Byron Dorgan

Mr. DORGAN

Mr. DORGAN. Mr. President, parliamentary inquiry: How much time was required on the last recorded vote?

Mr. DORGAN. Mr. President, that 20 minutes begins at this point. Let me yield myself 2 minutes. Then I will yield 5 minutes to the Senator from Maryland. Let me just say, this is the easiest amendment to consider of all of the issues that we have dealt with on this legislation. It deals with the question of whether we should shut down the loophole that exists in current tax law that says to a company, shut your American manufacturing plant down, fire your workers, move your manufacturing plant overseas, manufacture the product, ship it back into the U.S. marketplace and, by the way, we will give you a big tax break. If we can't begin a baby step in the right direction of saying, we will no longer subsidize in the Tax Code the movement of U.S. jobs overseas, then we don't have a ghost of a chance of fixing what is wrong with this Tax Code. You have two companies side by side. Both make bicycles. One decides it will move its plant to China. The other continues to live in Baltimore and make its bicycles in Baltimore. The difference? The company that moved overseas gets a tax break. The company that stays in Baltimore doesn't. It is an insidious, perverse tax incentive that makes no sense. We ought to end it. That is what my colleague and I do with our amendment. I will explain it further at some later moment. I want to offer 5 minutes to the Senator from Maryland who has to go to the Intelligence Committee.

Mr. DORGAN. Mr. President, I yield myself such time as may be necessary. Again, this is not complicated. Levis used to be American. When you would slip on a pair of Levis in the morning, you were wearing a pair of American pants. Not any longer. The manufacturer of Levis has gone to Mexico and China. Fig Newtons. If you want some Mexican food, you can get Fig Newtons from Mexico. That old all-American Fig Newton cookie has gone to Mexico. Fruit of the Loom underwear has gone to Mexico. I have mentioned previously Huffy bicycles. They have gone to China. Do you know that little red wagon, the Radio Flyer? This one has gone to China. The perversity of all of this is, whether it is Fig Newtons, Levis, Radio Flyers, Huffy bicycles, or Fruit of the Loom underwear, they were all rewarded for moving their jobs overseas because our Tax Code has embedded in it a special little deal: Move your jobs overseas and we will give you a special deal. We want to change that. According to the Joint Tax Committee, U.S. taxpayers will pay $6.5 billion between 2004 and 2013 as tax incentives to U.S. companies that set up offshore subsidiaries to manufacture merchandise and ship it back into this country. We have lost about 2.7 million manufacturing jobs in this country, and we have a perverse provision in the Tax Code that says let's even enhance that by incentivizing those who would close their American factories and move the jobs overseas. This is not a new idea. This is a rather narrow amendment, by the way. We don't end deferral; we just end deferral with respect to U.S. companies that are manufacturing abroad and selling back into this country. President Kennedy tried to end the entire deferral system. President Nixon tried to end it. President Carter tried to end it. The Senate voted to end it in 1975. The House of Representatives voted to end it in 1987. In each case, the big economic interests that get rewarded for shipping American jobs overseas have won. The question is, will they win today? We are losing jobs. We need to keep jobs in this country. This amendment doesn't prevent a company that chooses to move Huffy bicycles or the little red wagons to China. It doesn't prevent a company from moving Fig Newton cookies, Fruit of the Loom, or Levis to Mexico. But it does say if you are going to move those jobs, at least we are not going to help pay for it with incentives in the Tax Code. That is a simple enough proposition. This Senate should adopt this amendment. I reserve my time.

Mr. DORGAN. I respect those who disagree with me. They have a right to disagree. My colleague ended with a quote from someone from the Clinton administration. Let me quote Will Rogers. He said: It's not what they know that bothers me. It's what they say they know for sure that just ain't so. In this case, this narrow question with respect to deferral simply asks whether we want to continue to make it beneficial for someone to close a plant here and move it elsewhere, or to answer the question, if requested: Should I build it here or build it there, to answer the question by saying let's build it there because our Tax Code provides a benefit for me if I build it there. Move a job to China and our tax bill rewards you. Keep a job here and you actually face unfair competition because of the provision that is now in law, the one I want to get rid of. This is very simple. I reserve the remainder of my time.

Mr. DORGAN. Senator Kyl is here.

Mr. DORGAN. I ask unanimous consent that a minute and a half be added to the Republican side and a minute and a half be added to our side.

Mr. DORGAN. How much time remains?

Mr. DORGAN. Mr. President, let me consume the 2\1/2\ minutes. Does that include the 1\1/2\ minutes?

Mr. DORGAN. Mr. President, Senator Baucus has left the room. Let me consume 5 minutes, with Senator Baucus's consent, of the minority time after which I will yield back the time and I believe all time will have been yielded back on this issue. Is that correct?

Mr. DORGAN. Let me make a couple of comments about the facts. First of all, the number of manufacturing jobs we have lost in this country. This chart shows the number of manufacturing jobs we have lost since the year 2000, a little over 2.7 million manufacturing jobs. One cannot make the case this is not a problem. Of course, we are losing manufacturing jobs. The number of jobs in foreign manufacturing affiliates of U.S. firms has grown by a million in an 8-year period. So, of course, they are gaining jobs. We are losing manufacturing jobs and they are gaining jobs. It is hard to make the case there is not an issue here. Now with respect to the issue of the corporations, 61 percent of whom pay no taxes according to the GAO, my colleague says, well, probably some of them are dormant. The U.S. corporations made $2.7 trillion in gross income on which they paid zero in taxes. If that is dormancy, it is an interesting state of affairs, in my judgment. Second, the issue of Huffy bicycles. I have used the issue of Huffy bicycles and the Radio Flyer wagon to make the point. The point is jobs are migrating overseas. This Radio Flyer red wagon was made here for a century and now it is being made in China. This Huffy bicycle was made here for a long time. Now it is gone. It is made in China. We saw the little red wagons and Huffy bicycles leave America and move to China. With respect to Huffy, the workers here made $11 a hour. The company said that is way too much; I will hire a Chinese worker at 33 cents an hour, 7 days a week, 12 hours a day. As we did that, we said, We will give you a tax break. Move this plant to China and we will give you a tax break. That is what our amendment would shut down. I was trying to think how would we construct a defense, or how will I hear a defense about this, and it started out with trade. The Europeans are hitting us with these trade sanctions. Yes, well, we are really weak-kneed on trade. This country has a beef problem with Europe, so we slap them around. Do you know what we do with the Europeans? We slap them around with sanctions on truffles, goose liver, and Roquefort cheese. My God, that will send fear into an adversary. If Members want to talk trade, spend time talking about trade and wonder why we do not have a spine and backbone and strong knees to stand up for this country for a change. But this is not about trade. This is about an insidious, perverse little provision in the Tax Code that says, Move your jobs, decide to build overseas rather than here, and we will give you a little tax break. If we cannot take a baby step in doing this, if we cannot close this loophole, what on Earth can we do? With respect to the fact it is alleged this is a tax increase, my guess is almost everything will be alleged to be a tax increase in the future. It does not matter what you talk about, they will say it is a tax increase. Is closing a loophole that is fundamentally unfair, that incentivizes the moving of American jobs overseas, is that really a tax increase, or is it closing a loophole? Do you want to keep doing this? Should we take taxpayers' money, incentivize it to say, let's pay these guys to move bicycles and red wagons overseas? Or, let's pay them to move Fig Newton cookies to Mexico, or pay them to move tennis shoes to Indonesia. Is that what we want to do, pay them to do that? That is what exists in our Tax Code. This is the simplest possible amendment. If Members want to support American jobs and want to at least have a neutral Tax Code and want to stop the perversity of saying let's actually help finance and keep jobs from moving overseas, then vote for this. If you want to talk about competition between Bangladesh and France and Costa Rica, and construct all kinds of interesting theories that have nothing to do with this amendment, then vote against it. There is nothing wrong with that. I have lost before. I hope I will not lose today. This amendment will come up again and again because this country should not be subsidizing the loss of jobs to other countries. Those jobs are going in part because they can buy 33 cent an hour labor and put 12 people in a room and work them 7 days a week and say, if you try to organize as a group of workers, you are fired. If you complain about an unsafe work plant, you are fired. So that is the incentive to move jobs overseas. On top of that, we actually, in public policy, say we will buy you a little cherry on top of the sundae. The cherry on top of the sundae is you actually get a tax break here. The company you are competing against, that you left back in the United States--tough luck for them. They are paying higher taxes than you are. It seems to me if we cannot think our way through this short little maze, this Congress cannot think its way through anything. This is not organizing a two-car caravan. This is simple. This is easy. And the choice, when we cast this vote, is not going to be complicated at all. Either you believe this incentive should not be in the Tax Code or you believe we ought to continue to subsidize jobs that are moved overseas. We have more to do. We have a debate on trade that has to come. I don't expect we will get to the debate on trade because of the Central American Free Trade Agreement. It should be brought to the floor and debated, but will not be before the election because, I am guessing, the President does not want to have that debate--I would love it. Let's get it here tomorrow, as far as I am concerned. There is much more to discuss on this issue. With respect to this alone, the Senator from Maryland and I have offered an amendment that is painfully simple and I hope will be painless to vote for. Mr. President, I yield the floor.

Mr. DORGAN

Mr. DORGAN. Mr. President, I send an amendment to the desk.

Mr. DORGAN. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. DORGAN. Mr. President, I shall not debate the amendment at the moment. My understanding is the bill managers want to sequence a number of amendments. Let me indicate this amendment deals with the question of trying to close a tax provision that actually rewards or incentivizes those U.S. companies that would move jobs overseas for the purpose of producing a product and shipping it back into our marketplace. I believe that is a tax loophole that ought to be closed. We ought not incentivize the loss of American jobs and the movement of American jobs overseas. I offer this amendment on behalf of myself and Senator Mikulski and others. We will be happy to come this afternoon to debate it. Also, I will be happy to reach a time agreement when we come back this afternoon. It is not our intention to delay this bill. I want to see this bill finally passed, but I do want to have a good debate on our amendment. We will be ready to have a reasonable time agreement this afternoon.

Mr. DORGAN

Mr. DORGAN. Mr. President, if I might respond, Senator Feinstein has actually left her office and is on her way.

Mr. DORGAN. Mr. President, let me make a brief comment in response to the comments of my colleague from Idaho. He is quite correct. We have an urgent situation with respect to energy. We have two subjects at this point. One is the underlying bill, the Internet tax bill, and the other represents amendments offered by my colleague, Senator Daschle, and an amendment offered by Senator Domenici. I intend to support cloture with respect to both of these initiatives. I want to respond to my colleague from Idaho who says, Shame on us, this is false procedure, it is politics, and someone is trying to take over the floor of the Senate, and so on. If we believe that we have an urgent need to pass an energy bill-- incidentally, I was one of those who supported an energy bill when it came to the Senate floor, and it lost by two votes--if there is a time and place to do that, we are going to have a cloture vote. I suggest with respect to his suggestion about anger, hold your anger for a couple of hours until we see how we vote on cloture. If we want to debate energy, let us do that. I am in favor of debating energy. I am also in favor of concluding the bill dealing with Internet taxation. Also, my colleague, Senator Carper, said that he is not in support of taxing access to the Internet. I am not, either. I have previously supported a moratorium on taxation. I hope before this process is over, I will be able to support this. But we are dealing with two different subjects. My colleague from Idaho just described the subject of energy. My point on energy is very simple: There is a way to deal with energy sooner rather than later. The way to do that is vote for cloture in the next half hour or so, which I intend to do. I yield the floor.

Mr. DORGAN. Yes.

Mr. DORGAN. Mr. President, I thank Senator McCain for his leadership. We did just conclude a meeting and, as a result of that meeting, it appears to me we should be able to complete this legislation likely this afternoon. We dealt with the question of the voice over Internet protocol, VOIP. I think Senator McCain will offer an amendment that reflects an agreement on all sides of that issue. That is one of the issues resolved. There still remains some issues dealing with the grandfather issue. I believe Senator Lautenberg will offer an amendment on that issue. Senator Lott has an amendment. I am not certain whether they need votes. In any event, they will be working on those. The other issue is the definition as to what extent this legislation applies to certain activities with respect to taxation of telephone and telecommunications issues and the Internet. The underlying bill is a Federal preemption of taxation with respect to the Internet. The point of the legislation, as introduced, is to effectively prevent taxing the connection to the Internet, believing that the buildout of broadband services in this country is good for the country and will expand the economy and create jobs. Almost all of us previously voted for a moratorium on taxes on the Internet. I voted for it, and so has most of my colleagues. This iteration of that moratorium has become increasingly complicated because since the moratorium, new technologies have developed, and it has caused more difficulties in negotiating. Even though we do not have agreement on every feature, my expectation is that in the next couple of hours the likelihood is this legislation could be completed in the Senate. Again, I appreciate the leadership of Senator McCain. A group of us have been active in trying to see if we can find common definitions and common intent with respect to this important legislation. Mr. President, I yield the floor.

Mr. DORGAN. Mr. President, I have no objections to the amendment that is being offered by my colleague from Mississippi. We discussed the amendment earlier today. It is an amendment I support. I hope we can agree to it without a recorded vote. I think that makes sense. I might say while addressing this at the moment that I am trying to get in touch with Senator Feinstein to determine whether she intends to offer an amendment on this subject. I believe that is perhaps the last amendment on our side of which we need to try to determine the disposition. As soon as we determine what that is, I will let Senator McCain know. Once again, I do not object at all to the amendment offered by Senator Lott. I think a voice vote is in order. I yield the floor.

Mr. DORGAN. Mr. President, I support the Lautenberg amendment. His suggestion makes a great deal of sense. I hope we can voice vote the Lautenberg amendment.

Mr. DORGAN. I suggest the absence of a quorum.

Mr. DORGAN. Mr. President, to my knowledge, all of the amendments that have been previously noticed would not be offered. We have tried to check with the authors. A number of them would not be in order postcloture. We have checked with the authors of the amendments that were noticed. My understanding is that there are no amendments on this side other than Senator Feinstein. At least we have not been notified that there is an amendment out there other than Senator Feinstein.

Mr. DORGAN. Mr. President, Senator McCain has offered this amendment with agreement from all of us who have participated earlier today in a meeting to discuss areas of disagreement. This was one of the areas of disagreement. It is called VOIP, voice over Internet protocol. We had concern about the section of the McCain substitute that dealt with this topic. After a meeting, we were able to reach agreement on the language. So what Senator McCain is now offering is an amendment to his substitute which actually deals with this issue in a manner that is consistent with the intent of everyone who has participated in the meeting. I am pleased to support it. I think it improves this bill and adds to the bill language that reflects the intent of all of us who have worked together on it. So I fully support the amendment offered by Senator McCain. There is no objection to passing it by a voice vote.

Mr. DORGAN. Mr. President, I ask unanimous consent that the Senator from California be given 2 additional minutes.

Mr. DORGAN. Mr. President, I didn't understand exactly what was agreed to.

Mr. DORGAN. I reserve the right to object so I can understand what is happening.