Jon Kyl

Mr. KYL

Mr. KYL. Madam President, I have been coming to the floor to discuss why free enterprise is morally superior to all other economic systems. I have explored how free enterprise promotes the pursuit of happiness properly understood, by emphasizing earned success, and how it lifts up the poor by raising living standards. Today, I want to look at another way free enterprise lifts up the poor--by promoting the moral principles that make people more charitable and more socially responsible. This perspective sharply contrasts with President Obama's campaign narrative about social responsibility. He and many of his supporters paint free enterprise as a system that inherently clashes with social responsibility. In his telling, free enterprise is a system that mainly promotes Gordon Gekko-style ``greed'' and riches for those who least deserve them--a system that must be reformed through higher taxes and larger government. Most of the policies he has supported during the last 3 years demonstrate this perspective. The size and scope of the Federal Government has increased dramatically during his presidency. As he campaigns to get reelected, his main theme is that the only way some Americans can do better is if the government makes others worse off. There is an important counterargument to this negative narrative. In a new book, The Road to Freedom, American Enterprise Institute President Arthur Brooks provides a comprehensive explanation of the morality of free enterprise and how it makes everyone better off by creating a more positive society. As Brooks writes, the principles that underpin free enterprise are moral principles, such as honesty, industriousness, thrift, and opportunity. Those principles make people more virtuous, not less. Participants in free enterprise, for example, must be able to trust that those with whom they do business--that they will honor their contracts. By promoting greater trust and integrity, free markets promote the social and psychological linchpin of democratic prosperity. Brooks elaborates: The free enterprise system requires a culture of optimism and trust to function correctly--a positive sum, win-win mentality, and a desire for everyone to be better off. For many people, it produces more prosperity than they need to meet their daily requirements, a surplus that they will choose to direct to charitable purposes. The prosperity and positive outlook that stem from free enterprise encourages people to help the neediest and most vulnerable members of society. Indeed, it is no coincidence that the United States is a more charitable country than those with bigger welfare states. Those who believe in and have benefited from the free-enterprise system believe that everyone should have the opportunity to prosper, and they are willing to help take responsibility for lifting others up. ``Charitable giving appears to be part of most Americans' DNA,'' Brooks writes. Americans are remarkably generous not only toward our fellow citizens, but also toward those suffering abroad. On a per capita basis, we give 3\1/2\ times as much to causes and charities as the French, 7 times as much as Germans, and 14 times as much as Italians. These findings correlate to volunteering as well. Seventy to eighty percent of Americans donate money to charity each year. These donations add up to about $300 billion annually. The money goes to religious causes and also secular activities, such as education, health care, and social welfare. Americans also donate large amounts of their time to help the less fortunate. Indeed, there is a strong correlation between beliefs about the size of government and attitudes toward giving. As Brooks shows, those who believe in limited government give more to charity than those who hold more statist views. That makes sense. After all, a statist might argue that paying high levels of taxation is the equivalent of giving a lot to charity, since the government spends a large portion of its total revenue on social programs. By contrast, free-marketers would argue that government spending tends to crowd out private charity in ways that are both socially and fiscally harmful. Americans can take well-justified pride in their charitable giving. Both in aggregate and relative terms, we are the most generous society the world has ever known. As budget and tax debates move forward, we must remember that raising the top marginal tax rates could conceivably reduce charitable giving, because the biggest philanthropists would have less money to donate. This is just one of the many unintended--and undesirable--consequences that could result from the massive tax hike scheduled to take effect at the end of this year. If excessively high rates of taxation were the best way to cultivate a more generous and socially conscious citizenry, then Europeans would give more to charity than Americans. But that is simply not the case. America's record on charitable giving demonstrates that free enterprise is the best way to boost charitable giving and foster the civic virtues that underpin a broadly shared prosperity. I suggest the absence of a quorum.

Mr. KYL. Mr. President, reserving the right to object. I would ask the majority leader to modify his request to accommodate a few amendments. Therefore, I ask unanimous consent that the request be modified to allow the following amendments: Corker No. 2102, financing for transactions subsidized by export credit agencies; Vitter No. 2103, prohibitions on funds used for energy development outside of the United States; Toomey No. 2104, a $40 billion increase contingency; Lee No. 2100, phaseout; and Paul No. 2101, limitation on Ex-Im support. I further ask unanimous consent that following the disposition of the listed amendments, the bill be read three times and the Senate proceed to vote on the passage of the bill with a 60-vote threshold. Before the Chair rules, I would say the sponsors of the amendments would be prepared to enter into short time agreements in order to facilitate consideration of the bill.

Mr. KYL. Mr. President, I appreciate that. I hope we can continue to work together. As to the original request then, we would have to pose an objection as well.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Illinois (Mr. Kirk) and the Senator from Indiana (Mr. Lugar).

Mr. KYL

Mr. KYL. Mr. President, first let me say that I very much appreciate the comments of the Senator from Tennessee and his leadership on this issue. I join him in hoping we will be able to vote for the alternative he has provided, which is a more sensible way to ensure that this increase in student loan interest fees does not continue. Many students who entered college 4 or 5 years ago believing that higher education would improve their prospects for getting a good job are now, sadly, very disappointed. The Obama economy is going to let them down. According to a recent Associated Press story, one out of two recent graduates is either unemployed or underemployed. The article cites a new analysis based on government data which found that young college graduates ``are heavily represented in jobs that require a high school diploma or less . . . that's confounding their hopes a degree would pay off despite higher tuition and mounting student loans.'' At this time, most of us agree that Congress should extend the lower interest rate on certain Stafford loans. Unless we do, interest rates will double to 6.8 percent this July. There are competing proposals to accomplish this extension, as Senator Alexander pointed out. Unfortunately, the majority leader's proposal is going to make the underlying jobs problem worse by burdening job-creating businesses with new taxes and compliance costs. Let me illustrate how this occurs. In order to pay for the $6 billion cost of extending the 3.4-percent interest rates for 1 year, the Reid bill attempts to do what nearly every bill proposed by Senate Democrats this session has done: It permanently raises taxes on job creators in order to pay for temporary spending. Worse, the majority is attempting to divert dollars that are supposed to go to Medicare or Social Security in order to fund completely unrelated spending. In this case, the legislation singles out certain professional service businesses for a punitive tax hike, including those in the fields of health, engineering, architecture, accounting, actuarial science, performing arts, and athletics. Ironically, these are some of the fields in which there is actually demand for new employees, according to the AP story I referenced earlier. The tax hike would hit business owners who perform services for their businesses and make $200,000 or, if they are married, $250,000. If the IRS determines that 75 percent or more of the business's gross income is what this bill describes as ``attributable'' to the services of three or fewer owners, then this bill would make the owners pay payroll taxes on 100 percent of their share of the business profits even if some of that profit had nothing to do with the owner's work. In addition, if family members also own a piece of the business, then the working owner will owe additional payroll taxes on the family members' share of the business even if that family member provides no services. Obviously, there are several problems with this approach. Let's start with the most obvious: It takes more money from the private sector and gives it to the government at the very time when we want the private sector to have enough to create new jobs. Second, it rewrites the laws of income from labor and income from capital investment. This should not be done lightly, especially since confiscating more from small businesses means they will be less able to expand and create more jobs. Underscoring that this proposal is a tax increase and not a mere compliance measure, a coalition of 37 organizations that represents small businesses wrote a letter explaining that it ``could increase the payroll tax burden on business owners who are already fully complying with the law. For those businesses, this provision represents a tax increase rather than a clarification of existing tax burdens.'' I ask unanimous consent that the text of this letter be printed in the Record at the conclusion of my remarks.

Mr. KYL. I thank the Chair. So a bill that is intended to help students would actually make their job prospects even bleaker when they graduate. The American Institute of Architects said of the Reid proposal: If we're trying to make it easier for our college graduates to get started in their career and become contributing members of society, increasing taxes on those who would most likely hire them is simply bad public policy. Payroll taxes are already scheduled to become more punitive for the small business owners targeted by this bill. Under ObamaCare, the Medicare portion of their payroll tax will rise from 2.9 percent to 3.8 percent, and another 3.8 percent will be assessed on their investment income. To add insult to injury, this bill exposes family-owned businesses to double taxation. For example, in a business with three family member shareholders in which only two provide substantial services, those two family members would be responsible for payroll taxes on their own incomes and then both of them would have to pay payroll taxes on the income of their third family member. Applying this rising payroll tax to even more small business income is a terrible recipe in a time of a weak economy. At a time when businesses are struggling to hire, the last thing Congress should do is to make a bad situation worse. Now, the other side will argue that their bill is intended to prevent cases of tax abuse, so let's look into that. According to the IRS, 4.5 million S corporation tax returns were filed in 2009. Data from the Treasury Department shows that S corporations account for nearly 40 percent of small businesses with employees. As these numbers showed, doing business as an S corporation is popular because it allows a business to avoid the double taxation of income that comes with organizing as a C corporation. The business income of these and other so-called flowthrough organizations is taxed as individual income by the IRS. Given the prevalence of flowthrough businesses in our economy, it is not surprising that there has been some abuse from some S corporation shareholders who pay themselves small salaries in order to avoid paying Medicare and Social Security payroll taxes owed on their compensation. The IRS is well aware of this potential and has developed and implemented tools to go after firms and individuals who do not pay appropriate payroll taxes through what the IRS calls the reasonable compensation test. This test has been used for over 50 years, and the IRS has won a number of cases against taxpayers who paid themselves compensation that was deemed less than reasonable, most recently in last year's United States v. Watson decision. The Reid bill would impose a different standard--one that is arguably more confusing and less enforceable than the current IRS reasonable compensation test. Under the Reid bill, small businesses and the IRS will be asked to determine whether 75 percent of the small business income is ``attributable'' to the services of three or fewer shareholders. How on Earth is the IRS going to determine which income is attributable to the work of a particular shareholder and not to other employees or to capital investments? For example, if a business has three physical therapists, how will the IRS know whether the business's income is substantially due to their services or whether at least part of it relates to the fact that they hired talented front office staff, did marketing, bought a building in a good location, have a comfortable waiting room, implemented an efficient billing system, and invested in state-of-the-art medical equipment? Let's say an IRS agent manages to determine that exactly 75 percent of the business's income is attributable to the services of the three physical therapists. That means 25 percent of the business income was not due to their services, but the bill would impose payroll taxes on that portion as well. In other words, this bill would impose taxes on business income that is due to capital investment, which should not be subject to the payroll tax, and to the work of other employees who have already paid their payroll taxes. Payroll taxes should only apply to labor income, and they should only be applied once. That is current IRS policy and it is good policy. As one commentator noted last week, the Reid proposal will be a ``jobs program for tax lawyers defending clients before the IRS.'' To determine what percentage of business income is ``attributable'' to services performed by certain shareholders of an S corporation will be a boon for lawyers and CPAs but not for the professional service businesses that wish to expand and hire. Those of us who were here in 2010 argued against ObamaCare, among other reasons because it relied on student loans to pay for part of its costs. A more prudent way to extend the 3.4-percent interest rate on student loans is to cut at least $6 billion in ObamaCare spending, which is exactly what the House of Representatives recently voted to do. The House bill would cut spending from an unaccountable ObamaCare slush fund, formerly known as the Prevention and Public Health Fund. This approach, which our colleague Senator Alexander spoke to a moment ago, and of which I am a cosponsor, fully offsets the cost of a 1-year extension of the subsidized interest rate and directs an additional $6 billion toward debt reduction. This ensures that job-creating capital will not be diverted from small businesses to fund a temporary unrelated spending program. Notably, President Obama's own budget request recommended cutting this very same ObamaCare slush fund, and he has already signed into law legislation that cut $5 billion from it. Finally, I want to express my dismay at the lack of urgency from the majority about the most pressing issue facing small businesses and those college graduates seeking work; that is, the automatic tax increase for all Americans on January 1 of next year--the largest tax increase in the history of our country. The legislation on the floor today will not become law. The majority knows that. It is another political showboat. We know this because this Chamber rejected a similar tax hike 2 years ago when the majority had 59 Senate seats, and we know the House of Representatives would not pass the legislation. As the senior Senator from Utah noted last month: Senate Democrats are fiddling while Rome burns. That is because, in 8 months, as I said, the largest tax increase in American history will take effect on individuals, families, and businesses. Taxes on income, capital gains, dividends, family-owned farms and estates will skyrocket. As previously mentioned, new taxes on investment and payroll from ObamaCare will also take effect. Even without the tax increase in this Reid bill, small business owners are facing a marginal tax rate increase to nearly 41 percent, a regular payroll tax rising to 16.2 percent, and an additional 3.8- percent payroll tax on investment income. And we want these people to hire more, to create more jobs? Instead of wasting valuable time on a bill that will never become law, I hope my colleagues on the other side of the aisle will end their obsession with class warfare and start focusing on the most pressing issue at hand: stopping policies that will do further damage to our already weak economy. Defeating the majority leader's latest tax hike proposal will be a good place to start. Exhibit 1 May 3, 2012. Hon. Harry Reid, Majority Leader, U.S. Senate, Capitol Building, Washington,

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint), the Senator from South Carolina (Mr. Graham), the Senator from Illinois (Mr. Kirk), the Senator from Indiana (Mr. Lugar), and the Senator from Alaska (Ms. Murkowski). Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay.''

Mr. KYL

Mr. KYL. Mr. President, I rise today to say a few words about the nomination of Ajit Pai to be a member of the Federal Communications Commission. I have supported his nomination and that of his fellow nominee, Jessica Rosenworcel, and am pleased that unrelated matters have finally been resolved and that the Senate has confirmed both nominees. Ajit is somebody whom many of us have come to know from his years of public service, whether on the Senate Judiciary Committee, at the Department of Justice, where Ajit worked on both antitrust and legal policy matters, or in the general counsel's office of the FCC. I especially appreciate his important work on the Roberts, Miers, and Alito Supreme Court nominations during the 109th Congress, as well as his careful attention to national security matters while at the Department of Justice. Ajit is the son of immigrants who came to this country seeking opportunity, as did the ancestors of so many of our fellow Americans. They settled in the small town of Parsons, KS, population of 10,000. During his testimony before the Senate Commerce Committee, Ajit shared his memories of the sense of community and the Midwestern values that he learned in Parsons. He worked hard in school, excelled at both Harvard College and the University of Chicago Law School, and built a career in law and policy. Today, Ajit finds himself being confirmed to this position of honor and receiving a unique opportunity to serve his Nation. I am certain that his parents, having come to this country just 40 years ago, are immensely proud of him. We should all be grateful that individuals like Ajit choose to serve in these important positions, especially in fields where there are also opportunities in private life. He will be a member of the FCC for more than 4 years. I am grateful for his service and appreciate that he and his wife Janine have agreed to make this sacrifice for the good of our Nation. I am very disappointed that these nominations have been delayed for so long for nongermane reasons. Good men and women simply will not volunteer to serve if they are arbitrarily forced to spend months in limbo, uncertain as to their future. As an FCC Commissioner, Ajit will be one of five individuals overseeing an agency with 2,000 employees and a budget of $350 million. The Commission has broad regulatory authority over the Nation's communications industry. The communications landscape has evolved dramatically, not just during my lifetime but since I entered the Senate in 1995 and even in the past few years. It is sometimes difficult to remember how we functioned before we had the ability to reach most people on cell phones, to access the Internet from computers in any corner of the globe, or to watch videos of our children and grandchildren on mobile devices. Most Americans were raised in a world in which the television offered just a few channels, there was no cable news, and telephones had rotary dials. Policymakers should be reminded that many of the technologies that we take for granted today will soon be gone, and we do not really know which technologies will become obsolete and in which direction the Nation's innovators and consumers will take us. Congress and the FCC do not make those decisions, or at least they should not. These decisions should be made by the American people in their capacity as consumers, businessmen, entrepreneurs, investors, and citizens. Government does not create innovation or make entrepreneurs, and it should not be in the business of picking winners or losers or trying to shape private investment. The government's proper role in communications, as in other sectors of our economy, is to establish clear and stable rules that encourage competition, that give consumers choice and allow markets to thrive, and that keep bureaucratic preferences and politics to a minimum. Ajit has made clear that he shares this understanding of his role. I think that we can expect good things from him as a member of the Federal Communications Commission. I congratulate Ajit on this honor and am proud to have supported his nomination.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL

Mr. KYL. I appreciate that very much and I perhaps will ask unanimous consent the Senator from New Jersey follow my remarks?

Mr. KYL. Mr. President, I support reauthorization of the Violence Against Women Act. Throughout my career, I have worked on a number of crime victims' rights measures that, taken together, provide the mosaic of protections for all crime victims. As a member of the House of Representatives, I cosponsored the Sexual Assault Prevention Act--SAPA--which was incorporated into the Omnibus Crime Control Act signed into law by President Clinton in 1994. Among a number of reforms, SAPA increased penalties for stalking and sexual assault, and it changed the Federal Rules of Evidence to allow admission of prior sexual offenses in sexual assault cases. In 1997, I successfully petitioned the Arizona Supreme Court to adopt this change to Arizona's rules of evidence. In 2004, I co-authored the Crime Victims' Rights Act with Senator Feinstein. This legislation included a bill of rights for victims of Federal crimes, including the right to be informed, present, and heard at critical stages of the proceedings. That bill was signed into law by President Bush. I also supported the 2005 reauthorization of the Violence Against Women Act, which included a section Senator Cornyn and I wrote that expanded the Federal DNA collection program. Today, I am pleased to support the Hutchison/Grassley bill reauthorizing the Violence Against Women Act. I regret that there are competing versions of reauthorization, especially since I believe that virtually all of us support the current law. I cannot, however, vote for the Leahy version for a number of reasons. First, a new section, 904, is blatantly unconstitutional. This new section would give Indian tribes criminal jurisdiction to arrest, prosecute, and imprison non-Indians under tribal law for certain domestic-violence offenses. Adding this language to the existing law violates basic principles of equal protection and due process. All tribes require either Indian ancestry or a specific quantum of Indian blood in order to be a tribal member. Even a person who has lived his entire life on the reservation cannot be a tribal member if he does not have Indian blood. Such a person, no matter how long he has lived in the area, cannot vote in tribal elections and would have no say in crafting the laws that would be applied against him by section 904. Section 904 breaks with 200 years of American legal tradition that tribes cannot exercise criminal jurisdiction over non-Indians. By doing so, it creates a clear violation of the Constitution's equal protection and due process guarantees. I also take issue with the new Section 905 of the Leahy bill, which would allow Indian tribes to issue ``exclusion orders'' barring non- Indians from lands within the tribes' ``Indian country.'' ``Indian country'' is a term of art in Federal Indian law. It is meant to include lands that were allotted and sold to non-Indians, or allotted to Indians who later sold the land to non-Indians, but that are within the exterior boundaries of a historic Indian reservation. Many non- Indian families have lived on such lands for generations. Other such residents include people with Indian blood, but who have been expelled from membership in the tribe for various reasons. Section 905 would literally allow the tribes to issue orders that bar these individuals from entering their own land, land which they own in fee simple absolute. The primary rationale for these proposed additions to VAWA was to provide protection for tribal members. The Hutchison/Grassley alternative does that by replacing the unconstitutional provisions of the Leahy bill with an authorization for tribes to seek protection orders to prevent domestic violence, issued directly by a Federal court, upon a showing that the target of the order has assaulted an Indian spouse or girlfriend, or a child in the custody or care of such person, and that a protection order is reasonably necessary to protect the well-being of the victim. Violations of the order would be subject to criminal prosecution in Federal court. While punishing an offender for any underlying crime is important, preventing harm is critical; and it is often easier to prosecute violations of the terms of a protection order. For example, parties who are not in a romantic relationship with the defendant typically will be available to testify that the defendant entered areas from which he is excluded under the order. Protection orders, thus, tend to provide an effective means for preventing acts of domestic violence. And because orders would be issued by a Federal court, we can be reasonably certain that such orders will comply with basic principles of due process and will be enforced. The Hutchison/Grassley reauthorization of the Violence Against Women Act contains other improvements on the Leahy version, and I urge its adoption.

Mr. KYL. Mr. President, I note my colleague from New Jersey was also standing. I have about 5 minutes of remarks. Did the Senator from New Jersey wish also to speak?

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL

Mr. KYL. Mr. President, I would like to call the attention of my colleagues to a column published in the April 23rd edition of The Washington Post by Dr. Henry Kissinger and retired GEN Brent Scowcroft. These are two of the most respected voices on nuclear strategy, deterrence, and arms control, and they both recently testified on the New START treaty. The article, titled ``Strategic Stability in Today's Nuclear World,'' comes at an important time. The President, we know, has tasked his advisors to conduct an assessment of our nuclear forces and strategy to inform future arms reductions beyond the levels established by the New START treaty. The administration is said to be considering reductions that could lead to as few as 300 warheads, which would require rather significant changes to long-standing U.S. nuclear doctrine. Dr. Kissinger and General Scowcroft warn that: Before momentum builds on that basis, we feel obliged to stress our conviction that the goal of future negotiations should be strategic stability and that lower numbers of weapons should be a consequence of strategic analysis, not an abstract preconceived determination. In fact, the authors go on to warn the reader that: Strategic stability is not inherent with low numbers of nuclear weapons; indeed, excessively low numbers could lead to a situation in which surprise attacks are conceivable. This short column should be required reading for all of my colleagues, and the eight key criteria listed by the authors, to govern nuclear weapons policy, should become the basis for our consideration of nuclear strategy and arms control moving forward. I want to express my deep appreciation to Dr. Kissinger and General Scowcroft for their important contributions to our ongoing debates about nuclear weapons and, more broadly, for their decades of service to our country. Mr. President, I ask unanimous consent to have the article printed in the Record at the end of my remarks.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senators are necessarily absent: the Senator from Georgia (Mr. Chambliss), the Senator from Utah (Mr. Hatch), and the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Illinois (Mr. Kirk).