two out of the group come up with the same answer because of the complexity of the code. I spent 32 plus years of my professional career helping clients comply with the code or a company that I was working for and attempting to do my own tax return, because most folks really wouldn't understand a CPA screwing up his own tax return. So if I couldn't do mine right, why would I hold myself out for doing somebody else's right? And every time you signed one of those returns, it gives you a pause, because this is complicated stuff. And the legend at the bottom where you sign doesn't say, I have got this as close as I can to the right answer, sign your name; it requires you under penalties of perjury to say you have got it right. And that does give you some pause, because it is an incredibly complex code, unnecessarily complex. And we will have hopefully another night where we can talk about ways that we ought to be looking at how we collect the minimum amount of money needed to fund this Federal Government in a fair, straightforward, easy-to-comply-with way that most Americans would buy into, because I think our voluntary compliance in that arena would be far greater than it currently is with this incredibly complicated code. If you want to file manually, your client, you can file manually. I am trying to remember, I was reading one of those tax credits that was extended. There is no line for it on the form, and so the services said if you want to claim this credit or deduction, one of the two, since we did not put a line item on the return for it, stick it on a different line and tell us what that is. So you can go ahead and file manually if you would like to, but you are right. I thought it was February 4 maybe.

Mr. CONAWAY. Electronic filing before the IRS will have their computer systems ready to be able to receive that information coming in as a result of the late-breaking changes that we Republicans made in December to extend many of the tax credits that some had already expired and others that were set to expire with the close of business in 2006.

Mr. CONAWAY. Could I give the gentleman a quick history lesson?

Mr. CONAWAY. The alternative minimum tax was put in in 1969 at a point in time where our marginal tax rate, upper marginal tax rate was like 70 percent, and it was a point in time where there were a lot of gimmicks and tax loopholes, not loopholes because the code was written that way, but there were a lot of deductions and a lot of activities that folks could deduct against that 70 percent number. So consequently you had a lot of folks incented to do that, to take risks they might not have otherwise taken. So, as a matter of fairness and equity, the Congress put in an alternative minimum tax. In other words, they felt like everybody in America ought to pay something and that these folks were taking advantage of tax shelters in a way that was keeping them from paying any tax at all. Congress and the President, Johnson I guess, at that point in time felt like everybody ought to pay a little something. This was targeted at the really larger tax returns, really big investors, the big folks who made a lot of money. It was never intended to catch those two teachers who make together, what did you say, about $110,000, $120,000. The spirit of that was never intended to catch them in this loop. In the interest of full and fair disclosure, I had to pay the alternative minimum tax this year which irritated me. So the AMT is something that we did not do a good job of it. As Republicans, we kind of kicked the can down the road for a couple of years, a year at a time. This Democrat-led Congress is going to have that issue wrapped around their neck, and we will see how they go about trying to propose a fix for it, but it is an issue that is going to catch millions and millions of new taxpayers through the alternative minimum tax scheme each year that we move forward.

Mr. CONAWAY. I do. I wonder how many words have been spoken from these microphones over the almost 160 years that we have been just in this chamber.

Mr. CONAWAY. Too many, clearly. There are not a lot of lines created or spoken here that many people quote. The inaugural address produces great lines. It is not what you do for your country, all those kinds of lines that come out. I do not know of anything spoken here that many people quote. Lincoln said, and I will butcher this, but I think he said in his Gettysburg Address, the world will little remember what is said here. As it turns out, he was wrong, but I think that is exactly what happened here. In West Texas, I suspect, and in central Pennsylvania as well as Kentucky, talk is cheap, but what we do here is important and it is remembered. When we vote, as we did last week, to abrogate contracts with the Federal Government, when we vote, as we did last week, to tell people who have business deals with this Federal Government you really cannot trust the contract because if it begins to look like you are making a little money off this contract, some Member of Congress will think that is a bad idea and they will convince a party, maybe both parties, to take and redo that contract. When we vote, as we did two weeks ago, to say there are some lives in this country, they are not particularly important, lives on the front end of creation, that is remembered. That is important. That has an impact on what we do. When we vote here to do things to protect America, as I suspect over the next coming couple of weeks we will vote as to how we think this Congress ought to be commander-in-chief, that is important what we do. The good is important and the bad is important just as well. It is long remembered and long noted by the people of this country, the people in West Texas in District 11, and many instances, the people around the world. As I hear tonight our good colleague from Maryland talking about flaws in the bill that we will vote on tomorrow with respect to pensions, that I think all of us would love to support, when he says, well, guys, do not worry about it, this is just the House version; we will fix it in conference or we will fix it in the Senate.

Mr. CONAWAY

Mr. CONAWAY. I appreciate the gentleman from New Mexico being with us tonight. On the campaign trail and in the town hall meetings throughout my brief career, I have talked about Social Security being basically a contract with ourselves, a promise with ourselves, that we would not break that. From now, every time I talk about that, I will have to think about this legislation, have to think about the fact that, wow, here is a written contract, much like the written provisions of Social Security, much like the written provisions in our veterans' benefits, that we tend to keep but here is one that we did not. I appreciate both my colleagues coming tonight. Here is one final thing. I go through the long list of co-sponsors on this bill. At the end of it, it says they have introduced this bill and it has been referred to the Committee on Ways and Means, Natural Resources, Budget and Rules for a period to be consequently determined by the Speaker. I do not think there is a stopwatch fast enough that could measure the amount of time that this bill laid before those committees because they did not work. So how those committees did meet, how they were able to get it through all four of those committees without anything happening, without any meeting is one of those well-kept secrets about how this process works when you do not have a transparency that a full committee process will have. As I told them earlier this afternoon, I hope that my colleagues on the other side are not so intoxicated with this power that they now wield that they continue this process of not having committee hearings, not taking regular order, not moving things through in ways where at least we can point out the flaws in a format and in an arena in which it can be perhaps have an impact on the ultimate legislation. So I want to thank the Chair for having us in here tonight.

Mr. CONAWAY. Madam Speaker, it is great to be here tonight. Wow. I came here planning to talk about H.R. 6, which was passed this afternoon, but not knowing how much time our colleagues across the aisle were going to take, I was instructed to get here quite early in order that if they quit ahead of time that we might lose our hour. So I have sat here for the last, almost 45 minutes, and listened to my colleagues. It must be great, it must be wonderful to be so smugly self-confident to know the answers unequivocally. Things going on in Iraq are anything but clear-cut. We have some tough things going on ahead of us. I think there is a phrase that describes what really bothers me the most, and that is the classic, if I had known then what I know now, I might have taken a different course. Well, who wouldn't say that? It is just amazing to watch folks flee to the sidelines of this fight and say it is all yours, Mr. President, this is all your deal; and we are smugly confident to know that you are doing it the wrong way and our plan is to flee Iraq immediately. And all of the evidence to the contrary, that Iraq would become a disaster of biblical proportions, they simply ignore with a cavalier attitude that just amazes me. They continue to ignore the fact that since 9/11 we have not had a terrorist attack on this country, and I think that comes from several factors. One, we have some really wonderful men and women standing between us and the bad guys. Whether it is in uniform, whether in the intelligence services, or whether it is in the black operations all around this world, there are great men and women putting their lives on the line so that that has not happened. And they have done a great job. We are working real hard here at home at Homeland Security and elsewhere to make sure that doesn't happen, but I am afraid we have also been lucky that that has not happened. We heard some comments this morning from an expert in jihadists. She breaks down the Muslim religion and Muslim group into moderates, who make up about 80 percent of the Muslim population of the world, and 17 or 18 percent would be referred to, in her vernacular, as Islamists, who are kind of in between; and then there is that 1 or 2 or 3 percent she referred to as jihadists. Those are the ones that perpetrated 9/11, and may not have had a hand in 9/11 but cheered and danced in the street. And those are the ones whose intention it is to kill Americans. They hate us for who we are and the freedoms that we have. And they are still coming to get us. And all of the rhetoric to the contrary that this would be a great wonderful world if we would just simply grab hands and sing Kumbaya is like the little guy walking by the cemetery in the dark, late at night, whistling to beat the band just to try to keep himself from getting his pants scared off. It is unfortunate we are at this point with respect to the debate, and I am quite frankly saddened by it. It is unworthy of us to be setting ourselves up to say I told you so; the Monday morning quarterbacking. The second-guessing is just legion among the squad who is, with hindsight, with the ability to know things didn't work, yet who at the time supported the program and supported the President, to now come back and cast these horrible aspersions against him and his intelligence squads and all the other things. Yes, mistakes were made. No doubt about it. Mistakes are made in every war. But, you know, I think I will move on to something that is maybe a little better to talk about. Another sad day. Today, on this floor we did something I didn't think was, A, possible or legal, but we did it, and I will walk you through it. We passed H.R. 6 with about a 100-vote margin, which I suspect the folks who voted for it will crow that it is a giant bipartisan bill to make this country less dependent on foreign crude oil and natural gas. In fact, the preamble to the bill says that the intent of H.R. 6 is ``to reduce our Nation's dependency on foreign oil by investing in clean, renewable, and alternative energy resources,'' et cetera, et cetera, et cetera. Quite frankly, it doesn't do any investing in that. This bill's preamble is false because it simply sets aside the money taken away from the folks who are trying to provide crude oil and natural gas to this country and puts it into a slush fund to be spent by who knows who in the future on things we don't have a clue about. But their intent is, I suspect, straightforward when they talk about that. Would that this bill even came close to doing even that modest a statement. It doesn't. The one thing that most of my colleagues and I on both sides of the aisle agree on, and most Americans, most folks in my District 11, who I represent, is that we are far too dependent on foreign sources of crude oil and natural gas. I grew up in west Texas, and still make west Texas my home. It is one of the oil and gas capitals of the United States, and so I am unabashedly in favor of crude oil production and natural gas production. It feeds my family, in some instances, and fed me growing up. So I don't make any apologies for being in support of crude oil and natural gas. I heard a new phrase today during the debate. One of my colleagues on the other side talked about foreign and polluting sources of crude oil and natural gas and fuels. What I would say to my colleague is that his righteous indignation would be a little more sincere if he would come to me and say, I have committed to either getting to and from my district by walking, I am going to ride a horse, a bicycle, a horse- drawn carriage, or I have come up with some new conveyance that does not use any fossil fuels, non-electric cars, some sort of a new non- fossil fuel way to get here as the first step on making that happen, because I feel so offended by the use of fossil fuels that I am going to begin to take those steps. If my colleagues would begin to say that, then their disdain for the oil business and all the wealth it has created in this country, all the solutions it has provided would be a little more understandable. Yes, there are problems with it, and we ought to be dealing with those in a straightforward manner. But that seems to be lost on the folks who on the one hand drive their cars, ride in their airplanes, and at the same time insult the domestic oil and gas industry of this country. And it is an insult, quite frankly. Just look at the title to section 101, the short title, ``Ending Subsidies for Big Oil Act of 2007.'' What is Big Oil? It is not defined in the act. It is just one of those pejorative terms thrown out there by the folks who drafted this bill, which, by the way, had no Member input into this bill. And I am going to try to keep the whining about process to a minimum and just whine about the bill itself, but this is a staff deal. So at least the staff think the name Big Oil is pejorative, maybe the Members don't, but those who voted for it certainly agreed to that. So they are disdainful of the oil and gas business. Back to what we agree on. From the President down to anybody that you talk to, all of us want to be less dependent on foreign sources of crude oil and natural gas or, in fact, totally independent of those sources. Well, that road to independence is decades away. And between here and there, that road is paved with fossil fuels. That road is driven by crude oil and natural gas, and it is going to be a combination of domestically produced crude oil and natural gas and foreign sources of crude oil and natural gas because we consume 21 million barrels a day of gasoline, and whatever our imports are, about 65 percent of that is foreign sources. So I think most folks recognize that an immediate cessation of importing foreign crude oil and natural gas is not in the cards, not only in the short term, near term or really long term as we go about trying to become less dependent on fossil fuels, less dependent on foreign sources of that crude that we are headed to that path. I would also argue that every single barrel of domestically produced crude oil and every MCF of natural gas makes us less dependent on foreign sources. That is just one more barrel that we didn't have to import. That is another 50-plus dollars that we didn't send to some country that may hate us. It is another $6 an MCF of natural gas that didn't go somewhere else. And so, why, for goodness sakes, would we want to intentionally inflict financial harm on the folks that are producing the crude oil and natural gas from domestic sources? It is counterproductive in the extreme. And so when you talk about reducing our Nation's dependency over some period of time, since we recognize we are going to have to have crude oil and natural gas, then by reducing the domestic production of crude oil and natural gas, you have, in fact, increased the foreign source requirements of that crude oil and natural gas. And so that is what this bill does. Now, does to do it in a way that is going to destroy the economy or destroy life as we know it? Not likely. This economy, these producers, are incredibly resilient and in spite of all of our predictions of doom and gloom on the one hand, in all likelihood this will have an impact on it. But there will be great men and women working hard every day in the oil business to overcome the challenges that we have put in front of them tonight with the passage of this bill in the House. We will see, of course, whether or not our colleagues in the Senate take this up. The one disappointing thing about this bill is that as it talks about, they call it clean, renewable and alternative energy sources, it clearly ignores clean-burning coal technology, as well as nuclear power. Most folks who understand the need for energy in this country and understand the scope of energy and the scope of how that energy is produced would acknowledge that clean-burning coal and nuclear are two major and significant sources of energy for this path that we are on to try to get to where we have weaned ourselves off of crude oil and foreign crude and foreign natural gas. It is ignored in this bill. Now, I know I heard earlier this afternoon, the chairman of the Natural Resources Committee, in his mind, alternative energy sources is coal, but it is a fossil fuel; and I am hard pressed to understand that clean-burning coal fits into the generally accepted definition. So I am disappointed that he was not able to, well that is right, this didn't go through his committee. So he had no opportunity to make that clarifying statement in the committee where the chairman has great sway, whether you are the Republican or Democrat. If you are the chairman of a committee, you have got great control over the bill. And had it been through his committee in the regular order, my guess is, given West Virginia's coal production, that my good friend would have clarified that the money that is confiscated from producers out of this bill would have been used in the clean-burning coal arena to help us wean ourselves from crude oil and natural gas. Let me talk a little bit about the specifics of what this bill does. Back under the Big Oil category, let me talk about what that did. That is simply a tax increase. Most businessmen and -women understand that taxes on businesses go up and they go down, they go up, they go down, so a 3 percent increase in the tax rate on businesses is not something that is going to destroy any single business, I wouldn't expect. But it is cash flow that would have otherwise gone into their business. And in this instance, their business is producing crude oil and natural gas. Statistics show that the small producers who are impacted by this provision reinvest about, in 2005, reinvested 617 percent of their profits back in the ground. Let me make sure you understand that. If they made a dollar out of their businesses, they borrowed $5 and put $6 back in the ground. Now I would give you the statistics from 1999 to 2005, but it is embarrassing. It is 898 percent. And so these are folks that take that money that they earn, taking the risks of drilling for oil and gas. And I am going to be joined here in a few minutes by a colleague who fed his family for a while owning a service company in the oil and gas business, taking the risks that are inherent with all the oil and gas exploration, all of the regulatory burden with trying to produce crude oil and natural gas and making money with it and turning that money back into additional activity. That 617 percent provides additional jobs, because you spend that with drilling contractors; you spend it with service companies, some large and some small, some mom and pop organizations. In fact, my dad and mom owned an oil field service company for the last 25-plus years of my dad's career. They spent it with folks like him, who he also hired folks, and so that is how that system worked. What section 102 does is to change a section of the code, section 199, which, back in 2003 when America was losing jobs, particularly manufacturing jobs, the Republican Congress in place at the time said, we need some way to incent manufacturing jobs because most manufacturing jobs have better benefits and better pay than service jobs, particularly entry-level service jobs. Now, you know, lawyers and accountants and doctors and others are in service business and they make really good money. But the bulk of service jobs are such that they don't make as much money. But manufacturing jobs, by and large, really are important to this economy on a go-forward basis. In fact, back in 2003, Speaker Pelosi said manufacturing jobs are the engines that run the economy. These are good jobs. They give working families high standards of living. So even our current Speaker agreed that to incent manufacturing jobs to stay in this country was an important thing to do. So that is what section 199 of the code was intended to do. The net effect was to take the corporate tax rate which, on C corporations is 35 percent, and over its implementation time frame would lower that rate about 3 percent to somewhere between 32 and 33 percent, meaning that those manufacturing jobs would have that 3 percent taxes that instead of coming to the Federal Government and having the 435 of us spend it, the companies would spend that money themselves. And with respect to the oil and gas business, they would take that money and multiply it by, from 200 percent to 600 percent for the small companies with additional activity, additional jobs. Now, by definition, oil and gas production was considered to be manufacturing under the definition that was put in place. Now, under the ending subsidies for Big Oil, every single oil company, the companies that produce the largest average daily production down to the smallest daily production, if they are a C corp, are impacted by this. So I guess by impact, we will have to assume, my colleagues on the other side's definition of Big Oil includes every oil company, just because that is how this impact will be. This impacts every single oil company that is in that business. And again, I said taxes go up, taxes go down. But the net effect on this is that there is less money for these companies to spend in the oil business drilling, producing, completing all the things that go on to produce additional crude oil and natural gas which, again, as I said earlier, limits our need for imported crude oil and natural gas. Every single barrel is a barrel that we have not had to buy from somebody who really hates us. There are a couple of other tax provisions that, whether the amortization period should be 5 years or 7 years or 3 years, reasonable people are going to differ on that and it is unfortunate that we have made that change, but that was not one that I think anybody is necessarily going to fall on their sword over. Let me talk a little while about the most insulting piece of this entire piece of legislation, and that is referred to under section 201 as the Royalty Relief for American Consumers Act of 2007. Now, just the title would mean that apparently American consumers are paying royalties. That is not the case, and so the title is flawed. I had introduced an amendment that was not made in order for reasons you will see here in a minute when I quote it. My better title, my amendment would have given this thing a little more descriptive title to the bill than the Royalty Relief for American Consumers Act, which is meaningless, except the individual terms have meaning, but in context of this bill they don't have much meaning. The title is far more descriptive of what the impact of title II does on our oil producers, is the Congressional Abrogation of Contracts Using Blackmail Act of 2007. That is much more descriptive of what section or title II in these following sections do as a result of this. Let me set a little bit of the history for you. There are always going to be ups and downs in the oil business, not to be confused with drilling for oil and gas, but nevertheless there are swings in the economy. There are swings in oil and gas, and sometimes it is great to be in the oil business and other times it is not really good to be in the oil business. One of those times that was particularly bad to be in the oil business was 1998, 1999 when the price of crude oil, sweet crude was about 10 bucks a barrel. Sour crude was $7.50 or less per barrel. And so at that point in time, companies were coming to the Federal Government to lease offshore leases in the Gulf of Mexico. Now, again, the price was 10 bucks a barrel, 12 bucks a barrel. Contrast that and today. This is 1998 and 1999. I lived through that time in west Texas. We had a march on the Capital led by some folks who demanded that the Texas legislature do something to try to help the oil business. There were thousands and thousands of jobs lost in the economies of west Texas and throughout the oil business as a result of those low prices. It was almost impossible to make money at that price, and folks were being laid off. Rigs were being stacked and not utilized, and it was one of those bottom down times in the oil business that happens from time to time. So against that backdrop, the Clinton administration, led by Secretary Bruce Babbitt, who I assume is a competent Secretary of the Interior, offered up leases for the oil and gas companies to drill on. Now, when you are trying to decide how much bonus money to pay the leaseholder, in this instance the Federal Government, obviously the price of crude, the price of natural gas is a significant piece of what you are trying to do. Another piece of it is what your share of the crude oil will be if you find crude oil or natural gas in the ground. Most leases provide for a royalty to the mineral owner. In this instance the Federal Government is the mineral owner. But given the circumstances of the day, there is some fuzziness as to why this happened. But the leases issued in 1998, 1999, which would have normally had a royalty associated with them, did not. Now, I have to assume that there are competent lawyers, maybe some of them still there at the Interior Department who worked on behalf of the Interior Department to negotiate, in good faith, with the companies who were actually wanting to buy these leases or actually wanted to pay the Federal Government for the right to drill in the Gulf of Mexico in an environment which is very difficult to drill. I have to assume, since we have not seen any malpractice suits, we have not seen anybody lose their law license, that these guys were doing the job they were told to do. The companies were represented by reputable lawyers, and a deal was struck. In effect, the Federal Government shook hands with these companies and said, here are the leases. Here are the terms. Here is what you need to do. And go forth and drill. 1998, 1999. $10 a barrel crude oil. Well, today, crude oil has been much higher than it is right now. But it is still over 50 bucks a barrel last time I checked, although it may have dropped some yesterday, and circumstances are radically different. Well, the opportunists on the other side see this as a chance to, in their view, in their mind, correct something that was done wrong in 1998 and 1999. The truth of the matter is, a deal was struck in good faith by the Federal Government, by other companies. These companies should have been able to rely on those written contracts to conduct their business. This Congress, though, has seen fit to step into the breach to do something I didn't think was legal for us to do but nevertheless are doing. Most times, when you have a contract conflict or a conflict over the terms of a contract, our judicial system is where that is ferreted out, where facts are drawn, where rational arguments on both sides are presented, where you have a trier of the fact, you have a judge, and everybody comes to whatever conclusions. That is not how this works on this floor. On this floor somebody came up with a good idea that we ought to go get this money, and 260 of our colleagues agreed to that idea. I am not sure that everybody fully understands that these were contracts that companies should have been able to agree to, should have been able to rely on. Most companies can deal with taxes going up and down. What companies hate to deal with is dealing with a customer, dealing with a partner that you cannot trust. We have now placed the United States in that category. We are now in league with the conduct of Hugo Chavez, the conduct of Evo Morales in Bolivia in terms of how we treat contracts with this Federal Government. From this day forward, as far as the House is concerned, and, again, this may not happen in the Senate, but as far as the House is concerned, we are told, at least people in the oil and gas business, if you sign a contract with the Federal Government, too bad. Now, we are going to hold you to every single term in there, but we on the Federal Government side, if we don't like the deal, if the deal changes, if the deal looks like it is too good for you, then in addition to taking tax money away from you, we are going to impose either a fee or we are going to force you to renegotiate these contracts. Here is some language that is just unpalatable in the extreme. Section 202, the Secretary of the Interior shall agree to a request by any lessee to amend leases. A request by a lessee to come in and change a contract? That is not going to happen. Since when do you have to demand that the Secretary of Interior accept that? This is only happening because this law is, in effect, a gun held at the head of these lease owners to come in and renegotiate. There are some mechanical flaws in this thing that I am not sure was an intended consequence. One is that if you are a holder in due course of one of these leases, and you sell it to somebody else, you sell all of your right, title and interest in it. Then unless that new leaseholder agrees to these terms and agrees to this, nonsense, then you are forever tainted. You cannot get another lease. That is where the blackmail comes in. Unless you renegotiate the lease, you cannot get another lease from the Federal Government to drill on Federal lands. I know there are a lot of folks who hate the oil and gas business, and never drilling on another Federal land is an acceptable public policy, but it is wrong-headed if you think that we can continue to import foreign crude oil and get to where we want to with respect to the energy independence. Another problem that is, in all likelihood, is a Republican problem as well, back in June we passed a similar concept, a conservation fee that is triggered at $34.73 a barrel. Here are the mechanics. If the price is above $34.73 a barrel on average for a year, then you owe a $9 fee on that production. If it is less than that, then you don't owe that fee. So you are the business guy, you are the guy that is producing crude oil and natural gas, you have been rocking along all year along at $34.70 on average, and so you are not paying that fee. You built your business model based on that number. Then you get a $.10 increase in the average price over that timeframe, and you are now making $34.80. You now owe a $9 fee, which drops you back to a $25 gross revenue on each barrel of oil that is sold. There are many places in the world where business people have to deal with that kind of a 25 percent haircut just because something went up over a particular threshold. A couple of amendments that I offered, then I am going to turn to my colleagues for whatever time they would like to take that I offered up that seem to be a little more straightforward than my first one. The first one would have said there is plenty of uncertainty as to what the impact this is going to have on domestic crude oil and natural gas production. We all agree that for every barrel that is produced domestically is a barrel we don't have to buy from somebody else. Given the uncertainty, given the rush to judgment that this was, let's have the Secretary of Energy and the Secretary of Interior document what the impact is going to be and tell this body for sure and for certain that this will not reduce the investment in crude oil and natural gas and will not reduce the domestic production that we rely on to help wean ourselves off of foreign production. I got turned down on that. Then the second one was if our goal is to increase domestic production while we bring on these other technologies that are decades into the future, then let's not penalize the people who are taking the money and putting it back in the ground. Let's only have these penalties apply to people who are taking the money and giving it to shareholders or, you know, some nasty thing like that. So folks who reinvest over 75 percent of their net profits would not be affected by this. For those folks who are taking the money, putting it back in the ground, they wouldn't be impacted by this law; those folks who are taking less than 75 percent of their profits and putting it in the ground, then they would have to pay these penalties, and they would be associated with that. I meant to say early on that the chairman of the Rules Committee had told us in advance that none of these amendments would be made in order and that we were wasting our time and breath, but it seemed like something I ought to do. I am joined tonight by Steve Pearce from New Mexico. He and I share the New Mexico border along a good long stretch. He is also the Congressman for my three grandsons, and I am particularly interested in him doing a good job on behalf of my three grandsons and my son and daughter-in-law. Mr. Pearce, would you share with us some of your thoughts?

Mr. CONAWAY. Madam Speaker, I thank the gentleman for joining us tonight. It just occurred to me that the Federal Government has contracts with investors all over the world, where we have borrowed money from them at interest rates that may or may not be advantageous. I wonder if those holders of those bonds and T-notes out there all around the world are noticing tonight that if interest rates go the wrong way, that this Federal Government set a precedent of simply changing them at will. That ought to put a chilling effect on the purchase of this money.

Mr. CONAWAY. Madam Speaker, we are also joined tonight by a good colleague from Tennessee, Marsha Blackburn. I yield to the gentlewoman.

Mr. CONAWAY. I thank the gentlewoman for coming back from her previous engagement this evening to join my colleague from New Mexico. We are just winding down. Does my colleague from New Mexico have another point or two he wanted to make?

Mr. CONAWAY

Mr. CONAWAY. I thank the gentleman for yielding, and I appreciate the chairwoman's honesty earlier about the fact this was going to be a closed rule. We listened for 2 years about the whining on closed rules and the fact that it reflected a closed mind. So on our side, for the next 2 years, we will try to keep our whining to a minimum. Words are inflammatory. Title I to this act says ``Ending Subsidies for Big Oil Act of 2007.'' I have a title I would like to put on title II of section 1, and that would be the ``Congressional Abrogation of Contracts Using Blackmail Act of 2007.'' We can throw these wild words around at each other all we want to. I speak against the rule and the process. This is staff-developed underlying legislation. Not one Member of Congress had any input into it at a point in time where you could actually do something about it. There are flaws throughout it. I offered an amendment yesterday, which turned out to be for no good reason, that would simply say if you are in fact going to hamper domestic production of crude oil, and clearly in the near term increased domestic production is a way to get us to the point where we are no longer as dependent on foreign oil, if this act works to hamper that, then it wouldn't take effect. In other words, get the Secretary of Energy and the Secretary of the Interior to tell us this won't have a negative effect on oil production. The other amendment I offered would simply say if you are taking those profits, whether you consider them obscene or not, if you are taking those profits and putting them back in the ground to find additional sources of domestic crude oil and natural gas, then this act wouldn't apply. Evidence shows the small oil companies, to which the tax provisions affect, not just Big Oil but it affects the small companies, those small E&P companies reinvest 617 percent of their profits back in the ground finding additional supplies. The bill is flawed in its mechanics, and I will speak later this afternoon against the underlying concepts, but one of the flaws is, if I am an owner of one of those covered leases and I sell it to somebody else and am no longer in the loop, I am still covered and tainted with that until everybody else in that loop subjugates themselves to this American government and renegotiates those contracts. The price threshold mechanism is flawed. At 34.73 a barrel there is no threshold, yet at 34.75, I have a $9 pop, which means I am only really making $25 a barrel. These are the kind of things that, had it gone through committee, or I guess it did. Oh, it did not go through committee, that is right. This came straight to the floor without any input from anywhere else. Whether you agree with our positions or not, your closed mind on this issue is clearly evident in this. My only caution is, and we have heard we are coming to the end of this railroad train, that the other side has now become so intoxicated with the power and authority that they have being in the majority, that they do not continue to misuse that power and authority and continue to ignore open debate and honest ideas and an exchange of honest ideas that the committee process typically allows and that brings better legislation to this floor and helps us address these things. The consequence of the taint may be intended. I don't think it is, but we ought to know that. And there is no real way to know that without debate within the committee structure where there is adequate time to go at this. So I urge my colleagues to vote against this closed-minded rule, a little bit of whining just to keep up appearances, to vote against this rule, and I will speak against the underlying bill later this afternoon.

Mr. CONAWAY. Mr. Speaker, I thank the gentleman for yielding. The word ``integrity'' in this bill has been used several times today. It is offensive in the extreme just because of what my colleague just mentioned. The lead-in sentence to section 202, which is the beginning of this wreck where we take money, confiscate money from otherwise good hardworking individuals for government purposes, says, ``The Secretary of Interior shall agree to a request by any lessee,'' and I can assure you that no lessee that has negotiated in good faith leases is going to request without some sort of a gun held to their head, and that gun is this bill. Tax rates go up and tax rates go down. Everybody understands that. Every businessman understands that. What these businessmen don't understand is this Congress's attack on the sanctity of contracts. These leases were signed in 1998 and 1999. If mistakes were made by the Federal Government, fine, go find those lawyers and bring them up on malpractice suits. But those leases were signed. This bill has delay rentals which were not in the original negotiation. This bill takes money away from those folks. The bottom line for this increase in taxes and these takings is that there will be less money reinvested in oil and gas domestic production. Every reduction in domestic production leads to a demand for foreign crude oil and foreign natural gas. I recommend a ``no'' vote on this bill.

Mr. CONAWAY

Mr. CONAWAY. Did they pay rent on the front steps of the shop?

Mr. CONAWAY. That is your Gas Policy Act in 1978 under Carter is what you ended up with.