Phil Gramm

Mr. GRAMM

Mr. GRAMM. I am happy to yield.

Mr. GRAMM. I thank the Senator for his kind comments. I will say, in my 6 years on the Appropriations Committee I learned more about how Government really works than in any other of my service. Some of which I liked, how it worked. In some cases I didn't like how it worked. Let me now turn to the other issues. I want to begin with the following point that I think in a reasoned way we all agree with. One of the interesting things about public life and public service, and serving the greatest country in the history of the world, is that it constantly comes home to me that good people with the same facts, as Thomas Jefferson observed, are prone to come to different conclusions. There are several areas where I have come to a very different conclusion than Senator Byrd, and a very different conclusion than Senator Lieberman. I would like to try to explain why I have reached the conclusions I have reached. These areas have to do with what I think goes to the heart of homeland security. I think it is very instructive to note that there have been areas where the Congress has already decided that the civil service system, in those critical areas, needed to be changed. It is not as if we have not had many warnings about the inadequacy of the civil service system. The other day I was using some facts and there was an extra part to the story, but I want to repeat them with the rest of the story in it. I think they bring home the point. In 2001, we had 1.8 million people working for the Federal Government. Based on the performance of those 1.8 million, we immediately terminated 3 people. Under the previous administration, 64,340 Federal workers were estimated, or at least judged by that administration, to be poor performers. Of those 64,340 out of 1.8 million, we went through the process of removal with only 434. And that process takes up to 18 months. Currently, in OPM polls of Federal employees, the very people who many of our colleagues and many of the unions which oppose the President's bill claim to be representing, in opinion polls taken of Government employees, two-thirds of Federal workers today believe that poor performers are not adequately disciplined by the current system. That is two-thirds of the people who work for the Federal Government in random sample polling believe that job performance has little or nothing to do with their chances of promotion. So, first, I think it is important, in looking at what we are asking in terms of powers to promote national security and to protect it, to note that the current civil service system is far from perfect. Second, we have had study after study conclude that we needed a dramatic change in the civil service system--the Grace Commission report in 1983 and the Volcker Commission report. As we are all aware, Paul Volcker, former Chairman of the Federal Reserve Bank, certainly no union basher in the political phrase of our era and of this bill, concluded: The current system is slow. It is legally trampled and intellectually confused. It is impossible to explain to potential candidates. It is almost certainly not fulfilling the spirit of our mandate to hire the most meritorious candidates. Our own colleague, Senator Warren Rudman, headed up the U.S. Commission on National Security. We all know Warren Rudman. We know he is a serious person. We know he did not enter that Commission with any ax to grind. Yet he concluded that ``today's civil service system has become a drag on our national security. The morass of rules, regulations, and bureaucracy prevent the Government from hiring and retaining the workforce that is required to combat the threats we will face in the future.'' Not only are people in the system registering their unhappiness, but we have consistently had commissions headed by Democrats and headed by Republicans that have called for a dramatic reform of the system. Interestingly enough, we have responded. When we decided to federalize inspectors at airports, in that bill we gave the President power in terms of personnel flexibility to hire and fire. We gave him the ability to get around the normal procedure that requires up to 6 months to hire somebody. We gave him the ability to fire for incompetence and to promote, to some degree, on merit. We have done the same thing in the past with the Federal Aviation Administration. But, interestingly enough, in one area we have granted a tremendous amount of flexibility, when we decided to reform the Internal Revenue Service, we gave the executive branch of Government tremendous flexibility in hiring, firing, pay and promotion, because we were so concerned about the inefficiency and the potential corruption in the Internal Revenue Service. I ask my colleagues: If we believed that the current system was failing us in the Internal Revenue Service and that we had a problem which required a different approach and more flexibility with regard to our sensitivity at the Internal Revenue Service with people who know our intimate financial information and who look at our tax returns. If we believed that flexibility to administer that Department was necessary--and we did, and we adopted it and it is the law of the land today--I wonder what people back home would think when we said we thought flexibility was required at the Internal Revenue Service in terms of personnel because of its sensitivity and because of the lack of efficiency, but we don't think similar or greater flexibility should be provided to the President and to the Secretary of Homeland Security. If we thought the problems at IRS justified a new approach, a new flexibility, the ability to hire and fire and promote based on merit outside the Civil service system in terms of special procedures, how, after 9/11 and after terrorist attacks that killed thousands of our citizens, can we not believe that homeland security is at least as important as the Internal Revenue Service? When we granted flexibility for the Transportation Security Administration in the hiring, firing, and promotion of people who inspect your carry-on bags at the airport and helping to provide security, does anybody believe it made sense to give flexibility to the Transportation Security Administration but it doesn't make sense to give even more flexibility to the Department of Homeland Security? I don't think 1 American in 100 would agree with the thesis that the IRS is more important and that we are more concerned about its ability to do its job than we are concerned about the ability of the Coast Guard to keep a nuclear explosive from being brought into New York Harbor. But, incredibly, I think we got off into the ditch on this bill was that, while the Congress has already granted some flexibility to the President in the Transportation Security Administration, Internal Revenue Service, and Federal Aviation Administration, for some remarkable reason--even after the terrorist attack in New York--in this bill, a decision was made that the President should have less flexibility in managing the Department of Homeland Security than he does in managing the Internal Revenue Service. I think the American people will find that virtually incomprehensible, and I think they will find they are unable to accept it. Another place that I think we got off into the ditch on this bill was taking away power that the President now has. If you went out and did a poll, and if you asked people: Do you believe, in light of the attacks on September 11, we should give the President more power in the ability to run the Departments of Government that have to do with homeland security after the attacks than he had before?--if you posed that question, I don't believe there would be 1 American in 1,000 who would have said: No, let us take national security power away from the President. Not 1 in 1,000 would have said : No, why don't we just leave it like it is? I think probably over 900 out of 1,000 would have said: Yes, we ought to give the President more power. But, for some remarkable, unexplainable reason, the bill that is before us actually takes power away from the President which he has today. I remind my colleagues, when the President is asking for the ability, for national security purposes, to override union contracts in terms of work rules, that is a power the President has today--unabated in those areas that deal with intelligence and national security. The President has that power today. The current and previous Presidents have used that power, and that power is currently in effect. The waiver of collective bargaining agreements has occurred in eight Government agencies as we debate this issue about whether the President should have this power. Every President since Jimmy Carter has had this power, and they have used the power. Currently, in the following agencies, collective bargaining agreements of one form or another have been waived: The FBI, the CIA, the National Security Agency, the Secret Service, the Air Marshals Offices of the Federal Aviation Administration, the Criminal Investigation Division at the IRS, the Office of Criminal Enforcement at the Bureau of Alcohol, Tobacco, and Firearms, and the Office of Enforcement and Intelligence at the Drug Enforcement Agency. In those eight Government agencies today, we are operating under rules that the President has asked for power to use in the new Department of Homeland Security. I would have to say that never once in the Carter administration, in the Reagan administration, in the first Bush administration, in the Clinton administration--never in any of those administrations, so far as I am aware, did anybody propose taking away those national security powers. As I have said, these powers are currently in force in eight different Government agencies. Yet, remarkably, after the attack on 9/ 11, and in a bill we wrote to respond to it, this bill takes away power that President Carter had, that President Reagan had, that Bush 41 had, that Clinton had. I just would like to note that I do not remember--and I have served in Congress since the last 2 years of the Carter administration - but I do not remember, in any of those administrations: That is too much power for the President to have. He ought not to have that power, and we ought to take it away from him. But yet, remarkably, in a bill we have written to respond to the crisis we face, and the mortal risk we face, and in a follow-on to thousands of our citizens being killed in a terrorist attack, for some unexplainable and incomprehensible reason, the bill that is before us says we are actually going to take power away from the President to have a national security waiver of work rules under this new law and in this new Department. I do not believe, if the American people really understood that is what the bill is trying to do, there would be 1 American in 100 who would be for this bill. And the President has said he is not for it, and he will veto it. Let me explain what we are talking about in terms of these waivers. We are not talking about waiving worker protections in terms of the basic rights of people and their constitutional rights. We are talking about work rules that have been negotiated as part of union contracts that interfere with our ability to do the job in the new Department. Let me, very briefly, go through a few of those work rules that have impeded our ability to do things similar to the things we would like to do in the name of homeland security. Let me do a couple of them in detail, and then I will just mention the others. In 1987, the Customs Service in Boston decided they wanted to reorganize the inspection room. They concluded they could be more efficient in inspecting things coming into the country. So they set about the process of remodeling the inspection space. The Treasury Employee Labor Union filed a complaint with the Federal Labor Relations Authority claiming that to reorganize that work space, to reconfigure it, without renegotiating the union contract, violated the union contract. It ended up going to the Federal Labor Relations Authority, and--guess what--they ruled that it violated the union contract and the Customs Service could not restructure the inspection area. Now, look, after 3,000 people died in downtown New York, if we conclude, with this new Department, that we need to change the inspection area at the airport, are we going to go through 18 months of negotiating with the National Labor Relations Authority as to whether we can do it, when the lives of our people are at stake? Absolutely not. Nor would anybody in their right mind suggest that we should. That is the kind of waiver authority for which the President is asking. I will give you another example. Under the work rules that govern border inspection, Barry McCaffrey-- you all will remember Barry McCaffrey, the good general who was the drug czar during the Clinton administration--he observed, in the San Francisco Examiner that under these work rules for Customs and INS, there were some things they each could and could not do under these contracts. He observed officials at one agency were actually forbidden to open the trunks of cars, a policy well known among the drug dealers. Then he talks about how actually knowing these work rules allowed the drug dealers to game the system. Now, let me switch to the Coast Guard. Are we willing to let work rules and what some people will and will not do prevent us from searching a barge that might bring a nuclear device into New York Harbor? Does anybody really believe, in the Department of Homeland Security, the President should not have the power to waive those work rules when people's lives are at stake? Nobody believes that. But that is what we are debating here. That is what this debate is about. Let me give you another example. In 1990, INS wanted to add an extra shift at the Honolulu Airport to deal with a surge in international flights in the afternoon. They had a backlog and had people waiting in line, so they wanted to add another shift in the afternoon to do their inspections. But there was only one problem. The American Federation of Government Employees said: No, you are not going to add that shift because we have a union contract that says we get a say in whether more personnel come on board to do part of our job. And you have already guessed it: The union took the case to the Federal Labor Relations Authority and, they ruled that the INS could not add the shift. Now fast forward through 9/11. Take into account that people died at the Pentagon and the World Trade Center. Are we really going to allow a union agreement that would make us go back and renegotiate the contract before we could put more INS agents in an area where we believe there is a clear and present danger to the lives of our citizens? Obviously, some people think we should. That is what the debate is about. But I cannot believe most Americans would think the President should not have the power to say: Now look, this is no Sunday picnic we are going through here. People's lives are at stake. We need more people here, and we need them today, and we are putting them here. And if you don't like it, go work somewhere else. Now, that may seem extreme to some people, but I don't see it as extreme. If somebody is coming through Customs in Savannah, and they might kill my mother, I feel pretty strongly about it. And when we are dealing with homeland security, these kinds of issues have to be taken on and addressed. Now, I have gone through enough of them in detail. Let me just touch briefly on a few of others: Prohibitions against special task forces operating in the Border Patrol. Listen to this, we have union agreements that prohibit us from stationing Border Patrol agents, for any period of time, where there are not suitable eating places, drug stores, barbershops, places of worship, cleaning establishments, and similar places necessary for the sustenance and comfort and health of employees. And I generally agree with that. We have a lot of great people who work in the Border Patrol. But when lives are at stake, when you have extraordinary circumstances, we cannot be required to go back and renegotiate a union work rule because an area where terrorists might cross the border does not have a dry cleaner. Dry cleaning is important, but it isn't that important. You get the idea, in listening to some of our colleagues, that when the President is asking for the right to suspend these work rules, it is just willy-nilly, wholesale, we don't like your looks, you are out of work. We are talking about being able to put a Border Patrol agent where there is no dry cleaner in an emergency; not that we want him to go off and live in a tent. But if he has to live in a tent for a few weeks or a few months to protect our citizens from being killed, I think they would willingly do it. I don't think it is asking too much to ask people to do it. I will touch very briefly on the others. Body searches of detainees: You would think we would have the right to determine, in terms of our Border Patrol and our INS, what the body search policy would be based on the threat. But we really don't have that right because, under a union work agreement, the union has to sign off on a change in policy. And in 1995, when we tried to change the policy, the Federal Labor Relations Authority overruled the Department and set aside the new search policy. We have had similar things happen with firearms. We have had similar things happen with what offices could be opened and closed. This is not some idle concern. This is not some theoretical power the President wants. This is something that is a real-world problem today. It is something that the Congress gave the President in the Transportation Security Administration, the Internal Revenue Service, and the Federal Aviation Administration. But yet, remarkably, in the bill before us the majority in the committee decided that, you don't want to give the President the same flexibility with regard to the Department of Homeland Security where you are talking about lives. I don't think people understand that, and I don't think they accept it. As another example of how out of focus with reality the current bill is, you might ask yourself, when we have had the Federal Government put up tens of billions of dollars to pay for what happened in New York to try to comfort the people who were hurt, to rebuild the Pentagon, to indemnify people, and as we begin the rebuilding process, you might ask yourself, in light of the new reality after 9/11, should Congress artificially make it more expensive for Government to help people rebuild something that is destroyed? Should they leave it the way it is, or should they make it less expensive? I think if you ask the American people, in light of 9/11, do you think Congress should add a provision that will raise construction costs for FEMA for emergency assistance to people who have had their property destroyed, their lives uprooted, should we pass a law that requires the Government to pay an artificially high wage to people working in those areas, or should we rebuild those things competitively so we can help more people, I think if you ask the American people, they would say, why should we pay a premium when we are trying to help people? Yet remarkably, almost unbelievably, in a bill that is supposed to be responding to 9/11, there is a provision which says that on any construction that we undertake in responding to a disaster, we have to pay an artificially high wage that numerous outside groups and groups within the Government have estimated would raise the cost of that construction in emergency assistance by 20 percent. Why in the world would you have a provision such as that in this bill? Why would you apply this provision called Davis-Bacon? It is explained in one way; it operates in another. The way it operates is, you look at the highest wage paid anywhere in that region, which can be a huge swath of the country, and then anything that the Government does in emergency construction in that area, it has to pay that wage, whether there are good people willing to work for less or not, whether everybody else is paying less or not. Why in the world would you put that provision in this bill? How could it possibly make any sense? The obvious answer is it doesn't make any sense. Nor are you going to hear people stand up and defend it. I have talked longer than I meant to talk. Let me conclude by simply making a couple points. A bill that is supposed to respond to an attack on our country and the great vulnerability we have as a result of that threat, that actually takes power away from the President to provide security and takes power away in the name of security concerns, is totally unacceptable. That is what this bill does. The President of the United States, if this bill became law, would have less power to use national security waivers to promote homeland security than Jimmy Carter had or than Ronald Reagan had or than Bill Clinton had and that Bill Clinton used. Eight Government agencies today are operating under those rules. Yet in a bill that is supposed to be promoting homeland security, we say: It was all right for Bill Clinton to do it prior to 9/11, but now we are going to take that power away from George Bush. No, you are not. That is not going to happen--not in this life. That is just not going to happen. And there is not going to be a deal cut on it. We are not going to adopt a bill that gives the President less power to respond to 9/11 than he had the day before it happened. It is just inconceivable and totally unacceptable. No. 2, the President has asked for some flexibility in putting the right person in the right place at the right time. He doesn't want to have to wait 6 months to hire somebody. The FBI agent, Colleen Rawley, who sent the cable into the home office of the FBI saying, we have people with terrorist links taking flight training and maybe somebody ought to look at it. Don't you think that maybe the President ought to be able to go back and promote that agent and give her a good pay raise? Also, I would have to say that after the picture of these people who flew these planes in the World Trade Center was on every television set in America with their names, for the INS to turn around several weeks later and grant them a visa to come into the United States, I think the President should have had the power to say: Look, guys, we can't live with that, and you are fired. Now, you may think you should have those powers. I do. You may think you should not. But how do you justify that we gave similar powers to the Internal Revenue Service and to President Clinton but we will not give at least the same powers to the Department of Homeland Security under President Bush? Finally, there is just a lot of piling on in this bill. This Davis- Bacon provision is piracy; it is just piracy. When we are spending more money on emergencies than we have ever spent, the idea that we are going to make the Government pay a 20 percent premium--something we didn't have to do before this bill passed but now we are going to make them do it--it is absolute piracy. I think people ought to be ashamed that it is in there. I haven't heard many people bragging about it being there, but sure enough, there it is. I wonder if we could not have had a bipartisan bill, if we had just started out with a set of principles: No. 1, whatever power the President had before 9/11 he would still have when this bill was written; No. 2, any flexibility we have ever given the President with regard to the Internal Revenue Service and its operation, the President ought to have, at a minimum, that flexibility, and No. 3, provisions that actually make the job harder ought to be debated another day. I believe if we had started with a set of principles--those 3--we would have had a bipartisan bill and 95 Members of the Senate would have voted for it. But for some reason, which I do not understand and cannot comprehend, we now have an issue which has become largely partisan. It all revolves around an effort to take away from the President powers he had before 9/11. The real stumbling blocks on this bill boil down to three things: An effort to take power from the President in terms of national security waivers, which is not going to happen; then, a refusal to give the President personnel flexibility greater but similar to what we have already done in the IRS; finally, gratuitous provisions, I guess, in this piling-on mentality such as putting Davis-Bacon requirements onto FEMA something we have never done before. Those things represent our problem, and I think as people understand them, I don't believe the provisions of this bill can be sustained. I do not believe that, if the public really understood what was going on here, they would put up with it. I am hopeful that we can have an opportunity to vote on these issues. I think we will have a substitute that will try to deal with them. I am sure the vote is going to be very close. But I think it is important that people understand the issues. Something is really wrong when we cannot even get an amendment accepted that says the President cannot have less power than he has today. I mean, that is almost unimaginable, but this bill does that. I think when people understand it, they are going to be very unhappy about it. I think the President's position is not perfect. I think he went a little too far on appropriations, but I think that can be fixed. I think on the key elements we are talking about now, the President is on the side of the angels. It is clear to me he is not going to budge, and so if we are unwilling to let the President have the power that every President since Jimmy Carter has had, then I guess we will have an opportunity to explain it to people, and I am sure they will ask for the explanation. I yield the floor.

Mr. GRAMM

Mr. GRAMM. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote On Amendment No. 4533

Mr. GRAMM

Mr. GRAMM. Madam President, I thank my dear colleague and tell her I am very happy to have my remarks appear next to hers. A year ago today, terrorism struck at the very symbols of American democracy and capitalism, as if by destroying those symbols, as if by destroying the buildings, as if by killing innocent people, they could destroy those institutions. They failed. Like millions of Americans, a year ago today I watched the horror of the terrorist attacks. But then I watched the triumph of the human spirit. I watched ordinary Americans, people pretty much like us, who on that day did extraordinary things. A year ago today, our Nation's leaders watched, and we were helpless, like everybody else, to do anything about the problem. I am proud to say today that we are not helpless, that we have started to fight back. Our homeland is more secure today than it was a year ago, but it is not as secure as it has to be. We are fighting a war, but the Congress has to give to our military and to our law enforcement officials the tools they need to finish the job. When in doubt, I believe we must act. What is at issue is the safety of the American people, and I am not willing to turn that safety over to our allies, to the United Nations, or to anybody else. Where terror hides, it must be rooted out and it must be destroyed, and if we have to do that alone, then America is willing and capable of doing that alone. In my 24 years of public service in Congress, I have always been proud of my country and my countrymen, but I have never been prouder than I have been in the last 12 months. It has always been a privilege to serve, but in the last 12 months it has been my great privilege to serve the greatest country in the history of the world. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, we have listened as over and over again our Budget Committee chairman, the majority leader, and others have talked about deficits and the alarm we have for rising deficits. Yet today we are in the process of adding $6 billion to those deficits. We have already passed a farm bill that cost a record amount--over $80 billion over 10 years--but that is not enough. We are now being asked to add roughly another $6 billion to that deficit. We have to come to a recognition that deficits do not come from heaven. Deficits do not occur because God makes some decision. Deficits occur because we make decisions. We have a budget process. The chairman of the Budget Committee is not willing to defend it, but we have it. We have a budget point of order that requires 60 votes for the Congress to go on record as saying we are willing to throw fiscal restraint out the door, that we are willing to add $6 billion to a deficit which is swelling daily. I hope, first, that we sustain the budget point of order I will raise. But I hope those who are going to vote to waive this budget point of order and who will give us long lectures on many subjects will not include growing deficits among those subjects. I think ultimately we have to start making decisions. We have to make a choice: Do we want these deficits to go ever higher or are we willing to make a stand now? I am not saying there are not people who need help. I think we can focus a narrower bill which is paid for. I think a source of paying for it can be some of the over $80 billion in the farm bill. Mr. President, I raise a point of order under section 306 of the Congressional Budget Act against the pending amendment, No. 4481, because it contains matter which is within the jurisdiction of the Senate Budget Committee. That matter is, basically, setting aside the budget process.

Mr. GRAMM

Mr. GRAMM. Mr. President, this amendment is a perfect example, if one goes around doing surveys to decide on public policy, of how far afield from logic and reality and good sense one can get. Let me try to make a couple of points. If someone wants to get a good, rousing round of applause in front of any group, stand up and say companies that are domiciled in the United States that change their domicile to any other country should not be able to do business with the Federal Government. They will get applause every time. I wonder if one is going to get the applause when they explain to people that for the entire history of America, companies born in other countries have moved their domicile to America because we have had a better business climate. Secondly, let me make it clear that these are private businesses. This is private property. Another point: we sell about 80 to 90 percent of all defense and security goods sold in the world. They are produced by American companies, by American workers. The vast majority of those companies are domiciled in the United States, although not all of them. Why in the world we should be saying to the various parliaments and congresses around the world--some of whom may be having similar debates about why should they buy goods for their government that are produced by Americans when they can produce inferior goods at higher cost at home-- why we should be picking this fight, I do not understand. Finally, the world must think we have gone mad. We are the country that has drawn capital and business and literally created a brain drain in the world as people have voluntarily chosen to come to America and bring their wealth and bring their genius. They have helped make us the greatest country in the history of the world, but now the greatest deliberative body on Earth is trying to punish people who want to move the domicile, the headquarters, of their company, to another country? If I have ever seen logic in history turned on its head for political reasons, this is it. This bill is not prospective. It does not make any sense. What about a company that was born in America and in 1812 decided that most of its business was in Britain? Now, we have to understand, Britain is the largest investor in the United States of America and they are investing tens of billions of dollars in our country every day. But we will say, because a company in 1812 decided it could operate its business better by having the headquarters in London, but the ownership of the company did not change, that we are not going to let them do business with the Federal Government? Finally, this is simply a sign of a logic that is very dangerous; that is, this logic that somehow this is America against the world, and people are trying to get their businesses out of America, get their wealth out of America, and we have to stop them. For the long history of America, the preponderance of movement has been into our country, not out of it. Do we want other countries to be passing laws to prevent businesses from moving to America? I don't think so. In the Finance Committee today, there was an effort to mark up a bill--and people will think this is a joke, but it is the truth--that said if you own property and you want to leave America and you want to go become a citizen in Ireland or Germany or Argentina, we will act as if you have sold your property, and you have to pay a tax to the American Government before you leave. Now, forgive me, but that is right out of Nazi Germany. I don't understand, when people are trying to bring wealth to America every day, when we have been a net gainer from people moving capital for over 200 years, why all of a sudden we are passing laws that sound as if they are right out of Nazi Germany. The idea that somebody cannot leave America and take their property with them, that they have to pay a tax in order to get their property out of America--forgive me, but that rings of another era and another system, a system that I hated when I read about it as a schoolboy, and I still hate it. Look, it is good politics to bash on companies that are increasingly international. Many of these companies end up with more American employees by relocating their headquarters than they would have otherwise. It is very good politics to say: We are going to show them. Move your headquarters out of America, or if you did it in 1812, you can't do business with the government. It is good politics, but it is terrible public policy. We have probably, over the 200 years with active commerce in America, gained 100 companies domiciling in America for every one that has gone in the other direction. Do we really want to create an economic war where companies say, if you ever open a headquarters in our country, you can never move it anywhere else? Do we want that to happen to companies that want to come and locate in Texas? I don't think so. So, boy, you can get a great, rousing applause--probably even the Rotary Club would applause this--until they understood what you were talking about. We took this amendment because people do not want to vote on it. I am happy to vote on it. This is a bad policy. It is a wrongheaded policy that is basically counter to everything we believe in as a nation. If you do not want to live in America, I just as soon you leave. If you want to take your property, great, go to it. Now, the fact that for the whole history of America, property and people have been coming our direction, that does not change the fact you either believe in freedom or you do not. But to start saying, in order to sell us a good--even if your product is better, even if your product would save lives, even if your product would save money, if anyone cares about saving money--that you cannot sell it to us if, in 1812 you were domiciled in Boston and you moved to London and you did not change your ownership by moving. People make business decisions for business reasons. Part of what economic freedom is about is the ability of people to move their money and to move their labor by moving themselves. It is great to get rousing applause. It is wonderful. I don't doubt that 90 percent of the people in Minnesota would be for it. I am not criticizing Minnesota. I don't believe 90 percent of the people in Texas would be for it, but there may be. There may be. But whether it is 90 percent or 100 percent, you either believe in freedom or you do not. And I must stand up and speak out when, for over 200 years, people have been bringing their businesses to America, bringing wealth to America. We had almost $100 billion of wealth coming to America annually in the 1990s. Why we are suddenly passing laws saying you cannot go in the other direction? The problem with that is, if you cannot take it out, you will not bring it in. One of the reasons I am being so hard on the Senator from Minnesota is this amendment we had in the Finance Committee today. I am sure somebody can defend it and say: People ought to pay taxes. We want their taxes. We want their money. We do not want them to take their money out of America. Look, it is their money. It is a free country. Being a free country does not mean that you can do business with the Government if you do what the Government wants you to do. Freedom means you can do whatever you want to do. If people want to move their businesses, they ought to have a right to do it. If people want to take their money, their wealth, and move to France--I don't know why in the world anyone would want to do that--but if they do, my basic position is, God bless them and let them go. For every person that does that, there will be three people from France who want to move their wealth here. Good applause. Great political issue. You could run a dynamite political spot on this: Old Joe Jones voted to let people move their businesses out of America and that cost us tax revenue. Yet he let them sell to the Homeland Security Department. To me, that is what freedom is about. This is bad policy coming on the same day as this Finance Committee bill that would force you to act as if you sold your property when you want to leave America, to pay a tax. God forbid this should be the policy of the United States of America. And it is not going to be. This amendment is not going to become law. I intend to work very hard to see it doesn't. I don't believe it will. Again, nobody wants to vote against it. Everybody is going to applaud it, but in the end, some logic is going to prevail. When for 200 years people have been bringing wealth here, moving businesses here, why we want to prevent people from going in the other direction is beyond my comprehension, other than we are going to get a big applause in doing it. Applause is a poor reason to have public policy. I reserve the remainder of my time.

Mr. GRAMM. Will the Senator yield on that?

Mr. GRAMM. Nothing in this amendment talks about taxes. This amendment says if you redomicile without changing half your ownership, that you can't sell the products in America. You are assuming that if I move my business to France that I did it for tax reasons. I may do it for some other reason. I may just do it because I like French food. So you are acting as if the only reason people do this is for taxes. And, even if that were the case, that wouldn't change my opinion.

Mr. GRAMM. Mr. President, we have other business to attend to, so I am not going to belabor this. Let me make my point. Nothing in this amendment has anything to do with or says anything about tax cheating. This amendment would apply to a company that moved from the United States to Great Britain in 1812. The Finance Committee did not do any great deliberation in coming up with this amendment. It was a pay-for, something to create money they wanted to spend, and it seemed like a popular thing to do. Let's not deceive ourselves into thinking any great thought was behind it. And anybody who does not understand that amendments pass every day in the Senate that everybody hopes and believes will end up dying somewhere in some dark corner somewhere--where much of God's work is done, by the way--then I don't think they understand the reality of politics. So I just stand by the following points: First, this amendment has nothing to do with taxes. This amendment is punitive to companies that may have started in America, may still employ 90 percent of their people in America but are now domiciled abroad; that is, they call another country their economic home. The incredible paradox of the amendment is that for every American company that has moved abroad, 100 have moved to America over the last 200 years. Look, it is going to be on this bill. It is in the House bill. But I do not believe it is going to become law. Second, I want to make the point that we are going to end up hurting America in the capital markets of the world if we keep this business up. If we had our major trading partners pass and enforce a similar law, we would lose 100 or maybe 1,000 companies that are coming here for every one we are preventing going there. This is not smart. Third, I just have to raise this provision considered by the Finance Committee, which is based on the same logic: How dare anybody move out of America and take anything with them? My God, for over 200 years, people have moved from Asia and Europe and South America and everywhere, and they brought wealth with them to America. The idea of taxing people to get out of your country, the most dramatic example of that I remember is Nazi Germany. So I just ask people to please take a long, hard look at some of these things we are doing. Some people think they won't actually become law. I hope not. But I do believe we are going to reach a point where we are going to begin to do some harm. The people in the financial markets around the world must think we are crazy when they see these kinds of amendments. I yield the floor.

Mr. GRAMM. Mr. President, I think under the unanimous consent request I have 20 minutes to speak on the bill. We have been talking about the amendment of the Senator from Minnesota, and I had yet to get the 20 minutes. I think maybe the Senator from California was under the impression that I had spoken before that debate but----

Mr. GRAMM. I will be happy to yield.

Mr. GRAMM. Mr. President, probably we could move everything along by my just starting and trying to be expeditious. I speak slowly, so I will try not to repeat myself.

Mr. GRAMM. Mr. President, we have started the debate on homeland security, and one of the things that has struck me is that while we have talked about the President's request for flexibility--about his ability, in a national emergency, to override collective bargaining agreements--the debate, to this point, has basically been in the abstract. So while it does not make for a pretty speech, I would like to try to get specific this afternoon for 20 minutes and try to give some concrete examples as to what this debate is about. The President has said that in order to protect the American homeland, he needs the ability to put the right person in the right place at the right time, and that he also needs the ability to move or remove people who are not capable of doing the job that needs to be done in order to protect our country, its people, its property. I would like to just note the following things on this issue. No. 1, this is not a new concern. In 1984, the Grace Commission stated: The lack of integration of the INS, the Border Patrol, and the Customs Service would lead to security breakdowns. That was the Grace Commission in 1983. Does anybody doubt when INS approved a visa for two of the people who flew airplanes into the World Trade Center, after their pictures and names have been on every television station and every front page of every newspaper in the world, that the concern expressed by the Grace Commission in 1983 has been borne out? In 1989, the Volcker Commission, on the National Commission on Public Service, concluded: The current system---- They are talking about our system of hiring, firing, and promoting. The current system is slow, it is legally trampled, and intellectually confusing. It is impossible to explain to potential candidates. It is almost certainly not fit for filling the spirit of our mandate to hire the most meritorious candidates. Does anybody doubt that the young lady who was an FBI agent who tried to warn headquarters that we had suspected terrorists taking lessons on flying planes but not on landing them should have been promoted and given a raise? I think the concerns of the Volcker Commission in 1989 have been borne out. And then the U.S. Commission on National Security, chaired by our dear friend and former colleague, Warren Rudman, stated: An agile, flexible personnel system is required for us to have a successful defense of the American homeland. We can debate whether the current system is flexible enough, but let me just let the facts speak for themselves. And they are pretty simple facts. Mr. President, 1,800,000 people worked for the Federal Government in the year 2000--1,800,000. How many do you think were fired because they were incapable of doing their job? With 1,800,000 people working for the Federal Government, how many of them do you think lost their job because they were not getting it done? The answer: 6. In 2001, how many Government employees do you think lost their job out of 1.8 million because they were not getting the job done? The answer: 3. Does anybody believe that all but three Federal employees in all of America, in every agency combined, would have met the standards of the private sector to keep their job? I do not think so. Only 500 people out of the 1.8 million people who worked for the Federal Government were demoted in the year 2000 for lack of performance. Only 600 were denied pay raises. Think about that. The vast majority of people who got bad ratings-- over 99 percent of the people who work for the Federal Government who were given failing grades on their evaluations--got automatic pay increases with the Federal Government. No wonder two-thirds of Federal workers, in independent polls that have been conducted, believe that poor performers are not adequately disciplined. Further, nearly half of all Federal workers believe that job performance has little or nothing to do with a chance for promotion. It seems to me when you look at these facts, the President is simply asking, in the area where life and death are at stake, to have greater flexibility in being sure we hire the right person; it does not take 6 months to do it; and if somebody is clearly not doing the job, that we at least move them out of these highly sensitive areas. In listening to people who are defending workers instead of defending the homeland, you get the idea that the President is proposing a wholesale rewriting of personnel laws. I just want people to look at the facts and see that under the President's bill, only 6 of the 70 chapters in the Federal Registry governing the civil service system are modified, and none of them is repealed. Another area where people are wondering what are all these politicians talking about is this whole area of collective bargaining. Why, in this area of national security, in order to get a decision made and to get up our shield and to protect our people, does the President want to be able to waive collective bargaining agreements on a selective basis? I simply picked out 8 that are very different to give you examples of the kind of problem you have in trying to make the Government work. Please forgive my clumsiness in reading them, but they are pretty revealing. No. 1: Collective bargaining agreements can prohibit improvements to border protection in inspection areas. Let me give an example. In 1987, the Customs Service office at Logan Airport was renovated with a minor change in the area where the baggage of international flight passengers was inspected. The National Treasury Employees Union objected, saying the renovation had to be part of a collective bargaining agreement. The Federal Labor Relations Authority ruled that the Customs Service could not renovate its baggage inspection areas without a collective bargaining agreement. Are we kidding? Are we going to put American lives at stake over changing collective bargaining agreements so that we can upgrade inspection areas? I don't think so. I don't think that is protecting workers or protecting jobs. I think that is protecting the status quo and exposing Americans to being hurt. Let me give another example: Collective bargaining agreements can prohibit agencies from working together to protect the border. President Clinton's drug czar, Barry McCaffrey, as many will remember, noted the separate union rules that controlled how its inspectors would search vehicles. According to the San Francisco Examiner--this is General McCaffrey speaking-- Officials at one agency were actually forbidden to open the trunks of cars, a policy well known to drug dealers. We are not asking people to share toothbrushes. We are just asking that the President have the ability to jointly train people at the Border Patrol and at INS and at Customs so that they can work together. This is a perfect example of where that has not happened. Another example: Collective bargaining agreements could prohibit agencies from increasing the number of immigration inspectors. In 1990, the Immigration and Naturalization Service added an extra shift at the Honolulu International Airport to handle a surge of international flights in the afternoon. The American Federation of Government Employees objected, saying the new shift affected overtime and differential pay of existing workers and had to be negotiated with the union. The Federal Labor Relations Authority agreed that new shifts of border inspectors could not be added without a collective bargaining agreement. Do we really think the President ought to have the ability to add personnel if our lives are at stake? I think the answer is yes. Another example: Collective bargaining agreements could prohibit special task forces of the Border Patrol from being deployed in any region. Let me read you the union agreement and what it requires for deploying Border Patrol. I am not criticizing them. I have been maybe the biggest supporter of the Border Patrol. Under normal circumstances, when you are posting people, you want them to be posted in areas where they can preserve the basic quality of life. But let me read to you what the union agreement says. They have to be posted where there are ``suitable eating places, drug stores, barber shops, places of worship, cleaning establishments, and similar places necessary'' to sustain the comfort or health of the employees. In peacetime, when we are getting the job done, that is perfectly reasonable. But are we going to stand by and let a union work agreement say that we can't, in an emergency, deploy the Border Patrol where there are no dry cleaners? I don't think so. Another example: Collective bargaining agreements could prohibit the forward deployment of the best Customs Service inspectors to foreign ports to inspect container ships destined for the United States. Unions are currently negotiating with the Customs Service to determine which inspectors will be shifted abroad based not on merit, but on seniority. When we have a critical area where people's lives are at stake, we can't be fooling around with seniority. We have to give the President the right to say: Look, that agreement is perfectly good under ordinary circumstances, and at the post office we are going to agree with it. But when people's lives are at stake, we are not going to be fooling around where we can't put the best person in the best place. That is what this debate is about. Another example: Collective bargaining agreements could prohibit agencies from implementing a new body search policy on detainees. Listen to this one. In 1995, the INS sought to change its policies regarding body searches and detentions in order to protect employees from harm and the Service from lawsuits. The American Federation of Government Employees insisted that no change in body search policy occur until a broader collective bargaining agreement was reached. When the INS implemented the new policy, the union challenged it before the Federal Labor Relations Authority, and they ruled that the new body search policy could not be implemented without a new collective bargaining agreement. The President is asking for flexibility in the name of national security. This is exactly the kind of circumstance he is talking about. When we have people at these press conferences saying, protect our workers, they are not talking about protecting workers, they are talking about protecting agreements that don't make any sense, given that we have had over 3,000 of our fellow citizens killed. Let me give you a couple more examples. Collective bargaining agreements could prohibit agencies from canceling annual leave during a border crisis. In 2000, the Customs Service was pushing a drug interdiction effort along the Florida coast. When annual leave was canceled, the union filed a grievance on behalf of those Customs officers who wanted to attend the World Police and Firearms Games. The FLRA ruled that despite the interdiction effort, annual leave could not be canceled. When people are saying the President doesn't need this authority and these agreements are sacred, is anybody willing to say that in order to protect people's right to go to some conference, we are going to deny the President the ability to say no, today we are going to protect people's lives in your hometown? I don't think so. Let me give you one more example. Collective bargaining agreements could prohibit agencies from disbanding a single office. In 1991, INS attempted to shut down a unit facility due to a steady decrease in activity and staffing. No more than two union workers were at the facility in its last year, and one manager was capable of handling the workload. Yet, the union challenged the move and the Federal Labor Relations Authority ruled that the elimination of any unit could not occur until the collective bargaining agreement was changed. So when we are talking about giving the President, for national security reasons, the right to waive these work rules, this is exactly the kind of thing that we are talking about. When people's lives are at stake, should we be able to deploy the Border Patrol on a sustained basis where they don't have dry cleaners? When people's lives are at stake, should we be able to change facilities without renegotiating union contracts? When lives are at stake, should we be able to require that people that were attending some conference stay on their job to protect our fellow citizens? That is what this debate is about. The President has asked for the right to use a policy that has been available to every President for the last 20 years. Yet, in this bill, when we are supposed to be promoting homeland security, that right is taken away from the President. So what has happened here is we are providing a lot more money, and that will help. But we are imposing restrictions on the President that guarantee the money will not be well spent. I understand the power of special interest groups. I understand that people have other concerns in national security. But I think, under the circumstances, given the crisis that we face, that those who say the President is trying to trample on labor rights, trying to take away from unions their power, I don't think they have a leg to stand on. I think if my colleagues would look at these examples, they show very clearly exactly the kind of thing we have to do. Finally, I believe that the vast majority of people who are going to be in these emergency agencies would like to have these restrictions removed. They would like to have promotions based on merit. They would like incompetents who endanger their lives, as much or more than they endanger our lives, to be removed. That is what this debate is about. We have been sort of shouting back and forth at each other, and I thought it was important to come over and put some meat on the bones and give concrete examples. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, whenever a bill comes to the floor from a committee, obviously, a lot of people have had an opportunity to have an input in it. It is always easy for people who do not serve on that committee to stand on the outside and jeer and throw rocks through the windows. And we are going to have a long debate. I think this bill is going to change dramatically. So rather than spending my time being critical of the product, I would like to just talk about some basic principles, sort of where I am coming from and what I hope can happen. First of all, when September 11 occurred, it sort of awakened the country to a threat we always knew was there. But there is nothing like seeing your fellow countrymen suffer to focus the mind on a challenge that too often we chose to pretend did not exist. I think we all concluded, in the wake of September 11, that our country had changed, perhaps forever. Part of that change had to do with coming up with an effective response. Free societies are vulnerable to terrorist attacks. There is nothing we can do about that since we are going to remain a free society. The President, who has the responsibility under the Constitution, as Commander in Chief, to defend the homeland, spent time and effort in getting together the best people, at least in his mind, that he could assemble, and he came up with a plan. That plan involved bringing all or part of 22 agencies together in a new Homeland Security Department. I know there are many people who have many different views, and that is what makes democracy strong. But I would like to begin with the point that the one person who has the constitutional responsibility, the one person who has access to more information than anybody else in our society, made a proposal; and that is the President's proposal. In my mind, under these circumstances, and in this clear and present danger that we face, I believe--no blank check, no guarantee we are going to do it just as the President wants it--we ought to bend over backwards to try to accommodate the man who has the constitutional responsibility and is ultimately going to be given the credit or the blame by the American people based on what happens. The President primarily asked for three things. One, he wanted flexibility in reorganizing these Departments. The flexibility wanted was substantial, but it was not without precedent. We had given similar flexibility to the Department of Energy, which was created from other Departments. We had given similar flexibility to the Department of Education, which was created in part by transfer and part by creation. Yet, remarkably, the bill that is before us denies the President the same flexibility that the President had when the Departments of Energy and Education were created. Now, energy is important, especially if you are in an energy crisis. Education is always important. But is there anybody who really believes the crisis we face is so unimportant that President Bush should not have the same powers in setting up the Department of Homeland Security that the President had in setting up the Department of Energy? I do not think many people take that position, but we have a problem in that the bill before us takes that position. In my mind, that has to be fixed. I understand reasonable people with the same facts are prone to disagree, but, as I look at this first request of the President, that he be given enhanced flexibility, not dissimilar to what we had with the Department of Energy and the Department of Education, to me, that is pretty close to a no-brainer that the President ought to have that flexibility. The second request is that the President have the power, based on national security, to override labor agreements. Now, that sounds like a pretty dramatic power. In fact, the way opponents normally talk about it, it is basically giving the President the power to eliminate collective bargaining. In my mind, nothing could be further from the truth. All this power does is gives the President the power to set aside elements of collective bargaining when national security is involved. Interestingly enough, the power the President sought he has under existing law. The President was simply asking for an affirmation of existing power. But, remarkably, in the wake of 9/11, not only did the committee not reaffirm this existing power but they took power away from the President in saying that whereas today, whereas on September 11, or September 10, the President could have waived collective bargaining agreements for national security purposes, under this bill he would not be able to do that. But the prohibition would apply only to the Department of Homeland Security. I submit there is always room for disagreement, there is always room for some negotiation in trying to understand what other people think, but, to me, it is incomprehensible and absolutely unacceptable that we should be setting up a Department of Homeland Security and at the same time take away power the President has under existing law to take action based on national security concerns. The provision taking away the President's national security powers simply does not fit in this bill. I do not think it fits in any bill. But in a bill that is trying to respond to 9/11, it clearly does not fit and cannot be accepted and will never be accepted. Clearly, that is something that has to be fixed. Let me give you some examples. We currently have labor contracts negotiated with Government employee labor unions that prohibit the stationing of Border Patrol in areas that do not have laundries, that do not have access to personal services. There is a long list of things that were written. Now, in normal circumstances, where you have people trying to lead a quality life like everybody else, you can understand those things. The ability to take your clothes to the drycleaners is pretty important when you are wearing uniforms that require drycleaning. But in an emergency circumstance, do we really not want to have the power to waive that collective bargaining agreement? Another thing that has constantly driven me crazy, being in a border State--a huge border--with Mexico, is that trying to get the Border Patrol, INS, and Customs all to work together, trying to get them to cross-train so that people can perform various functions, is like trying to get them to use the same toothbrush. In fact, President Clinton's National Security Adviser talked about his frustration in dealing with the INS and Customs and the unwillingness of one agency to open the trunk in working with another agency. Now, look, I understand work rules. I admit I am probably less sympathetic to them than most other people. I think if you sign onto a job, whatever the job requires, within the limits of human dignity, you ought to be willing to do. I don't understand negotiating about who pushes what button or who opens what trunk. To me that seems silly. I am not very sympathetic to it. But when we are dealing with national security concerns, when the lives of our fellow citizens are at stake, we cannot put up with that business. So all the President is asking for is the power to set aside those kinds of agreements in dealing with national security. It is not a question of being anti-union, it is a question of having concerns that override collective bargaining. We don't have collective bargaining for the Marines because they are about very serious, life-threatening circumstances and tasks. In dealing with homeland security, we are dealing with exactly those kinds of circumstances. Finally, the President's proposal asks for personnel flexibility--the ability to put the right person in the right position at the right time, without waiting for the normal 6 months, and the right to transfer people who are incompetent, and the right to fire people. I understand collective bargaining, and I understand writing in requirements of how the personnel system works. I understand trying to prevent people from being arbitrary and capricious. But the bottom line is, if we are trying to fight and win this war on terrorism, we need to have the ability to hire, fire, and promote based on merit in those agencies that are involved. I will give you two examples. A woman FBI agent sends a cable to the home office basically saying that maybe we ought to be concerned about people with terrorist connections who are taking flight training and are focusing on flying planes but not landing them. That actually happened. In the whole process of trying to absorb massive amounts of information with conflicting jurisdiction, nobody ever responded to it. But don't you think we ought to promote that woman? Don't you think we ought to promote her out of grade and reward her--not only to reward the fact that she was paying attention to her business, she was alert to a potential problem that, God knows, we wish we had been alerted to, and we want to send a signal to others in the FBI and other agencies that if you are doing a good job, we are going to reward you. On the negative side--and I don't want to belabor it because I don't know the circumstances and I am not at INS. I don't know the individual life stories of the people involved or the problems they had or the bureaucracy they faced. But, look, when we granted visas to terrorists who had their picture on every television screen in the world, whose names are on the front page of every newspaper in America because they had killed over 3,000 of our citizens, and then weeks later we processed a visa request for these brutal terrorist/murderers, maybe somebody should have been fired. Maybe somebody should have been transferred. I know that theoretically in the Federal Government you can fire people, but the reality is that it is virtually impossible. As everybody in the Senate knows, fewer than 1 percent of people who are found to be doing totally unsatisfactory work end up being fired in the Federal Government, and 80 percent of them, because of the momentum of the seniority system, end up getting raises after they have been deemed to be doing failing work. In the Department of Homeland Security, where we are dealing with people's lives, we need the flexibility to promote and reward. And, quite frankly, despite all the protests from the labor unions, every time I talk to people in Government agencies who would be affected, they like this flexibility, they like rewarding merit, they believe they would benefit and thrive in this system. I will conclude by simply saying this: The President is not saying do it my way or forget it. I think the President has been and will be flexible in terms of trying to work out an agreement. I think there is room for flexibility on the whole funding issue and reprogramming and the rights of the legislative branch. But when you get down to the ability to reorganize, the President is not going to accept a bill that gives him less power in the name of national security than the President had when we created the Department of Energy. He is not going to do that, and he should not do it. There is no possibility that the President is going to accept a bill that takes away emergency powers that he has today to waive collective bargaining agreements in a bill that claims to enhance the President's power to deal with national security. Finally, we gave flexibility on personnel under the FAA reorganization bill, under the IRS reorganization bill, and under the Transportation Security Administration reorganization bill. Yet in a bill trying to deal with homeland security, do we think it is less important than the FAA, or the IRS, or the Transportation Security Administration? Well, obviously, if you look at this bill, we do. So I don't think it is productive for this to degenerate into any kind of partisan battle. But the problem is, this is a bill that does not do the job. This is a bill that we would be better off--if it were adopted in its current form--not having. The President is not going to accept this bill, and I think we have reached the moment on a critical issue where we need simply to promote a bipartisan solution, work out these agreements, give the President these three powers he wants, work something out on the appropriations issue for enhanced reprogramming and a partnership, and preserve the ability of Congress to control the purse. I think the President, for every one problem he will have with money, will have 100 problems dealing with reorganization and personnel flexibility. I am hopeful we can work something out. We are going to be offering a series of amendments. I assume at the end we will offer a substitute. I hope that substitute will be broadly supported. Senator Miller and I, along with almost 40 of our colleagues, have introduced the President's bill because we wanted to try to promote a compromise moving in the President's direction. I thank Senator Thompson for his leadership on this issue. As I have followed what he has had to say, there is not any issue on which I have a substantive disagreement with him. I look forward to following his leadership as we work out these three key issues, but these issues have to be dealt with. There cannot be a bill that does not give the President reorganization flexibility, the ability to override collective bargaining agreements in the name of national security and personnel flexibility. Denying these three powers simply is a denial of common sense and a denial of the crisis as we all know it exists, and the bill has to be changed. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Why don't I take up to 10 minutes. Every time I have ever heard anybody say they will not use it, they talk more. But certainly everything I would want to say or should say or am competent to say I can say in 10 minutes.

Mr. GRAMM. Mr. President, I will withhold for a moment.

Mr. GRAMM

Mr. GRAMM. Mr. President, I thank our dear colleague from Arizona. I thank him for his vigilance on this issue. We have two issues before us, but they really boil down to the same principle, and I want to talk more about the principle than I do the interest. The first issue has to do with the leasing of four 737s. I would have to say, this is a transaction I have not looked at very closely. This is something new to this bill. What I want to focus my attention on is the leasing of 100 Boeing 767s, which was contained in last year's appropriations bill, which was not competitively bid. In looking at the economics of leasing these planes, to the best of my ability--to get data, and to understand it--it looks to me that if we need these planes as tanker replacements, we ought to buy the planes. My concern is, we are going into leasing because we do not have the front-end costs in the appropriations process with leasing that we do with purchasing. If in fact my concern is legitimate, what it means is, we are having procurement dictated by how we score leasing versus procurement. I think if that in fact is the case, we are making a very big mistake. I think something needs to be done about looking at these leasing contracts into which we are entering. They represent tens of billions of dollars of commitments of resources into the future. It seems to me that OMB and CBO need to work together to come up with a methodology to look at leasing versus buying. And this is something that ought to be looked at by the Defense authorization bill since the leasing of the 737s and the leasing of the 100 767s--neither of them was authorized by the Defense authorization bill. I think it is imperative, before we go through this process again, that we have OMB and CBO develop for us a methodology of looking at leasing versus purchases, that we have hearings in the authorizing committee, and that we have authorizing legislation in this area. I was very concerned, last year, with 100 Boeing 767s because the clear intent at that time, no matter what the economics were, was to basically help Boeing, given that they did not get the major defense contract of our era. I do not think, given that we have a $168 billion deficit, we ought to be in the business of simply gratuitously giving billions of dollars to companies that do not win contracts. The whole purpose for competing contracts is to choose the contractor that will do it best at the lowest possible price. The idea that losers have to be compensated is about as far away from the market principle as it can be. So I would certainly urge that something be done to develop a methodology so that the Senate can make rational decisions about leasing versus buying. I thank Senator McCain for his leadership in this area. This is something we ought to be concerned about. We are talking about tens of billions of dollars. We are making commitments on economics that people have not looked at or understood. I think this is something we need to understand. And I hope to pursue, with Senator McCain, a study by CBO and OMB to set the stage for the setting of a policy in the future. I yield the floor.

Mr. GRAMM

Mr. GRAMM. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRAMM

Mr. GRAMM. As I said earlier, every penny of American income is taxed under IRS code 881. But the point you are making is, the money they are investing abroad is after tax money, which belongs to them.

Mr. GRAMM. Mr. President, if you are trying to get cheers in coffee shops, this is an excellent amendment. If you are trying to make law in the greatest capitalistic country in the history of the world, a country that more than any other country on Earth has had companies operating in other countries, come to America and gradually move the bulk of their business to our country over the years in order to benefit from the fact we have better laws and lower tax rates, then this is a very bad amendment. Let me make it clear. I don't have any sympathy for people who are transferring where their company is domiciled to try to get a tax advantage. But I would make the following points. Whether a company is domiciled in Barbados, Germany, Ireland, or Saudi Arabia, the IRS Code is very clear on one thing. Section 881 of the IRS Code says any income effectively connected with the United States is taxed in the United States of America. When companies are relocating--and I noticed Ireland is not listed here even though Ireland is a major relocation center for companies all over America because they have very low tax rates on business, and I congratulate them for being smart enough to do that--we double tax dividend income, we double tax the income on corporate America. It is not an enlightened policy, and in my opinion, we should not do it. This is the point. Under section 881 of the IRS Code, if you earn income in America, you are taxed here. Companies are seeking jurisdictions where they get more favorable overall tax treatment, including tax treatment on their foreign earnings. I don't have sympathy for companies that do this, but the plain truth is they are doing it. The plain truth is by affecting Government procurement, this amendment is GATT illegal and violates GATT. Also, it is astounding to me that we would want to give one individual, the Secretary of the Treasury, the power to unilaterally disbar any company that is domiciled in a foreign country. Under this amendment, we outline all these countries that we are saying are tax havens, and then we add any other country that the Secretary of the Treasury determines is used as a site of a corporation primarily for the purpose of avoiding U.S. taxation. As I pointed out, you do not avoid U.S. tax by changing where your company is domiciled because the IRS Code requires income earned in the United States is taxed here. What companies do, however, is they get a more favorable environment. What we should be doing is looking at our corporate tax structure and trying to become more competitive. The amendment gives the Secretary of the Treasury unilateral power to disbar any company that is domiciled in a foreign country from selling goods to the Defense Department. I understand politics. I once was engaged in it. I have now given it up. But I understand it is very good politics to basically attack people who are operating in foreign countries that have low tax rates, that we choose to call tax havens. I long for America to be a tax haven. I long for us to get back to the situation we once had where companies were moving out of Germany, Italy, and Britain to domicile in the United States of America because we had favorable tax treatment. I don't remember us thinking it was a bad deal then. We thought it was a good deal. I had not heard the business about giving up your citizenship. This thing has nothing to do with citizenship. If Stanley Works changes their domicile, the people who own Stanley Works do not change their citizenship. The people that run Stanley Works do not change their citizenship. I don't know from where that comes from. That has nothing to do with this debate. Now, we had a debate once where people were giving up their American citizenship to avoid death taxes. Fortunately, we have passed a tax cut that eliminates death taxes and some of us want to make that elimination permanent. You can be guaranteed that will never happen again if our elimination of the death tax becomes permanent. Now, I conclude by saying I don't have any doubt about the fact that if this is brought to a vote it will pass. We are in an environment where slapping businesses around is good politics. Talking about denying procurement opportunities to companies domiciled in other countries is always popular until you remember that we sell more military equipment to foreign countries than any other country in the world--and more than every other country in the world combined. Under the IRS Code, you have to pay American income taxes on income earned in America. If you are domiciled somewhere else, you do not have to pay American taxes on income earned in another country. This amendment is not good public policy. I hope we can find a way of dealing with this. I am very reluctant to see this amendment pass. On the other hand, if this amendment had to be clotured, we would be talking about 2 days before we would have an opportunity to do it. I hope people who are managing the bill can find some way out of this. I don't think anyone really believes this issue belongs on this Defense bill. I think this is something we ought to be discussing at the authorization level. This is an appropriations bill. Our goal as taxpayers is to procure the best stuff we can for military use at the lowest possible price. I know that is not a popular view, but it is a rational view, whether it is popular or not. This amendment is GATT illegal. It will be subject to retaliation if it actually becomes law. I don't know that anyone here is serious about it becoming law. In any case, if you want to pick a debating point for the local high school and you get to pick which side you will be on, you want to pick this topic, and you want to pick Senator Wellstone's side. But in terms of public policy, this is an amendment that is bad public policy. While it is easy to attack companies that are domiciled in other countries, especially countries with low tax rates, the bottom line is, for most of the 220-odd-year history of America, we have been the tax haven. We have had companies move from other countries to America seeking lower taxes and better opportunity. How much better our time would be spent if we were debating ways to make America more competitive rather than trying to build walls around our country to try to keep capital in. What a far cry this is from the basic American approach, which has been to have an environment that is so favorable to investment and capital creation and wealth that other countries have to try to build walls around themselves to keep their capital in. Now we are talking about building walls around America to keep people from taking capital out. I understand it is easy for us to say: Look, we think you should not use your money in a way that you view as most efficient. We know more about your money than you do. We did not invest it, we did not save it, we did not risk it, but we are perfectly capable of telling you how to do it. I think, again, if we are debating this in terms of popular hoorah, we are basically saying that in a free country someone who owns wealth cannot take that wealth out of the country and invest it and still have the right to engage in commerce--which we grant to companies in Germany and Ireland and Czechoslovakia. We are going to take that position because right now slapping around people who are trying to engage in business is popular. It may be popular, but I do not think it is good public policy. We should be debating how we can change our laws so that no company would ever want to move out of the United States. But if they want to move out of the United States, you either believe in freedom or you do not--and I do. So I wish they did not find it desirable to do it. I wish Stanley Works would keep their headquarters in America. But I have to say I am not an investor in Stanley Works. Now TIAA-CREF, my teacher retirement, may invest in Stanley Works. But so far as I know, I do not own any Stanley Works stock. So who am I to be trying to tell them where they put their money? I may not like how they do it, just like I do not like it when people waste their money. I have never understood why people buy lottery tickets. But I know it sends some people to college and it is a free country. If they want to do it, let them do it. I never understood why people go out and spend their money buying a lot of different things that I do not value. People might not understand why I want to own a whole bunch of shotguns, more than I will ever pull the trigger on, but it is a free country and you either believe in freedom or you do not. Now, some freedom is not popular. Here today on the floor of the Senate, the freedom to take your wealth that you created and put at risk and invest it in any one of the following countries--Gibralter, Cyprus, and others. I don't know why we are picking on Cyprus. I thought we were trying to make peace there. I thought we were trying to create jobs for both the Greeks and the Turks. But it is popular to say, today: It is your money, you earned it, you put it at risk, but you can't invest it in Cyprus and have the freedom to engage in international commerce and sell to the U.S. Government. I know that is popular today, but the question is, Is it right? What if it were our money, if we owned these companies as public companies, and if this were really a socialistic country? I know some dream of it being that, but it is not. Thank God. Thank you, sweet Jesus, it is not. The commanding heights of the world are dominated by capitalism. The Berlin Wall has collapsed. Tears are still shed about it, not just in East Germany, either. But freedom is tested when it is unpopular, not when it is popular. Standing up and cheering for the team that wins the Super Bowl is an exercise in freedom of speech, but that is not where you measure freedom of speech. You measure it when somebody is saying something you do not agree with, something that is not popular. I would say that I do not own any Stanley Works stock. I did not invest in Stanley Works. Who am I to be telling them they can't have the rights that we give to every other company in the world that is domiciled in Germany or in Taiwan or Korea or the Philippines or Morocco or wherever? They can produce things and sell to the Defense Department, but Stanley Works, domiciled in Cyprus or elsewhere, they are not going to sell to the United States.

Mr. GRAMM. I am happy to yield.

Mr. GRAMM. That is exactly right. Had they invested their money in a company domiciled in Germany, which competes with Stanley Works, they could have sold products to the Defense Department. But under this amendment, a company operating in Germany, making drills that might be bought by the Defense Department, having not one American employee, can sell to the Defense Department. Under this amendment, Stanley Works, which may have 40 percent of its employees in this country, many of them in the Northeast, as the Senator is aware, is not allowed to sell in this country if they choose to domicile in Cyprus or Gibraltar.

Mr. GRAMM. Which gets back to my point: You either believe in freedom or you do not. If you believe in freedom, you have to believe if it is somebody's money--they have earned it, they pay taxes on it--and if they want to invest it in Cyprus. You may not like it, and you might get big cheers at the local coffee bar by saying we are not going to let people invest in Cyprus and sell to the United States. That is just wildly popular, but the point is it violates our basic precept of the right of people to use their own money for their own purposes, to promote their own goals.

Mr. GRAMM. And they pay taxes on that money. And it may not be the goal of the Members of the United States Senate, but the point is this: In a very real sense, when you cut through all the ability to make this a popular issue--when you cut through to the bottom line, it is about freedom; freedom to do something that is very unpopular. It is very unpopular. We all hate it. When there is a company operating in our State and they decide it is to their advantage to move their corporate headquarters to Ireland, we decide we do not want them to do it. We hate them doing it. They do it, not because it changes their taxes on their American-earned income but because it changes their taxes on money they make in Europe and Asia and because they can have a better business climate. We hate that they do it, but it is their money and they have a right to do it. They have a right to do what we think is wrong. Now to come in through the back door and try to limit their right because they are doing something we do not like, we are saying: You can't do the same thing that a German company that never invested in America and that has no employees in America can do. So it is popular, it gets you applause, but it is fundamentally wrong. I yield to the Senator.

Mr. GRAMM. That is correct.