Jon Kyl

Mr. KYL

Mr. KYL. I wonder if, in the spirit the Senator and I have frequently resolved matters, I have about 10 minutes of presentation. Perhaps if we can enter into an agreement, you proceed and make your comments about Representative Lantos, I will speak for my 10 minutes or so, with the understanding that you then conclude the remainder of your remarks. We could propose that in the form of a unanimous consent agreement. Would that be acceptable?

Mr. KYL. Mr. President, that was a very fine tribute from the Senator from Utah to a very fine man. I had the honor of serving with Tom Lantos in the House of Representatives, and I certainly join all others who mourn his death today. I wonder if I might ask the Senator from California--I think she would like to make a FISA presentation. I understand the Senator would like to have about an hour. Is that how long she plans to speak?

Mr. KYL

Mr. KYL. Mr. President, today we are debating the amendments to the Foreign Intelligence Surveillance Act. I am going to say a few words about why Congress ought to provide legal relief to those private entities that have aided the United States in our war against al-Qaida and, in particular, one of the amendments that will be voted on tomorrow. I begin by quoting a passage in an opinion by Justice Cardozo, from the time when he was the chief judge of the New York Court of Appeals. In the 1928 decision Baggington v. Yellow Taxi Corp., this is what Justice Cardozo had to say about the legal immunities that should be provided to private parties that assist law enforcement efforts: The rule that private citizens acting in good faith to assist law enforcement are immune from suit ensures that the citizenry may be called upon to enforce the justice of the State, not faintly and with lagging steps, but honestly and bravely and with whatever implements and facilities are convenient and at hand. We need to encourage citizen involvement in our efforts against al- Qaida. We know that good intelligence is the best way to win the war against those terrorists, and if we want to monitor al-Qaida, we need access to the information which is available through the telecommunications companies. We asked them for help, and they provided that help at a critical time, after 9/11. We need to know, for example, whether al-Qaida terrorists are planning other attacks against us. When we ask parties to assist us, such as those telecommunications companies that assisted us after 9/11, we want them to reply not faintly and with lagging steps but, rather, in Justice Cardozo's words: We want them to answer the call honestly and bravely and with whatever implements and facilities are conveniently at hand. In today's technological world, what that means is that when we ask these telecommunications companies for their support, they provide the incredibly intricate and advanced technology at their disposal to assist us in understanding what communications al-Qaida is having with each other. Now, tomorrow we are going to be voting on some amendments which, in my view, weaken and in one case would actually strip the liability protections the Intelligence Committee bill provides to such private parties. I think these amendments are unwise. Certainly, I urge my colleagues to reject them. Let me focus on one of them today, one that relates to a subject called substitution. The idea is that while it would be unfair to hold these telecommunications companies responsible for coming to the aid of the Government in its time of need, that they should be immune from liability, that we should somehow substitute the U.S. Government in their place and that would somehow balance the equities here of having the matter litigated and yet protecting the telecommunication companies. There are several reasons why this simply does not work. In the first place, it would still be required to reveal the identity of the company involved. Part of this entire matter is protecting the identity of the company so it does not lose business around the world and so it is not subject to the kind of abuse that would otherwise occur. In addition to that, full discovery could be conducted. In other words, depositions could be taken, interrogatories could be served. In every respect, the company is not protected from the legal process, it is simply not liable at the end of the day; it would only be the Government that would be liable. But the individuals of the company and the company itself would still be subject to all the rigors of litigation which we are trying to protect them from. The litigation does not go away. In addition to that, a method has been set up to litigate this before the FISA Court, which misunderstands what the FISA Court is. The FISA Court is not like the Ninth Circuit Court of Appeals. The FISA Court is individual judges called upon primarily to issue warrants that permit the Government to engage in its intelligence operations. So you do not have a court sitting the way you do in a typical Federal district court or a circuit court. This FISA Court would presumably have to litigate whether the companies are entitled to substitution, so it is not a free substantiation but, rather, if they can prove that they are entitled to the substitution. Finally, the point of having this liability protection for the Government's purpose is first and foremost because of the need to protect its sources and methods of intelligence collection from the enemy or from the public at large. Of course, if you still have the litigation ongoing, if you still have the process, it is just that Party A is liable rather than Party B. You still have the threat that sources and methods could be compromised, information relating to the activity could be disclosed, as it has in the current debate. We should remind ourselves that what we are debating publicly is a system of collection that has been, to some extent, defined by public discussion of matters that were and should have been totally classified. We have given the enemy a great deal of information about how to avoid the kind of collection that is vital to our efforts. That is the kind of thing we are trying to prevent. So substitution, simply substituting the Government as a party for the phone companies does not solve that problem either. The bottom line is, that as with these other amendments, the so-called substitution amendment is not a good amendment, it should be rejected, and I hope at the end of the day we will have been able to vote it down. Let me conclude by repeating some of the things the Statement of Administrative Policy stated in quoting the Intelligence Committee's conclusions in its report. Al-Qaida has not ceased to exist in years since the September 11 attacks. It still exists and it still seeks the wholesale murder of American civilians. We know how devastating such attacks can be. And we know that once an attack is underway--once a plane has been hijacked, or a bomb has been assembled--it is too late. We need to stop al-Qaida attacks before they are executed, before they are being carried out. We need to act at a time when such attacks are still being planned or when al-Qaida terrorists are still being prepared. To gather this type of intelligence--the intelligence needed to stop a terrorist attack--we will need the assistance of private parties. Information about al-Qaida's communications, its travel, and other activities often is in the hands of private parties. If we want to monitor al-Qaida we will need access to information. And when telecommunications companies or others are asked for their help in tracking, for example, an al-Qaida cell that may be operating in this country, we do not want those parties to reply ``faintly and with lagging steps.'' Rather, in Justice Cardozo's words, we want them to answer the call for assistance ``honestly and bravely and with whatever implements and facilities are convenient at hand.'' The Senate Intelligence Committee bill contains provisions that ensure that results that future requests for assistance will be met ``honestly and bravely,'' rather than with fear of becoming embroiled in litigation. Tomorrow the Senate will be voting on amendments that seek to strip out or weaken the legal protections that the Intelligence Committee bill provides to private parties that assist antiterrorism investigations. These amendments are unwise, and I would strongly urge my colleagues to reject them. As the Statement of Administration Policy on the Judiciary Committee bill notes, the failure to provide strong legal protections to private parties would undermine U.S. efforts to respond to and stop al-Qaida in two ways: first, it allows the continuation of litigation that has already resulted in leaks that have done serious damage to U.S. counterterrorism efforts. This litigation is inherently and inevitably damaging to U.S. efforts to monitor al-Qaida's communications. As one Intelligence Committee aide aptly characterized the situation, allowing this litigation to go forward would be the equivalent of allowing the legality of the Enigma code-breaking system to be litigated during World War II. In addition, the failure to provide protection to third parties who have assisted the United States would undermine the willingness of such parties to cooperate with the Government in the future. And such cooperation is essential to U.S. efforts to track al-Qaida. As the SAP on this bill further explains: In contrast to the Senate Intelligence Committee bill, the Senate Judiciary Committee substitute would not protect electronic communication service providers who are alleged to have assisted the Government with communications intelligence activities in the aftermath of September 11th from potentially debilitating lawsuits. Providing liability protection to these companies is a just result. In its Conference Report, the Senate Intelligence Committee ``concluded that the providers . . . had a good faith basis for responding to the requests for assistance they received.'' The Committee further recognized that ``the Intelligence Community cannot obtain the intelligence it needs without assistance from these companies.'' Companies in the future may be less willing to assist the Government if they face the threat of private lawsuits each time they are alleged to have provided assistance. The Senate Intelligence Committee concluded that: ``The possible reduction in intelligence that might result from this delay is simply unacceptable for the safety of our Nation.'' Allowing continued litigation also risks the disclosure of highly classified information regarding intelligence sources and methods. In addition to providing an advantage to our adversaries by revealing sources and methods during the course of litigation, the potential disclosure of classified information puts both the facilities and personnel of electronic communication service providers and our country's continued ability to protect our homeland at risk. It is imperative that Congress provide liability protection to those who cooperated with this country in its hour of need. The ramifications of the Judiciary Committee's decision to afford no relief to private parties that cooperated in good faith with the U.S. Government in the immediate aftermath of the attacks of September 11 could extend well beyond the particular issues and activities that have been of primary interest and concern to the Committee. The Intelligence Community, as well as law enforcement and homeland security agencies, continue to rely on the voluntary cooperation and assistance of private parties. A decision by the Senate to abandon those who may have provided assistance after September 11 will invariably be noted by those who may someday be called upon again to help the Nation. Many members of the Senate Majority insist that there be stringent congressional oversight of these intelligence-collection programs. No one disputes that point. All agree that we need oversight over the intelligence agencies. That is why this Congress and previous Congresses have agreed on a bipartisan basis to create robust oversight of U.S. intelligence gathering, even when such intelligence gathering is directed at foreign targets. The agencies executing wiretaps and conducting other surveillance must report their activities to Congress and to others, so that opportunities for domestic political abuse of these authorities are eliminated. I conclude by asking: what is the Senate's goal? Do we want to allow our intelligence agencies to be able to obtain the assistance of telecommunications companies and other private parties when those agencies are investigating al-Qaida? If so, then we need to create a legal environment in which those companies will be willing to cooperate--an environment in which their patriotic desire to assist the United States does not conflict with their duties to their shareholders to avoid expensive litigation. We need to write the laws to ensure against the domestic political abuse of surveillance authority, and we have done that. The question now is whether we want to give our intelligence agents the tools that they need to track al-Qaida. We should do so, and in order to do so, we must defeat amendments that would weaken the bill's legal protections for private parties who assist the government's efforts against al- Qaida. To conclude, we obviously want to write our laws to ensure that in intelligence collection, and any kind of this activity, the rights of American citizens are fully protected, that we protect against domestic political abuse of surveillance authority. We have done that. The question now is whether we want to give our intelligence agencies the tools they need to track al-Qaida and other terrorists. We should do so, and in order to do so, we have to defeat amendments that would weaken the Intelligence Committee bill, which lays out a good process for balancing the equities involved and ensuring that we have provided not only the Government agencies what they need to do the job we have asked them to do but also to protect the private parties whom the Government has asked to volunteer to help and which up to now they have been able to do because they felt that what they did would be protected from liability. Without that liability protection, the kind of negative results would occur which I have identified. So I hope that when this substantiation amendment comes before us, we will vote it down and that we will also reject the other amendments which are designed to weaken the Intelligence Committee FISA bill.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent. The Senator from Arizona, (Mr. McCain).

Mr. KYL. The following Senator is necessarily absent. The Senator from Arizona, Mr. McCain.

Mr. KYL

Mr. KYL. Mr. President, I have been working with the Senator from North Dakota. While we have not surveyed all of the Members on this side, I believe the issues are well known to us; they have surfaced. The three key issues have mostly been worked through, as I understand, and I believe Senator Coburn is willing to put a time agreement on the amendments he has. All of which is to say that I believe, unless there are some votes on our side that have not come forward--and we will certainly inquire--it should be possible to get a time agreement with specific amendments that is not very long and that would result in the bill being concluded in a relatively short time. But we do need to survey the rest of our Members.

Mr. KYL. I do not know of any reason that cannot be done. There is certainly no intention on our side to take a long time or slow it down. I think the Senator from North Dakota would verify that I have worked to try to resolve issues that are outstanding. It is my belief that this can be done within a time period that is acceptable to the majority. The PRESIDING OFFICER (Mr. Pryor.) The majority leader has a unanimous consent request pending. Is there objection? Without objection, it is so ordered.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Arizona (Mr. McCain).

Mr. KYL. Madam President, first, let me say that one of the points made by my dear friend from New Mexico is backward. We need to deal with this issue in a speedy fashion. There is one point that unites everybody with regard to this stimulus package: If it is not done quickly, its stimulative effect diminishes effectively, and there is a point at which it will not have the stimulative effect people would like. Therefore, speed is of the essence. One of the points about the Finance Committee package is, of course, if it were to pass, we would have to go to a conference committee between the House and the Senate which would obviously delay this process. I don't know how long it will take to get to conference or how long a conference committee will take, but it could be a lengthy process taking us beyond the February recess which means that, clearly, we will be talking about weeks to get this bill to the President. Were we, on the other hand, to follow Leader McConnell's advice and reject the Senate Finance Committee package and move to a modified version of the House-passed bill, we could get that to the House which could pass it, send it on to the President, and be done with it. That can all happen, frankly, by the end of this week. In terms of the issue of speed, it would behoove us to reject what has been called the Christmas tree package out of the Senate Finance Committee which substantially raises costs, spends more money, is much more complicated than it would be to take up the House-passed bill which can be done more quickly. I don't mean to be pejorative when I talk about a Christmas tree, but that is pundits talk about a bill that starts out relatively small, but because Members have favorite adds to make to it, which is another favorite pundit phrase, things we like to add to the bill, we end up with a bill that started out small but ends up looking like a tree with a lot of ornaments on it. Remember when Speaker Pelosi and Leader Boehner and the President struck the agreement they did that passed the House with 38 negative votes, there was a recognition this needed to be done quickly and cleanly. There were just three working parts to this legislation. Members of the House had a lot of other great ideas. There are a lot of other items they would have wanted to put on it, but their leaders convinced them to get bipartisan support. It was very important to keep the package trimmed down to the point where Secretary Paulson believed it would actually benefit the economy and not add extraneous spending and elements. What happened when the bill came to the Senate Finance Committee on which I sit? I haven't added it up, but some have said there is $40 billion in additional costs, in additional spending, and I will talk for a moment about some of that spending. Those who are concerned about adding to the deficit need to be concerned about the additional cost of this bill. Some of that spending has to do with some tax credits for various kinds of businesses that have no stimulative effect whatsoever and are being done to either please certain legislators or to find a vehicle for something. For example, there is something like $100 million that is owed to some coal companies in the United States. They have not been able to find a legislative vehicle to get the money appropriated so they can be paid their $100 million. So this was thought to be perhaps the right kind of vehicle to do it on. Apparently they are owed $100 million and we need to send it to the coal companies, but that has nothing to do with stimulating the economy. It is payment for a past debt for a court case. But one of the Members wanted it in this bill and, as a result, it got put in the bill. That is not a stimulus package for the American people. Then there was a group of tax breaks. What are some of the tax breaks for businesses? One is a tax break so we can build more efficient homes. One of our problems in our economy is we have a glut of housing on the market right now. So we are going to make a tax break so folks can build more homes to put on the market to add to those that already exist, as well as commercial buildings. There has been a lot of talk about the rich getting too much in this package. One of the tax breaks is to remove the income limit for people who can now, under the Finance Committee bill, take a tax break for investments they have made in marginal oil and gas wells. Maybe that is a good idea. I don't know. But it clearly has no place on a stimulus package. My point is that the Finance Committee did a variety of things which Members wanted done. They may or may not represent good policy, but they have nothing to do with the stimulus and simply add costs to this bill. Remember, this is all borrowed money. So it takes us further into a deficit situation. One of our colleagues on the committee pointed out that these energy tax breaks actually are part of a larger bill, which I support, called the extenders package and, indeed, that is true. What is the extenders package? The extenders package is a package of legislation that each year we pass without question to ensure that various kinds of tax provisions remain in the Tax Code, such as the research and development tax credit and a variety of provisions such as that. I asked for unanimous consent to offer that in committee and it was rejected. We do know, however, for a certainty, that is going to pass this Congress. So these energy provisions, even to the extent people want them, are going to become law, but they don't have to be put in the stimulus package to drag it down. The other big expense added in the Finance Committee was the extension of unemployment. The Secretary of the Treasury and other people in the administration will tell you, in their view, this stimulus package could add anywhere from a half percent to three- quarters of a percent of growth to the GDP, if it is done very quickly and very cleanly. However, adding the unemployment extension, $30 billion or so to it, would eliminate the effect of a stimulus that otherwise would be provided. So the irony is that by adding the unemployment compensation extension provision here, we actually remove whatever stimulative effect there is in the bill, and we are right back to a bill that ends up, as I said, looking like a Christmas tree. Right now, unemployment nationwide is 4.7 percent. We have never extended unemployment benefits when unemployment was at that low a level. It has always been in the neighborhood of 6 percent or above, maybe a little below that, that has caused us to extend unemployment benefits. So there may well come a time, if we can't get the economy moving in the way we want it to, that there would continue to be stress in the employment sector and people might actually begin losing more jobs, in which case we might have to extend it. But the best way to prevent that from happening is to do sensible policy in the meantime to try to obviate that situation. And the Secretary of the Treasury and the President and the House of Representatives clearly believe the best way to do that would be to pass the stimulus package that doesn't have this additional $30 billion in unemployment extension added to it. The final point I wish to make is that there is some concern that there are politically popular things in the Finance Committee package and it is hard to vote against those politically popular things. I think the Senator from Montana made a good point a moment ago in reference to a different matter, that when you do something as a matter of conscience, and it is hard to do, usually it represents good policy. This is a case where the House of Representatives was willing, on a bipartisan basis, under the leadership of Speaker Pelosi and Leader Boehner, to put together a package, with the administration, in the kind of bipartisanship our constituents would like to have us engage in more often, in order to pass a bill quickly, that could be sent to the President quickly, and they did that even though I am sure many of them were tempted to add all kinds of other politically popular things to it. Now the attention turns to the Senate, and are we acquitting ourselves as well? I daresay not, if this Christmas tree package from the Finance Committee is adopted on the Senate floor. Instead, our constituents will look at us as the folks who slowed it down; we added a bunch of spending to it. The American people are already skeptical that getting a $500 or $700 rebate check is going to help stimulate the economy. But clearly they are going to look at the additional spending, the increased hit to the deficit, and wonder whether we were simply acting in a political way rather than in a way best for the country. So my view is we would be far better served to do what is the best policy, and that is to reject the Senate Finance Committee package as too much, more than the traffic can bear in this case, and to go back to the version of the House of Representatives, which would be modified ever so slightly, to send it back to the House to immediately pass it and on to the President and get this done. My personal view is the kind of spending that is involved in the Finance Committee package will actually act to the detriment, not to the benefit, of stimulating the economy, and that is why it should be rejected. In a few moments, we are going to have a chance to vote on this, and I hope my colleagues will vote no on the motion for cloture to bring up the Finance Committee-passed package of the stimulus bill.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from South Carolina (Mr. Graham), and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that during the quorum call, which I am about to invoke, we not have time counted against either side as it runs.

Mr. KYL. Mr. President, I wish to speak to the amendment offered by the Senator from Connecticut to the FISA bill, the Foreign Intelligence Surveillance Act, the amendment that would strike provisions from the bill that provide liability protection to those telecommunications companies that were asked by our Government to assist us in a dire time of need. I begin by asking unanimous consent to have printed in the Record at the conclusion of my remarks a letter to Senator Reid, dated February 5, 2008, and signed by Attorney General Mukasey and Director of National Intelligence Admiral McConnell. (See exhibit 1.)

Mr. KYL. Mr. President, I have no objection to that. But I would like to add that when the Senator from Washington has concluded her remarks, I be recognized for my remarks.

Mr. KYL. Mr. President, I suggest the absence of a quorum.

Mr. KYL. Mr. President, next, I would like to quote a few passages from this letter that relate specifically to this issue of liability protection. They begin by noting: Liability protection is the just result for companies who answered their Government's call for assistance. Further, it will ensure that the Government can continue to rely upon the assistance of the private sector that is so necessary to protect the Nation and enforce its laws. The point of beginning with this reference is to note the fact that what happened was that the U.S. Government, in the aftermath of 9/11, went to certain kinds of telecommunications and asked for their assistance in tracking down foreign terrorists, in providing intelligence-gathering services to the U.S. Government. These companies did not have a legal obligation to provide that support, but they certainly, as good citizens of the United States, undertook to provide the support, some of them in that capacity. The question is whether, having done that in good faith, they should now be protected from private lawsuits that have been filed against them or whether, as is the historic tradition in such circumstances, they would be immune from such lawsuits for volunteering to help the Government. Here is a little bit of what Attorney General Mukasey and Admiral McConnell wrote in the letter. In its report on S. 2248, the Intelligence Committee recognized that ``without retroactive immunity, the private sector might be unwilling to cooperate with lawful government requests in the future without unnecessary court involvement and protracted litigation. The possible reduction in intelligence that might result from this delay is simply unacceptable for our Nation.'' The letter goes on to say: The committee's measured judgment reflects the principle that private citizens who respond in good faith to a request for assistance by public officials should not be held liable for their actions. And that, in fact, has always been the common law rule in the United States of America. The concern is not only to protect those who were good enough to assist the Government in the past but also to ensure that in the future companies can rely upon this type of protection because of all of the situations in which they find themselves. It is very difficult for people to do business with them if they believe they might be hauled into court and all of the resultant effects of litigation would extend to them. In the letter that Attorney General Mukasey and Admiral McConnell wrote to our leadership, they point out their objection to several amendments and one of those amendments is specifically the one offered by the Senator from Connecticut, striking the immunity provisions, No. 3907. They begin by discussing it in this way: Extending liability protection to such companies is imperative; failure to do so could limit future cooperation by such companies and put critical intelligence operations at risk. Moreover, litigation against companies believed to have assisted the government risks the disclosure of highly classified information regarding extremely sensitive intelligence sources and methods. If any of these amendments-- And they specifically refer to this amendment-- . . . are part of the bill . . . we, as well as the President's other senior advisors, will recommend that he veto the bill. We know we need a bill to become law. We know what the President will accept, and we know it would be unacceptable to strike the immunity provisions as amendment No. 3907 would do. But let me continue to quote from this letter, because the authors note something in addition to the problem I identified, and I will state from it precisely: This amendment also would strike the important provisions in the bill that would establish procedures for implementing existing statutory defenses in the future and that would preempt State investigations of assistance provided by any electronic communication service provider to an element of the intelligence community. Those provisions are important to ensuring that electronic communication service providers can take full advantage of existing immunity provisions and to protecting highly classified information. In other words, this amendment doesn't simply strike the immunity provisions but would also have this deleterious effect. I want to quote from three other paragraphs of the bill, but I don't want to exceed 10 minutes. Therefore, I would ask how much time I have consumed.

Mr. KYL. I thank the Chair. Let me quote from three other paragraphs of the letter relating to this amendment. The authors are referring to the Intelligence Committee's extensive work on this particular aspect of the problem, and they say: After reviewing the relevant documents, the Intelligence Committee determined that providers had acted in response to written requests or directives stating that the activities had been authorized by the President and had been determined to be lawful. The letter goes on to note: In its Conference Report, the committee ``concluded that the providers had a good faith basis'' for responding to the requests for assistance they received. The Senate Intelligence Committee ultimately agreed to necessary immunity protections on a nearly unanimous bipartisan 13-2 vote. Twelve members of the committee subsequently rejected a motion to strike this provision. The authors go on to note: The immunity offered in S. 2248 applies only in a narrow set of circumstances. They note, for example: A court must review this certification before an action may be dismissed. This immunity provision does not extend to the government or government officials. In other words, they can still be sued. And it does not immunize any criminal conduct. This is critical to understand what the amendment does not do. Let me quote from the final paragraph relating to this particular amendment. Attorney General Mukasey and Admiral McConnell say: Providing this liability protection is critical to the national security. As the Intelligence Committee recognized, ``the intelligence community cannot obtain the intelligence it needs without assistance from these companies.'' That committee also recognized that companies in the future may be less willing to assist the government if they face the threat of private lawsuits each time they are alleged to have provided assistance. The committee concluded that: ``The possible reduction in intelligence that might result from this delay is simply unacceptable for the safety of our Nation.'' The authors then conclude: Allowing continued litigation also risks the disclosure of highly classified information regarding intelligence sources and methods. In addition to providing an advantage to our adversaries, the potential disclosure of classified information puts the facilities and personnel of electronic communication service providers at risk. For these reasons, we, as well as the President's other senior advisers, will recommend that he veto any bill that does not afford liability protection to these companies. This is, I guess one could say, the definitive word of what the President is recommending and is willing to accept from the Congress. It comes from the two individuals in our Government who have the chief responsibility for our safety with respect to not only the protection of American civil liberties but also the gathering of foreign intelligence, and it extensively quotes from the report of the committee itself, the Intelligence Committee, which it notes acted in a bipartisan 13-to-2 vote to provide for this liability protection. That is why it is so critical that when we have an opportunity to vote, I gather tomorrow or whenever we have an opportunity to vote on the amendment of the Senator from Connecticut, we reject that amendment on the grounds that it is contrary to the Intelligence Committee's actions, to the recommendations of the Attorney General and the Director of National Intelligence, and to the President with respect to the liability protection for these entities. There is much we cannot discuss, because so much of this program is of a classified nature. But I think everybody understands the fundamental principle involved here, and that is: When citizens of the United States are asked by their Government to assist, and they agree to do that in good faith for the protection of citizens of the United States of America, they should be protected from lawsuits that have been filed. That is what the amendment of the Senator from Connecticut would do is to eliminate that protection, and it is why the amendment should be defeated. I hope my colleagues are recognizing the seriousness of what these two authors of this letter have said when they recognize the seriousness of the potential consequences from failing to provide this kind of liability protection and that we will support the Intelligence Committee, we will support the intelligence community, and we will reject the amendment of the Senator from Connecticut. Exhibit 1 February 5, 2008. Hon. Harry Reid, Majority Leader, U.S. Senate, Washington, DC. Dear Senator Reid: This letter presents the views of the Administration on various amendments to the Foreign Intelligence Surveillance Act of 1978 (FISA) Amendments Act of 2008 (S. 2248), a bill ``to amend the Foreign Intelligence Surveillance Act of 1978, to modernize and streamline the provisions of that act, and for other purposes.'' The letter also addresses why it is critical that the authorities contained in the Protect America Act not be allowed to expire. We have appreciated the willingness of Congress to address the need to modernize FISA and to work with the Administration to allow the intelligence community to collect the foreign intelligence information necessary to protect the Nation while protecting the civil liberties of Americans. We commend Congress for the comprehensive approach that it has taken in considering these authorities and are grateful for the opportunity to engage with Congress as it conducts an in- depth analysis of the relevant issues. In August, Congress took an important step toward modernizing FISA by enacting the Protect America Act of 2007. That Act has allowed us temporarily to close intelligence gaps by enabling our intelligence professionals to collect, without a court order, foreign intelligence information from targets overseas. The intelligence community has implemented the Protect America Act in a responsible way, subject to extensive executive branch, congressional, and judicial oversight, to meet the country's foreign intelligence needs while protecting civil liberties. Indeed, the Foreign Intelligence Surveillance Court (FISA Court) recently approved the procedures used by the Government under the Protect America Act to determine that targets are located overseas, not in the United States. The Protect America Act was scheduled to expire on February 1, 2008, but Congress has extended that Act for fifteen days, through February 16, 2008. In the face of the continued threats to our Nation from terrorists and other foreign intelligence targets, it is vital that Congress not allow the core authorities of the Protect America Act to expire, but instead pass long-term FISA modernization legislation that both includes the collection authority conferred by the Protect America Act and provides protection from private lawsuits against companies that are believed to have assisted the Government in the aftermath of the September 11th terrorist attacks on America. Liability protection is the just result for companies who answered their Government's call for assistance. Further, it will ensure that the Government can continue to rely upon the assistance of the private sector that is so necessary to protect the Nation and enforce its laws. S. 2248, reported by the Senate Select Committee on Intelligence, would satisfy both of these imperatives. That bill was reported out of committee on a nearly unanimous 13-2 vote. Although it is not perfect, it contains many important provisions, and was developed through a thoughtful process that resulted in a bill that helps ensure that both the lives and the civil liberties of Americans will be safeguarded. First, it would establish a firm, long-term foundation for our intelligence community's efforts to track terrorists and other foreign intelligence targets located overseas. Second, S. 2248 would afford retroactive liability protection to communication service providers that are believed to have assisted the Government with intelligence activities in the aftermath of September 11th. In its report on S. 2248, the Intelligence Committee recognized that ``without retroactive immunity, the private sector might be unwilling to cooperate with lawful Government requests in the future without unnecessary court involvement and protracted litigation. The possible reduction in intelligence that might result from this delay is simply unacceptable for the safety of our Nation.'' The committee's measured judgment reflects the principle that private citizens who respond in good faith to a request for assistance by public basic legal role officials should not be held liable for their actions. Thus, with the inclusion of the proposed manager's amendment, which would make necessary technical changes to the bill, we strongly support passage of S. 2248. For reasons elaborated below, the Administration also strongly favors two other proposed amendments to the Intelligence Committee's bill. One would strengthen S. 2248 by expanding FISA to permit court-authorized surveillance of international proliferators of weapons of mass destruction. The other would ensure the timely resolution of any challenges to government directives issued in support of foreign intelligence collection efforts. Certain other amendments have been offered to S. 2248, however, that would undermine significantly the core authorities and immunity provisions of that bill. After careful study, we have determined that those amendments would result in a final bill that would not provide the intelligence community with the tools it needs to collect effectively foreign intelligence information vital for the security of the Nation. If the President is sent a bill that does not provide the U.S. intelligence agencies the tools they need to protect the nation, the President will veto the bill. I. Limitations on the Collection of Foreign Intelligence Several proposed amendments to S. 2248 would have a direct, adverse impact on our ability to collect effectively the foreign intelligence information necessary to protect the Nation. We note that three of these amendments were part of the Senate Judiciary Committee substitute, which has already been rejected by the Senate on a 60-34 vote. We explained why those three amendments were unacceptable in our November 14, 2007, letter to Senator Leahy regarding the Senate Judiciary Committee substitute, and the Administration reiterated these concerns in a Statement of Administration Policy (SAP) issued on December 17, 2007. A copy of that letter and the SAP are attached for your reference. Prohibition on Collecting Vital Foreign Intelligence Information (No amendment number available). This amendment provides that ``no communication shall be acquired under [Title VII of S. 2248] if the Government knows before or at the time of acquisition that the communication is to or from a person reasonably believed to be located in the United States,'' except as authorized under Title I of FISA or certain other exceptions. The amendment would require the Government to ``segregate or specifically designate'' any such communication and the Government could access such communications only under the authorities in Title I of FISA or under certain exceptions. Even for communications falling under one of the limited exceptions or an emergency exception, the Government still would be required to submit a request to the FISA Court relating to such communications. The procedural mechanisms it would establish would diminish our ability swiftly to monitor a communication from a terrorist overseas to a person in the United States--precisely the communication that the intelligence community may have to act on immediately. Finally, the amendment would draw unnecessary and harmful distinctions between types of foreign intelligence information, allowing the Government to collect communications under Title VII from or to the United States that contain information relating to terrorism but not other types of foreign intelligence information, such as that relating to the national defense of the United States or attacks, hostile actions, and clandestine intelligence activities of a foreign power. This amendment would eviscerate critical core authorities of the Protect America Act and S. 2248. Our prior letter and the Statement of Administration Policy explained how this type of amendment increases the danger to the Nation and returns the intelligence community to a pre-September 11th posture that was heavily criticized in congressional reviews. It would have a devastating impact on foreign intelligence surveillance operations; it is unsound as a matter of policy; its provisions would be inordinately difficult to implement; and thus it is unacceptable. The incidental collection of U.S. person communications is not a new issue for the intelligence community. For decades, the intelligence community has utilized minimization procedures to ensure that U.S. person information is properly handled and ``minimized.'' It has never been the case that the mere fact that a person overseas happens to communicate with an American triggers a need for court approval. Indeed, if court approval were mandated in such circumstances, there would be grave operational consequences for the intelligence community's efforts to collect foreign intelligence. Accordingly, if this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. Imposition of a ``Significant Purpose'' Test (No. 3913). This amendment, which was part of the Judiciary Committee substitute, would require an order from the Foreign Intelligence Surveillance Court (FISA Court) if a ``significant purpose'' of an acquisition targeting a person abroad is to acquire the communications of a specific person reasonably believed to be in the United States. If the concern driving this proposal is so-called ``reverse targeting''--circumstances in which the Government would conduct surveillance of a person overseas when the Government's actual target is a person in the United States with whom the person overseas is communicating--that situation is already addressed in FISA today. If the person in the United States is the actual target, an order from the FISA Court is required. Indeed, S. 2248 codifies this longstanding Executive Branch interpretation of FISA. The amendment would place an unnecessary and debilitating burden on our intelligence community's ability to conduct surveillance without enhancing the protection of the privacy of Americans. The introduction of this ambiguous ``significant purpose'' standard would raise unacceptable operational uncertainties and problems, making it more difficult to collect intelligence when a foreign terrorist overseas is calling into the United States--which is precisely the communication we generally care most about. Part of the value of the Protect America Act, and any subsequent legislation, is to enable the intelligence community to collect expeditiously the communications of terrorists in foreign countries who may contact an associate in the United States. The intelligence community was heavily criticized by numerous reviews after September 11, including by the Congressional Joint Inquiry into September 11, regarding its insufficient attention to detecting communications indicating homeland attack plotting. To quote the Congressional Joint Inquiry: The Joint Inquiry has learned that one of the future hijackers communicated with a known terrorist facility in the Middle East while he was living in the United States. The Intelligence Community did not identify the domestic origin of those communications prior to September 11, 2001 so that additional FBI investigative efforts could be coordinated. Despite this country's substantial advantages, there was insufficient focus on what many would have thought was among the most critically important kinds of terrorist-related communications, at least in terms of protecting the Homeland. In addition, the proposed amendment would create uncertainty by focusing on whether the ``significant purpose . . . is to acquire the communication'' of a person in the United States, not just to target the person here. To be clear, a ``significant purpose'' of intelligence community activities that target individuals outside the United States is to detect communications that may provide warning of homeland attacks, including communications between a terrorist overseas and associates in the United States. A provision that bars the intelligence community from collecting these communications is unacceptable. If this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. Imposition of a ``Specific Individual Target'' Test (No. 3912). This amendment, which was part of the Judiciary Committee substitute, would require the Attorney General and the Director of National Intelligence to certify that any acquisition ``is limited to communications to which any party is a specific individual target (which shall not be limited to known or named individuals) who is reasonably believed to be located outside the United States.'' This provision could hamper United States intelligence operations that currently are authorized to be conducted overseas and that could be conducted more effectively from the United States without harming the privacy interests of United States persons. For example, the intelligence community may wish to target all communications in a particular neighborhood abroad before our armed forces conduct an offensive. This amendment could prevent the intelligence community from targeting a particular group of buildings or a geographic area abroad to collect foreign intelligence prior to such military operations. This restriction could have serious consequences on our ability to collect necessary foreign intelligence information, including information vital to conducting military operations abroad and protecting the lives of our service members, and it is unacceptable. Imposing such additional requirements to the carefully crafted framework provided by S. 2248 would harm important intelligence operations without appreciably enhancing the privacy interests of Americans. If this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. Limits Dissemination of Foreign Intelligence Information (No. 3915). This amendment originally was offered in the Senate Intelligence Committee, where it was rejected on a 10- 5 vote. The full Senate then rejected the amendment as part of its consideration of the Judiciary Committee amendment. The proposed amendment would impose significant new restrictions on the use of foreign intelligence information, including information not concerning United States persons, obtained or derived from acquisitions using targeting procedures that the FISA Court later found to be unsatisfactory for any reason. By requiring analysts to go back to the relevant databases and extract certain information, as well as to determine what other information is derived from that information, this requirement would place a difficult, and perhaps insurmountable, operational burden on the intelligence community in implementing authorities that target terrorists and other foreign intelligence targets located overseas. The effect of this burden would be to divert analysts and other resources from their core mission-protecting the Nation-to search for information, including information that does not concern United States persons. This requirement also stands at odds with the mandate of the September 11th Commission that the intelligence community should find and link disparate pieces of foreign intelligence information. Finally, the requirement would actually degrade--rather than enhance--privacy protections by requiring analysts to locate and examine United States person information that would otherwise not be reviewed. Accordingly, if this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. II. Liability Protection for Telecommunications Companies Several amendments to S. 2248 would alter the carefully crafted provisions in that bill that afford liability protection to those companies believed to have assisted the Government in the aftermath of the September 11th attacks. Extending liability protection to such companies is imperative; failure to do so could limit future cooperation by such companies and put critical intelligence operations at risk. Moreover, litigation against companies believed to have assisted the Government risks the disclosure of highly classified, information regarding extremely sensitive intelligence sources and methds. If any of these amendments is part of the bill that is presented to the President, we as well as the President's other senior advisors, will recommend that he veto the bill. Striking the Immunity Provisions (No. 3907). This amendment would strike Title II of S. 2248, which affords liability protection to telecommunications companies believed to have assisted the Government following the September 11th attacks. This amendment also would strike the important provisions in the bill that would establish procedures for implementing existing statutory defenses in the future and that would preempt state investigations of assistance provided by any electronic communication service provider to an element of the intelligence community. Those provisions are important to ensuring that electronic communication service providers can take full advantage of existing immunity provisions and to protecting highly classified information. Affording liability protection to those companies believed to have assisted the Government with communications intelligence activities in the aftermath of September 11th is a just result and is essential to ensuring that our intelligence community is able to carry out its mission. After reviewing the relevant documents, the Intelligence Committee determined that providers had acted in response to written requests or directives stating that the activities had been authorized by the President and had been determined to be lawful. In its Conference Report, the Committee ``concluded that the providers . . . had a good faith basis'' for responding to the requests for assistance they received. The Senate Intelligence Committee ultimately agreed to necessary immunity protections on a nearly-unanimous, bipartisan, 13-2 vote. Twelve Members of the Committee subsequently rejected a motion to strike this provision. The immunity offered in S. 2248 applies only in a narrow set of circumstances. An action may be dismissed only if the Attorney General certifies to the court that either: (i) the electronic communications service provider did not provide the assistance; or (ii) the assistance was provided in the wake of the September 11th attacks, and was described in a written request indicating that the activity was authorized by the President and determined to be lawful. A court must review this certification before an action may be dismissed. This immunity provision does not extend to the Government or Government officials, and it does not immunize any criminal conduct. Providing this liability protection is critical to the national security. As the Intelligence Committee recognized, ``the intelligence community cannot obtain the intelligence it needs without assistance from these companies.'' That committee also recognized that companies in the future may be less willing to assist the Government if they face the threat of private lawsuits each time they are alleged to have provided assistance. The committee concluded that: ``The possible reduction in intelligence that might result from this delay is simply unacceptable for the safety of our Nation.'' Allowing continued litigation also risks the disclosure of highly classified information regarding intelligence sources and methods. In addition to providing an advantage to our adversaries, the potential disclosure of classified information puts the facilities and personnel of electronic communication service providers at risk. For these reasons, we, as well as the President's other senior advisors, will recommend that he veto any bill that does not afford liability protection to these companies. Substituting the Government as the Defendant in Litigation (No. 3927). This amendment would substitute the United States as the party defendant for any covered civil action against a telecommunications provider if certain conditions are met. The Government would be substituted if the FISA Court determined that the company received a written request that complied with 18 U.S.C. Sec. 2511(2)(a)(ii)(B), an existing statutory protection; the company acted in ``good faith . . . pursuant to an objectively reasonable belief'' that compliance with the written request was permitted by law; or that the company did not participate. Substitution is not an acceptable alternative to immunity. Substituting the Government would simply continue the litigation at the expense of the American taxpayer. Substitution does nothing to reduce the risk of the further disclosure of highly classified information. The very point of these lawsuits is to prove plaintiffs' claims by disclosing classified information regarding the activities alleged in the complaints, and this amendment would permit plaintiffs to participate in proceedings before the FISA Court regarding the conduct at issue. A judgment finding that a particular company is a Government partner also could result in the disclosure of highly classified information regarding intelligence sources and methods and hurt the company's reputation overseas. In addition, the companies would still face many of the burdens of litigation--including attorneys' fees and disruption to their businesses from discovery--because their conduct will be the key question in the litigation. Such litigation could deter private sector entities from providing assistance to the intelligence community in the future, Finally, the lawsuits could result in the expenditure of taxpayer resources, as the U.S. Treasury would be responsible for the payment of an adverse judgment. If this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. FISA Court Involvement in Determining Immunity (No. 3919). This amendment would require all judges of the FISA Court to determine whether the written requests or directives from the Government complied with 18 U.S.C. Sec. 2511(2)(a)(ii), an existing statutory protection; whether companies acted in ``good faith reliance of the electronic communication service provider on the written request or directive under paragraph (1)(A)(ii), such that the electronic communication service provider had an objectively reasonable belief under the circumstances that the written request or directive was lawful''; or whether the companies did not participate in the alleged intelligence activities. This amendment is not acceptable. It is for Congress, not the courts, to make the public policy decision whether to grant liability protection to telecommunications companies who are being sued simply because they are alleged to have assisted the Government in the aftermath of the September 11th attacks. The Senate Intelligence Committee has reviewed the relevant documents and concluded that those who assisted the Government acted in good faith and received written assurances that the activities were lawful and being conducted pursuant to a Presidential authorization. This amendment effectively sends a message of no-confidence to the companies who helped our Nation prevent terrorist attacks in the aftermath of the deadliest foreign attacks on U.S. soil. Transferring a policy decision critical to our national security to the FISA Court, which would be limited in its consideration to the particular matter before them (without any consideration of the impact of immunity on our national security), is unacceptable. In contrast to S. 2248, this amendment would not allow for the expeditious dismissal of the relevant litigation. Rather, this amendment would do little more than transfer the existing litigation to the full FISA Court and would likely result in protracted litigation. The standards in the amendment also are ambiguous and would likely require fact- finding on the issue of good faith and whether the companies ``had an objectively reasonable belief'' that assisting the Government was lawful--even though the Senate Intelligence Committee has already studied this issue and concluded such companies did act in good faith. The companies being sued would continue to be subjected to the burdens of the litigation, and the continued litigation would increase the risk of the disclosure of highly classified information. The procedures set forth under the amendment also present insurmountable problems. First, the amendment would permit plaintiffs to participate in the litigation before the FISA Court. This poses a very serious risk of disclosure to plaintiffs of classified facts over which the Government has asserted the state secrets privilege and of disclosure of these secrets to the public. The FISA Court safeguards national security secrets precisely because the proceedings are generally ex parte--only the Government appears. The involvement of plaintiffs also is likely to prolong the litigation. Second, assembling the FISA Court for en banc hearings on these cases could cause delays in the disposition of the cases. Third, the amendment would purport to abrogate the state secrets privilege with respect to proceedings in the FISA Court. This would pose a serious risk of harm to the national security by possibly allowing plaintiffs access to highly classified information about sensitive intelligence activities, sources, and methods. The conclusion of the FISA Court also may reveal sensitive information to the public and our adversaries. Beyond these serious policy considerations, it also would raise very serious constitutional questions about the authority of Congress to abrogate the constitutionally-based privilege over national security information within the Executive's control. This is unnecessary, because classified information may be shared with a court in camera and ex parte even when the state secrets privilege is asserted. Fourth, the amendment does not explicitly provide for appeal of determinations by the FISA Court. Finally, imposing a standard involving an ``objectively reasonable belief'' is likely to cause companies in the future to feel compelled to make an independent finding prior to complying with a lawful Government request for assistance. Those companies do not have access to information necessary to make this judgment. Imposition of such a standard could cause dangerous delays in critical intelligence operations and put our national security at risk. As the Intelligence Committee recognized in its report on S. 2248, ``the intelligence community cannot obtain the intelligence it needs without assistance from these companies.'' For these reasons, existing law rightly places no such obligation on telecommunications companies. If this amendment is part of the bill that is presented to the President, we, as well as the President's other senior advisors, will recommend that he veto the bill. III. Other Amendments Imposing a Short Sunset on the Legislation (No. 3930). This amendment would shorten the existing sunset provision in S. 2248 from six years to four years. We strongly oppose it. S. 2248 should not have an expiration date at all. The threats we face do not come with an expiration date, and our authorities to counter those threats should be placed on a permanent foundation. They should not be in a continual state of doubt. Any sunset provision withholds from our intelligence professionals and our private partners the certainty and permanence they need to protect Americans from terrorism and other threats to the national security. The intelligence community operates much more effectively when the rules governing our intelligence professionals' ability to track our adversaries are established and are not changing from year to year. Stability of law also allows the intelligence community and our private partners to invest resources appropriately. Nor is there any need for a sunset. There has been extensive public discussion, debate, and consideration of FISA modernization and there is now a lengthy factual record on the need for this legislation. Indeed, Administration officials have been working with Congress since at least the summer of 2006 on legislation to modernize FISA. There also has been extensive congressional oversight and reporting regarding the Government's use of the authorities under the Protect America Act. In addition, S. 2248 includes substantial congressional oversight of the Government's use of the authorities provided in the bill. This oversight includes provision of various written reports to the congressional intelligence committees, including semiannual assessments by the Attorney General and the Director of National Intelligence, assessments by each relevant agency's Inspector General, and annual reviews by the head of any agency conducting operations under Title VII. Congress can, of course, revisit these issues and amend a statute at whatever time it chooses. We therefore urge Congress to provide a long-term solution to an out-dated FISA and to resist attempts to impose a short expiration date on this legislation. Although we believe that any sunset is unwise and unnecessary, we support S. 2248 despite its six-year sunset because it meets our operational needs to keep the country safe by providing needed authorities and liability protection. Imposes Court Review of Compliance with Minimization Procedures (No. 3920). This amendment, which was part of the Judiciary Committee substitute, would allow the FISA Court to review compliance with minimization procedures that are used on a programmatic basis for the acquisition of foreign intelligence information by targeting individuals reasonably believed to be outside the United States. We strongly oppose this amendment. It could place the FISA Court in a position where it would conduct individualized review of the intelligence community's foreign communications intelligence activities. While conferring such authority on the court is understandable in the context of traditional FISA collection, it is anomalous in this context, where the court's role is in approving generally applicable procedures for collection targeting individuals outside the United States. Congress is aware of the substantial oversight of the use of the authorities contained in the Protect America Act. As noted above, S. 2248 significantly increases such oversight by mandating semiannual assessments by the Attorney General and the Director of National Intelligence, assessments by each relevant agency's Inspector General, and annual reviews by the head of any agency conducting operations under Title VII, as well as extensive reporting to Congress and to the FISA Court. The repeated layering of overlapping oversight requirements on one aspect of intelligence community operations is both unnecessary and not the best use of limited resources and expertise. Expedited FISA Court Review of Challenges and Petitions to Compel Compliance (No. 3941). This amendment would require the FISA Court to make an initial ruling on the frivolousness of a challenge to a directive issued under the bill within five days, and to review any challenge that requires plenary review within 30 days. The amendment also provides that if the Constitution requires it, the court can take longer to decide the issues before it. The amendment sets forth similar procedures for the enforcement of directives (i.e., when the Government seeks to compel an electronic communication service provider to furnish assistance or information). This amendment would ensure that challenges to directives and petitions to compel compliance with directives are adjudicated in a manner that avoids undue delays in critical intelligence collection. This amendment would improve the existing provisions in S. 2248 pertaining to challenges to directives and petitions to compel cooperation by electronic communication service providers, and we strongly support it. Proliferation of Weapons of Mass Destruction (No. 3938). This amendment, which would apply to surveillance pursuant to traditional FISA Court orders, would expand the definition of ``foreign power'' to include groups engaged in the international proliferation of weapons of mass destruction. This amendment reflects the threat posed by these catastrophic weapons and extends FISA to apply to individuals and groups engaged in the international proliferation of such weapons. To the extent that they are not also engaged in international terrorism, FISA currently does not cover those engaged in the international proliferation of weapons of mass destruction. The amendment would expand the definition of ``agent of a foreign power'' to include non-U.S. persons engaged in such activities, even if they cannot be connected to a foreign power before the surveillance is initiated. The amendment would close an existing gap in FISA's coverage with respect to surveillance conducted pursuant to traditional FISA Court orders, and we strongly support it. Exclusive Means (No. 3910). We understand that the amendment relating to the exclusive means provision in S. 2248 is undergoing additional revision. As a result, we are withholding comment on this amendment and its text at this time. We note, however, that we support the provision currently contained in S. 2248 and to support its modification, we would have to conclude that the amendment provides for sufficient flexibility to permit the President to protect the Nation adequately in times of national emergency. IV. Expiration While it is essential that any FISA modernization presented to the President provide the intelligence community with the tools it needs while safeguarding the civil liberties of Americans, it is also vital that Congress not permit the authorities of the Protect America Act not be allowed simply to expire. As you are aware, the Protect America Act, which allowed us temporarily to close gaps in our intelligence collection, was to sunset on February 1, 2008. Because Congress indicated that it was ``a legislative impossibility'' to meet this deadline, it passed and the President signed a fifteen-day extension. Failure to pass long-term legislation during this period would degrade our ability to obtain vital foreign intelligence information, including the location, intentions, and capabilities of terrorists and other foreign intelligence targets abroad. First, the expiration of the authorities in the Protect America Act would plunge critical intelligence programs into a state of uncertainty which could cause us to delay the gathering of, or simply miss, critical foreign intelligence information. Expiration would result in a degradation of critical tools necessary to carry out our national security mission. Without these authorities, there is significant doubt surrounding the future of aspects of our operations. For instance, expiration would create uncertainty concerning: The ability to modify certifications and procedures issued under the Protect America Act to reflect operational needs and the implementation of procedures to ensure that agencies are fully integrated protecting the Nation; The continuing validity of liability protection for those who assist us according to the procedures under the Protect America Act; The continuing validity of the judicial mechanism for compelling the assistance needed to protect our national security; The ability to cover intelligence gaps created by new communication paths or technologies. If the intelligence community uncovers such new methods, it will need to act to cover these intelligence gaps. All of these aspects of our operations are subject to great uncertainty and delay if the authorities of the Protect America Act expire. Indeed, some critical operations will likely not be possible without the tools provided by the Protect America Act. We will be forced to pursue intelligence collection under FISA's outdated legal framework--a framework that we already know leads to intelligence gaps. This degradation of our intelligence capability will occur despite the fact that, as the Department of Justice has notified Congress, the FISA Court has approved our targeting procedures pursuant to the Protect America Act. Second, expiration or continued short-term extensions of the Protect America Act means that an issue of paramount importance will not be addressed. This is the issue of providing liability protection for those who provided vital assistance to the Nation after September 11, 2001. Senior leaders of the intelligence community have consistently emphasized the critical need to address this issue since 2006. See, ``FISA for the 21st Century'' hearing before the Senate Judiciary Committee with Director of the Central Intelligence Agency and Director of the National Security Agency; 2007 Annual Threat Assessment Hearing before the Senate Select Committee on Intelligence with Director of National Intelligence. Ever since the first Administration proposal to modernize FISA in April 2007, the Administration had noted that meeting the intelligence community's operational needs had two critical components--modernizing FISA's authorities and providing liability protection. The Protect America Act updated FISA's legal framework, but it did not address the need for liability protection. As we have discussed above, and the Senate Intelligence Committee recognized, ``without retroactive immunity, the private sector might be unwilling to cooperate with lawful Government requests in the future without unnecessary court involvement and protracted litigation.'' As it concluded, ``[t]he possible reduction in intelligence that might result from this delay is simply unacceptable for the safety of our Nation.'' In short, if the absence of retroactive liability protection leads to private partners not cooperating with foreign intelligence activities, we can expect more intelligence gaps. Questions surrounding the legality of the Government's request for assistance following September 11th should not be resolved in the context of suits against private parties. By granting responsible liability protection, S. 2248 ``simply recognizes that, in the specific historical circumstances here, if the private sector relied on written representations that high-level Government officials had assessed the [the President's] program to be legal, they acted in good faith and should be entitled to protection from civil suit.'' Likewise, we do not believe that it is constructive--indeed, it is destructive--to degrade the ability of the intelligence community to protect the country by punishing our private partners who are not part of the ongoing debate between the branches over their respective powers. The Protect America Act's authorities expire in less than two weeks. The Administration remains prepared to work with Congress towards the passage of a FISA modernization bill that would strengthen the Nation's intelligence capabilities while respecting and protecting the constitutional rights of Americans, so that the President can sign such a bill into law. Passage of S. 2248 and rejection of those amendments that would undermine it would be a critical step in this direction. We look forward to continuing to work with you and the Members of the Senate on these important issues. Thank you for the opportunity to present our views. The Office of Management and Budget has advised us that from the perspective of the Administration's program, there is no objection to the submission of this letter. Sincerely, Michael B. Mukasey, Attorney General. J.M. McConnell, Director of National Intelligence.

Mr. KYL

Mr. KYL. Mr. President, I thank the Senator from California for her remarks about Sean and his service to this country. He clearly represents all those marines, soldiers, and others who have given their lives and the many others who have been casualties of conflicts on behalf of the American people. We do, indeed, owe them our debt of gratitude and we, as policymakers, in the country owe them decisionmaking which ensures that their sacrifices will not have been in vain.

Mr. KYL

Mr. KYL. Mr. President, I wish to turn to the business at hand, which is the so-called economic stimulus package. I have not had an opportunity to offer my personal views on this issue. I do not believe that tax rebate checks and an extension of unemployment benefits will boost the economy. Of course, Americans deserve to keep more of their hard-earned dollars and Washington should spend less of them. But giving people tax rebates and telling them to go shopping will do virtually nothing to grow our economy. Our economy grows--GDP increases--when new goods and services are produced. A one- time shopping spree is not going to encourage a business to hire one additional worker or invest in one additional machine. Only a permanent reduction in tax rates will do that. Gross domestic product increased by just 0.6 percent in the fourth quarter of 2007. While most economists do not forecast that the U.S. economy will enter recession this year, they do estimate it will enter a period of below-trend growth in the first half of 2008, with growth recovering in the third and fourth quarters. The current unemployment rate is 4.9 percent; down from 5 percent in December. The drop is due to an upward revision in the number of jobs created in December. The preliminary estimate is that the number of jobs created in January fell by 17,000--the first decline in many months. But note that a very small increase in December job creation was revised upward to 82,000 new jobs. Also, the initial August 2007 jobs reading showed a 4,000 job decline, but it too was revised upward substantially. The January figure could well be revised upward. Over the past 30 years, from 1977 to 2007, personal consumption has grown steadily and strongly and has not fallen off during economic downturns. In contrast, during times of economic weakness, private investment declines significantly. We are seeing this very thing happen during this economic downturn as well. The Treasury Secretary negotiated an agreement with the bipartisan House leadership. That agreement was fairly simple: It provides a rebate of $600 for individuals and $1,200 for married filers, and gives parents another $300 for each child. The rebate is phased out for individuals with adjusted gross income of more than $75,000, and couples with adjusted gross income. of $150,000. It also expands the ability of small businesses to expense new equipment purchases for 2008 and gives businesses of all sizes the ability to write off 50 percent the cost of many new depreciable assets placed in service in 2008. The House bill was passed on January 29 by a vote of 385 to 35. The administration predicts that the proposal would boost the economy by about 0.7 percent. In reality, that ``growth'' would be borrowed from the future. It would not create new growth. While I disagree with the central premise of the House-passed bill-- that we need to stimulate consumer spending--I am impressed that the bill was very narrowly focused and that it generally did not include new spending. While the House bill was not the bill I would have written, I feared that it would become far worse in the Senate. It has. The bill passed out of the Finance Committee dedicates $10 billion to extend unemployment benefits. Our current unemployment rate is 4.9 percent. Congress has never before extended unemployment benefits when the rate is this low. Because extending unemployment benefits has the effect of lengthening the traditional spell of unemployment by 1 to 2 weeks, this provision effectively eliminates any possible stimulative effect of the bill. It also included a slightly smaller tax rebate--$500 per individual, $1,000 per couple, $300 per child. Unlike the House bill, the rebate would be available to senior citizens and disabled veterans who otherwise have no earned income. While I generally oppose the idea of rebate checks, this change from the House bill is probably one on which we can agree. But we should understand that fully 42 percent of the rebate approved by the Finance Committee is classified as ``spending'' because it would go to individuals with no tax liability. The Finance bill also seeks to ensure that illegal immigrants cannot legally obtain tax rebates, something we all support. The Finance package also includes the same business tax breaks as the House bill but adds a 5-year carryback for net operating losses. This is an important provision that I helped to have included in the Finance bill and I would support adding it to the House bill. From this point, the Finance Committee bill really becomes a Christmas tree. All kinds of legislative ornaments have been attached: $3 billion for utilities wind and solar energy production; $1.6 billion for energy-efficient homes, not particularly wise, given the glut of new homes on the markets; $323 million for manufacturers of energy-efficient appliances; $247 million for tax breaks for wealthier investors in marginal oil and gas wells; $153 million to for energy-efficient commercial buildings; and $100 million for coal companies owed interest by the Federal government from a court case. Interestingly, the committee defeated an amendment I offered to patch the AMT for 2008. The committee defeated an amendment offered by Senator Ensign to provide another repatriation window, during which companies could bring back overseas earnings at a much-reduced tax rate. The committee also denied me an opportunity to offer a package of individual and business tax provisions that expired at the end of 2007 and other provisions that expire at the end of this year, including: the teacher tax deduction, the tuition deduction, the R&D tax credit, accelerated depreciation for leaseholds and restaurants, and extending foreign tax changes that help U.S. multinationals compete-- active financing and the CFC look-through. At best, proposals for short-term, demand-side stimulus will borrow economic growth and consumer spending from the future, and will appear to create a small boost for the economy. My real worry is that we are doing a disservice to all Americans if we tell them that increasing consumer spending is a panacea to our economic problems. We would be far wiser to recognize that our short-term challenge now is deflated home values and a glut of housing, along with insufficient liquidity in the capital markets--none of which will be fixed by this, or the House-passed, stimulus bill. The only viable remedy is to focus on policies that encourage sustainable economic growth by encouraging work, investment, and entrepreneurship. We are scheduled to see across-the-board hikes in income tax rates and investment tax rates, as the current rates automatically expire, reverting to the pre-2001 and pre-2003 higher rates--and we know from economists that the only way to encourage sustainable economic growth is to encourage work, savings, and investment through lower marginal rates. No one is willing to see the child tax credit cut in half, the marriage penalty spring back to life, or a host of other popular provisions disappear. Washington is slowly coming to the realization that our corporate tax rate of 35 percent hurts American competitiveness. Only one OECD country--Japan--has a higher rate. In fact, I filed an amendment to cut the corporate rate to 25 percent when the Finance Committee considered the economic stimulus bill. Larry Kudlow had this to say about my amendment: In my view, this would be the single best pro-growth measure that Washington could take. It would help create healthy businesses, create jobs, and raise real wages. It also would boost the dollar. The minute such a bill is signed--the very minute--the incentive effects would take place. Last year, the Treasury Department released a study of American competitiveness and determined that our high corporate tax rate is in fact a barrier to encouraging businesses to locate in the U.S. Also in 2007, Charlie Rangel, the chairman of the House Ways and Means Committee, unveiled a comprehensive tax reform proposal which included a reduction in the corporate tax rate to 30 percent. There seems to be a growing consensus across party lines that our corporate tax rate should be reduced. Another idea that has been gaining traction is reducing the corporate capital gains rate. This would have a tremendous ``unlocking effect.'' It simply makes no sense to tax corporate capital gains at 35 percent; such a high tax rate only encourages companies to hold on to unproductive assets. For years and years, investors and Government officials have debated whether the Treasury Department has the necessary authority to index capital gains for inflation without Congress needing to act legislatively. I believe there is a case to be made that Treasury does have the authority, and I hope the President will take this bold step in his final year. Forty-two percent of the cost of the Senate Finance Committee economic stimulus ``rebate'' goes to Americans with no tax liability. The percentage of Americans who actually pay taxes continues to shrink and our ability to raise revenue by increasing taxes on ``the wealthy'' is a losing proposition. In 2004, 37 percent of all Federal personal income taxes were paid by the top 1 percent of taxpayers; the bottom half of taxpayers, by adjusted gross income, pay just 3.3 percent of Federal personal income taxes. We run the very real risk of developing a system whereby a majority of Americans do not have a stake in limiting the size of our Federal Government because they do not have to pay for it. Congress should consider some research explained in a recent Wall Street Journal column by Art Laffer. Art Laffer explains that the highest income earners are the most sensitive to tax increases and the most likely to plan to avoid tax increases. He found that over the last 25 years, as the top income tax rates fell, the share of income taxes and the dollar-value of taxes paid by the top 1 percent of taxpayers increased dramatically. Over that same period, as income tax rates fell for the bottom 75 percent of taxpayers, both the share of Federal income taxes paid and the dollar amount of income taxes paid fell too. Laffer points out that the temptation to cut taxes in the lower brackets--or only retain the current rate structure for the lower brackets--while raising taxes for taxpayers in the top brackets is completely counterproductive. The only tax cuts that seem to result in increased revenues are those that affect the wealthiest taxpayers because they have the ability to defer income, invest in tax deferred accounts, invest in tax-exempt bonds, and otherwise plan around taxes. Art Laffer closes his article with this statement: Mark my words: If the Democrats succeed in implementing their plan to tax the rich and cut taxes on the middle and lower income earners, this country will experience a fiscal crisis of serious proportions that will last for years and years. . . While Congress is focusing on stimulating consumer spending and short-term economic fixes, we must remember that it makes far better sense to plan for long-term, sustainable economic growth. We must not let this deviation into Keynesian economics become an excuse for massive increases in government spending, tax policies geared toward short-term consumer spending; we must not ignore the importance of long-term savings and investment and we must remember to reward hard work with permanently low income tax rates. As George Melloan wrote recently: Ironically, even the brilliant John Maynard Keynes disowned [Keynesian Economics]. After meeting with a group of Washington ``Keynesians'' in 1944, he said he was the only non-Keynesian in the room. His brainchild . . . had been converted from its originally intended limited application to an all-purpose economic panacea by politicians, academics, and journalists. I wish to summarize, in 3 or 4 minutes, what I think is at work here. My view, contrary to the President and to some others in my party, is that tax rebate checks and extension of unemployment benefits will not boost the economy. Obviously, Americans deserve to keep more of their hard-earned dollars, and obviously Washington should spend less of them, but giving people tax rebates and telling them to go shopping will do virtually nothing to grow our economy. Our economy grows; that is to say, the gross domestic product increases, when new goods and services are produced. A one-time shopping spree is not going to encourage business to hire one additional employee or invest in one additional machine. Only a permanent reduction in tax rates will do that. I will share a couple statistics relating to the state of our economy now, particularly as it relates to unemployment. The current unemployment rate is 4.9 percent. That is down from 5 percent in December. The drop is due to an upward revision of the number of jobs created in December. The preliminary estimate is that the number of jobs created in January fell by 17,000, which is the first decline in months. But note that a very small increase in December job creation was revised upward to 82,000 new jobs, and the initial August 2007 jobs reading showed a 4,000-job decline, but it also was revised substantially upward. So the January figure could also be revised upward. The point is unemployment is at a relatively low level in this country, and it would be a huge mistake for us to exacerbate the unemployment situation by extending unemployment benefits, as the Senate Finance Committee does. In addition, personal consumption is growing strongly and steadily, as it has over the last 30 years. It has not fallen off at all. What has fallen off, and this happens during times of economic weakness, is private investment, which has declined significantly, and that is what should be addressed but is not addressed, in the so-called stimulus package. Rather, what is addressed in the stimulus package is, of course, consumer spending which, in this case, is not the solution to the problem. At best, proposals for short-term, demand-side stimulus will borrow economic growth and consumer spending from the future and will appear to create a small boost to the economy right now, but they are borrowing it from the future. Of course, we are also borrowing $150 billion in order to accomplish this result. My worry is we are doing a disservice to all Americans if we tell them an increase in consumer spending is a panacea to our economic problems. It is not. We would be far wiser to recognize our short-term challenge now is depleted home values, a glut of housing, along with insufficient liquidity in the capital markets, and none of this is fixed by the stimulus bill before us. The only viable remedy is to focus on policies that encourage sustainable economic growth by encouraging work, investment, and entrepreneurship. One of the first things we have to address is to make sure we do not suffer a tax increase. That would be the worst thing that would happen, and we are headed for that if Congress does not take action to take that from taking place, which is automatically built into our tax laws. In 2 years, unless Congress does something, we will have the largest tax increase in the history of the country. So we should be signaling right now that is not going to happen. We should also get in line with the other countries in the world and reduce our corporate income tax rate which, except for Japan, is the highest in the world. That would do something immediately to help. We should also index taxes, such as the capital gains tax, for inflation. For years, investors and Government officials have debated whether the Treasury Department has the authority to do this. I believe it does have the authority to do it administratively and that we ought to do it. But if the administration doesn't do it, then the Congress ought to do it. The bottom line is there is a variety of things we could do to actually stimulate economic growth to provide for the long-term productivity increases in capital expansion and job creation that provide that kind of economic growth. That is what will solve the problem, not a one-time rebate for people who would far rather have a job than a $500 check. So while we are focusing on stimulating consumer spending and the short-term economic fixes, my view is it would make far better sense to plan for the long term and to do those things which provide for actual sustainable growth. We cannot let this deviation into so-called Keynesian economics become an excuse for massive tax increases and Government spending or tax policies geared toward short-term consumer spending. We must not ignore the importance of long-term savings and investment, and we must remember to reward hard work with permanently low income tax rates. As George Melloan recently wrote: Ironically, even the brilliant John Maynard Keynes disowned Keynesian Economics. After meeting with a group of Washington ``Keynesians'' in 1944, he said he was the only non-Keynesian in the room. His brainchild had been converted from its originally intended limited application to an all-purpose economic panacea by politicians, academics, and journalists. I hope we will not fall into the same trap this year, in 2008, but recognize there are some significant things we could do to stimulate the economy to ensure that the average American family is not burdened with increasing taxes. The first step in that direction is not to go another $150 billion in debt by offering people rebate checks and an extension of unemployment compensation but, rather, by signaling to them we are serious about ensuring there will not be a big tax increase in this country.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Brownback), the Senator from North Carolina (Mr. Burr), the Senator from New Mexico (Mr. Domenici), the Senator from South Carolina (Mr. Graham), the Senator from Arizona (Mr. McCain), and the Senator from Mississippi (Mr. Wicker).

Mr. KYL

Mr. KYL. Mr. President, obviously, our colleagues are not here. I would not object to that kind of agreement. I don't know what others would do. To be fair, did I represent the distinguished majority leader correctly, that you had assured Senators they would not be voting on the stimulus package tomorrow?

Mr. KYL. Mr. President, for the reasons I expressed with the majority leader a moment ago in our colloquy, I must object at this time.

Mr. KYL. I know the Senator from New Jersey wants to speak, but since some of this was directed to my comments on the unanimous consent request, I think I should take a couple of minutes to respond.

Mr. KYL. Since we have had this discussion, let me take no more than 4 minutes. I will join the Senator in the pride he has for the Giants and their wonderful victory in my home State of Arizona yesterday. I hope a good time was had by all, including those who had their string broken. I do wish to respond because there have been a couple suggestions made I think that are inaccurate. We are not going to come in tomorrow and have the prayer by the Chaplain and do nothing. I hope that debate on the stimulus package is not perceived by people as doing nothing. All of us, almost all of us I think, everybody on the Democratic side voted to take up the stimulus bill. That is what we voted on an hour ago. We voted to take up the stimulus bill. Now we are on the stimulus bill. I have not had a chance to speak on it yet. I would like to do that. Tomorrow is my opportunity. The majority leader is the one who said there would be no votes on the stimulus package tomorrow, not the Senator from Kentucky, the minority leader. So the fact that we are not voting on the stimulus bill tomorrow has nothing to do with Republican delay. It is a commitment made by the majority leader. I have no problem with the commitment. There are people out campaigning. But that was the majority leader's decision not to vote on the stimulus bill tomorrow. As I said, we voted for cloture for the House bill. I am happy to vote on the House bill. I do not know whether my other colleagues are going to be done debating this in 1 day tomorrow. But I do know this, we have gone to the stimulus package. We are going to be on it tomorrow. That is what we all agreed to do. Now the assistant leader comes down and asks unanimous consent to go off the bill we voted to go on and to start voting tomorrow on some FISA amendments, some amendments to the FISA bill. He said: What a waste it would be. Now, as everyone in this body knows, we did not vote last Wednesday, last Thursday, last Friday, not because Republican's were not ready to vote, there was no agreement on how to proceed to a FISA bill. We have now reached that agreement. That agreement is in place. The minute we finish this stimulus package, we will move to the FISA bill. We can get that done within the next 10 days. There is no question about that. So I do not know why this constant attempt to try to put people on record, as the distinguished assistant leader said, and then to talk about 64 filibusters by Republicans. The majority leader set a record last year in the number of cloture votes that were required in order for us to do business. When the majority leader brings up a bill and then precludes any other amendments and files cloture, we have no choice but to vote on that cloture motion. If we vote against it, it is called a filibuster. That is not a filibuster. But by the reckoning of the other side, I gather that is how they count up the number of filibusters. Every time we vote against a cloture vote, the majority leader has required--and there is no opportunity for Republican amendments--many of those times Republicans are going to say: No, we want a chance to offer some amendments. That is not a filibuster. Yet that is the kind of accusation that has been made here. I want to get back to the point that surely we can have a constructive debate without constantly trying to cut each other off at the knees; that the Republican minority has taken this to an extreme, that they are not sensitive to the challenges the people face, that the Republican position is to do nothing tomorrow. Well, we are all going to debate the stimulus package tomorrow because we all voted to debate the stimulus package tomorrow. That is not doing nothing. I ask my colleagues again: Let's quit this business of trying to put the other side into an embarrassing position to object to something or complain that we want to do nothing or we do not care about people or that the President wants to violate the Constitution. This is the kind of thing the American people are sick of. We voted to take up the stimulus package. Let's take it up. We will have time to read it. If it is as simple as the other side says, that is great. It is 71 pages long. But if it is pretty simple, then presumably the debate will not take all that long. Then we can turn to the FISA bill, on which we have reached an agreement. I hope my colleagues, in moving forward, will consider the interests of the American people first and stop this bickering to try to put each other into embarrassing positions so we gain a little bit of a political advantage. Mr. President, I am very happy now to join my colleague from New Jersey in a bipartisan exercise; that is, to congratulate the New York Giants on their victory. I am happy to yield the floor to him at this time.

Mr. KYL. And there are some additional changes from the Finance Committee version as well; is that not true?

Mr. KYL. It would, indeed. The majority leader would like to comment.