Jon Kyl

Mr. KYL

Mr. KYL. Madam President, the Senator from Massachusetts made a couple of statements I need to correct. One was that this amendment would cost $45 billion. I do not know how he arrived at that figure. Even if you add up all of the amendments I have proposed at one time or another on this bill, they don't add up to $45 billion. The amount that this amendment would, in effect, cost to take section 179 through the year 2012 would be about $2.1 billion over 10 years. That is more than absorbed by the authority that we have under the budget from last year, which is $278.6 billion. So there doesn't have to be an additional offset. There doesn't have to be an additional pay- for. The cost for extending section 179--what we are doing with this amendment--is entirely subsumed in the budget we passed last year. That is why it is not subject to a point of order and why a mere majority vote will determine whether it moves forward. According to the Congressional Budget Office, by the way, the minimum wage increase will impose about $5 billion worth of new costs on businesses each and every year. Most of that will be on small businesses. The extension of this relief will benefit those very small businesses that are going to have to absorb this additional cost. When the Senator from Massachusetts said earlier, ``We have debated over the period of the last few days tax breaks for corporate America,'' I want to be very clear, that is not the tax break I am talking about. The tax break for corporate America is the tax break the majority of the Democrats on the Finance Committee have provided in the form of the work opportunity tax credit. Testimony before our committee confirmed that 95 percent, approximately, of the value of the WOTC, work opportunity tax credit, goes to bigger businesses, S and C corporations, because they have the wherewithal to set up the complicated accounting mechanisms for the work opportunity tax credit legislation to actually work. Very few of the small businesses are benefited by that tax relief. But almost all of the small businesses are benefited by the tax relief that I have proposed. So I respectfully correct my colleague from Massachusetts. What I am proposing doesn't benefit the big corporations. That is what is already extended under the bill through the year 2012. What we are doing is extending through the year 2012 these benefits for the small businesses--specifically, the section 179 expensing. How does that work? As I explained this morning, by definition, section 179 allows businesses to write off an amount that is right now $112,000, when they spend that much money on a new piece of equipment or add on their business. If they spend more than $400,000, they cannot use this particular provision. The bottom line is that this is for the small business, it is not for big business. So it is simply incorrect to say that the proposal that is before us now, to be voted on shortly, benefits big corporations. They cannot, by definition, take advantage of this particular provision of the Tax Code. Again, why are we seeking to do this? All of us on the Finance Committee agreed that we needed to provide some tax relief to small businesses because small businesses would bear the brunt of the new expense of the minimum wage. So the committee unanimously extended various provisions of the Tax Code. It extended this section 179 for another year, recognizing its importance. All my amendment does is extend it another 2 years, so that it will conform with the same period of time that the work opportunity tax credit goes to and, thus, provide some balance between the big businesses, which get the work opportunity tax credit relief, and the small businesses, which primarily rely on the section 179 tax relief. Section 179 is probably the most used of the tax provisions because all small businesses can take advantage of it whenever they add value to their particular business. It is for this reason that several organizations have endorsed this proposal of mine and, in fact, have communicated with us that they intend to key vote this amendment. So when you are voting on my amendment, if you vote to table my amendment, you are going against the recommendations of the following groups: National Federation of Independent Business, NFIB; Food Marketing Institute; Printing Industries of America; International Franchise Association; and Society of American Florists. You can see that these are the kinds of businesses that can take advantage of this section of the Tax Code. So anybody who votes to table this amendment, as I said, will be going against the recommendation of these particular groups. I urge my colleagues--this has never been a partisan issue. Section 179 is supported by Democrats and Republicans and Independents. Our committee action was unanimous. There is no reason this has to become a partisan issue. There is no question of pay-for. We already, in the budget from last year, the scorecard, as they call it, have revenue available to offset the modest increase of $2 billion that a 2-year extension would entail in this particular amendment. So I see no reason for anybody to vote against it and, most especially, to table this amendment. I urge my colleagues to vote against the motion to table. Madam President, might I inquire how much time is now available on both sides of this issue?

Mr. KYL. Oh, I see. As the proponent of the amendment, I hope that I will be able to close the debate. But given the fact that there is 6 minutes remaining on my side, if there is nobody from the majority side to speak to this, then I will continue the conversation, at least until someone arrives. One of the other arguments is that by extending this through 2008, we have provided enough certainty to small businesses that they could go ahead and make the investment, plan the renovation or buy the piece of equipment, or whatever that might be. The bottom line is that any amount that we extend in these tax provisions enables businesses to plan better. If we extend it 1 year, as the committee did, then at least businesses can look out 1 year. But as we all know, in the business environment, a 1-year horizon is very short. That is why, just as we extended the work opportunity tax credit through 2012, it makes sense to extend the small business expensing through the year 2012 as well. Any additional time that businesses can know what the tax consequences of their purchases or expenses are is an advantage to them and will enable them to create the jobs, as I said, that will offset the costs of the minimum wage. Madam President, I don't know of anybody who opposes the extension of section 179. The committee itself extended it for 1 year. I don't know why there would be partisan debate about extending it for another 2 years. I think we can all agree that would represent good policy. The relatively modest expense of this $2.1 billion, in terms of theoretical lost revenue, is more than compensated for by the $278 billion in offset tax authority from the years 2011 and 2015 under the budget we passed last year. So there is no point of order and there is no reason, on a purely fiscal basis or balanced budget basis, to vote against this. Everybody knows it is good for small business. Adding 12 years for planning purposes for the business to purchase the equipment or add to the building is simply an improvement over existing law and enhancing of the small business's ability to create more jobs, expand their business and, frankly, to contribute to the great economic growth that we have right now. So I don't understand any of the reasons a Member of this body would want to oppose this particular amendment. I am not doing this for any purpose other than to try to support these small businesses. That is why the NFIB and the others are so supportive of my amendment. I would think that in this time when we wanted to start out the year in a bipartisan way, this is a provision that has strong bipartisan support; it always has. I just don't understand why anybody would not want to extend it for 2 years, especially when the costs of doing so are already offset in the budget that we passed last year. Again, I urge my colleagues to oppose the motion to table this amendment. Madam President, let me first inquire how much time both sides have remaining.

Mr. KYL. All right. It is also my understanding that time not used is to be counted off equally against both parties; is that correct?

Mr. KYL

Mr. KYL. Mr. President, I join my colleague, the Senator from Texas, in urging the Senate to think very carefully about passing what appears to be a nonbinding resolution, but what, in fact, has dramatic consequences. It is true that a nonbinding resolution would not change the policy of the President; he is the Commander in Chief. He has decided on a new strategy after consultation with a lot of people, and that new strategy is now being implemented in Iraq as we speak. The Senate, last Friday, confirmed GEN David Petraeus to carry out that policy. By the way, it seems quite incongruous we would, on the one hand, confirm General Petraeus, pat him on the back, and say: Go do the mission in Iraq--by the way, we disagree with the mission. That is one of the bad messages that is sent. I would like to talk a little bit more about the sending of messages with the nonbinding resolutions. That is obviously what the proponents of the resolutions would like to do. They have talked about sending a message. Mostly they are trying to send a message to the President. Of course, any Senator who wants to talk to the President has that capability. We do not need to send messages to the President publicly in areas that cause harm. We should think about the consequences of such a message to our enemies, to our allies, and most especially to the troops that we send in harm's way. Think for a moment about the consequences of a message that says that we disagree with the President's strategy, we disagree with the mission, and we don't believe that any more troops should be involved or that the United States should remain in Iraq beyond a very limited period of time. The message that sends to our enemies is a devastating one. As General Petraeus testified before the Senate Committee on Armed Services, war is about breaking the will of your opponent. He feared the consequences of such a resolution which he said would not be helpful because it would send a signal to our enemies that we don't have the support in the United States Government necessary to break the will of the opponent. These terrorists well understand this is a contest of wills. Can they outlast us? Osama bin Laden thinks we are the ``weak horse,'' as he puts it, and he is the ``strong horse''; that we left Vietnam, that we left Lebanon, that we left Somalia, and we will leave Iraq before the job is done as well. And he believes that. So there is a test of wills going on. And if the enemies come to believe they can outlast us, that their will is stronger than ours, then it is very difficult to defeat them in this war against terrorism. The message it sends to our allies is we are not necessarily a reliable ally. Certainly, to people in the neighborhood--the people in Afghanistan, in Pakistan, and elsewhere--you can imagine they would quickly begin to hedge their bets because of the neighborhood in which they live. If we are going to leave, and they have to continue to live with these bad actors, then, as before September 11, you will see them begin to hedge their bets and provide support for, in one way or another, terrorists who live in that neighborhood. That is against the national security interest of the United States. The message that is sent to our troops is perhaps the most devastating because it says: We have sent you on a mission, and yet we do not believe in the mission. We are putting you in harm's way. You may, in fact, die trying to complete your mission, but it is not a mission that we believe in. Think about the message that sends to the troops and to the families. Very interestingly, last Friday, ``NBC Nightly News'' had an interview with three soldiers from Iraq talking about this very point. It was in the Brian Williams newscast. He called on Richard Engel, reporting from Baghdad, who had interviewed these three soldiers. I think what they had to say should instruct us. He talked about the new mission they were on, and he said: It's not just the new mission the soldiers are adjusting to. They have something else on their minds: This is David Engel, the reporter, speaking-- the growing debate at home about the war. Troops here say they are increasingly frustrated by American criticism of the war. Many take it personally, believing it is also criticism of what they've been fighting for. Twenty-one-year-old Specialist Tyler Johnson is on his first tour in Iraq. He thinks skeptics should come over and see what it's like firsthand before criticizing. Then, this is what SPC Tyler Johnson said: Those people are dying. You know what I'm saying? You may support--``Oh, we support the troops,'' but you're not supporting what they do, what they share and sweat for, what they believe for, what we die for. It just don't make sense to me. Engel then said: Staff Sergeant Manuel Sahagun has served in Afghanistan and is now in his second tour in Iraq. He says people back home can't have it both ways. Then SSG Manuel Sahagun said: One thing I don't like is when people back home say they support the troops but they don't support the war. If they're going to support us, support us all the way. Finally, Engel said: Specialist Peter Manna thinks people have forgotten the toll the war has taken. SPC Peter Manna said: If they don't think we're doing a good job, everything that we've done here is all in vain. Engel closed his report saying: Apache Company has lost two soldiers and now worries their country may be abandoning the mission they died for. That is the message we send to our troops: that they may be dying in vain, that they may be putting their life on the line in vain because we do not support the mission we put them in harm's way to accomplish. That is a devastating blow to morale. Just imagine what you would do if you were the parent or the spouse of one of those soldiers who got killed and came to believe the mission we had sent them on was no longer a mission that we supported, and yet we continue to keep them in harm's way. My view is, if you think this war is lost or that we cannot win it, that you have the courage of your convictions and vote to cut off the funds and bring the folks home right now before any more die. But if you believe, as the President does, that we must not leave Iraq a failed state, that there is still an opportunity there to succeed, and that his plan deserves a chance to succeed, then we should not support resolutions that send a different message. That is why I want to urge my colleagues to think very carefully before supporting any of these resolutions which may be nonbinding on the President but, nevertheless, have severe consequences to our enemies, to our allies, and to the troops we put into harm's way. This is serious business we are about. We need to consider it seriously and not undercut the troops we put in harm's way.

Mr. KYL

Mr. KYL. Mr. President, I, too, am anxious to get on to the debate about the resolutions that deal with Iraq. I will speak to that for 10 minutes. My position is clear. I think we ought to give the President's strategy a chance to work. We asked him to come up with a new strategy. He has done so, and it seems to me that it is our responsibility as a Senate to give that a chance to work or to provide an alternative--not an alternative to leave but an alternative to win. There are plenty of ways to leave. We can begin leaving now and have it done in a year. We can leave in 6 months. We can leave to the border but not beyond. There are a lot of different ideas about how to leave, but an alternative is not how to leave but how to win. The President has presented such a strategy and I believe we ought to give it a chance to work. Resolutions that are nonbinding nevertheless have consequences. They can't change the policy that is already being effected, the strategy in Iraq, but what they can do is send very powerful messages. First, they can send a message to our enemies. It seems to me the last message we want to send to the enemy is that the Congress does not support the mission in Iraq. Obviously that emboldens the enemy. That is what GEN David Petraeus said in his testimony before the Armed Services Committee last week. It sends a message to our allies that we are not in it to the end, and they begin to wonder whether they should start hedging their bets. By the way, it sends a message to a country such as Iran, which is already beginning to offer, now, to in effect take our place in Iraq: They will do the training of troops, they will do the reconstruction if the Iraqis will simply invite them in. That obviously would not be in our best interests, not to mention the Iraqis' best interests. Most importantly, a resolution such as this sends a message to our troops. It is a very powerful message and a very negative one. It is a message that in effect says we support you, but we don't support your mission. We are sending you into a place where you could well die, but we don't support the cause for which you are dying. We don't think you can win. As a matter of fact, I have more respect for those who advocate voting on whether we should continue to support the effort monetarily--the legitimate function of the Congress, to cut off the funds if we don't like the war--than I do for those who simply want to ``send a message.'' At least the others would be willing to have the courage of their convictions, that if this is not a winnable war, we better stop it now as opposed to simply trying to send a message. Let me tell you what this message does. Last Friday night I was watching the NBC ``Nightly News.'' Brian Williams was the broadcaster, and he called on Richard Engel, reporting from Iraq, to talk about what was going on there. Richard Engel talked about the Stryker Brigade, Apache Company, setting out on a mission to find bases for U.S. troops. I will quote what he said in the report. He said: It's not just the new mission the soldiers are adjusting to. They have something else on their minds: The growing debate at home about the war. Troops here say they are increasingly frustrated by American criticism of the war. Many take it personally, believing it is also criticism of what they've been fighting for. He goes on to say: Twenty-one-year-old Specialist Tyler Johnson is on his first tour in Iraq. He thinks skeptics should come over and see what it's like firsthand before criticizing. And here is what Specialist Tyler Johnson said: Those people are dying. You know what I'm saying? You may support--``oh we support the troops,'' but you're not supporting what they do, what they share and sweat for, what they believe for, what we die for. It just don't make sense to me. Back to Richard Engel: Staff Sergeant Manuel Sahagun has served in Afghanistan and is now on his second tour in Iraq. He says people back home can't have it both ways. And then Staff Sergeant Manuel Sahagun says the following: One thing I don't like is when people back home say they support the troops but they don't support the war. If they're going to support us, support us all the way. Engel then says: Specialist Peter Manna thinks people have forgotten the toll the war has taken. And Specialist Peter Manna says: If they don't think we are doing a good job, everything we have done here is all in vain. Engel concludes the report by saying: Apache Company has lost two soldiers and now worries their country may be abandoning the mission they died for. Richard Engel, ABC News, Baghdad. That report struck me. I immediately talked to my wife about it, and I said those three soldiers have said more eloquently than I and my colleagues have, than we have, in making the point that you can't have it both ways. You can't both support the troops and oppose the mission we are sending them on, putting them in harm's way. And can we say that their colleagues who died did not die in vain if the Senate goes on record saying we don't support your mission? This is the conflict that has to be in the minds of the families of those who are putting their lives on the line and the very soldiers and marines who are doing the same. Last Friday, this Senate confirmed GEN David Petraeus to take command of that theater, and there were all kinds of expressions of support for him. He is, indeed, one of the finest military officers ever to come before the Senate for confirmation. No one said otherwise. Yet at the same time we are talking about passing a resolution that would say to him: We don't believe in the mission we have just sent you on. He testified he needed more troops in order to carry out the mission and that he supported the President's new strategy, one component of which is to add some troops so that he has the capability, in conjunction with the new Iraqi troops, to stabilize and pacify the city of Baghdad as well as the Al Anbar Province, which is currently being threatened by al-Qaida terrorists. He said he needs those new troops. Yet Congress would go on record as saying we do not believe you should have those new troops. Again, at least some number of my colleagues, maybe half or thereabouts on the other side of the aisle, would cut off the funding for the troops in order not just to send a message but to end the involvement. At least that is a position that has action attached to it. I disagree with it, but simply sending the message by sending David Petraeus on the way, patting him on the back, saying, ``Go do a good job but, by the way, we don't believe in the mission,'' it seems to me is starting off on the wrong foot. He said something else in his testimony that I thought was telling. He said: Wars are all about your will, your will and your enemy's will. When asked a question by Senator Lieberman, he said passage of these resolutions would not be helpful, among other things, because you need to break the enemy's will in a conflict, in a war. This kind of resolution would inhibit his ability, General Petraeus's ability, with our great military, to break the enemy's will to fight. How can you break the enemy's will to fight when the people who are allegedly running the war back home have already signaled that they think it is lost and it is simply a matter of bringing the troops home, and that the mission is not supported by a majority of the Senate? Resolutions, even if they are nonbinding, have consequences. In this case the consequences are detrimental, to our enemy, to our allies, and to our soldiers and their families. We have some solemn responsibility here, but none is more serious than putting our young men and women in harm's way. All of us want to bring them home safe and sound. We all understand when we vote for that, people are going to die. Everyone who does that does so with a solemn responsibility. We are all looking for a way also to end the conflict so no more have to die. But the reason we authorized this in the first place was because we understood there was a mission to perform. Even those who disagree with the reasons to begin with appreciate the fact that we cannot leave Iraq a failed state. I think virtually everybody in this body would agree with that proposition. We cannot leave Iraq a failed state. The consequences, not just to the Iraqis and to the other people in the region but to United States security, would be devastating. Something else on which most people agree is that the Iraqis are not currently in a position to pacify Baghdad and Al Anbar Province all by themselves. They need our help. That is what the testimony before the committees was last week. If they need our help, if we all agree we can't leave Iraq a failed state, if General Petraeus is saying we need some time and some troops to get this job done in conjunction with a significant change in the way the Iraqis are approaching the war--finally backing us up now when we say we want to go into these areas and not just clear them but hold them, keep the bad guys in jail, the ones who have not been killed, for example--if we agree with all those things, then it seems to me the last thing the Senate should be doing is considering a resolution which would say we disagree with the mission, we disagree with the President's strategy, we don't think we should be sending any more troops, and we want to begin a process of withdrawing from Iraq. When the debate time comes, I am anxious to have it. The American people deserve a debate. I heard a message yesterday that the American people had spoken. Indeed they did. I had an opponent who said we should withdraw from Iraq. Yet I won the last election, saying we needed to stay there until the mission was completed, and I even supported the addition of more troops if that were necessary. In the case of Arizona, I think people have spoken. The reality is, however, I think it is a mixed message. They would all like to get out as quickly as possible, but if you ask them, Do you think we should leave before the mission is accomplished, do you think we should leave even though there is the strong probability of a failed Iraqi state, do you think we can say we support the American troops but we don't support the mission, I think we would disagree with that proposition. It is up to us as leaders to lead. That means to let them know we support not just them but their mission, that we want to see it accomplished, and we will not undercut that mission or their support by passing a resolution that disapproves of the new strategy. I hope my colleagues will agree we have to give this strategy a chance to work.

Mr. KYL. Mr. President, I ask unanimous consent to speak as in morning business.

Mr. KYL

Mr. KYL. Mr. President, if I may respond to the Senator, I would like to get in, and I will ask unanimous consent to speak as in morning business for 10 minutes. I don't know where Senator Sessions is. I gather it would be fine if he is delayed for 5 minutes. I don't know what Senator Cornyn's intentions are.

Mr. KYL. Mr. President, I ask unanimous consent to speak as in morning business.

Mr. KYL. I am sorry. I thought I would be recognized now. Excuse me.

Mr. KYL

Mr. KYL. I yield back the remainder of my time.

Mr. KYL. Mr. President, in 10 minutes we will have a vote on an amendment which I offered earlier that merely extends the small business Tax Code provisions that came out of the Finance Committee, which were adopted unanimously, from March 31 of next year through December 31. Everybody recognized that if we could afford to do it, we wanted to extend them as long as we could, but the funds were there simply to extend it through March 31. No small business can plan on that short of a timeframe. So I think everybody would agree it is good policy. In the committee, we agreed it was important to extend these benefits. These are primarily the writeoff periods for small business leasehold improvements, restaurants, and so on. Restaurants are about 60 percent of the people who will be receiving the benefits of the minimum wage increase and, therefore, these tax benefits clearly are important to them. It is totally paid for. I hope my colleagues will be willing to extend these provisions from March 31 of next year through December 31 of next year. I reserve the remainder of my time and yield to Senator Grassley.

Mr. KYL. Mr. President, please understand that one of the things my friend from Montana said is not correct. We are not taking away the $5,000 benefit that exists for everybody who provides for tuition to be tax free. That remains. We are not touching that. All we are saying is that it ought to be the same for the son or daughter of a college professor as the son or daughter of the manager of the pizza shop. The only one who gets the tuition tax break that is tax free is the son or daughter of the college professor. But if you work for a small business and your boss decides to send your child to school, pay the tuition for that child, you could still get that tuition, but you have to pay the tax consequences of that; that is a taxable benefit. There should be no differentiation between working for a small business or a big business, for that matter, or being the son or daughter of a college professor. That is what the bipartisan Joint Tax Committee said. This is totally unfair. It is part of the closing of the tax gap because of the unfairness between one small group of our society and everybody else. All this does is equalize the tax treatment of the employer providing the tuition free for the student. That pays for what everyone recognizes is a very important extension of the small business provisions of the Finance Committee from March 31 of next year through December 31 of next year. I urge Members to vote against the motion to table the amendment.

Mr. KYL. Mr. President, I can further describe the amendment, and we can discuss it, debate it, when the chairman is ready to do that or there is no one who intends to speak. I hope we can get this amendment voted on as soon as possible today.

Mr. KYL. Yes.

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

Mr. KYL. Mr. President, I direct a question to the chairman of the Finance Committee. Did he need to do some intervening business before I speak?

Mr. KYL. It is my understanding that under a previous order, I have 10 minutes to speak. I will speak on the amendment that until just a moment ago was pending, amendment No. 205, which is my amendment to this minimum wage bill to extend provisions of the Finance Committee bill from March 31 of next year through the end of next year. The committee decided in its wisdom--and I note that it was a unanimous vote out of the committee, a bipartisan vote--that there were certain small business tax provisions that should be extended to help small business pay for the minimum wage increase we would be mandating by this bill. Most of the jobs are small business jobs that would be affected by the minimum wage. In fact, about 60 percent of those jobs are in the restaurant industry. As a result, the Finance Committee took several provisions of existing law and created a couple of new provisions that enable these small businesses to write off their leasehold improvements or their owner improvements either in a shorter period of time than they had been previously allowed under the code or, in the case of new improvements, a 15-year period which would be consistent for all these entities, whether they be restaurants or leasehold improvements or other new construction. This makes sense under the Tax Code since one needs to conform a new building that is built with leasehold improvements. If you are talking about a restaurant, for example, what you build in terms of new counters or new kitchen facilities is going to be the same for both. The writeoff period should be the same, a consistent 15-year period in this case. Certainly the Presiding Officer can appreciate the need to be able to make improvements to a restaurant kind of facility and be able to write those improvements off in a meaningful time under the Tax Code. This was not a matter of debate. The members of the Finance Committee agreed unanimously that this was good policy. But the policy was only extended through the end of March of next year. The reason was that the committee was committed to offsetting the cost--that is to say the loss of revenue to the Treasury--with some other way of raising revenue to equal that revenue which was lost. The so-called pay-for requirement, requiring members of the committee to find a way to pay for the tax loss, inhibited my amendment which would have extended these provisions for an additional 9 months through the end of the year. We now have found ways to pay for this additional extension and to simplify it. What my amendment does is to take these same provisions that are in the Finance Committee bill and extend them, not just through the end of March of next year but through the end of December next year. That obviously allows businesses to be able to plan better, and if they can plan better, they can help to add to their facilities, create new facilities, create new jobs. And, of course, what we ought to be doing to enable small businesses to pay a minimum wage increase is to be creating more business, more jobs earning more income so they can afford to pay this minimum wage. Another reason I offered the amendment was that there is an imbalance in the Finance Committee product. One provision out of the Finance Committee actually was extended for a period of 5 years. This is the work opportunity tax credit. This is mostly--in fact, one witness said about 95 percent of the value of this work opportunity tax credit is enjoyed by big businesses because they can afford to hire the lawyers and accountants to figure out how to comply with the provision. So this work opportunity tax credit--the value of that is mostly something that is enjoyed by the bigger businesses. That provision was extended 5 years. All of these provisions to help the small businesses were only extended through March of next year. We believed that was very much out of balance. My amendment doesn't impact this 5-year extension of the work opportunity tax credit, but what it does do is at least it brings these other tax benefits up to the end of next year rather than just the end of March of next year. So we make it slightly more beneficial for small businesses and therefore somewhat improve their ability to pay for the minimum wage increase. I would argue that something like we have done here, that is, a temporary extension of a tax benefit, should not have to be ``paid for'' with a permanent change in tax policy. That makes no sense. But the chairman of the committee ruled my amendment would have been out of order without such a so-called pay-for, so I withdrew the amendment in committee and now have reoffered it with a pay-for. It is change in permanent tax policy. At this moment, my staff is meeting with the staff of the committee chairman and ranking member on the committee to see if there is some way we can agree to pay for this modest extension with tax policy on which we can all agree and not have to have a debate about. If we can do that, obviously that would be my preference, and perhaps we can have a vote that can be accommodated here very quickly. If staff is not able to agree on what that pay-for is and we have to go forward with the one I offered, we certainly want to do that. We want to have that vote as soon as possible this afternoon. I will briefly describe what it is. There may be some slight error in the way I describe it because I will, instead of reading it, explain it the way I understand it. Currently, the Tax Code would allow a discrimination between certain kinds of--different people receiving free tuition at a university, for example. If you work for a company and that company says: We will send your child to school free, we will pick up the tuition, you have to pay the tax on that benefit, it is a taxable benefit to you. Let's say the tuition cost is $10,000, and your company gives you the $10,000 to pay for your child, though you have to pay the taxes on that. But if you are a university professor and your child wants to go to school, in many cases, the school waives the tuition for your child. Right now, you don't have to pay the tax on that. That is clearly discriminatory. The Joint Tax Committee has recommended in a report that deals with the so-called tax gap several provisions or loopholes that need to be closed. This is one of those so that the Tax Code would treat everybody the same. If you have tuition waived at a school, for example, it doesn't matter whether you are the principal of the school, a teacher, or you are an employee of another corporation that is paying for it; in any event, the tax treatment is the same: You would be taxed on that particular benefit. That is a fairer treatment than the current code. As I say, it was recommended by the Joint Tax Committee as part of this tax gap series of recommendations to enable the Internal Revenue Service to collect taxes fairly and try to ensure that when the code is administered, it treats all taxpayers the same. As I said, if there is a concern about that and the majority would like to work with us to try to find a different way to offset the cost of our modest provision, we would be delighted to work with them. I appreciate the willingness of the chairman of the committee to do exactly that. So if I could summarize, in my own words, all my amendment does is to take the provisions of the Finance Committee bill that passed out of the committee unanimously, that extends for small businesses certain tax benefits through the end of March of next year and extend those through the end of next year, December 31 of next year. That is the sole effect of the amendment. I think it is something we can all agree is good policy and would help to pay for the minimum wage increase we are imposing on the small businesses of our country. The Congressional Budget Office estimated that the minimum wage increase would impose $4 billion in new costs on the private sector in 2009 and $5.7 billion in 2010, with the increased costs extending at roughly $5 billion each year. Small businesses would incur the bulk of these costs, with restaurants subject to 60 percent of those costs. Therefore, it is responsible to combine the minimum wage increase with tax provisions that will help these small businesses weather the financial blow of the increase. That's why I am introducing my amendment to extend three tax incentives that are designed to encourage business investment and job creation in areas where the impact of the minimum wage increase will be felt most. There are three provisions. The first amends current law and is a 15- year recovery period for leasehold improvements and restaurant renovations. The second, new provision, is a 15-year recovery period for new restaurant construction. The third, also new, is a 15-year recovery period for retail improvements The base bill extends current law by 3 months, through the first quarter of 2008. My amendment extends the time-period during which renovations to leaseholds or restaurants must be completed through the end of 2008 will enable more businesses to plan renovations that will help them improve and expand their business operations. Regarding my provision on restaurant construction, there is no policy justification for providing a 39-year depreciation recovery period for new construction, but giving renovations the 15-year treatment. The floor, walls, or restrooms installed in a new building are the same quality as full-scale renovations and will suffer the same wear and tear. Further, convenience stores--a direct competitor of quick service restaurants--are allowed to use a 15-year depreciation schedule for all construction this treatment is permanent law for convenience stores. Ideally, all of the accelerated depreciation provisions we are considering should be permanent too. By allowing restaurateurs to deduct the cost of renovations and new construction on a shorter schedule, many more restaurant owners will be in a position to grow their businesses and continue to create more jobs. By definition, encouraging more new restaurants to be built means more new restaurant jobs. This is important, because the restaurant industry is uniquely impacted by a minimum wage increase. Of the nearly 2 million workers earning the minimum wage, 60 percent work in the food service industry. Further, the last time Congress increased the minimum wage, 146,000 jobs were cut from restaurant industry payrolls, according to the industry. Regarding the provision on retail improvements, The Small Business and work Opportunity Act of 2007 provides 15-year recovery period for improvements made to owner-occupied retail spaces, thus putting these establishments on the same footing as the leasehold improvements through the first quarter of 2008. The Kyl amendment would extend it through the end of 2008. Again, extending this treatment through 2008 makes it more likely businesses can take advantage of the incentive. Some have asked questions about the offset for these provisions. Although I don't believe we need an offset, this one does the following: It eliminates the present--law exclusion from gross income and wages--meaning income and payroll taxes for qualified tuition reductions under section 117(d) of the Tax Code. The proposal would be effective for taxable years beginning after December 31, 2006. I don't question whether a university or prep school wants to provide free tuition as an employment perk for a professor or chancellor. But it makes little sense that the rest of the taxpayers in this country have to subsidize that free tuition. Senators must clearly understand, if a small business wanted to give its employees' children free tuition at the local college, amounts over $5,000 would be a taxable benefit. And that is the right tax policy. To allow a college to provide the same benefit and have it competely tax-free is unfair. And again, this amendment does not eliminate the free tuition benefit. Finally, let me reiterate that if we are going to increase the minimum wage, it must be combined with responsible tax relief to ensure that we maintain our strong and growing economy. Mr. President, the scale of this tax relief does not represent what we should be passing today. This is a modest proposal, and I urge my colleagues to approve it. Amendment No. 207 to Amendment No. 100

Mr. KYL. Mr. President, I thank the chairman of the committee. I say to the Senator, do I understand there is a Member on his side who would like to give some brief remarks?

Mr. KYL. We are ready to offer the amendment. I thought what I could do is get it pending, and then if someone wants to make some remarks.

Mr. KYL. Mr. President, as soon as the staff brings it to me, I will send it to the desk. There is an amendment I sent to the desk earlier, and I will briefly describe it. It simply extends the provisions in the Finance Committee bill that provide tax assistance to small business in terms of expensing, depreciation, leasehold improvements, and so on, from the period of March 31 of next year through the end of next year. So it extends those provisions an additional 9 months. That legislation is pending at the desk. Amendment No. 205 to Amendment No. 100 Mr. President, at this time, I send to the desk the legislation which adds to that the element that provides for the pay-for or the tax provisions that will ensure this is revenue neutral. So I send this amendment to the desk.

Mr. KYL

Mr. KYL. Mr. President, I send to the desk an amendment that deals with extending some current provisions and adding additional provisions to assist small businesses to pay for a minimum wage increase, should one be adopted. I will speak to this later. I appreciate others allowing me to lay it down.

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

Mr. KYL. Mr. President, I seek recognition for the purpose of laying down an amendment and not speaking to it. I ask unanimous consent that the pending amendment be laid aside for that purpose.

Mr. KYL

Mr. KYL. Mr. President, I wish to address recent changes in the situation in Iraq and the possibility that resolutions of disapproval to the President's new strategy will be offered in the near future--a possibility which I believe would be very dangerous to the success of our military efforts. I will make three points this afternoon. The first is that it is important for us to give the newly announced strategy of the President an opportunity to succeed. That makes sense not only because everyone recognized that the President needed to announce a new strategy--he has done that, and it seems to me he should be accorded that courtesy--but also because, from a military standpoint, it is the only thing that makes sense. The key to the new strategy announced by the President is not the addition of new troops. We have had far more in terms of numbers of troops in Iraq than the increase that will be provided by this latest plan. No, the primary change in the strategy is the actions of the Iraqi Government--in particular, Prime Minister al-Maliki's commitment to begin doing things we wanted him to do a long time ago but which he was unwilling to do--to hold people after being arrested rather than releasing them on the streets, to allow curfews and checkpoints to work, to allow the control of the Mahdi army, which is under the leadership of Sadr, the Shiite leader in Iraq, who has confronted al- Maliki and his government. It appears this new strategy is beginning to work even after only a few days of its announcement. People have asked: Can we trust al- Maliki? The answer is that no one knows. But actions speak louder than words. Apparently, he has made good--at least initially--on his commitment to confront the Mahdi army and to stop Sadr and that army from continuing the sectarian violence against Sunnis in Baghdad. Apparently, there have been a lot of arrests made, and the United States is going to be able to now conduct the type of hold operations, after they have cleared an area, that would be necessary to create stability for an ultimate peace in Iraq. So the first point is we do need to give this new strategy a chance to succeed. The very early returns suggest that it just might be having that effect. In addition, it is important for us to be able to regain control of the Anbar Province. Almost a third of the western part of Iraq is under attack by al-Qaida and other terrorists who mean to create their own little fiefdom--called a caliphate--in that part of the country. Clearly, we cannot allow al-Qaida to have a terrorist base in Iraq. The additional battalion of marines who are committed to clearing this area is critical to the stability in Iraq and the defeat of the terrorists there. The second reason we should give this strategy a chance is that the nonbinding resolution which has already been offered and will apparently be brought before the Senate within a week or so is wrong for two reasons: First of all, it presents no credible alternative, and secondly, it is dangerous. It presents no credible alternative, just mere criticism. Albeit in a nonbinding way, it is still criticism without any kind of an alternative. The resolution itself doesn't contain an alternative except the following: ``The primary objective of the United States''--I am really listening at this point--``strategy in Iraq''--I am looking for a verb here but instead here are the four words--``should be to have the Iraqi political leaders make the political compromises necessary to end violence in Iraq.'' ``Should be to have'' them. Well, if I had a magic wand, maybe I could make this happen. But the reality is that it is not the lack of political compromise, it is the lack of peace that is enabling them to make the political compromise. As long as the Mahdi army is controlling Sadr City and Sadr is confronting al-Maliki and fomenting violence-- Shiite and Sunni and vice versa--the political compromises are going to be impossible to make. That is why the President and al-Maliki understood you have to first create peaceful conditions, change the conditions on the ground. If the Mahdi army is going to have death squads foment this kind of violence, you will never have those political compromises. If al-Maliki can control Sadr and eliminate the threat, political compromise is possible. So there is no alternative to the President's strategy in the nonbinding resolution that was filed. Secondly, it would be dangerous. To pass a nonbinding resolution in the United States is for effect. What is the effect? Well, the effect theoretically is to try to get the President to change policy. This strategy isn't going to change in the near term. Troops are on the way. Al-Maliki made his commitment and is apparently making good on the commitment, so the new strategy is working out right now. So a nonbinding resolution passed in a week or two is not going to change this. Instead, its effect is a pernicious one. What kind of a message does it send, first of all, to our troops that Congress doesn't support what the President and they are trying to accomplish here; that the Congress thinks we should be going in some other direction, albeit there is no alternative being presented, just in a resolution of criticism? What kind of a message does it send to the allies that the President's policy is going to be undercut to the point that it will not be carried out, and therefore they better begin to hedge their bets? And most important, what message does it send to our enemies? Can they simply decide that in a matter of time, support for the President's policies will have diminished to the point that they won't have to concern themselves with this new strategy anymore if they can wait it out, and they will have an opportunity for success? So it is not going to work, No. 1, and secondly, it is dangerous. That brings me to the third and final point. It seems to me that those people in favor of sending a message without presenting an alternative have an obligation to consider what will occur if the President's policy doesn't succeed. Almost everybody recognizes that the Iraqi Army is not able to defend this country and create a peaceful stability in the country at this point. So the question is: What would happen if we leave Iraq a failed state? Most agree, and the intelligence community has recently testified, that it would be disastrous, not only for the people in Iraq but for our allies in the region and for our long-term national security interests, both because of the ability of al-Qaida and other terrorists to consolidate their gains in the area and use that as a place from which to operate, and secondly, because all of the momentum we have gained in getting support, more or less, from countries such as Afghanistan, Pakistan, Saudi Arabia, Yemen, Egypt, Jordan--all of the countries in the region--that have helped in the war against the terrorists will switch the other way as they realize America will not stay in the fight, that they have to begin hedging their bets with the other powers in the region which include the sectarian killers and the terrorists. What is the consequence of a failed Iraq? It seems to me that for those who present no alternative other than Iraq needs to get its act together and provide for its own security, a policy which I don't know of anyone who agrees would succeed at this point in time, if that is not going to succeed, then what is the consequence of a failed Iraq and what is the consequence of the President's strategy failing? It all gets back to what I said in the beginning, and that is, it seems to me all Americans should want this strategy to succeed. Why would anyone want the strategy to fail? Just to prove a political point? That doesn't make sense when we have young men and women in harm's way and a lot riding on it not just for Iraqis but also for our national security. We should all want this strategy to work. We should do everything in our power to help make it work, and that begins by giving the plan a chance and not criticizing it before the strategy even has a few days to work out. That is why the possibility of a resolution, which is highly critical of the President's strategy and suggests a different course of action, a timeline for leaving, is the wrong strategy. What is that alternative in terms of timeline? It simply reads as follows: The United States should transfer under an appropriately expedited time line responsibility for internal security and halting sectarian violence in Iraq to the Government of Iraq and Government security forces. That is the alternative, in an appropriately expedited timeline. That is no alternative at all. That doesn't direct anybody to provide for security in Iraq on any faster basis than we are already attempting. I have heard no one criticize our training of the Iraqi forces or finding or suggesting there is some other way to train them in a better way, in a faster way. It takes time. We are doing the best we can. The general who was in charge of creating that program, General Petraeus, will be our general in charge again. I think, by all accounts, he did a terrific job of setting up the program. We know it takes a certain amount of time to train these Iraqi forces. We know the country is not in a position to defend itself at this point. Why would we want to set ourselves on a course to leave when we know they cannot defend themselves? The truth is, for the time being, we are going to have to remain there to help secure the peace in Iraq, and that means we ought to give the President's policy a chance to succeed, and all of us hope it will succeed.

Mr. KYL

Mr. KYL. Mr. President, on January 15, our Nation commemorated the birthday of the Reverend Dr. Martin Luther King, Jr. Every year we pay tribute to the life of this great American. But, in honoring Dr. King, we celebrate more than his life; we celebrate the legacy of his words and deeds, and the virtues that he embodied. Today, we remember Dr. King because he represents the best of the American spirit: someone who is compassionate, devoted, courageous, and hopeful. His compassion drew him to the plights of the poor and oppressed, and his devotion led him to champion their cause. His courage led him to act on this devotion, countless times placing himself in harm's way. Indeed, it was because of his courage that he fell to an assassin's bullet in 1968. And, his hope sustained him, even in the face of bitter racism. All of these virtues--compassion, devotion, courage, and hope-- propelled Dr. King to the esteemed place he occupies today. Perhaps Dr. King's most enduring virtue was his hope. It surely was on display when he delivered his most famous oration. In 1963, on the steps of the Lincoln Memorial, gazing out at the Washington Monument and beyond to the Capitol, he delivered his ``I Have a Dream'' speech, which is familiar to all Americans. As Dr. King looked upon these impressive symbols of America, he reflected upon the glaring shortcoming of our democracy. For all its successes, America had failed to realize the truth put forth in our Declaration of Independence: ``that all men are created equal.'' Amid these monuments to the promise of America, he told hundreds of thousands of the Nation's greatest injustice: racial inequality. Yet he still maintained hope, speaking in terms dreams and freedom. In 1964, President Lyndon Johnson signed the Civil Rights Act, and the Voting Rights Act became law the following year. Despite these legislative gains, Dr. King realized that achieving equality of opportunity required something much greater, and far more difficult, than mere legislation. It required a change in the hearts and minds of citizens. Despite this challenge, his optimism did not waver. In 1967, he appeared on ``Meet the Press'' where he was asked if he believed ``the American racial problem can be solved.'' ``Yes, I do,'' he replied. ``I refuse to give up. I refuse to despair it in this moment. I refuse to allow myself to fall into the dark chambers of pessimism, because I think in any social revolution, the one thing that keeps it going is hope.'' King's hope survived him, and today we are closer to the world that he envisioned. We honor historical figures not merely because they achieved or said great things. We honor them because their lives continue to offer insight that we might use to improve our world. ``[T]he goal of America is freedom,'' he wrote as he sat in a Birmingham, AL, jail cell. Only a man with great hope and faith in the triumph of good could write those words in those circumstances. It is with similar hope that we as Americans should proceed today, whatever the challenges that confront us.