Jon Kyl

Mr. KYL

Mr. KYL. I ask unanimous consent Senator Landrieu be added as a cosponsor to this amendment.

Mr. KYL. Mr. President, the time is under the control of Senator Sessions, who asked I take the floor next.

Mr. KYL. Mr. President, I will take a moment, before we vote to again thank the folks I thanked last night: Senator Kennedy; Senator McCain; my colleague, Senator Cornyn, who worked on this amendment for a long time; and Senator Lindsey Graham, among others, for working together to arrive at a consensus on how this amendment should be drafted, to achieve the things the Senator from Massachusetts was just talking about. We all agree on the significant benefits that can result from legislation of this kind, including, potentially, citizenship, for a lot of people. It should be limited to those who came here and otherwise worked honestly in this country, and it should never be available to those who have deliberately abused our laws, our process, or been convicted of serious crimes. As a result of this amendment, it will make certain that benefits of the legislation, however they are ultimately defined, are not available to that class of people we do not want to count as fellow citizens when this is all over with. I hope my colleagues will join in voting yes on the amendment. I thank my colleagues.

Mr. KYL

Mr. KYL. It is my understanding that following Senator Kerry this evening we will lay down the Kyl-Cornyn-Graham-Allen-McCain-Frist- Brownback-Martinez amendment so all can see what it is and we can start some debate this evening and then finish the debate tomorrow. Is that correct?

Mr. KYL. I am happy to yield.

Mr. KYL. I thank the Senator from Texas. Yes, we have tried to do that. I see the distinguished minority leader is here, and I suggest the best way to get this bill quickly considered and finished is to lay down as many of the amendments as Members have ready and then have the minority and majority side work together to figure out the proper order of those amendments, to try to enter into time agreements. If we are able to do that, I don't have any doubt that working in good faith we can complete the work of this Senate before the Memorial Day recess on this important piece of legislation.

Mr. KYL. Mr. President, in view of some things that were said a couple weeks ago, let me close this out with a couple of brief comments. At the time that Senator Cornyn and I first introduced this amendment, we speculated that it might ultimately result in 300,000, 400,000 500,000 people being denied the benefits of the legislation. However, there were those on the other side who said this was a poison pill, this was going to preclude everyone who came into the country illegally or overstayed a visa from getting the benefits of the legislation. We said: No, that is not true. It is cast narrowly by its terms. It talks about convicted felons, three misdemeanors, and the people who have avoided a court order or a judge's order that they leave the country. That is it. Some on the other side said: We look at the language, and we think maybe this could apply to anyone who comes into the country illegally. By laying it down, you have created a poison bill. As a result, they would not permit a vote on the amendment. As a result, this legislation came to the end of the period of time, the end of the week, and the majority leader had to lay it aside so that the Senate could go on its recess. Senator Cornyn and I never had an intention to bring the bill to a halt or to create some kind of a poison pill that would make it impossible for anyone to support the legislation if the amendment were agreed to. We simply were trying to point out that there was a deficiency in the bill. Serious criminals could become citizens of the United States. We felt that was wrong. So we introduced the amendment and tried to explain at the time that was our sole motivation. Frankly, we could have dispensed with this amendment 3 weeks ago if our colleagues had simply gotten down to the debate, carefully read it, talked it out with us, and gotten a vote. Because of a question that our colleagues raised that we referred to earlier this evening, we have made a couple of modifications to the amendment, demonstrating that we are perfectly willing to negotiate a provision if there is a sense that we should have done something a little bit differently, which we did. I hope as we proceed to introduce other amendments to this legislation, that our colleagues on the other side will be willing to have votes. We wanted to have a vote on this earlier today or tonight or to lock in a time for a vote tomorrow. No, the other side said: No, we are not ready yet. If we continue at this pace, we are not going to finish the bill by Memorial Day, as the majority leader has requested, as the President has requested, and as we are committed to do. Our colleagues are going to have to do two things with respect to the rest of the debate on this bill: No. 1, to be willing to move with us to a quick consideration of amendments, a reasonable time for debate, then a vote, and then move on to the next amendment. No. 2, instead of characterizing amendments in a way that is not correct and attributing political motives to those who are simply trying to point out deficiencies in the bill and correct them with these amendments, they ought to simply be willing to come to the Senate, have the debate, and then proceed to a vote on the amendment. We are not in this to somehow try to stop the legislation as our repeated efforts to get a vote and move on have demonstrated. I join my colleague from Texas in saying I appreciate the fact that, hopefully now, knock on wood, tomorrow morning, first thing, we will be able to have a vote on this amendment and not only vote on it but finally, having sat down and looked at it, our colleagues will say: This is an amendment we can support. It makes sense to deny citizenship to serious criminals. If we can approach the other amendments in the same fashion we have finally gotten to with this amendment, we can actually finish this bill. I urge my colleagues to cooperate with us in that way.

Mr. KYL. Mr. President, might I ask the chairman to yield?

Mr. KYL. Mr. President, I appreciate the comments of my colleague and thank him, Senator Graham, and Senator Kennedy for their work in helping us to negotiate provisions of this amendment. I join my colleague from Arizona in expressing the view that we should not take very long tomorrow to conclude the debate, and I hope we will receive substantial support for the amendment.

Mr. KYL. Mr. President, let me briefly explain this amendment. It is a somewhat different version from what was introduced a couple of weeks ago and was pending at the time this legislation was laid aside for other business. This amendment has the primary purpose of ensuring that people who have committed serious crimes or have absconded after on order for their removal has been issued would not be entitled to the benefits of the legislation. Specifically, in the bill as written, there were certain crimes which were included, and if you had committed one of those crimes, you couldn't participate in the program--certain crimes of moral turpitude, for example. What we found was that list was not all-inclusive and there were other serious crimes, including felonies, that were not included and therefore we felt should be added so that nobody who had committed a serious crime would be able to participate in the program. Among the crimes that courts have said did not involve moral turpitude and therefore needed to be included in this legislation are the following: alien smuggling, conspiracy to commit offenses against the United States, simple assault and battery, involuntary manslaughter, simple kidnapping, weapons possession--for example, one of the cases dealt with possession of a sawed-off shot gun--burglary, money laundering, and there are others as well. The point is, we want to be sure this legislation denies the benefits of legal status, including potential citizenship, to anyone who has committed a serious crime of this type. Therefore, the statute provides that if you have been convicted of a felony or three misdemeanors or have been convicted of a serious crime or there are reasonable grounds to believe the alien has committed a serious crime outside of the United States prior to arrival, and there are reasonable grounds for regarding the alien as a danger to the security of the United States, then in those events the individual would not be able to participate in the benefits of the law. In addition to that, there are several categories of individuals who for various reasons have been ordered removed from the United States and have adjudicated their case and a final order of removal has been issued, either by an immigration judge or another judge or immigration official. Here, too, given the fact that we want the benefits of this legislation to apply to people who are willing to comply with the law, even where there has been a court adjudication of this statute, if they do not like the results and decide they are not going to leave even though the judge ordered them to leave, then we should not allow the benefits of this legislation to apply to them. One of the things which is inherent in most of the bills--I think in all of the bills, including the bill that is on the floor--is the concept that you are not permitted to be in the United States unless certain things happen. If you commit a crime, for example, then you can't stay here. That relies to some extent on the individual complying with the court order to leave. This part of the amendment says that when you have been ordered to leave by a judge, you have to do that. If you have demonstrated that you are not willing to do that, then you shouldn't be able to participate in the benefits of this law. One of the things we have done--and as a result, there have been several cosponsors added to the legislation--is provided some opportunities to have this provision waived if people can make certain arguments. For example, if an individual who has been ordered to be removed can demonstrate they did not receive notice of removal proceedings, under that condition, this provision could be waived. In addition, the alien could argue that his failure to appear and be removed was due to exceptional circumstances beyond the control of the alien or that the alien's departure from the United States would result in extreme hardship to the alien's spouse, parent, or child who is a citizen of the United States or an alien lawfully admitted for permanent residence. There is one other factor that has been added relative to coming into this country based upon fraudulent documents. In those situations, the alien could argue that there was a reason this provision should be waived and the alien should still be permitted to participate in the benefits of the legislation. We think we have drafted something that is fair, that ensures that people who should not be citizens of the United States or granted other legal status under the bill will not be granted the status, but that if there is some reason they can argue that there should be an exception, they will have every right to do so. In that sense, we think this is a firm but fair provision. I hope our colleagues on the other side of the aisle and colleagues who support the underlying legislation would consider this not an unfriendly amendment but an amendment that is truly designed to ensure that a key principle is upheld. The principle is already built into the underlying bill in one respect. The object of this amendment is to make sure it is complete and covers all of the kinds of crimes one might want to cover. As a result, we would hope this would receive an overwhelming response and could be supported by a large number of our colleagues, both on the Democratic and Republican side. Let me conclude by saying that this vote will not occur until tomorrow, but it is an important vote. I think it will demonstrate our willingness to continue to move this legislation forward. I appreciate the consideration of this amendment and ask my colleagues to support it tomorrow.

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

Mr. KYL. Mr. President, there is an amendment at the desk which I would like to have considered at this time.

Mr. KYL. If we start tomorrow morning with our amendment, the Kyl- Cornyn et al. amendment, perhaps we could conclude more business if we follow in that process.

Mr. KYL. Mr. President, Chairman Specter, it is my understanding that if I defer to the Senator from New Mexico, we can actually get an amendment of the Senator from New Mexico voted on and perhaps another amendment considered by Senator Kerry, so they would be disposed of, whereas it may take a bit longer if our amendment is put down.

Mr. KYL

Mr. KYL. Mr. President, as one of the three Senate conferees on this legislation, I want to take a moment to explain why this legislation is so important to our Nation's continued economic growth. The centerpiece of this conference agreement is the extension of the 15 percent investment tax rate for 2 more years, through 2010. Under this rate structure, lower income taxpayers will have dividends and capital gains taxed at a 5-percent rate through 2007, and in 2008-2010 will have them taxed at a zero rate. Taxpayers who fall above the 15- percent income tax bracket will have their dividends and capital gains taxed at a 15-percent rate through 2010. As the lead sponsor of the Republican leadership bill, S. 7, to make the lower investment rates permanent, I am pleased we were able to extend these rates to give investors certainty that they will not face a tax increase in the near term. The reason I have worked so hard to extend these lower rates is because the policy has worked exactly as we intended it when we enacted the rates in 2003. In 2003, we suggested that by reducing the marginal rate imposed on investment earnings we would give investors an incentive to put more of their money at work in the markets. At that time, following the tech-bubble bursting and the terrorist attacks of September 11, investors had been very reluctant to put their hard- earned money at risk in the markets. But by reducing the marginal tax rate on investment income, the tax penalty imposed on the additional investment earnings the reward for taking on additional risk is smaller, and thus makes the risk more attractive. When investors get to keep more of their reward, they are encouraged to invest more; with more investment, businesses have an easier time attracting the capital they need to expand, create new goods and services, and also create more jobs. All of this additional economic activity creates economic growth. Critics argue that most of the benefit of the lower rates flows to the wealthiest taxpayers, but they fail to acknowledge that millions of low- and middle-income taxpayers receive dividends and capital gains and will benefit from the lower rates. Research by the Joint Committee on Taxation and the Finance Committee has found that lower income taxpayers will save more than higher income taxpayers, when the savings are measured as a percentage of total tax liability, thanks to the lower rates, especially the 5 percent and zero rates. The savings are even more pronounced for seniors. In 2008-2010, seniors with adjusted gross incomes of $50,000 and under will see their tax liability reduced by 17.1 percent as a result of the lower tax rates for dividends. In contrast, seniors with income over $200,000 will see their tax liability cut by only 5.7 percent. All taxpayers with incomes of $200,000 and up will see their tax liability reduced by just 2.2 percent as a result of the dividend tax rates. The sheer numbers of taxpayers who benefit from these policies is equally impressive. More than 19 million taxpayers claimed dividend income in 2003 and more than 7 million reported capital gains. More than 315,000 Arizona taxpayers reported taxable dividends in 2003 and more than 127,000 Arizona families reported capital gains in 2003. More than 38 percent of Arizona tax filers who reported dividend income in 2003 had incomes under $50,000; 73.1 percent had incomes under $100,000. Of those reporting capital gains, 35.1 percent had incomes under $50,000 and 68.8 percent had incomes under $100,000. In addition to benefiting millions of taxpayers, the lower rates have encouraged investment in our growing economy. The economy expanded at a 4.8-percent annual rate in the first quarter of 2006. This follows economic growth of 3.5 percent in 2005 the fastest rate of any major industrialized nation. Moreover, the economy has created about 2 million jobs over the past 12 months and more than 5.2 million jobs since August 2003. The unemployment rate is 4.7 percent--this is lower than the average of the 1960s, 1970s, 1980s, and 1990s. Productivity increased at a strong annual rate of 3.2 percent in the first quarter of 2006. Productivity is a key factor to increasing standards of living. Hourly compensation rose at a 5.7 percent rate in the first quarter--more than twice as much as in the previous quarter. The Conference Board index of consumer confidence increased in April to its highest level in almost 4 years. Industrial production rose at a 4.5- percent annual rate in the first quarter. The stock market hovers near its all-time high. Our economy is booming, and it is due in large part to the tax policies we enacted in 2003. Another argument we hear about this bill is that we cannot afford it. I don't think we can afford to not pass this bill. The growing economy that has resulted from these tax policies has led to a surge of revenue flowing into the Treasury. According to the Congressional Budget Office, ``Monthly Budget Review'' released on May 4, 2006, ``the 2006 deficit will be significantly less'' than was predicted, even assuming enactment of the supplemental and the tax reconciliation agreement. Revenues for April 2006 were 14 percent higher than revenues for April 2005. Government estimators had predicted that the reduction in capital gains rates that was enacted in 2003 would cost the Federal Government $27 billion in lost revenues for 2004, but CBO now reports that the lower rates actually brought in an additional $26 billion in revenue. So instead of costing $27 billion, the lower rates actually made $26 billion for the Treasury. I heard that this morning Ambassador Portman, in his nomination hearing to be the new Director of the Office of Management and Budget, told the Budget Committee that revenues flowing into the Federal Treasury will reach their post-World War II average of about 18 percent of GDP as early as this year. That means Congress must make the 2001 and 2003 tax cuts permanent just to avoid taking historic amounts of revenue out of the economy. Clearly, the American people are not undertaxed. I want to mention briefly some of the other important provisions of this reconciliation agreement. It extends the AMT ``patch'' through 2006, thus keeping 15.3 million taxpaying families out of the alternative minimum tax. I am a cosponsor of Senator Baucus's legislation to repeal the AMT, S. 1103, and, as chairman of the Subcommittee on Taxation and IRS Oversight, I held a hearing last year that looked into the burdens of the AMT. I am proud that we were also able to address some problems in the international section of our Tax Code in this agreement. The conference agreement provides ``look through treatment'' for 3 years for certain payments between related controlled-foreign corporations. I am the sponsor of legislation, S. 750, to provide this treatment permanently. Today's economy is different from the environment that existed when our foreign tax rules were introduced in the 1960s. Enacting the ``CFC Look-Through'' provision will simplify business structures for U.S. multinational companies and make it easier for them to compete with foreign companies. The conference agreement also includes an extension of the ``active financing income'' exception, which I actively sought in the conference negotiations. I am a cosponsor of legislation to make this exception permanent, S. 1159. Active financial services income banking income, leasing transactions and other financial transactions that is earned overseas has an exception under law that allows deferral until the funds are repatriated to the U.S. parent, but it expires at the end of 2006. The conference agreement extends the exception through 2008. The conference agreement extends the current thresholds for small businesses to expense equipment purchases through 2009. Under current law the increased thresholds were due to expire after 2007. Expensing makes it more cost-effective for small business owners to grow their businesses by purchasing new machines and other equipment; extending the provision through 2009 enables businesses to better plan for such investments. Finally, the conference agreement eliminates the income restrictions on the ability of taxpayers to convert a regular IRA into a Roth IRA in 2010. Under current law, families with incomes over $100,000 cannot convert a regular IRA into a Roth. Allowing the conversion will help families save for retirement because Roth IRAs are made up of aftertax money, and all appreciation in the accounts is withdrawn tax free. We ought not double-tax savings, especially when we need to encourage young people to do more to plan for their own retirements. I thank Chairman Grassley for being so supportive of my efforts to extend the investment tax rate for 2 more years and for all of his hard work as chairman of this conference. Through his efforts we were able to put together a tax reconciliation agreement that prevents tax increases on millions of Americans and that will keep our economy growing strong well into the future.

Mr. KYL

Mr. KYL. Mr. President, I regret that, twice this week, the Senate has failed to address the problem of medical liability costs. I support S. 22, the Medical Care Access Protection Act of 2006, and S. 23, the Healthy Mothers and Healthy Babies Access to Care Act. Both of these bills would address the very real problem of access to medical care for people in my State and across the country. We have a crisis in the United States, and in particular in Arizona, when it comes to the availability of providers. The terrible distortions in our medical liability system have been with us for years. In Arizona, we have seen emergency rooms that cannot remain open because there are not enough trauma surgeons and specialists to staff the ER, physicians who have decided to move from my State to States with more supportive medical liability law, and finally, doctors who have opted to retire early. It is troubling to have highly trained, dedicated, qualified members of the medical community leave or to give up their profession--all to the detriment of their patients. This shrinking availability of physicians is due in part to the high insurance premiums that doctors are facing. In just 5 years, the premiums for general surgery in Arizona increased from $37,804 to $56,862--an increase of 50 percent. For obstetricians in Arizona, premiums in 2001 were $49,436 and are now averaging $72,734. These premiums are rising at a staggering rate in part because juries in malpractice cases have given high-dollar verdicts to plaintiffs. Some of the verdicts are merited; many, we know, are not. In the end, these legal excesses damage the medical liability system, push up premiums, and lead to the early exodus of physicians. The system is broken and it is patients who suffer. Hard-working men and women who need emergency medical treatment face longer waiting times when there are too few physicians to staff hospitals. Instead of a few days, it takes weeks for children to be seen for complex conditions because of the lack of pediatric specialists. Our seniors are forced to drive longer distances because they are told that physicians are no longer seeing any new Medicare patients. The situation for both physicians and patients has grown bleak, and care is compromised. We should address this by enacting meaningful medical liability reform. S. 22 provides full recovery of the cost of necessary medical expenses and lost wages in a medical negligence case. When a wrong has occurred, it is important that the patient be able to gain a legal settlement or verdict that meets his or her future needs. This has always been a hallmark of medical liability legislation I have supported because it is in the best interest of the patient. New to S. 22 is the Texas model of caps on noneconomic damages,limiting them to $750,000 for noneconomic damages from three parties. I hear constantly from physicians who share with me the escalating costs of medical liability insurance and the ways they have had to alter their practice to pay these bills. We have had an exodus of specialists from emergency room on-call rosters, and as you might have expected, hospitals are having trouble recruiting new physicians to the area. Compared to the national average of 283 physicians per 100,000 people, Arizona has only 207 physicians per 100,000 people. I recently got an e-mail from an emergency physician, Todd Taylor of Phoenix, who is leaving the clinical practice to go to Tennessee. He is giving up medicine at the age of 49, in part, he said, because he sees a bad situation getting worse. The American College of Emergency Physicians recently issued a ``national report card'' and graded the medical liability environment in Arizona a D-minus. I also heard about a woman in Arizona who returned to her obstetrician to deliver her second child, only to find out that physician had stopped delivering babies because of the high liability premiums. Arizona cannot afford to have physicians leave the State or curtail their practices. There are areas of my State like Apache County that don't have even a single obstetrician. That means women in labor have to drive to neighboring counties to deliver their children. Apache had only 34 physicians in the whole county in 2004 and has seen even more physicians leave the area since then. One physician there, Thomas Bennett, said that his liability premiums, coupled with decreasing reimbursement, forced him out of his practice after 25 years. Dr. Bennett was an OB/GYN and always practiced in rural areas. What a loss to that community and to our State. S. 23, the second bill I mentioned, would provide liability protection for those who deliver babies and might keep physicians in practice or encourage obstetricians to practice in underserved areas like Apache Conty, AZ. This is not how the system was ever intended to work. If we want women and babies to enjoy the medical care they expect and deserve, we need to find ways to encourage physicians to practice throughout my State and throughout the country. We cannot afford to have doctors relocating to different States to find more favorable laws and for communities to go without vital services. The health care community has asked for the protections it needs to continue to provide services. My Senate colleagues should do the right thing for patients, physicians, and hospitals, and reconsider their opposition to medical liability reform now. We will keep coming back until they are willing to address this situation--not just for the medical community but for all of the patients it serves.

Mr. KYL

Mr. KYL. Mr. President, I rise today in support of the resolution introduced by Senator Leahy and others to recognize May 15, 2006, as ``Peace Officers Memorial Day. Peace Officers work tirelessly to protect our society from criminals who would prey on the weak and innocent. They are the front line in a battle for justice and the rule of law. They often are unheralded heroes, whose simple act of going to work puts them in harm's way for our sake. Tens of thousands of police officers were assaulted last year, and that number is likely to be similar this year. It is important that we take a moment to recognize the crucial service they provide. Last year, 156 police officers were killed in the line of duty. Justice for the families of slain officers often comes slowly. I have introduced legislation that would speed up the process for the most hardened of criminals, those who murder police men and women. The Law Enforcement Officers' Protection Act would guarantee tough punishment for criminals who murder or assault police officers. Part of the legislation is named after Dr. John B. Jamison, a Coconino County, AZ Reserve Sheriffs Deputy who was slain while responding to a fellow deputy's call for assistance. The killer fired 30 rounds from an assault rifle into Deputy Jamison's car, killing him before he could reach for his gun or even unbuckle his seatbelt. He is survived by two children. State courts completed their review of the killer's conviction and sentence in 1985. Federal courts then delayed the case for an additional 15 years. One judge on the U.S. Court of Appeals for the Ninth Circuit even tried to postpone the killer's final execution date on the alleged basis that that killer was wrongfully denied Sate funds to investigate a rare neurological condition that his lawyer had learned of while watching television. Deputy Jamison's killer ultimately was executed in 2000--18 years after the crime occurred, and 15 years after Federal habeas corpus proceedings began. So as we recognize the sacrifice that peace officers make to protect us every day--to protect the streets on which we drive to work, protect the neighborhoods where our children play, protect the stores where we shop, protect the very halls of government where I stand today--I urge my colleagues to help protect the peace officers and bring justice to the families of those who have given the ultimate sacrifice for the benefit of the rest of us.

Mr. KYL

Mr. KYL. Mr. President, it is with great pride that I rise today to honor a respected jurist and dedicated public servant upon the occasion of his stepping down as the Chief Judge of the United States District Court for the District of Arizona. The Honorable Stephen M. McNamee earned his bachelor of arts in history from the University of Cincinnati in 1964. He received his master of arts degree in 1967 and his juris doctor degree in 1969 from the University of Arizona. Judge McNamee began his professional career as an assistant U.S. attorney, a position he held from 1971 to 1985. During that time, he was chief of the civil division in Tucson, chief assistant U.S. attorney, and first assistant U.S. attorney. In 1985, President Reagan appointed him U.S. attorney for the District of Arizona. He made prosecuting violent crime within the 21 Native American communities in Arizona a top priority, particularly the prosecution of those who victimize Native American children. He also implemented model collection procedures for fines and penalty assessments of Federal defendants--the source of funding for the entire Victims of Crime Act program. Additionally, he testified before congressional committees on behalf of the Department of Justice regarding a variety of issues from terrorist threats to the southwest border, to child abuse and neglect on Indian reservations, to theft of Indian artifacts from archeological sites, to the reauthorization of the Victims of Crimes Act of 1984. At the behest of Attorney General Richard Thornburgh, he helped organize the first major conference to bring together American and Mexican criminal justice officials. In 1990, he was appointed to the Federal bench by President George H.W. Bush, and in that capacity he developed a similar program to bring Mexican and U.S. Federal judges together to learn about each other's processes and procedures. As the chief judge of the District of Arizona, Judge McNamee managed a burgeoning docket. Since 1999, the filing of criminal cases went up 80 percent and civil case filings went up 59 percent. Nevertheless, under his leadership, the number of cases pending for 3 years or more has declined nearly 20 percent. Judge McNamee has been an active liaison to Congress for the Administrative Office of the United States Courts and the Federal judiciary. He was appointed to the board of directors of the Federal Judges Association and has served on several Ninth Circuit and District of Arizona committees addressing a wide range of issues, from capital cases to racial, religious, and ethnic fairness to security issues. As a distinguished member of the community, Judge McNamee has been the recipient of almost two dozen international, national, and State commendations and awards. He exemplifies the highest standards that we have come to expect from our judiciary, and we thank him for his service.

Mr. KYL

Mr. KYL. Mr. President, I wish to address the same subject and begin where the distinguished Senator from Illinois left off when he talked about new leadership. I wonder if he would join Republicans to see if we can eliminate the tariff on Brazilian ethanol, something which the Senator from Illinois suggests we need more of, one of the three solutions he says we need-- more leadership, more ethanol and fuel economy standards. I think we are going to provide some leadership and we are going to provide some more ethanol. One way to do that is to reduce the extraordinary expense of bringing it in from Brazil. We haven't gotten a lot of cooperation from the other side on that. That will be my first question to him: Will he step up and exercise leadership with us to eliminate that tariff on ethanol? There is a 10-percent mandate in the Energy bill on ethanol. The Senator suggested we should have a higher mandate on ethanol, or a higher subsidy for that. The reality is one of the reasons gas prices have been where they are is we haven't been able to meet that 10- percent mandate. There isn't enough ethanol being produced and, therefore, because there is a lack of supply in comparison to the demand, the price has gone up, obviously. What we need to do here, instead of pointing fingers and demagoguing the issue, is to understand economics and appreciate where the real problem is. Then we can begin to solve it. There is an old saying: For every complex problem, there is a simple and wrong solution. That is what we have mostly heard on the other side. The reality is, if you want to know the truth, the single most important component in the retail price of gasoline is the cost of crude oil--the single most important factor. Indeed, the cost of crude oil accounts for 95 percent of the price of a gallon of gasoline. Changes in the price of retail gasoline are almost entirely explained by changes in crude oil prices. I have a chart I wish to show you which demonstrates that over the last 15 years, changes in the world price of crude oil have accounted for more than 95 percent of the changes in gasoline prices. It shows that as crude oil prices have gone up, the price of gasoline has tracked it almost exactly. If you are looking for a culprit and why crude oil prices have gone up, it is because the demand has exceeded the supply. Countries such as China and India are demanding more and more of the product. And because of constraints imposed significantly by the Congress, we have not been adding to the supply. There are also other problems that have created this spike recently. The largest reason, according to the folks on Wall Street, is the nuclear saber rattling from Iran, which produces about 4 million barrels of oil a day--or about 5 percent of world's supply--and it controls the Strait of Hormuz through which about 17 million barrels of Middle East oil passes every day. Some experts believe that concern about the Iranian nuclear crisis has added $10 per barrel to the price of crude oil since the start of the year. If you add to that supply disruption in Norway and Nigeria, as well as the machinations of Venezuela's strongman Hugo Chavez, you can see there has been a spike in the world prices which have been reflected at the pump. We have also had some domestic problems that have added to the spike in prices. The U.S. Minerals Management Service has reported that over 334,000 barrels per day of crude oil production in the gulf coast are still shut in as a result of Hurricane Katrina. More importantly, some of the heavily damaged gulf coast refineries representing nearly 5 percent of U.S. refining capacity are still undergoing repair. But the good news is they are likely to resume production at the end of this month. Another problem is because there was so much refining capacity that went down, the Government urged the refiners to continue refining and forego their regularly scheduled annual fall maintenance in order to keep the supply of gasoline from dropping even further. They did that. I am glad they did. The problem now is the crisis is over and they are having to engage in that deferred maintenance. And after months of heavier than normal usage, they are finding this long overdue maintenance is reducing production out of the refineries as well. As it comes on line, we are going to see some relief. Finally, as occurs every spring, refiners, in compliance with Federal mandated fuel regulations, have to switch from the wintertime fuel blend to the summertime fuel blend which entails completely drawing down supplies of wintertime fuel blend and replacing it with the summertime fuel blend. This obviously also causes a short-term supply disruption adding to the spike. There are some other factors as well, having to do with the elimination of MTBE as a motor fuel additive and the mandate for ethanol production or addition to the fuel which was not initially able to comply with the 10-percent standard which has had some impact on prices, especially in much of the East Coast and Texas. But the bottom line here is there is a variety of reasons why fuel costs and, therefore, gasoline prices have spiked. It does not do a lot of good to point the finger at somebody and say, We know the answer; we will punish them and that will solve the problem. The reality is that profits from the oil industry are now being put to use in expanding production. The industry invested nearly $109 billion in 2004. While the numbers aren't in for 2005 yet, for first three quarters it showed investment spending was 28 percent higher than in the first three quarters of the previous year. It is projected this year to grow by double digits again. This investment will lead to a 2.2 million barrel per day increase in production this year, outpacing demand that is expected to rise by just 1.8 million barrels per day. That, more than any of these other factors, is going to add actual fuel to the pipeline which will, therefore, enable us to bring the fuel costs down. The bottom line here is when you are talking about solutions, you talk about that which will either reduce the demand or increase the productivity. Unfortunately, consumer demand has not been reduced that much even with the higher prices, which means you have to look for more production. There are several ways you can do this. The Senator from Illinois scoffed at ANWR, saying it is only 3 percent of the world's supply. Do you realize how much that it is? That is huge. That is as much oil as Iraq produced. Had President Clinton not vetoed the exploration in ANWR 10 years ago, that oil would now be flowing today. The Senator says it will take 10 years. Yes. Before you can complete your journey, you have to establish the first step. That is what we have to do here. Had we done that 10 years ago, that oil would be flowing today. By the way, to characterize it as a wilderness area is a misrepresentation because as we should realize, this is an area expressly set aside for oil exploration by the Congress. It is not going into a wilderness area and cutting it out and then exploring in an area that was set aside for wilderness. There are other increases in productivity in addition to ANWR. Increasing our deepwater production 100 miles offshore is virtually safe. Clearly we can eliminate restrictions on the 100-mile limit for deepwater drilling offshore. We could, if we wanted to, stop buying temporarily in this market today for the SPR, the Strategic Petroleum Reserve. We could suspend the boutique fuel blends and reduce the ethanol mandate. Those are short-term things that could be done. But again for the longer term, if you want to bring in more ethanol, eliminate or reduce the tariff on Brazilian ethanol; if you want to have more production, look at deepwater drilling and ANWR. Those are ways to actually add crude oil and, therefore, fuel to the equation rather than these ideas of not adding any oil whatsoever but simply make a political point. The point was made that profits of the oil companies are up. As has been indicated, those profits are now being plowed back into production and to refinery capacity which is going to help us reduce the cost. The Senator from Illinois said it is strange indeed that prices go up all over town when they go up. It is not strange at all. You don't have to have collusion between the oil companies for that phenomenon to be reflected because of the fact that the crude oil prices are the same for everyone. So if everybody's baseline price goes up, everybody is going to be raising the cost of gasoline at the fuel pump. The idea that there must be collusion or at least the inference there must be collusion, remember that the Government has been investigating this for years and, to my knowledge, has never found any evidence of collusion. As the President said, we will keep on looking for it. If we find it, obviously those people will not go unpunished. Let us not try to point a finger of blame in an area where we know we are coming up with a dry hole. That isn't going to add anything to the production of crude oil and, therefore, do anything to increase the supply and, therefore, reduce the cost. The bottom line is this: There are a of lot ideas about how to deal with the short-term cost of energy. Some of them are good. There are ways to increase the long-term supply and thus deal with the long-term cost. But until we are serious about the economics of the issue, rather than simply trying to come up with a bumper sticker solution, we are never going to be able to eliminate the cost to consumers. And that, after all, ought to be our primary responsibility.

Mr. KYL

Mr. KYL. I thank the Senator. Mr. President, the Senator from Oregon has made a very important point I want to second; that is, at the time this was being debated, I recall the Senator for Oregon, in his comments, making the same points I made, which were that it is important for us to be supportive of American industry being able to do the things we want it to do, but that since we are talking about taxpayer dollars, we need to be very careful that if there is some kind of support for industry, that it is very well thought out, that it is not open ended, hopefully, it is not mandatory, that we retain enough flexibility, let's say, so when the conditions no longer warrant the support of a particular industry we will no longer do that. Now, all of us in this body can have different ideas about when that is appropriate. I happen not to be a big fan of subsidies. Some others may like them a little bit more. But at least the Senator from Oregon and I have been consistent for a long time wanting to know the facts about whether support for a particular good cause was necessary with respect to the expenditure of taxpayer dollars. If it was necessary for the national good during a time of war, for example, then I think the consensus is there to always do it. But what we said is: Is it necessary at this time? We were talking about a situation where oil was at least $10 a barrel cheaper than it is today. Even the President was saying at that time: This particular subsidy is not necessary. So it seems to me that colleagues who may have supported the bill at the time would have no reason not to support our amendment here because this is a very specific and differentiated item. It is not the entire Energy bill; it is one very specific little provision. It is a provision that will save us a lot of money if we can get it amended the way we are talking about doing. And its relevance to this supplemental appropriations bill--whatever the germaneness provision is--its relevance is very clear. It would be nice if we could offset some of the spending we are going to have to engage in here to support our troops with real savings. This is an area where we can achieve real savings because the royalty is simply not needed at this time for the purpose that it was originally put in the legislation. So this would be consistent with the policy we have talked about for a long time. And I think it makes very good policy sense for the country to begin to put it into place in the future. When you need something like this, fine. But when you do not need it, then don't saddle the taxpayers of the country with an expenditure that simply takes money out of their pocket and is not needed by the producers, who are going to be producing the oil, in this case, in any event. Again, I thank the Senator from Oregon.

Mr. KYL. Mr. President, let me ask another question of the Senator from Oregon. Your amendment does not just wipe out this provision that waives royalties but, rather, allows for a situation, as I understand it, when the price drops to a point where maybe some incentive is necessary to provide for this production. It actually does not eliminate the possibility of that incentive. Is that correct? Could the Senator explain that?

Mr. KYL. So, Mr. President, if I could kind of summarize this point, it seems to me this amendment represents kind of a win-win situation in that we have the opportunity now to save the American taxpayers a lot of money--money that is not necessary to stimulate the production of oil and gas at this time because the price of oil is so high. But it is also a win in the sense that the Senator from Oregon has drafted the legislation in such a way that should we need that ability to stimulate production in the future--for example, should we be in a wartime situation and the President determines we have to do everything we can to produce more domestic oil--that the authority exists and would continue to exist. The Senator from Oregon is not eliminating that authority but noting that is one of the protections in his amendment. So it seems to me that either way we have protected the American taxpayer, the American consumer, and, of course, the American citizen in a time of war. So it is a little hard to argue there could be a bad result from this since at the time you might need this kind of stimulus, it would be there or at least potentially would be there. Let me make another point and ask a question. I happened to have been watching television the other night late, and I believe it was the Discovery Channel, watching the drilling off of our coast down to the depths of--I have forgotten how many miles. It was incredible. The people on the rigs were saying they never dreamed years ago they could do that, that they would be able to do that. Certainly the Presiding Officer, being from the State of Louisiana, knows a lot more about this than I do. I was impressed with the ability of these people to explore, to find the oil, and then to be able to drill at such great lengths, and to be able to pull that oil out of the ground in a way that, while very expensive, was still profitable and could, therefore, contribute to the domestic oil production in the United States. At a time when it does not appear it is at all necessary to provide this kind of royalty relief, it seems to me we ought to be taking our hat off to those who produce this kind of critical product in our society during a time of war. My understanding, at least from some folks I talked to, was that at least the companies that were asked about this at the time said they did not even need this royalty relief, that they could do this work, that the price of oil was such that they could pull it out of the ground. So like the Senator from Oregon, I am a bit mystified about who the folks were who came in, whether it was in the dead of night or whenever, and extended this in the Energy bill. I would note this is one of the reasons I voted against the Energy bill, by the way. I saw the President's Statement of Policy saying we don't need this provision. It was a mystery to me why it remained. It was clear it was going to cost a lot of money. The Senator from Oregon has now quantified how much that is. Again, the estimate I have, over 5 years, is at least a $7 billion cost to the taxpayers. At a time when we are looking for revenues to offset the cost of the war, it seems to me to be a perfect opportunity to achieve two good policy objectives: save some money for the American taxpayer, avoid the bad policy of subsidizing something that does not need to be subsidized, but retain the ability to continue stimulating our domestic production if and when we need to have such a policy to do so. So I commend the Senator from Oregon for his work. I am very pleased to cosponsor it. I hope through the processes of the Senate at some point we can get this matter to a vote. Again, the distinguished chairman of the committee has left the floor momentarily, but I want to commend him for his patience in trying to work out all of these things. I suspect somehow or other we are going to be able to sit down and work out a vote on this since it is pretty hard for me to see where any opposition to this amendment could come from based upon the fine arguments the Senator from Oregon has made. So, again, I commend the Senator from Oregon. I am very pleased to cosponsor this and will work in every way I can to bring it to a vote so we can effect the policy.

Mr. KYL. Mr. President, $7 billion may be a very low estimate. Is $20 billion over a 5-year period?

Mr. KYL. Mr. President, I noted that the Senator said something earlier in his remarks that I thought was very important in the context of our consideration of this supplemental appropriation. We all agree we have to appropriate the funds not only for relief from the hurricane to States such as that of the Presiding Officer, but also to ensure that everything our troops need to conduct their activities in the war against terror is provided to them and that the bulk of the money in the supplemental appropriations bill is going for that purpose, but that this is emergency spending we have not offset in any other way. What the Senator from Oregon has pointed out is that actually, in great measure, a great deal of this could be offset if we simply eliminate some of the costly taxpayer subsidies such as that which is the subject of this amendment, so that we are in total agreement that we have to provide this funding for our military, and that one way we can help to pay for it is for the taxpayers to not have to continue this subsidy, which by all accounts is totally unnecessary to produce additional oil and gas, at least at this time. Let me ask the Senator further, I don't know what the crude oil price was in June of last year when the President made his statement that this royalty was simply not necessary, but it probably was somewhere in the neighborhood of half of what it is today. Maybe the Senator has an idea on that. But the estimates today, I think--when I last looked at the market--were about $72 a barrel. Therefore, if it is true the measure was not necessary a year ago, as lawyers say: a fortiori, it is not needed today. Does the Senator from Oregon have any thoughts on that?

Mr. KYL. And then what happened was in the Energy bill we adopted, we thought, well, if it was a good enough idea then, even though these mandatory provisions of the act expired in 2001, it would be a good idea to continue them, but the administration at that time, observing the fact that oil prices were going up now, came to the conclusion that the extension of this royalty relief was not necessary and, in fact, issued its statement of policy on the Energy bill on June 14, 2005, saying the President believes that additional taxpayer subsidies for oil and gas exploration are unwarranted in today's price environment and urges the Senate to eliminate the Federal oil and gas subsidy and other exploration incentives contained in the bill. So when the President made his statement about whether we should extend this mandatory royalty relief, he was saying at that time--this was in June of 2005, not quite a year ago; the prices were up but not nearly where they are now--but even at that level he was saying this provision is not necessary to encourage more exploration. Is that the Senator's understanding?