Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, if I could interrupt my colleague to give a couple of bits of further information, the next opportunity for an amendment should be from the Democratic side. Senator Cornyn is ready to proceed with an amendment, and also Senator Hutchison has an amendment I think that is cleared on both sides that we could do by voice vote, when that is appropriate. But the next amendment should come from the Democratic side. My suggestion would be, while we are deciding the immediate future ahead of us, that Senator Alexander be allowed to proceed on a matter that is unrelated, and then we could go to the Democratic side.

Mr. KYL. Mr. President, up to 5 minutes for Senator Alexander.

Mr. KYL

Mr. KYL. Mr. President, I wish to speak briefly in opposition to the amendment of the Senator from North Dakota. I certainly concur with several of the comments he made, about the need to secure our borders, about the need to have a workable immigration system, and the need for reform that ensures the rule of law is restored in the United States. Where I differ with him is in his belief that we can actually achieve these goals if we have no ability for temporary workers to come to the country. His amendment would eliminate the temporary worker program from this bill. Now, there are several reasons why a temporary worker program, within certain constraints, is a good idea. The first reason is because it will help to relieve the magnet for illegal immigration. This is one of the things President Bush has talked about frequently. The reason most of the people are crossing our border illegally is to get employment. There are jobs available for them. Some people say this is work Americans will not do. That is actually not true. In all of the different work areas, whether it be construction or landscaping or working in a hotel or motel, whatever it might be, roughly half the people working in those industries are American citizens. But there are not enough American citizens to do all of the work that needs to be done. So naturally the law of supply and demand sets in here. People come across the border illegally, and they take that work. What we want to do is both close the border, secure the border of the United States, but also eliminate the magnet for illegal employment here, because the reality is desperate people will always try to find some way to get into the country. It would be nice if, instead of having to rely strictly on fences and Border Patrol agents, we also relieved the pressure so American employers would have the workers they need and there would be no opportunity for illegal workers to come into the United States. Another way we have done that, by the way, is to have a very good employee verification system put into this legislation. But the key here is to, in effect, have a pressure cooker safety valve. When there is too much employment need here to match up with the number of workers, then we let off the pressure by allowing some visas or temporary workers to come here temporarily. In the bill they either come 10 months out of the year--that is the seasonal workers--and then return home, or they can get a 2-year visa, which enables them to come here and work for 2 years, then go home for a year. They could reapply. They could reapply twice for a total time of 6 years. But in between each 2- year time period working in the United States, they would have to return to their home country for a year, in order to try to prevent the situation in which they put down a stake in the United States and believe after a period of time they are entitled to stay here, thus raising the same kind of problem we have had in the past where a group of people come here and then do not want to go home, and somehow America doesn't have the will to enforce its law, in this case to require them to go home. That is why the program was set up the way it was. The concept here is if you relieve that pressure for employees, by having an opportunity for people to temporarily come here as the guests of the United States to work here under our conditions and our rules and then go back home, that will both serve our needs and serve their needs. That is the rationale for a temporary worker program. Now, why wouldn't you want to immigrate all of the people here as legal permanent residents? Well, obviously you are talking about millions of people, as the Senator from North Dakota said, in addition to the quotas we currently have. But, secondly, you need to have some ability to adjust. Let me mention the construction industry in my home State of Arizona as a good example of this. Two or three years ago we could not find enough workers to build homes in Arizona. The reality is, the Home Builders Association was candid in saying this, that if they had to guess, they would guess about half of the people building homes in Arizona were illegal immigrants. They had the legal papers, but we all know that is a joke. That is why we have to have a workable employee verification system, which we have put into the bill we are now debating. But the law currently is not good in terms of verifying employment documents. So you have a construction boom that is occurring in Las Vegas, Phoenix, Tucson, and other cities in the Southwest, and we need workers desperately. About 6, 8 months ago, the market began to taper off, and today we are in a situation where we have an excess of workers for the jobs available. The market has not tanked completely, by any means, but there is clearly a downturn in the housing construction industry in Arizona. So we do not need nearly as many workers now. Now that is depressing wages. The Senator from North Dakota is correct in one respect here with regard to wages. If you have a greater supply of labor than you have jobs available, you will depress wages. That indeed has happened in some sectors of our economy, particularly in some low-skilled areas. But the reason is because you have a glut of workers. The workers who came here illegally find it very difficult to go home. Moreover, they will undercut the wages of American workers or depress those wages. They are here and they are depressing wages. Wouldn't it be better to have a temporary worker program, where everyone is working within the law so when we need the temporary workers to build houses, for example, we issue more of these 2-year visas, but when we don't need them, we stop issuing the visas? When those visas run out, we wait until we need more workers. Then we issue more visas. That is the way the temporary worker program is designed to work. The alternative some people want--well, there are two alternatives. Either you allow the illegal situation to continue, which nobody wants--that is not a solution--or you adjust all of the quotas Senator Dorgan was talking about and let everyone come in as a permanent worker. That totally upsets our immigration quotas, for one thing. Secondly, you do not have the flexibility of moving up or down depending upon what the labor requirements or demands are. Again, in housing, if we had let all of these workers come in as green card holders, as legal permanent residents, they are here and there is no ability to send them back where they came from. They have a legal right to be in the United States for the rest of their lives. That is why you do not want to try to deal with temporary, especially low-skilled worker categories, with extra green cards. That is why you have a temporary worker program, in addition to relieving the magnet for illegal employment. Let me make a couple of other points here. The Senator from North Dakota says even the temporary worker program will depress wages. Well, there are two reasons why that is not true. The first is it is adjusted based on the labor needs. So at least ideally you never have a glut of workers, an oversupply of workers compared to the demand. The market works to set the wages at the proper rate. If you have green cards, for example, you can easily get a depression in wages, because you never can adjust that downward once the workers are here. Secondly, in order to get a temporary worker under this bill, you have to advertise at a wage which, in effect, is the average wage that is being paid in that area in that industry. Now, you have to do that to be fair to American workers, because otherwise what would happen is you say: Hey, I have got a construction job; it pays $8 an hour. Well, there are not very many Americans who would do heavy construction for $8 an hour, so nobody shows up. Then the employer goes to the Department of Labor and says: Well, gee, I could not get an American to take the job. Let me have some temporary workers. You cannot do that. If it is a carpenter--I am not sure what the wage is; maybe it is $18 an hour, maybe more. If he says I need 10 carpenters, he has got to say the wage I am paying is $18 an hour. Then if American workers are out of work and want to work for that wage, that is the average wage in that industry in that place, and they can come in and work with the knowledge that they are not receiving a depressed wage. If you have Americans willing to do the work, then there is no temporary worker. But if there is not an American to come do the work, the temporary worker comes in at the same wage that is paid to everyone else, so there is no wage depression under this temporary worker program. I think that argument is not an argument to eliminate this program. Finally, the Senator from North Dakota began his argument with something that is absolutely true. He made the point that we cannot allow everybody in the world to come to a better place, to come to the United States. That is absolutely true. We have got a big heart, but we have only got so much room. As a result, we have an immigration system that tries to establish quotas, and it establishes areas of immigration in which we will allow people to come here: countries from which they can come; some family immigration; some work visas; asylum, and all of the other categories we have. Then we draw a limit. We say that is it, except for certain categories, except for the nuclear family. A temporary worker program allows us to remain true to that general immigration philosophy we have always had in this country. That is to say, when we need more workers temporarily, we will bring them into the country, but when we no longer need them here, they return home. That way you are not, as the Senator from North Dakota said, opening your doors to all of the people in the world who want to come here. I agree with him; we cannot do that. But when we have a need that is not being satisfied and we have advertised the job for the same wage Americans are earning, and we cannot get an American to do that work, then it is appropriate to say to a foreign national: If you want to come here and work under our conditions, abiding by our rules, we will allow you to do that and, of course, when you are done, you will return home. That is the essence of the temporary worker program here. It is a good program. I hope my colleagues will appreciate that there are strong reasons for including it in this legislation, as I said, starting with the proposition that it will eliminate the magnet for illegal employment that exists today. I urge my colleagues to oppose the amendment of the Senator from North Dakota. I yield the floor.

Mr. KYL

Mr. KYL. Mr. President, let me comment a little bit on the same points Senator Kennedy made. This is an extraordinarily important piece of legislation. The American people--certainly our colleagues in the Senate--need plenty of time to digest and debate and discuss it. It is certainly nobody's intention that this would be rushed. That is why the majority leader made comments earlier this evening that assures all of the Members of this body that not only will we have this week to debate and perhaps amend the legislation, but that upon our return from the Memorial Day recess, we will take up the bill again and, as he indicated, would have another week, if we needed it, to continue work on the legislation. While it is true the legislation did not go through the committee process, I assure my colleagues it was never anyone's intent that there not be the fullest opportunity for discussion and debate. That will in fact occur. We are now on the bill formally. It is also my understanding that technical changes from the draft legislation will be completed tonight and the first amendment will be the amendment of that substitute version. If the distinguished chairman of the committee has any other point on that, perhaps he could make it. But that would then put before the body the exact language we would begin the debate and discussion on. I have about another 5 minutes of comments unless Senator Kennedy wants to say anything else. It would be in order to thank Secretary Chertoff and Secretary Gutierrez for their work in helping us in the Senate to craft this bipartisan consensus legislation. So much of the enforcement of the legislation will depend upon action by the administration. They had to help us ensure this was a bill that could be enforced in the future. I know during the last election so many of my constituents asked the question: Why should we create a new law for you to enforce when the current law is not being enforced? That is a good question. So one of the things we tried to do in drafting this legislation was to put together a bill that actually would and could be enforced, and the administration has helped us by providing expertise in what it would take for Homeland Security and other departments to actually provide the enforcement the American people so desperately want. There was general agreement that return to the rule of law was the central component of any bipartisan compromise, starting with securing the border, working right up to more enforcement in the interior of the country, and especially at the workplace, to make sure nobody in the future would be hired unless it could be established they were entitled to be hired. That is one of the critical changes in this legislation from the previous law which was not enforceable and, as virtually everybody who knows this subject appreciates, the law is not being assiduously enforced particularly at the workplace. So that is a critical component of what we have talked about doing. There are a great many other things that will be discussed as we proceed with the legislation. Referring back to my recent campaign, the voters in my State of Arizona, which is being overrun by illegal immigration, had one message loudly and clearly: Do something about this problem of illegal immigration. So I was returned to the Senate by my constituents with an obligation to do my best to get in and do as much as we could to secure the border, return to the rule of law, ensure that only people who are eligible to work here are permitted to do so, deal with the people who are here illegally in a humane and just way, and try to set up a temporary worker program for temporary workers only, rather than to recreate the problem we have today with a great deal of foreign-born workforce that isn't legal in the United States and is now demanding to become legal. In order to get engaged in that process and do something about it, it was important to sit down with people of the other side as well as the administration. Of all the criticism I have received for being one of the sponsors of this legislation, the one I don't quite understand from my constituents is, why would I sit down with Senator Kennedy? What I have tried to tell them is, I understand your anxiety about sitting down with Senator Kennedy, but on the other hand, in a body of 100 Senators who are supposed to try to work together to find solutions to problems, do you not at least acknowledge that every now and then you have to sit down and talk to each other, even when you are on the other side of the aisle? Senator Kennedy right now happens to be in the majority, in addition. As a result, it is, in my position, important to sit down, articulate what the people of Arizona have told me they would like in any immigration reform, and do my best to try to see that those principles, as much as possible, are included in this legislation. If I didn't sit down with Senator Kennedy, I doubt he would include very much of what I wanted in the legislation he could otherwise draft. So what we have done, in a bipartisan fashion, is to get Senators on both sides of the aisle, with many different views, agreeing to try to put together something that can pass this body, pass the House of Representatives, and be signed into law. I know every one of us will stand up here and say: This is not the bill I would have drafted if I were king of the world or queen of the world. There is a lot in this bill I don't like very much. But I know that in order to get something, you have to give something. At the end of the day, in order to do something about the problem of illegal immigration that is hurting my own State of Arizona in ways I can't begin to describe, we have to try our very best to work together to get something that will actually pass the Senate. That means an agreement with the administration, with Democrats, and with Republicans. I hope as my colleagues consider what we have put together, they will acknowledge you have to start somewhere, but that if there are amendments that go to the heart of this agreement and that break the agreement apart in substantial ways--not ways at the periphery or tangentially but that go to the guts of this agreement--that they can fully expect it will no longer enjoy the support of those of us who worked hard to put the agreement together. If you want to try to kill this legislation, go right to the heart of it and change any of the major pieces of it, you will find it will quickly lose support, including mine. We fully expect Members to have a lot of amendments that deal with different aspects of the bill. There are a million different details, and that is all fine. But if we go to the guts of the legislation and that basic agreement is destroyed, then I think we will see support for it evaporate quickly, including mine. I am looking forward to working with my colleagues and debating and discussing this legislation. But at the end of the day, I conclude there is no option of doing nothing, that our only option is to do something. That means sitting down, working together, and trying to get a good bill passed. I appreciate the spirit in which all of my colleagues who have joined in this effort have worked toward this end.

Mr. KYL

Mr. KYL. Mr. President, I have one last comment regarding the ``whopper,'' as the Senator put it. It is absolutely true that Republicans were in charge when we passed the lower tax rates for Americans to help Americans out. We had 55 votes at the top amount; to make tax policy permanent, we needed 60. We could not get enough of our Democratic friends--not even six or seven of them--to join us to make the tax policy permanent; we could not get 60 votes so we could eliminate that irrational system. So it wasn't a ``whopper'' that I told; it was the truth. Republicans were in charge. If we had about seven more votes, we could have had a rational tax system rather than the one we have today.

Mr. KYL. Mr. President, let me take a few moments to discuss what this motion to instruct conferees embodies. The subject is the death tax, the tax which requires millions of American families and small businesses to spend millions of dollars preparing against the possibility that they will have to pay very large amounts of money to the Federal Government upon the death of the person in the family who is responsible for that small business or who owns the property. For a long time, there has been a bipartisan understanding that this death tax is not a good thing. The Gallup poll and other polls consistently show that at least 60 percent of the American people think it is an unfair tax, that we should not be taking money from people at the time of death. They have already paid income taxes on it, frequently capital gains and dividends taxes, and yet again they are taxed at the time of death on an amount of asset that remains. But just as pernicious as that tax is the planning, and the expensive planning, that has to go into trying to prepare for the possibility that the tax will be imposed--if you have a very large estate, frankly, trying to avoid having to pay a large amount of taxes into that estate because that frequently means you have to sell the small business, the farm, in order to liquidate assets to pay the tax. This is not a theoretical proposition. A good friend of mine from Phoenix, AZ, who was one of the great contributors to eleemosynary concerns in Phoenix--especially the Girls and Boys Clubs; he has one named after him--moved from New York City to Phoenix and with another person started a printing company. Years later, they had over 200 employees. They were a great printing company in Phoenix. When Jerry died, his family could not afford the death tax liability because most of the money in the business was in the equipment. In that business, you have to constantly get new equipment to stay up with your competitors. They took out a small amount each year in salaries, but the rest of it was tied up in the business. So he did not have the liquidity to pay the substantial death tax that would be required. The business was sold. Interestingly enough, as to the argument that we have a death tax to prevent the concentration of wealth, it was sold to a big corporation. By the way, corporations do not pay death taxes. Also, this corporation has not contributed, as far as I know, a nickel to any of the great charity causes in Phoenix that Jerry contributed to every single year. It was really a shame when he died. More than the head of that household passed away at that time. What we are trying to do is to permanently reform the death tax. Now, in the past we have tried to repeal it. What this motion to instruct conferees does is embodies concepts that have been agreed to by both Democrats and Republicans to reform the death tax so that most people do not have to worry about it, they just do not have to go to the lawyers and the accountants, the estate planners, they do not have to pay money for insurance to get around it because they know the way we have constructed it, they are not going to have to pay it. It is still there for the very large estates, but most people would be exempted from it. Specifically, the motion to instruct conferees would call on Senate conferees to insist that the final budget resolution provide for a reduction in revenues relative to the baseline sufficient to allow Congress to approve meaningful death tax relief, defined as follows: A top marginal rate of no higher than 35 percent with a lower rate for smaller estates, and an exemption level that is sufficient to shield smaller estates from having to file a death tax return. While the motion does not specify that amount, an exemption of $5 million per estate indexed for inflation is what is contemplated. As I said, I think repeal of the death tax is the best option. I have been trying to find some agreement on reform since we haven't been able to get the votes for repeal. It is a nightmare for families now, and that is why I want to see if we can find a bipartisan way to do that this year. America's small business owners, farmers, and ranchers deserve this kind of certainty now. I might say, this might be a bonanza for insurance companies, but I think they have plenty of other ways to offer products to us. There is plenty to insure against. They can still make a very comfortable living without putting us through the burden to invest without insurance to avoid paying much of the death tax. This concept, by the way, would be sufficient to accommodate the death tax reform similar to the proposal introduced by the senior Senator from Louisiana last year and which was endorsed by the junior Senator from Arkansas on his Web site. I might say I have worked with other Members of the majority party now, and I thought last year we were very close to having an agreement that might have been achieved in a bipartisan way. In particular, the Landrieu bill provides for a $5 million exemption indexed for inflation, which is great, a family business carve-out, a top rate of 35 percent, as I mentioned, and it recaptures the benefit of the $5 million exemption for estates valued at over $100 million. The motion to instruct does not specify any revenue offsets. We don't believe extensions of existing law should require that. Indeed, this would be a retreat from existing tax law. It would be less generous to taxpayers, and none of our provisions last year contemplated an offset. We don't offset extensions of existing mandatory spending, and we don't think this extension of tax relief should be offset either. Some have said we should freeze the 2009 law in place. That provides for a $3.5 million exemption and a gift tax exemption that would be separate, a 45-percent rate, but a 45-percent rate means the Government takes almost half your property above the exempted amount, and that is frankly not acceptable to most small businesses or farmers. Forty-five percent is a rate most Americans deem to be unfair. So what we would suggest is a proposal that would be able to accommodate no higher than the 35-percent rate. Now, a couple of final points here. We all know budget resolutions don't dictate policy of the Finance Committee. It would be my intention to work with the Senators whom I have mentioned here, in addition to Senator Lincoln, who worked very hard on this the last couple of years, and others, to craft an estate tax reform proposal that would provide for this $5 million exempted amount indexed for inflation, a lower rate for the smallest estates, and it provides for a top marginal death tax that is no higher than 35 percent. I would love to see it lower than that. The Joint Tax Committee tells us anecdotally that a rate any higher than 35 percent would drive families into aggressive tax planning to avoid the tax. That is what we are trying to avoid here, the extra expense of planning. I might add that the last study done that I know of determined that the amount spent on trying to avoid the payment of the death tax each year is almost exactly the same amount that is collected by the U.S. Government. So in effect, we have a double tax here. People are paying maybe $30 billion, roughly, in these taxes to the Government, and spending another $30 billion to try to avoid paying the tax. That is $30 billion that could be going to much more productive activities than paying lawyers, accountants, and insurance folks. I conclude by saying it is important to provide the lowest rate for the smallest estates, because we don't want to have to have them go to the trouble of trying to protect their assets against the payment of the tax. We could accommodate that through a high exempted amount and a very low rate. That means they simply wouldn't have the incentive to go pay the money to the accountants and the lawyers. There is much more I could say about this. Right now I know the distinguished chairman of the committee might have something to say. I am happy to reserve the balance of the time on this side, subject to the ranking member's concurrence with that.

Mr. KYL. Mr. President, let me make three quick comments and then I would like the ranking member to respond as well. It is true the budget already provides for some form of death tax relief. The problem is that form is a 45-percent rate--45 percent. Almost half of your estate would be paid to the Federal Government. I want a show of hands for everybody who believes that is fair. Let the Record show one person in the Chamber raised his hand. Second, the idea of the chart which the chairman pointed out showing the irrational treatment of the death tax, I totally agree with that. It is irrational, and there is a reason why it is irrational: because Democrats would not agree to cause the death tax relief to be permanent. All they would do is agree to the budget window, which at the time was a 10-year budget window. After that, it is done. That is why you have this crazy system where we have a declining rate. In the year 2010 it goes away, and in the year 2011 it comes right back again. We are all for making it rational by making it permanent. All in favor of that, raise your hands. The problem is, we can't get 60 Senators to vote for that, which is why we are stuck with this irrational system. Finally, the most irrational thing of all, the idea--and this is an odd concept if you stop to think about it. The Government takes citizens' money in taxes, and then if we decide to let people keep more of their hard-earned money, they have to pay for that. We decide you should be able to keep more of your money because you know how to spend it better than Washington, but this odd concept on the other side of the aisle is: We can't let people keep more of their own money unless they ``pay for it.'' Pay who for it? Pay Washington for it. In effect, we are going to raise your taxes in some other way to make up for the relief in taxes we are providing here. That is what the American people are stuck with under the Democratic budget's idea of a good time, of what is fair. That is not good policy, and it is not fair. When we decide it is good policy to let the American people keep more of their hard-earned money, they shouldn't have to ``pay Washington an equivalent amount in some other kind of taxes.'' We wish to instruct conferees to pass a budget that can accommodate real relief from the death tax. I think the way we have laid this out is the best way to provide that kind of relief, as evidenced by the fact that several of our colleagues on the other side of the aisle have joined with us in proposing precisely that.

Mr. KYL. Thank you, Mr. President. I compliment both the chairman of the Budget Committee and the ranking member, who both have to have the patience of Job to work with all of their colleagues--all of them who have a little different idea of how things should proceed. I appreciate the comments. motion to instruct conferees Mr. President, I send a motion to instruct conferees to the desk and ask for its consideration.

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to be joined by Senator McCain to introduce the Las Cienegas Enhancement and Saguaro National Park Boundary Adjustment Act of 2007. This legislation directs a land exchange between the Bureau of Land Management, BLM, and the Las Cienegas Conservation, LLC in southeastern Arizona. A similar bill was introduced last year, and it passed the House of Representatives. Unfortunately, the Senate was unable to pass it before the session ended. We can turn this disappointment into a success. The bill we introduce today adds to the exchange a highly sought after private parcel, the ``Bloom Property.'' The Bloom Property would be added to Saguaro National Park. State and local officials, conservationists, and other stakeholders have worked together to include the Bloom Property in this bill and to structure an exchange that is fair and in the public interest. Let me explain the details of the exchange. The land to be transferred out of Federal ownership, approximately 1,280 acres, is referred to as the ``Sahuarita property.'' This property is BLM-managed land south of Tucson near Corona de Tucson. The land is low-lying Sonoran desert and has been identified for disposal by the BLM through its land-use planning process. The private land to be brought into Federal ownership consists of two parcels. The first parcel is approximately 2,392 acres of land referred to as the ``Empirita-Simonson property.'' This property lies north of the Las Cienegas National Conservation Area managed by the BLM. The Empirita-Simonson property lies within the ``Sonoita Valley Acquisition Planning District'' established by Public Law 106-538, which designated the Las Cienegas National Conservation Area. The act directed the Department of the Interior to acquire lands from willing sellers within the planning district for inclusion within the conservation area. The idea was to further protect lands with important resource values for which the national conservation area was designated. The second parcel, the Bloom Property, is approximately 160 acres of land that was identified for inclusion in the Saguaro National Park during a boundary study conducted by the National Park Service in 1993. In 1994, using the data from the study, Congress enacted legislation expanding the park and changed Saguaro's designation from monument to park. At that time, the Bloom Property did not have a willing seller. I am pleased to say circumstances have changed, and we are able to include it in this exchange. The Bloom Property, which lies just south of the Sweetwater Trail in Saguaro Park West, is a prime example of Sonoran desert important to maintain corridors for wildlife like the mountain lion. Although this bill is centered on the land exchange I just described, it also accomplishes two other important objectives: addressing water withdrawals at Cienegas Creek and providing road access to a popular recreation destination, the Whetstone Mountains controlled by the Forest Service. Let's talk about water. Arizonans understand that protecting our water supply is crucial to the State's future. For this reason, we continually seek ways to promote responsible use of our limited water supply. This bill promotes responsible use. There is a prior claim to a well site on the private land that will be exchanged. That prior claim would allow a developer to withdraw 1,600 acre-feet of water a year. Pima County and the community at large are concerned about the future of Cienegas Creek and the entire riparian area if these water withdrawals occur. To address this concern, the land exchange is conditioned on Las Cienegas Conservation, LLC conveying the well site to Pima County and relinquishing those water rights it controls. The net result is a water savings of 1,050 acre-feet per year. This is a significant benefit to this riparian area. Overall, this bill allows us to accomplish important environmental and conservation objectives while managing our development. It is a bill with broad support that includes Pima County, the city of Tucson, and many others. I urge my colleagues to work with me to approve this legislation at the earliest possible date.

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to be joined by Senator McCain to introduce the Las Cienegas Enhancement and Saguaro National Park Boundary Adjustment Act of 2007. This legislation directs a land exchange between the Bureau of Land Management, BLM, and the Las Cienegas Conservation, LLC in southeastern Arizona. A similar bill was introduced last year, and it passed the House of Representatives. Unfortunately, the Senate was unable to pass it before the session ended. We can turn this disappointment into a success. The bill we introduce today adds to the exchange a highly sought after private parcel, the ``Bloom Property.'' The Bloom Property would be added to Saguaro National Park. State and local officials, conservationists, and other stakeholders have worked together to include the Bloom Property in this bill and to structure an exchange that is fair and in the public interest. Let me explain the details of the exchange. The land to be transferred out of Federal ownership, approximately 1,280 acres, is referred to as the ``Sahuarita property.'' This property is BLM-managed land south of Tucson near Corona de Tucson. The land is low-lying Sonoran desert and has been identified for disposal by the BLM through its land-use planning process. The private land to be brought into Federal ownership consists of two parcels. The first parcel is approximately 2,392 acres of land referred to as the ``Empirita-Simonson property.'' This property lies north of the Las Cienegas National Conservation Area managed by the BLM. The Empirita-Simonson property lies within the ``Sonoita Valley Acquisition Planning District'' established by Public Law 106-538, which designated the Las Cienegas National Conservation Area. The act directed the Department of the Interior to acquire lands from willing sellers within the planning district for inclusion within the conservation area. The idea was to further protect lands with important resource values for which the national conservation area was designated. The second parcel, the Bloom Property, is approximately 160 acres of land that was identified for inclusion in the Saguaro National Park during a boundary study conducted by the National Park Service in 1993. In 1994, using the data from the study, Congress enacted legislation expanding the park and changed Saguaro's designation from monument to park. At that time, the Bloom Property did not have a willing seller. I am pleased to say circumstances have changed, and we are able to include it in this exchange. The Bloom Property, which lies just south of the Sweetwater Trail in Saguaro Park West, is a prime example of Sonoran desert important to maintain corridors for wildlife like the mountain lion. Although this bill is centered on the land exchange I just described, it also accomplishes two other important objectives: addressing water withdrawals at Cienegas Creek and providing road access to a popular recreation destination, the Whetstone Mountains controlled by the Forest Service. Let's talk about water. Arizonans understand that protecting our water supply is crucial to the State's future. For this reason, we continually seek ways to promote responsible use of our limited water supply. This bill promotes responsible use. There is a prior claim to a well site on the private land that will be exchanged. That prior claim would allow a developer to withdraw 1,600 acre-feet of water a year. Pima County and the community at large are concerned about the future of Cienegas Creek and the entire riparian area if these water withdrawals occur. To address this concern, the land exchange is conditioned on Las Cienegas Conservation, LLC conveying the well site to Pima County and relinquishing those water rights it controls. The net result is a water savings of 1,050 acre-feet per year. This is a significant benefit to this riparian area. Overall, this bill allows us to accomplish important environmental and conservation objectives while managing our development. It is a bill with broad support that includes Pima County, the city of Tucson, and many others. I urge my colleagues to work with me to approve this legislation at the earliest possible date.

Mr. KYL

Mr. KYL. Mr. President, I think my colleague from Texas, Mr. Cornyn, can certainly answer that question, but first allow me to make a few additional comments. News reports suggest that increased gas prices can be linked to production shortages at a time of increased demand. More directly, the problem can be traced to a continuing lack of refining capacity and unexpected outages at the Nation's oil refineries. A series of recent outages, largely for maintenance, have reduced the supply of domestic gasoline. The price of a gallon of oil is still $10 below last year when prices spiked: however, demand has increased 2.3 percent from the same period last year. Existing refineries are unable to meet the ever-rising demand for gasoline. The system also cannot handle unexpected outages, for example, the recent fire in Texas. The U.S. saw the strain on refinery capacity during Katrina when prices nationwide went up 45 cents in 1 week due to refinery damage in the region. Because of high costs, regulatory redtape, and public opposition, refiners haven't built a new facility since 1976--30 years ago. The system is under such strain that any outages or disruptions are quickly felt in the market in the form of increased prices. The lack of domestic refining capacity also increases our reliance on foreign sources of refined gasoline. America now imports about a million barrels of gasoline every day--that means that about one of every ten gallons of gas Americans get at the pump is refined in a foreign country. Regulations requiring a variety of new regional gasoline blends also increase the price and make it difficult to address shortages by moving supply from one area of the country to another. Last year, Republicans saw the strain on the existing system, and we tried to do something about it. We passed legislation that opened new areas in the deep waters off the Gulf of Mexico to oil and gas exploration to bring more supply on line. Republicans recognize that it is in our national security interest to increase domestic supply, including ANWR, and reduce our reliance on foreign oil. I also introduced legislation to ensure that oil companies pay their fair share for the oil and gas they produce from public lands. And I introduced legislation to remove the 54 cent import tariff on ethanol, to lower the price consumers pay at the pump. Republicans also tried to address the lack of domestic refinery capacity. We introduced legislation to streamline permitting to build new refineries, and we were blocked by Democrats. Republicans introduced legislation to incentivize building new refineries, and we were blocked by Democrats. Republicans introduced legislation to reduce the number of boutique blends of gasoline, and we were blocked by Democrats. Now the Democrats have to do more than block legislation--they have to solve problems. The Democrats will talk about price gouging legislation and say that is the solution. The FTC looked at this last year after Hurricane Katrina and did not find evidence of price gouging. More hearings will not reduce the price of a gallon of gasoline since there are already laws in place to prosecute price gouging. The Democrats will talk about conservation and higher CAFE as well. We all support conservation as a long-term solution, but we also need to take action to address our near-term problems and reduce our reliance on foreign oil. We need to increase domestic production and increase our refining capacity. The theme that I think we see developing here is that the Democrats campaign rhetoric is catching up with them, and now they must prove they can govern and solve people's problems. They are 0 for 7 in '07 with their agenda. Gas prices are only the most recent example of failure. We still don't have a comprehensive energy policy. We still haven't taken steps to improve health care. Democrats campaigned on big ideas, but they are playing small ball. The Washington Post wrote in an article this weekend entitled ``Democrats Momentum is Stalling,'' which stated that: ``Not a single priority on the Democrats' agenda has been enacted, and some in the party are growing nervous that the `do nothing' tag they slapped on Republicans last year could come back to haunt them.'' That was the Washington Post, May 5, 2007. I hope the Democrats will work with us for real solutions to people's problems, including reducing gas prices.

Mr. KYL. Mr. President, my two Texas colleagues and I would like to talk about the Democratic response to high gas prices. Given the fact I believe we have about 12 minutes, we may just have a colloquy instead of each giving presentations. Let me begin by making a couple of points. The press reported yesterday that U.S. average retail gas prices rose to an overall alltime high, breaking $3 a gallon. I know I paid $3.04, and this is up just about 20 cents a gallon over the last 2 weeks. Every family feels this pinch. Now, Democrats understand this, and that is why last year--and I know because I was going through a campaign at the time--they attempted to capitalize on a similar spike in gas prices. They held press conferences all across the country pledging to lower gasoline prices. Let me read one of the headlines that resulted from this publicity blitz from the New York Times. It says: ``Democrats Eager to Exploit Anger Over Gas Prices.'' This is an April 21, 2006, article, which reported, and I am quoting: The recommendations of a memorandum sent by Democrat campaign officials to Democratic candidates include holding a campaign event at a gas station where you call for a real commitment to bringing down gas prices. I guess you can say: That was then, this is now. Now that the Democrats are in charge, the question is, What have they done about the problem they were all too quick to exploit back during the campaign? As far as I can tell, the answer to that question is, exactly nothing. In fact, they tried to and to some extent did prevent Republicans, when we were in control last year, from initiating a series of reforms that would have actually done something about the problem and might have prevented some of what we see now. We were finally able to get legislation passed to open the deep waters off the Gulf of Mexico for oil and gas exploration to bring more supply on line--that was a very positive development--but when we tried to do other things, we were stopped by the Democrats. I think it is important for us to challenge our colleagues on the other side of the aisle who were very interested in the American public having to pay high gas prices back during the campaign last year. Well, you are in charge. What have you done about it? The answer, so far, appears to me to be, exactly nothing. Let me say to my colleague from Texas that I know a lot of our problem is because of regulations that inhibit oil refineries from improving their capability to refine more oil and gas or building new refineries. It is very sensitive to what happens at the refineries. My recollection is that there was a recent fire at one of the Texas refineries. Is it the case that we could do some things--and tried last year to do some things--to make it easier from a regulatory standpoint for oil refineries to increase their capacity? And isn't this one of the ways Republicans have tried to ensure we have a larger supply, which would, therefore, reduce the price of gasoline to our consumers?

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to join with Senator McCain in introducing the Arizona National Scenic Trail Act. This bill would amend the National Trails System Act to designate the Arizona Trail as a national scenic trail. In 1968, Congress established the National Trails System to promote the preservation of historical resources and outdoor areas. National scenic and historic trails may be designated only by an act of Congress. This is not a new proposal. Senator McCain and I have been working on legislation relating to the Arizona Trail since the 108th Congress. Past legislation focused on conducting a feasibility study to determine whether the trail is physically possible and financially feasible. A feasibility study is generally the first step toward national trail designation, but such legislation was not successfully enacted. In the meantime the Arizona Trail Association and its State and Federal partners have continued to develop the trail with national designation in mind. Senator McCain and I believe a feasibility study is not necessary. Let me explain: the Arizona Trail already exists. It extends over 800 continuous miles and is over 90 percent complete--clearly, it is physically possible. It is also financially feasible, as this trail does not require a single land acquisition, and commitments already exist to manage the trail and complete the remaining few miles of trail construction. This trail is ready for designation. In fact, the Arizona Trail is farther along than many national scenic trails that have already been designated by Congress. The Arizona Trail is highly deserving of national designation. The trail is a roller coaster ride through the wide range of ecological diversity in the State. The trail corridor begins at the Coronado National Memorial on the U.S.-Mexico border and winds some 800 miles, ending on the Bureau of Land Management's Arizona Strip District on the Utah border. Between these two points, it invites recreationists to explore the State's most renowned mountains, canyons, deserts and forests, including the Grand Canyon and the Sonora Desert. This trail is unique in that it maximizes the incorporation of already existing public trails into one continuous trail to showcase some of the most spectacular scenery in the West. Over 16 Federal, State and local agencies, as well as numerous community and business organizations and countless volunteers, have cooperated to develop and sustain the trail as a recreational resource for future generations. Designating the Arizona Trail as a national scenic tail will help streamline its management, boost tourism and recreation, and preserve a magnificent natural, cultural, and historical experience of the American West. I urge my colleagues to enact this legislation at the earliest possible date.

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to join with Senator McCain in introducing the Arizona National Scenic Trail Act. This bill would amend the National Trails System Act to designate the Arizona Trail as a national scenic trail. In 1968, Congress established the National Trails System to promote the preservation of historical resources and outdoor areas. National scenic and historic trails may be designated only by an act of Congress. This is not a new proposal. Senator McCain and I have been working on legislation relating to the Arizona Trail since the 108th Congress. Past legislation focused on conducting a feasibility study to determine whether the trail is physically possible and financially feasible. A feasibility study is generally the first step toward national trail designation, but such legislation was not successfully enacted. In the meantime the Arizona Trail Association and its State and Federal partners have continued to develop the trail with national designation in mind. Senator McCain and I believe a feasibility study is not necessary. Let me explain: the Arizona Trail already exists. It extends over 800 continuous miles and is over 90 percent complete--clearly, it is physically possible. It is also financially feasible, as this trail does not require a single land acquisition, and commitments already exist to manage the trail and complete the remaining few miles of trail construction. This trail is ready for designation. In fact, the Arizona Trail is farther along than many national scenic trails that have already been designated by Congress. The Arizona Trail is highly deserving of national designation. The trail is a roller coaster ride through the wide range of ecological diversity in the State. The trail corridor begins at the Coronado National Memorial on the U.S.-Mexico border and winds some 800 miles, ending on the Bureau of Land Management's Arizona Strip District on the Utah border. Between these two points, it invites recreationists to explore the State's most renowned mountains, canyons, deserts and forests, including the Grand Canyon and the Sonora Desert. This trail is unique in that it maximizes the incorporation of already existing public trails into one continuous trail to showcase some of the most spectacular scenery in the West. Over 16 Federal, State and local agencies, as well as numerous community and business organizations and countless volunteers, have cooperated to develop and sustain the trail as a recreational resource for future generations. Designating the Arizona Trail as a national scenic tail will help streamline its management, boost tourism and recreation, and preserve a magnificent natural, cultural, and historical experience of the American West. I urge my colleagues to enact this legislation at the earliest possible date.

Mr. KYL

Mr. KYL. Mr. President, today I am introducing legislation to make permanent a provision of our tax that was enacted in 2006 as part of the Increase Prevention and Reconciliation Act, but expires at the end of 2008. The controlled-foreign corporation (CFC) look-through provision allows U.S.-based multinational companies to better compete with foreign companies by enabling them to be more flexible in their overseas operations. In this age of global competition, I hope my colleagues will agree that the United States needs to maintain a business climate that encourages U.S.-based companies to grow and succeed. The CFC look-through provision is an important part of that effort. For several years now, I have been encouraging my colleagues to recognize that our tax system puts many of our best U.S. employers at a competitive disadvantage as compared to foreign-based companies. Many foreign countries only impose tax on income earned within their borders; the United States taxes U.S. companies on their worldwide income. The general rule is that income from a foreign subsidiary is not taxed by the United States until those earnings are brought back to the U.S. parent, usually in the form of a dividend. Subpart F of the Internal Revenue Code sets forth a number of exceptions to this general rule, imposing current U.S. tax, instead of allowing deferral of taxation, on subsidiary earnings generally when that income is passive in nature. One exception to the general deferral rule imposes tax on the U.S. parent when a foreign-based subsidiary receives dividends, interest, rents or royalties from another subsidiary that is located in a different country. If the two subsidiaries are in the same country, however, U.S. tax is generally deferred until the income is repatriated to the U.S. parent. In 2005, I introduced legislation to extend this ``same-country'' treatment, the CFC look-through provision, to payments between related foreign subsidiaries that are located in different countries, and I was pleased that the 2006 tax reconciliation bill included this provision. Today, I am introducing legislation to make the CFC look-through permanent. Today's global economy is significantly different from the environment that existed when the subpart F rules were first introduced in 1962. As the global economy has changed, the traditional model for operating a global business has changed as well. In today's world, it makes no sense to impose a tax penalty when a company wants to fund the operations of a subsidiary in one country from the active business earnings of a subsidiary in another country. For example, to operate efficiently, a U.S.-based manufacturer could establish specialized manufacturing sites, distribution hubs, and service centers. As a result, multiple related-party entities may be required to fulfill a specific customer order. Before the CFC look-through was enacted last year, U.S. tax law inappropriately increased the cost for these foreign subsidiaries to serve their customers in a very competitive business environment by imposing current tax on these related-party payments, even though the income continues to be used in active operations in the foreign market. In another example, financial institutions have established foreign subsidiaries with headquarters in a financial center, such as London, and branches in multiple countries in the same geographic region. This permits an efficient ``hub and spoke'' form of regional operation; however, this efficient business model made it difficult for the same- country exception to be met for payments of dividends and interest. Before the CFC look-through was enacted, American companies were at a real and significant competitive disadvantage as compared to foreign- based companies. U.S.-based multinationals were penalized for responding to market or investment opportunities by redeploying active foreign earnings among foreign businesses conducted through multiple subsidiaries. To remove this impediment, Congress amended subpart F to provide a general exception for inter-affiliate payments of dividends, interest, rents or royalties that are generated from an active business. Congress was right to apply look-through treatment to payments of dividends, interest, rents and royalties between subsidiaries. If the underlying earnings would not have been subject to subpart F, the payments should not be subpart F income. Look-through treatment for payments of dividends, interest, rents and royalties should be permitted as long as the payments are made out of active business, non- subpart F, income. Look-through principles are already well developed for other purposes of the Internal Revenue Code. For example, a look- through approach to the characterization of foreign income is used for purposes of calculating foreign tax credits. A consistent application of look-through principles simplifies the interaction between subpart F and the foreign tax credit rules. If we want to keep U.S.-based multinational companies, which employ millions of workers here at home headquartered in the United States, we must modernize our tax rules so that our companies can be competitive around the globe. I urge my colleagues to cosponsor this legislation to make permanent this modest change in the law that will enhance the position of U.S.-based employers trying to succeed in competitive foreign markets.

Mr. KYL

Mr. KYL. Mr. President, today I am introducing legislation to make permanent a provision of our tax that was enacted in 2006 as part of the Increase Prevention and Reconciliation Act, but expires at the end of 2008. The controlled-foreign corporation (CFC) look-through provision allows U.S.-based multinational companies to better compete with foreign companies by enabling them to be more flexible in their overseas operations. In this age of global competition, I hope my colleagues will agree that the United States needs to maintain a business climate that encourages U.S.-based companies to grow and succeed. The CFC look-through provision is an important part of that effort. For several years now, I have been encouraging my colleagues to recognize that our tax system puts many of our best U.S. employers at a competitive disadvantage as compared to foreign-based companies. Many foreign countries only impose tax on income earned within their borders; the United States taxes U.S. companies on their worldwide income. The general rule is that income from a foreign subsidiary is not taxed by the United States until those earnings are brought back to the U.S. parent, usually in the form of a dividend. Subpart F of the Internal Revenue Code sets forth a number of exceptions to this general rule, imposing current U.S. tax, instead of allowing deferral of taxation, on subsidiary earnings generally when that income is passive in nature. One exception to the general deferral rule imposes tax on the U.S. parent when a foreign-based subsidiary receives dividends, interest, rents or royalties from another subsidiary that is located in a different country. If the two subsidiaries are in the same country, however, U.S. tax is generally deferred until the income is repatriated to the U.S. parent. In 2005, I introduced legislation to extend this ``same-country'' treatment, the CFC look-through provision, to payments between related foreign subsidiaries that are located in different countries, and I was pleased that the 2006 tax reconciliation bill included this provision. Today, I am introducing legislation to make the CFC look-through permanent. Today's global economy is significantly different from the environment that existed when the subpart F rules were first introduced in 1962. As the global economy has changed, the traditional model for operating a global business has changed as well. In today's world, it makes no sense to impose a tax penalty when a company wants to fund the operations of a subsidiary in one country from the active business earnings of a subsidiary in another country. For example, to operate efficiently, a U.S.-based manufacturer could establish specialized manufacturing sites, distribution hubs, and service centers. As a result, multiple related-party entities may be required to fulfill a specific customer order. Before the CFC look-through was enacted last year, U.S. tax law inappropriately increased the cost for these foreign subsidiaries to serve their customers in a very competitive business environment by imposing current tax on these related-party payments, even though the income continues to be used in active operations in the foreign market. In another example, financial institutions have established foreign subsidiaries with headquarters in a financial center, such as London, and branches in multiple countries in the same geographic region. This permits an efficient ``hub and spoke'' form of regional operation; however, this efficient business model made it difficult for the same- country exception to be met for payments of dividends and interest. Before the CFC look-through was enacted, American companies were at a real and significant competitive disadvantage as compared to foreign- based companies. U.S.-based multinationals were penalized for responding to market or investment opportunities by redeploying active foreign earnings among foreign businesses conducted through multiple subsidiaries. To remove this impediment, Congress amended subpart F to provide a general exception for inter-affiliate payments of dividends, interest, rents or royalties that are generated from an active business. Congress was right to apply look-through treatment to payments of dividends, interest, rents and royalties between subsidiaries. If the underlying earnings would not have been subject to subpart F, the payments should not be subpart F income. Look-through treatment for payments of dividends, interest, rents and royalties should be permitted as long as the payments are made out of active business, non- subpart F, income. Look-through principles are already well developed for other purposes of the Internal Revenue Code. For example, a look- through approach to the characterization of foreign income is used for purposes of calculating foreign tax credits. A consistent application of look-through principles simplifies the interaction between subpart F and the foreign tax credit rules. If we want to keep U.S.-based multinational companies, which employ millions of workers here at home headquartered in the United States, we must modernize our tax rules so that our companies can be competitive around the globe. I urge my colleagues to cosponsor this legislation to make permanent this modest change in the law that will enhance the position of U.S.-based employers trying to succeed in competitive foreign markets.

Mr. KYL

Mr. KYL. Mr. President, speaking on the same matters addressed by both the majority and minority leader, I remind our colleagues that last week this body passed by a very narrow margin what amounts to a strategy for defeat in Iraq. This course of action was not a surprise. After all, the majority leader had announced to the world that the war was lost. This, of course, was news to people in Iraq, our soldiers in the field included. For example, SGT George Turkovich was quoted in the Las Vegas Review- Journal, saying: We're not losing this war. Unfortunately, politics has taken a huge role in this war affecting our rules of engagement. This is a guerilla war that we're fighting, and they're going to tie our hands. So it does make it a lot harder for us to fight the enemy, but we're not losing this war. This is from a 24-year-old a half a world away. I suspect the announcement that we had lost the war was also a surprise to General Petraeus. Remember, we confirmed him unanimously in this body. We knew what his strategy was. He has testified about it when he came here for his confirmation hearings. In fact, he had written a book about it. Many in this body, I fear, have forgotten what he said. In a Pentagon briefing, last week, when he returned from the theater to brief us on the status of the conflict, he reminded us: [A]s I noted during my confirmation hearing, military action is necessary but not [a] sufficient [condition]. We can provide the Iraqis an opportunity, but they will have to exploit it. Now, I mention this because the majority leader and others have quoted General Petraeus as saying this war can only be won politically, not militarily. What General Petraeus actually said was: ``Military action is necessary but not sufficient.'' He has pointed out over and over that the political compromises and decisions and agreements that need to be made cannot be made in the context of the violence and instability that exists in Iraq today. Let me quote him again. He said: The situation is, in short, exceedingly challenging, though as I will briefly explain, there has been progress in several areas in recent months despite the sensational attacks by al Qaeda, which have, of course, been significant blows to our effort and which cause psychological damage that is typically even greater than their physical damage. He said: And I again note that we are really just getting started with the new effort. He concluded by saying: Success will take continued commitment, perseverance and sacrifice, all to make possible an opportunity for the all- important Iraqi political actions that are the key to long- term solutions to Iraq's many problems. Because we are operating in new areas and challenging elements in those areas, this effort may get harder before it gets easier. He predicted this. He said, likely we will have more casualties as we ramp up our efforts because the fighting will be more intense, and that is a necessary precondition to creating the peace and stability which we hope to achieve by this increase in our activity. So it is mystifying to me those on the other side of the aisle can say we should withdraw now because the war is lost and that the only solution is a political solution, but we are going to pass a bill denying the President and General Petraeus, the State Department, and others much of the economic reconstruction funding we need to achieve the political solution. As the majority leader noted, there is still much to be done in Iraq, other than on the military side of the equation, just getting things up and running there. But this is the bill sent to the President, after months of delay, including 2 weeks when the other body was in recess. There, of course, was no recess for our troops, nor for the Pentagon, which, according to Secretary Gates, in an April 11 letter to Congress, told of the disruptions already taking place. Let me describe what some of those disruptions from this lack of funding are: reducing Army quality-of-life initiatives, including routine upgrade of barracks and other facilities; reducing the repair and maintenance of equipment necessary for deployment training; curtailing the training of Army Guard and Reserve units within the United States, reducing their readiness levels. This may be just the beginning of what is to come if this supplemental funding is further delayed. The National Journal, this morning, reported: ``Democrats have set a Memorial Day deadline to send Bush a reconstructed supplemental.'' Memorial Day--a month away. Why the further delay, when everyone knows the detriment to the training and equipment availability for our troops that has resulted already from the delay in funding? This would be dangerously irresponsible, and the impacts will get only more significant over time. Here are some of the additional results that will occur: reducing the pace of equipment overhaul work at Army depots, which will likely exacerbate the equipment availability problems facing stateside units; curtailing training rotations for Brigade Combat Teams currently scheduled for overseas deployment. Such a step would likely require the further extension of currently deployed forces until their replacements were judged ready for deployment. The self-fulfilling prophecy that would result from the lack of funding is: Our colleagues on the other side of the aisle say we are going to have our troops have to be in theater a longer period of time. Answer: Yes, if you continue to deny the funding, that is exactly what will happen. It will also delay the acceleration of additional modularized Army brigades necessary to expand the Army unit rotational pool and reduce the stress on existing units. This must be what GEN Peter Schoomaker, who is the Army Chief of Staff, meant when he stated, the Army ``will be forced to take increasingly draconian measures which will impact Army readiness and impose hardships on our Soldiers and their families.'' These political delays are keeping much needed lifesaving equipment out of the hands of our troops as well. I supported the amendment offered by the senior Senator from Delaware to add an additional $1.5 billion for the Mine Resistant Ambush Protected vehicles, the so-called MRAPs, which, on top of the $1.83 billion for the services the President requested, would get these vehicles into the field now. As the senior Senator from Delaware said: MRAP could reduce the casualties in vehicles due to IED attack by as much as 80 percent. So why would we further delay the funding to get these vehicles into the hands of our troops? Delaying this all the way to Memorial Day simply means further delays in getting this equipment to the troops. Meanwhile, though we cannot get this funding to the troops, the majority is feverishly at work adding unrequested, nonemergency spending to the bill--all in an apparent effort to try to cobble together enough votes to actually pass the bill, since the underlying surrender date is so unpopular. The bill includes over $21 billion in unrequested items--$21 billion. Among them is title V, which provides $3.5 billion in emergency agricultural assistance--things such as $60 million for salmon fisheries. The bill also includes provisions such as--and by the way, neither the Senate nor the House put these provisions in the bill; they were added in the conference committee--such as an extension of the Pharmacy Plus program in Wisconsin. Now, I am on the Finance Committee, and we did not consider this in the Finance Committee. It is, obviously, not an emergency, but, apparently, there were some folks from Wisconsin who could be brought along in support of the vote if this was added to the bill. These provisions have no place in the bill. They should not return in the final bill after the President has exercised his veto tomorrow and the majority decides to get serious and pass legislation which the President can actually sign. My recommendation to the President, if they are included, is to veto the bill. The military troops should not be forced to carry the pork of Members on their backs. This bill should be vetoed both because of the surrender date and because of the pork. It is time to end wasteful Washington spending, especially when it is being carried on the backs of our troops in an emergency supplemental bill. I saw the items: the spinach farms, the peanut storage, the tropical fish, bailouts for sugar beets. Let these provisions go through the normal channels. If they have merit, their sponsors should be able to carry the day and get them supported. If not, then we should not be supporting them anyway. But let's not slow down the money for the troops just in the name of some special parochial earmark. One thing that has been lost, I would add, in the race to enact this strategy for defeat is the consequences for this premature--this setting a deadline for surrender. Remember, this is the first time ever in the middle of a war we would set a date and say: At this time we will be out of there. The message it sends to the enemy is--well, it is unthinkable. But think about the message it sends to the Iraqis who have fought along our side and to our troops and their families. It would be a nightmare for the Iraqi people were we to leave. As President Bush said: [T]o step back now would force a collapse of the Iraqi government, tear the country apart, and result in mass killings on an unimaginable scale. Do we want to be responsible for that in this body, the mass killings that would result--exactly what we criticized Saddam Hussein for when he was in power? It would not end with an American withdrawal in Iraq, either. As General Anthony Zinni said: This is no Vietnam or Somalia or those places where you can walk away. If we just pull out, we will find ourselves back in short order. Failing in Iraq would set back the entire region. The Brookings Institution--no big supporter of the President, I would add--argues, in their study, that: Iraq appears to have many of the conditions most conducive to spillover because there is a high degree of foreign ``interest'' in Iraq. Ethnic, tribal, and religious troops within Iraq are equally prevalent in neighboring countries and they share many of the same grievances. Iraq has a history of violence with its neighbors, which has fostered desires for vengeance and fomented constant clashes. Iraq also possesses resources that its neighbors covet--oil being the most obvious, but important religious shrines also figure in the mix. There is a high degree of commerce and communication between Iraq and its neighbors, and its borders are porous. All of this suggests that spillover from an Iraqi civil war would tend toward the more dangerous end of the spillover spectrum. We know Iran and Syria are fostering instability in Iraq. Al-Qaida and Hezbollah are both active there as well. Chaos in Iraq could draw in Saudi Arabia, and Saudi officials have threatened ``massive intervention to stop Iranian-backed Shiite militias from butchering Iraqi Sunnis.'' Kurdish succession could well cause Turkish intervention in the region. Failing in Iraq would be a dramatic setback in the war on terror. Iraq must not be divorced from its context--the struggle between the forces of moderation and extremism in the Muslim world. Al-Qaida has been in Iraq since before the United States invaded and has dedicated itself to fomenting sectarian violence there. Much of the violence between Shia and Sunni is a result of prodding by al-Qaida, starting primarily with the blowing up of the Golden Mosque in Samarra. Osama bin Laden himself referred to Iraq--I am quoting him--as the ``capital of the Caliphate,'' arguing that ``The most . . . serious issue today for the whole world is this Third World War . . . [that] is raging in [Iraq].'' Those are not my words. That is what Osama bin Laden said. One of the terrorism experts, Peter Bergen, said this: [U.S. withdrawal] would fit all too neatly into Osama bin Laden's master narrative about American foreign policy. His theme is that America is a paper tiger that cannot tolerate body bags coming home; to back it up, he cites President Ronald Reagan's 1984 withdrawal of United States troops from Lebanon and President Bill Clinton's decision nearly a decade later to pull troops from Somalia. A unilateral pullout from Iraq would only confirm this analysis of American weakness among his jihadist allies. Failure in Iraq will encourage further attacks against the United States and provide a base from which to plan and train for attacks. I must remind my friends, if you are going to push this legislation through, the strategy for defeat, you have a responsibility to tell the American people what the consequences will be and to tell them how you would respond. These are the burdens of being in the majority. These are the burdens of making the difficult decisions we make in this body. I urge my colleagues to work together to develop a supplemental appropriations bill that President Bush can quickly sign, that will get the funding to our troops and enable us to give the strategy a chance to succeed so that the horrible consequences I have described will not be the result of our actions.

Mr. KYL

Mr. KYL. Mr. President, I rise to express concern that serious violations of the law appear to be occurring and should be aggressively pursued by the IRS and, in turn, prosecuted by the Department of Justice. Specifically, numerous Internet gambling websites may be violating statutes such as 26 U.S.C. 4401 et seq. Section 4401 requires an excise tax equal to 2 percent of the amount of unauthorized wagers. Section 4404 makes clear that the tax applies to wagers ``placed by a person who is in the United States with a person who is a citizen or resident of the United States.'' I applaud the indictment in United States v. BETonSPORTS.COM and the inclusion of tax evasion charges in counts 14, 15, and 16. These counts charge that the defendants attempted to ``evade and defeat the . . . wagering excise tax'' in three ways: (1) by failing to make any wagering excise tax returns on or before the last day of the month following the month the wagers were accepted, as required by law, to any proper officer of the Internal Revenue Service, (2) by failing to pay to the Internal Revenue Service said wagering excise tax, and (3) by directing that the wagering funds be sent outside the United States--all in violation of Title 26, United States Code, Section 7201, and Title 18, United States Code, Section 2. I firmly support the decision of the Department of Justice to enforce the wagering excise tax and pursue any persons in violation. Additionally, it is important to note that extremely large sums of money are at issue: count 14 charges that from January 29, 2001 to on or about February 3, 2002, the sum of approximately $1,094,669,000.00 in taxable wagers were had and received; count 15 charges that from February 4, 2002 to on or about February 2, 2003, the sum of approximately $1,228,874,000.00 in taxable wagers were had and received; and count 16 charges that from February 3, 2003 to on or about February 1, 2004, the sum of approximately $1,235,374,000.00 in taxable wagers were had and received. That is over $3.5 billion in three years, and Internet betting has increased significantly in the last two years. I would like to point out that significant income taxes and excise taxes appear to be owed by numerous persons. Collecting these amounts would be an important component of the Administration's efforts to address the ``tax gap.'' Further, with such large sums at issue, the IRS and the Department of Justice should see if money laundering is involved. The State Department has expressed strong concern that Internet gambling operations could be used not only for tax evasion, but also for other criminal activities such as money laundering and terrorist financing: Internet gambling is particularly well-suited for the laying and integration stages of money laundering, in which launderers attempt to disguise the nature or ownership of the proceeds by concealing or blending transactions within the mass of apparently legitimate transactions. Due in large measure to the volume and speed of transactions, as well as the virtual anonymity offered by the Internet, offshore gambling websites are an area of considerable money laundering concern. The Internet gambling operations are, in essence, the functional equivalent of wholly unregulated offshore banks with the bettor accounts serving as bank accounts for account holders who are, in the virtual world, virtually anonymous. For these reasons, Internet gambling operations are vulnerable to be used, not only for money laundering, but also for criminal activities ranging from terrorist financing to tax evasion. (State Department, International Narcotics Control Strategy Report, released March 2004.) The Department of Justice has echoed these concerns. At a hearing before the Senate Banking Committee, John G. Malcolm, Deputy Assistant Attorney General, Criminal Division, testified: Another major concern that the Department of Justice has about on-line gambling is that Internet gambling businesses provide criminals with an easy and excellent vehicle for money laundering, due in large part to the volume, speed, and international reach of Internet transactions and the offshore locations of most Internet gambling sites, as well as the fact that the industry itself is already cash-intensive. It is a fact that money launderers have to go to financial institutions either to conceal their illegal funds or recycle those funds back into the economy for their use. Because criminals are aware that banks have been subjected to greater scrutiny and regulation, they have--not surprisingly--turned to other non-bank financial institutions, such as casinos, to launder their money. On-line casinos are a particularly inviting target because, in addition to using the gambling that casinos offer as a way to hide or transfer money, casinos offer a broad array of financial services to their customers, such as providing credit accounts, fund transmittal services, check cashing services, and currency exchange services. Individuals wanting to launder ill-gotten gains through an on-line casino can do so in a variety of ways. For example, a customer could establish an account with a casino using illegally-derived proceeds, conduct a minimal amount of betting or engage in offsetting bets with an overseas confederate, and then request repayment from the casino, thereby providing a new ``source'' of the funds. If a gambler wants to transfer money to an inside source in the casino, who may be located in another country, he can just play until he loses the requisite amount. Similarly, if an insider wants to transfer money to the gambler, perhaps as payment for some illicit activity, he can rig the game so the bettor wins. The anonymous nature of the Internet and the use of encryption make it difficult to trace the transactions. The gambling business may also not maintain the transaction records, in which case tracing may be impossible. While regulators in the United States can visit physical casinos, observe their operations, and examine their books and records to ensure compliance with regulations, this is far more difficult, if not impossible, with virtual casinos. (John G. Malcolm, Deputy Assistant Attorney General, Criminal Division, Department of Justice, March 18, 2003.) Again, there should be strong enforcement efforts to ensure that Internet gambling entities are not violating the law.

Mr. KYL

Mr. KYL. Madam President, I wanted to say a few words about the Supreme Court's decision last week in Gonzales v. Carhart. In that opinion, the Court held constitutional the Partial-Birth Abortion Act of 2003, a law that passed this Senate with strong bipartisan support, including my own. I was heartened by this decision, and not just because partial-birth abortion is a disgusting act that should never be performed in a civilized society. I am also heartened because this decision represents a step towards restoring the American people's right to govern themselves through their elected representatives. For too long, the Supreme Court has set itself up as an antagonist to the people and has shown unfortunate disregard for the judgments of those our governmental system is supposed to serve. The decision yesterday is a departure from that trend, and it should give us all cautious optimism that the Supreme Court is coming around to a greater level of respect for the elected branches on questions of fundamental moral values. I also want to send a word of congratulations and thanks to the man who made this legislation a reality, former Senator Rick Santorum. During the debates on this bill back in 2003, I can remember Senator Santorum being on the Senate floor virtually full-time, taking on all comers, engaging on every point, showing his skills as a debater, and displaying the passion and spirit that defined him during his two terms in the Senate. Senator Santorum was our leader in the debates on this bill, and the Supreme Court's affirmation of the bill's constitutionality yesterday should be a moment of great pride for our former colleague. This bill is part of his legacy, and we owe him a debt of gratitude.

Mr. KYL

Mr. KYL. Mr. President, I wish to comment on section 207 of the pending matter, the Court Security Improvement Act of 2007. Section 207 increases the statutory maximum penalties for the Federal offense of manslaughter. Pursuant to this legislation, the maximum penalty for involuntary manslaughter will be increased from 6 to 10 years, and the penalty for voluntary manslaughter will be increased from 10 to 20 years. This is a change that I sought to have included in last year's various court security bills. I am pleased to see that it will be included in this year's final Senate bill. The need for an increase in the manslaughter statutory maximum penalty is made clear in testimony that was presented before the U.S. Sentencing Commission by Paul Charlton, the U.S. Attorney for the District of Arizona, on March 25, 2003. Despite recent changes to the guidelines for manslaughter offenses, the typical DUI involuntary manslaughter crime still is subject to a sentencing range of only 30 to 37 months. Yet, as Mr. Charlton noted in his testimony, under Arizona State law, the presumptive sentence for a typical DUI involuntary manslaughter offense is 10\1/2\ years. In other words, despite recent guidelines adjustments, the Federal criminal justice system still imposes a sentence for involuntary manslaughter in drunk driving cases that is only a third of the sentence that would be imposed for the exact same conduct under State law. Mr. Charlton concluded that there is a ``dire need for immediate improvements to the manslaughter statutory penalty and sentencing guidelines.'' As he noted, ``the respect and confidence of surviving victims in the federal criminal justice system is severely undermined and will continue to be unless the statutory maximum penalties are increased to reflect the seriousness of the crime and the sentencing guidelines are comparably changed to reflect that increase.'' With this bill, the Congress finally acts on Mr. Charlton's recommendation to increase the statutory maximum. I would like to emphasize, however, that enactment of section 207 does not alone finish the job. As Mr. Charlton noted in his testimony, even after Congress increased statutory penalties for these offenses in 1998, the sentences imposed by Federal courts ``remain[ed] inadequate to deter and punish offenders [as of March 2003] because the federal manslaughter sentencing guideline was never changed to reflect the increased penalty.'' The Sentencing Commission did eventually adjust the guidelines in response to the 1998 amendments, albeit 5 years after those changes were enacted. In case a staffer for the Sentencing Commission reads this speech in the Congressional Record, let me be clear: yes, we do expect the Commission to adjust the guidelines for voluntary and involuntary manslaughter in order to reflect the statutory changes made by section 207. And please persuade the Commissioners to act expeditiously. If this matter is not addressed during the next appropriate period for submitting proposed changes to the guidelines, I will contact the Commission to inquire why no adjustment has been made. I ask unanimous consent that Mr. Charlton's 2003 testimony before the Sentencing Commission be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I appreciate the majority leader yielding for the purpose of commenting for a moment about the guest Chaplain who just delivered the prayer, who happens to be the chaplain of my church in Paradise Valley. Let me speak a few words about Tim Smith and his service to our congregation. He is the associate director of Congressional Ministries at Valley Church, and his expertise is ministries throughout the community. He has been a pastoral minister for over 25 years, serving as a hospice chaplain, a prison chaplain, and a bereavement counselor. In addition, he is a certified spiritual director and mentor and teacher to those who study spiritual direction. Tim and his wife Rita are members of Valley Presbyterian Church. They are parents of two sons, one of whom, incidentally, interned in my office in Phoenix, AZ. It is also a special privilege for a guest Chaplain to be here, and I express my appreciation also to our Chaplain, Dr. Barry Black, for his willingness and kindness in inviting Tim Smith to be with us today. Mr. President, I welcome Tim Smith, Minister of Valley Presbyterian Church, to Washington and to the Senate.

Mr. KYL

Mr. KYL. I yield the floor.

Mr. KYL. Mr. President, I would like to speak for a few minutes on the bill on which we will be voting in approximately an hour, as the majority leader just said. I would like to speak directly to the point he attempted to make, which was why should there be a problem with allowing the Federal Government to negotiate for drug prices for Medicare by repealing Medicare's so-called noninterference provision? Nobody doesn't support negotiation. Negotiation is at the heart of the Medicare prescription drug benefit. I was there when it was written in the conference committee and there was a conscientious decision to ensure that there would be competition for lowering prices by specifically designating pharmacy benefit managers to do negotiating with the drug companies to bring the prices down. So the first myth is that Medicare somehow does not involve negotiations. It involves extensive negotiations. What it does not do is allow the Federal Government to interfere in those negotiations and, in effect, put itself in between patients and doctors and the drugs. The Medicare Fair Prescription Drug Price Act of 2007, on which we will be voting cloture, turns this law upside-down and basically inserts the Government into this process under these decisions. The purpose may sound simple--the Government, using its negotiating clout, forcing drug companies to give seniors deep discounts--but if you take a closer look and peel away the layers, you realize it is nothing more than a promise running on empty, void of details and muddled by political rhetoric rather than sustained by the facts. Let's look at the facts. First of all, Medicare Part D is working. When Congress crafted the bill, we heard from our constituents loudly and clearly. They wanted a prescription drug benefit that guaranteed access to affordable drugs and offered a choice of plans. They didn't want to be packed into a one-size-fits-all, Government-run plan that didn't fit their needs, and in fact they asked us to model the benefit after the plan that is available to Members of Congress. We did that. We chose access over restrictions, choice over Government control, and competition over price control. As a result, Medicare Part D is exceeding everyone's expectations. Approximately 90 percent of Medicare beneficiaries have some form of prescription drug coverage. The average premium was $22, in 2007, which is 42 percent lower than the Government projected initially. On average, seniors saved $1,200 on their prescription drug costs last year. Eight out of ten Part D enrollees report they are satisfied with their current coverage, and the Congressional Budget Office estimates that the drug benefit will cost the taxpayers 30 percent less, $265 billion in savings over the next 10 years. To sum it up, we have 90 percent Medicare beneficiaries with coverage, 80 percent satisfaction rate, and it costs 30 percent less than originally estimated. If it ``ain't'' broke, don't fix it. The second fact, drug negotiation is at the heart of the Medicare bill. For the first time in history, health insurance plans and pharmaceutical companies and these benefit managers whom I mentioned are required to negotiate better prices for seniors, just like they do for Members of Congress. The noninterference provision, which first appeared in democratically sponsored legislation, prevents the Federal Government from interfering in those negotiations. It is a basic economic principle. In competitive markets, supply and demand interact, determining the price of the good or service. How do you get a good price? These pharmacy benefit managers I mentioned have significant market power. Consider this fact: The three largest PBMs have nearly 200 million members, compared to Medicare's 44 million. So when you talk about the Government using its considerable bargaining clout because it would represent 44 million, appreciate that these pharmacy benefit managers represent 200 million. They insure all of these people--Americans in the private sector, as well as Americans who have Government insurance. So the private drug negotiators already enjoy a significant competitive advantage. They use that power to negotiate lower prices and, as I pointed out, that negotiation has worked. Third, the secretarial negotiation cannot achieve any lower price without rationing choice in access. That was the testimony before the Senate Finance Committee, and I think every one of us appreciates that we should be very careful about anything which could restrict access to care for our seniors. When the Finance Committee marked up this bill last week, I looked forward to getting some clarity on exactly how Members contemplated this secretarial negotiation, how it would work. To my disappointment, no one could explain exactly how it would work. In fact, my colleagues openly and candidly admitted they had no plan or any specifics. What they said was that the Secretary would have to use his imagination and that it could take a number of different forms. So what we are buying, in effect, is a pig in a poke. Nobody knows what the Secretary would or could do in order to try to bring prices down; he would have to use his imagination. I think it is appropriate for us to ask this kind of question before we buy into legislation that could so dramatically and negatively impact health care for our seniors. Restricting access could theoretically reduce lower prices if they were raised with some other program. That is the other downside to this legislation. During the Finance Committee noninterference hearing, we heard testimony from Dr. Fiona Scott Morton, who is a Professor of Economics at the Yale School of Management. She made a couple of critical points. Individuals eligible to participate in Medicare Part D generate approximately 40 percent of prescription drug spending in the United States. The Secretary cannot negotiate a lower average price for such a large population; Medicare is the average. So if it were somehow theoretically possible to reduce prices, they would have to go up somewhere else. That is the other point we established as well. There are many different organizations, including veterans organizations, that urged us to oppose this legislation because they understand that if you are somehow able to lower the prices for Medicare, they necessarily, arithmetically, have to go up somewhere else. The Veterans' Administration is one of those areas. Let me quote from two letters, one received from the American Legion, which asks us to consider, and I quote: . . . the serious collateral damage that would result from repealing the noninterference provision. The VA is a health care provider, whereas Medicare is a health insurer. Any possible Medicare savings would likely result in a reciprocal cost to the VA. Compromising the noninterference provision by striking this section is not in the best interest of America's veterans and their families. The American Legion is not alone. The Military Order of the Purple Heart sent a similar letter to the Hill. Bottom line here: Cost savings are the result of true efficiencies. Repealing the noninterference provision is just another way to shift costs at the expense of other consumers. In conclusion, during this markup of this bill in the committee, I offered three amendments, each of which ensured important safeguards: No. 1, to prohibit cost shifting, as I mentioned, to entities such as Medicaid or veterans or the uninsured; No. 2, to require a certification of cost savings to Medicare beneficiaries if these negotiations were to occur; No. 3, a certification of four beneficiary protections: One, individual choice of a prescription drug plan; two, access to prescription drugs by prohibiting a government formulary or other tool to restrict drug access; three, guaranteed access to local pharmacies; and, four, no cost shifting to other payors, such as Medicaid, veterans or the uninsured. All three of these amendments were rejected. In fact, somebody called them a red herring. Well, restricting seniors' access to prescription drugs and increasing drug prices for all consumers are not red herrings, they are important issues which have not been adequately addressed in this legislation. Repealing this noninterference provision would put the Government, not the individual in charge, and put seniors one step closer to a single Government-run designed formulary. I appreciate and respect the goals of my colleagues. We all want to improve access to affordable health coverage. But with all due respect, they are wrong. A great deal of expert testimony and experience with Medicare Part D by millions of Americans has demonstrated they are wrong. So I urge my colleagues, when considering how to vote on this motion for cloture, to appreciate the fact that, first of all, there is a great benefit that is producing savings and is well appreciated by the American people; that there are organizations that are very much opposed to this, such as the VA, and that we would be very foolish, it seems to me, to adopt a piece of legislation such as this about which there is no consensus as to how the Secretary would utilize his authority to negotiate. Mr. President, I ask unanimous consent to have printed at this point in the Record an editorial from the Wall Street Journal of today, April 18, 2007, which further amplifies the points I have made this morning.

Mr. KYL

Mr. KYL. Mr. President, I wonder if my colleague will first allow me to lay down an amendment but not speak to it.

Mr. KYL. Mr. President, is there a pending amendment?