Jon Kyl

Mr. KYL

Mr. KYL. I ask unanimous consent to consume such time as I may take.

Mr. KYL. Mr. President, I was very happy to have the Senator from Massachusetts take a long time to make a lot of points, asking an important question. Therefore, I am happy to engage in what amounts to a debate on the issue. I would be delighted to comment on the specifics that he points out. I served on the Intelligence Committee for 8 years during this period of time and have a fair degree of information about it. I need to reflect a little bit carefully about what one can now say because, after a while, you realize, when you are on the committee, it is better not to say a lot because it might be one of the things you should not be talking about. But I think I should speak to each of these items. The last one first. No, I don't agree that being in error is the same as misleading. I don't think that the people in the intelligence agencies were misleading us. They were, in some instances, in error. Frequently, they expressed their views with caveats and degrees of certainty that, frankly, are not reflected in the public debate.

Mr. KYL

Mr. KYL. I thank the Chair. I thank the chairman. This is a choice between the product of the Finance Committee and the amendment offered by the Senator from North Dakota. I strongly urge my colleagues to support the product of the committee and to defeat the Conrad amendment. Let's first focus on this issue of deficit. The deficit reduction that has occurred as a result of the President's tax policies supported by the Republican Members of Congress has been nothing short of incredible. This is a choice between a continuation of a policy which provides economic growth for our country and more money for our families, more investment for our businesses, and therefore more jobs for Americans. Look at some of these statistics in terms of the gross domestic product growth in our country. Whether you embraced the lower rates at the time, I think everybody has to acknowledge that the rates we put into effect in 2003 have had a dramatic effect. Consider: The economy grew at a 3.8-percent annual rate in the third quarter. That is the 10th straight quarter the GDP grew at a rate above 3 percent. We remain the fastest growing industrialized country in the world. That is the longest such period of growth in our history since World War II. Business investment: In the nine quarters before the 2003 tax rates were put into effect, business investment fell. We passed the tax provisions to cut taxes on capital gains, for example, and we reversed that. In fact, business investment has now increased at an annual rate of 6.9 percent. That means jobs to our economy and more wealth for American families. In terms of deficit reduction, specifically, we are not undertaxed. Congress is spending too much. That is what is creating the deficit. Nevertheless, as a share of our GDP, the 2005 deficit was 2.6 percent, down from a 3.6-percent share in 2004. In fact, before Hurricane Katrina we were well on the way toward achieving the President's objective of cutting the deficit in half in the next 2 years. In fiscal year 2005, taxpayers sent Washington $274 billion more in revenue than the year before, and $100 billion more than we predicted back in January. How could we be so far off? This economy is so strong, it is growing so rapidly that even at the lower tax rates we are producing more revenue to the Federal Treasury. This is not a path from which we should deviate. We should continue this path and not adopt the principle of the substitute amendment offered by the Senator from North Dakota. What his amendment presumes is something very strange in economics, and that is that somehow we have reached a magic Minerva, an equilibrium where the Federal Government is taking a tax in the right amount from American citizens never to be changed one iota, notwithstanding the fact we will continue to spend more and more and more, and we will have to have the taxes to pay for that spending or go deeper in debt. The pay-go amendment that is the centerpiece of the amendment proposed as a practical matter does not affect the most significant aspects of our continued spending, namely the mandatory increases in our mandatory spending, our so-called entitlements--Medicare, Medicaid, Social Security, that which represents about two-thirds of the spending. As a result, the big-ticket items are not restrained in any way. All that is restrained is the ability to promote the continuation of our current tax rates. If we don't continue these tax rates, if we don't take action, for example, this year to extend the capital gains and dividends tax rates for another 2 years, we are going to find in a couple years the American taxpayers are going to be faced with a huge tax increase, and that is because without further action those tax rates will go up by 25 percent in 2 years. That is not right. Now, some of our colleagues say, well, these tax rates only help the wealthy in our country. Well, is that so? From a column that was authored by Larry Kudlow, a noted economist: The investor class in America ``continues to grow by leaps and bounds . . . The number of families owning stocks has risen to 56.9 million from 54.1 million, meaning nearly 60 percent of U.S. households are invested in equities today.'' We ``have become a society of equity investors.'' Zogby polling shows that nearly all Americans--93 percent--earning $75,000 a year or more own stocks. They can't all be rich. And how about those earning up to $75,000 a year? In this group, more than half, or 56 percent, own shares. Of those earning below $50,000 a year--a group that in the aggregate pays very little taxes overall--30 percent own stocks. So the continuation of the 15-percent rate on dividends is a matter that affects a very large swath of Americans. As a matter of fact, 23 percent of all filers spread evenly across income categories reported dividend income in 2003 and of that group, 30 percent, 30.6 percent had an adjusted gross income under $30,000. Rich people? I don't think so. How about capital gains? Seventeen percent of all filers spread equally across income categories reported capital gains in 2003, and of that group 30.1 percent had adjusted gross income of under $30,000. The rich? I don't think so. How about some of the other provisions in the bill from the committee? The savers credit, only 4 percent of filers benefited from that in 2004. The above-the-line-deduction for college tuition costs, only 2.7 percent of filers claimed that deduction in 2003. AMT, only 6 percent of filers are affected by that. Now, why are all of these things in the committee mark? Because they still represent important policy and we continue to support all of those things. With AMT, the number of filers is going to double so we have to do something about that. But the bottom line is when you are comparing that to capital gains and dividends, far more Americans are affected by capital gains and dividends and they are not just the wealthy. I read the statistics for $30,000 and under. The other flaw in the amendment of the Senator from North Dakota is that the whole question of what ``tax cuts cost'' is upside down. The Senator from North Dakota raises that question with respect to revenues to the Federal Government. How much does it cost the Federal Government to have a tax cut? Think about it. That is a strange way to put it. How much does it cost the Federal Government to cut your taxes? I will put that question the other way around. How much does it cost you when we have a tax increase? Because that is exactly what will happen in 2 years if we don't extend the current tax rates. We should be asking what it costs American families, American taxpayers, and the American economy, American businesses. What is it going to cost them if we take more of their hard-earned money and bring it back to Washington for us in our wisdom to figure out how to spend? That is the question we should be asking. What is the productive part of our economy? Does the Government create jobs? Other than these very hard-working clerks here and the other jobs in the Federal Government, we don't create jobs. The private sector creates jobs. It costs money to pay employees. That is why employers try to make money, so they can hire more people, more people will have jobs, their families will be better off. We all understand how the private market works. It requires capital, it requires profits, it requires the Government to get out of the way and not take so much of its money, frankly, and that is why the real question should be with regard to this so-called pay-go, not how much it is going to cost the Federal Government, but how much a tax increase which will result from the policies that are being proposed on the other side of the aisle, how much that tax increase is going to cost hard-working Americans. That is the real question we should be asking. We need to support the proposal that is before us on the floor today, a proposal which in large measure makes American taxpayers better off and increases the revenues to the Treasury of the Government because the tax policies we have had in place since 2003 are working, both to help stimulate investment in the private sector and create more jobs, and because they are low enough that they create economic activity that can be taxed, providing more revenue to the Federal Treasury. We should reject the amendment of the Senator from North Dakota because it doesn't pursue that same policy goal. The only caveat to this, of course, is that the capital gains and dividends tax rates I have been talking about are not included in the proposal on the floor or in the proposal of the Senator from North Dakota. But I can assure my colleagues it will be part of the conference report. There is no way we are going to consider a conference report that doesn't continue these current tax policies. To not do so, as I said, would be to begin the biggest tax increase in the history of this country, and we are not going to do that at a time when we need to keep the economy robustly growing as it has been. I say to my colleagues, the tax proposals of President Bush have been working. Our economy is producing a tremendous number of new jobs, revenue growth for the private sector as well as for the Government sector. Why would we want to turn from that? With respect to paying for it, let's remember who bears the cost. There is no free lunch at the end of the day. The taxpayers are going to bear the cost. As a result, the real question we should be asking is not how much these policies cost the Government, but how much they cost the taxpayers. I urge the Senate to vote against the amendment of the Senator from North Dakota and support the chairman's mark.

Mr. KYL. Since the Senator referred to me by name, I would like the opportunity to ask a question.

Mr. KYL. Will the Senator yield?

Mr. KYL

Mr. KYL. Mr. President, today the Senate is considering long-delayed legislation to reform our defined benefit pension system. While reforms are certainly needed, I must say that I am disappointed with how watered down this legislation has become since we passed it out of the Finance Committee earlier this year. Obviously, the current system is in dire straits, with the Pension Benefit Guarantee Corporation, the Federal corporation that insures traditional pension plans, running a $22.8 billion deficit for fiscal year 2005. Moreover, the PBGC said that if events that occurred just after the fiscal year's end had occurred a few weeks earlier, the deficit would have been $25.7 billion. If the Government is going to continue to operate a pension-plan insurance program, we must make sure that employers fulfill their pension promises appropriately so that taxpayers are not asked to bail out the PBGC. This legislation makes a first step toward requiring more realistic funding of pension promises, and it tries to assess more accurately which companies are in such financial difficulty that they are likely to declare bankruptcy and shed their pension plans as part of their reorganization, leaving it to the PBGC to cover their remaining obligations. While I believe the provisions approved by the Finance Committee were stronger and more responsible, I understand that compromises had to be made as the Finance bill was combined with the bill reported out by the Health, Education, Labor, and Pensions Committee. I hope these provisions will be retained and reinvigorated when this legislation is reconciled with the House pension-reform bill. My primary concern about this legislation has to do with the special provisions for legacy airlines. The bill reported out of the Finance Committee allows certain airlines to freeze their existing defined benefit pension plans so that no new participants can be added and benefits will not increase in any way. Then it allows these companies an additional 14 years to pay off what they owe on these frozen plans. I agree that it makes sense to allow the airlines to freeze their pension plans so that their liabilities do not get any worse. Further, if giving the airlines extra time to pay their obligations will keep them from shifting the debts to the PBGC, then I believe we are acting responsibly to protect the American taxpayers. I must say, however, that this special treatment is unfair to those airlines that have been responsible about funding their pension liabilities or that have different, and more affordable, retirement savings plans for their employees. Nor is that all we are apparently going to do to provide special relief for the legacy airlines. On the floor, an amendment will be offered, and will likely pass, that will lengthen the amortization period for the so-called ``hard-freeze'' provision to 20 years and to provide separate funding relief to certain other legacy airlines that will not be taking advantage of the ``hard freeze.'' This separate funding relief will allow these particular airlines an extended period to pay their pension obligations, but will not require the airlines to freeze completely their pension plans. Rather, this so-called ``soft- freeze'' would not allow new participants, but would allow benefit accruals if the company funds those accruals. This is terrible policy; if the airlines have the resources to fund benefit accruals, they should fund their existing obligations on a timely basis instead of taking on new obligations. Congress should not grant any company the ability to amortize its obligations over a longer period of time without requiring it to freeze its pension plan completely. Further, increasing the 14-year ``hard freeze'' to 20 years is overly generous and provides a one-size-fits-all plan for two legacy airlines that have very different financial situations. I am pleased that Chairman Grassley will oppose this amendment. Finally, with respect to the Akaka amendment, I opposed this measure because it would exacerbate the already terrible fiscal problems facing the PBGC. Unfortunately, Federal regulations dictate that individuals age 60 and older may not serve as airline pilots. I am one of 20 Members of this Chamber who have cosponsored Senator Inhofe's bill to remove this blanket prohibition, a stricture which I have concluded cannot be justified as a safety measure. I am heartened that the Senate Commerce Committee will have the opportunity at their next markup to rectify the inequitable treatment of older pilots the right way--by removing the arbitrary mandatory retirement age. Unfortunately, the Akaka amendment would proceed the wrong way--by swelling the PBGC's deficits by raising the ceiling on allowable benefits. Overall, this legislation moves forward the process of reforming our badly broken defined benefit pension-plan funding system, and for that reason I will support it even though I am very opposed to its special funding relief for certain legacy airlines. I hope, as the conference committee meets to work out a final version, that the conferees will work for the best possible funding requirements for all companies that participate in the system; that they will keep some kind of a benchmark to identify struggling companies; and that they will keep the legacy airline relief as responsible as possible. We must remember that the American taxpayer will be asked to bail out the PBGC if the system, which is supposed to be self-funding, cannot sustain itself. And a taxpayer bailout is an outcome that I know none of us wants to happen.

Mr. KYL

Mr. KYL. Mr. President, let's go back to the fundamentals of what actually happened and what the amendment of the Senator from South Carolina would actually do. The Congress did not create laws to deal with terrorists, primary to the beginning of the war on terrorism. Questions arose as to the executive branch's treatment of these terrorists in detention. Absent congressional direction, the U.S. Supreme Court had to interpret an existing statute, section 2241. It held that, since Congress had not expressed any intention outside of section 2241 in interpreting that section, the courts had jurisdiction to consider habeas corpus petitions regarding the status of these detainees. That is all that the Court has held. As Justice Scalia said in his dissent, ``the petitioners do not argue that the Constitution independently requires jurisdiction here.'' So let's be plain, that the Great Writ does not apply to terrorists. No one argued in the Rasul case that the Constitution required habeas corpus petitions. It was, rather, a matter of statutory interpretation. As the Justice said: Accordingly, the case turns on the words of section 2241. How did the Court in the majority opinion treat that? Considering that section 2241 draws no distinction between Americans and aliens held in Federal custody, there is little reason to think that Congress intended it not to apply . . . The bottom line is that the Congress has, on numerous occasions, statutorily limited the writ of habeas corpus to American citizens. In 1996, when the courts were plugged up with habeas petitions, Congress passed a substantial revision of the habeas corpus laws, reducing this backlog of habeas petitions in Federal court from U.S. citizens. We have the statutory jurisdiction to write whatever kinds of laws we want. We clearly have the statutory jurisdiction to say it does not apply to foreign terrorists. And nothing in the Rasul case says otherwise. So let's be very clear about this Great Writ. It does not apply to terrorists, and it should not apply to terrorists, and nothing in this amendment goes any further than to say it applies to U.S. citizens. It does not apply to terrorists. Another argument is that we should not suspend the writ of habeas corpus. We are not suspending the writ of habeas corpus. It does not apply. The only reason the Court in Rasul said the Court had jurisdiction to consider it is because the language in 2241 was not explicit enough to exclude the aliens, the terrorists who were detained at Guantanamo Bay from asserting that jurisdiction. Third, our chairman, Senator Specter, has said we need a comprehensive way to deal with the prisoner claims. And he is absolutely correct about that. And this amendment provides such a mechanism. What Senator Specter says is: I'm not sure that we should be granting a circuit court of appeals review right. That's a pretty good right, I would say. That's what this amendment does. Either we are arguing we are not giving these detainees enough rights or we are giving them too many rights, but let's get one or the other here. I think what we are doing is granting a substantial right to appeal the issue of status when, first of all, it is determined by the CSRT procedures in the military tribunals at Guantanamo Bay and then there is an automatic right to appeal this, not just to a Federal court but to the U.S. court of appeals, on the record. That is a substantial right. But what we have gotten rid of are these hundreds of habeas petitions that will be clogging the Federal courts. We have already seen them making medical malpractice claims against the doctors, saying they want one kind of food as opposed to another kind of food and so on. It is going to get like it did with prisoners. One of the real-life cases that came out of Arizona that we tried to take care of in 1996 law is a prisoner said: I want chunky peanut butter, I don't want creamy peanut butter. And that was the habeas petition. You have a right to question food in a habeas petition. Do we want our Federal courts clogged with terrorists making these kind of petitions? No. As a result, what Senator Graham has done here is very sensible, to say there is going to be a military tribunal to determine status. By the way, it is reviewed every single year. When that status is first determined, there is an automatic right to appeal to the U.S. Court of Appeals for the District of Columbia. But the writ of habeas corpus, which has never been intended to apply to prisoners of war, much less terrorists, does not apply in this case. We are not going to clog up the courts with habeas corpus petitions. You can have an automatic right to the circuit court of appeals. It gets us back to the point that Senator Graham made in the beginning. Let us recognize that we are not dealing with criminal defendants. We are dealing with people who have committed acts of war against the United States. They certainly should not be accorded greater privileges than U.S. citizens or prisoners of war. A final point: There has been a suggestion by some that this would somehow undercut the McCain antitorture amendments. I think Senator Graham laid that to rest. But make it crystal clear. Under McCain, there is not private right of action. They are enforced by the constitutional requirement that the President take care that the laws be executed. The Graham amendment does not take away the right of action to enforce McCain because there is no right of action to enforce McCain in the McCain amendments. This is a very good amendment. It gets us back to the basics of what kind of folks these terrorists are. It grants them substantial rights to contest their status but not the right to clog up Federal courts.

Mr. KYL

Mr. KYL. Mr. President, reducing overall Federal spending on farm programs is important if we are to succeed in reducing the Federal budget deficit. The current budget-reconciliation package includes $39 billion in savings, including $3 billion from agriculture programs. To achieve these savings, the Senate Agriculture Committee cuts farm spending by implementing an-across-the-board 2.5 percent reduction in payments for all farm commodities. I wholeheartedly support these cuts in farm spending. However, I cannot support waiving the Budget Act to consider the Grassley Dorgan amendment to impose more restrictive payment limits on farm commodities. This amendment is being offered as a substitute to the cost savings achieved by the fair, across-the-board reductions currently in the package. Substituting the Grassley-Dorgan payment limits is eerily reminiscent of the flawed formula in the highway bill: Instead of all States bearing the burden equally, the farm cuts would be achieved on the backs of Arizona farmers and other farmers of capital intensive crops in the West and South. The advocates of the Grassley-Dorgan amendment claim that reducing payment limits preserves the family farm. What they meant to say is that it preserves family farms in North Dakota, Iowa, and other Midwestern States that grow certain commodities: namely grains and oilseeds such as corn, wheat, and soybeans. Family farmers in Arizona farm cotton. It is a highly capital intensive crop, in fact, one of the two most expensive program crops to grow. To illustrate, cotton program payments represent 39 percent of western farmers' cash costs of production. Corn and wheat program payments represent 49 percent and 50 percent of Midwestern farmers' cash costs, respectively. Thus, in order to achieve economies of scale and remain competitive, Arizona farms must be large. According the Economic Research Service, over 30 percent of cotton production occurs on farms operating on an average of 3,500 acres. Are we to believe that none of these large farms are owned by Arizona families? I know for a fact that they are. The average farming operation in Arizona consists of about 7,000 acres. Using a farm in near Buckeye, AZ as an example, this family farm is run by four brothers. Several children are managers of the operation, including performing marketing and financial services. About a third of the farm grows cotton, about a third grows feed grains, and the remaining third alfalfa. The annual budget is $5 million, and the brothers draw an annual salary of about $50,000 each when the farm generates sufficient income. This farm would be hit hard by the payment limitations in the Grassley-Dorgan amendment. Its operators would be forced to cut the amount of acres on which they grow cotton. In years when prices decline at harvest, their cash flow would be restricted and their ability to qualify for financing would be severely hampered. The Grassley-Dorgan amendment, in equating large with bad, ultimately favors growers of corn, wheat, and soybeans at the expense of farmers of cotton, rice, and peanuts. To further illustrate what I am talking about, let us apply the limitations in the amendment: a farm that produces cotton or rice would, at today's world prices and average yields, hit the limit on payments at about 400 to 600 acres. This acreage is generally deemed to be too small to sustain the investment in the specialized equipment necessary for cotton and rice production. In contrast, a corn farmer with an expected yield of 190 bushels per acre, would not hit the limit on payments until just over 3,100 acres. Clearly, very few corn farmers will ever feel the effects of the Grassley-Dorgan amendment. It has been further estimated that the more restrictive eligibility rules that are part of the amendment, combined with the limits on direct payments, would reduce direct payments to Arizona growers by $24.6 million. This represents a reduction of 62 percent, the highest of any State. Iowa would see a loss of just 4 percent and North Dakota, 10 percent. I am not going to argue that the farm law is off limits for the purpose of finding savings for the American taxpayer. However, I encourage my colleagues to look closely at the ways we achieve that savings. It is simply not fair to use a faulty perception of what constitutes a family farm to favor one farming region of the country at the expense of another. Yet, that is exactly what the Grassley-Dorgan amendment would do. Thus, I cannot support a motion to waive the Budget Act with respect to this amendment and must vote against it.

Mr. KYL

Mr. KYL. Mr. President, America mourns the passing of a quiet hero, Rosa Parks, who died yesterday in Detroit at the age of 92. On December 1, 1955, in Montgomery, AL, a seamstress named Rosa Parks refused to move from her seat near the front of a city bus so a White person could sit there. Like a shot heard round the world, her act of civil disobedience spurred the movement to gain social and political equality for Black people in this country. It is almost hard to recover, half a century later, a sense of how much courage it took for her to do what she did. By remaining seated, she violated a local segregation law that consigned African Americans to second-class citizenship. She was arrested for disorderly conduct, and the incident galvanized the Montgomery bus boycott, propelling Martin Luther King, Jr., the boycott's leader, to a national role in the civil rights movement. As the ancient poet once said, ``A good reputation is more valuable than money.'' Rosa Parks' sterling reputation was what civil rights leaders banked on in putting her in the spotlight for the cause that day--and they were never disappointed. Throughout her long life she exemplified honesty, integrity, and dignity, and articulated the all- important principle that political and social equality is every American's due. Mrs. Parks, along with Dr. King, A. Philip Randolph, Medgar Evers, Fannie Lou Hamer, Bob Moses, and the other campaigners for civil rights during the 1940s, 1950s, and early 1960s, had faith in the legal process. They had faith, too, in the moral conscience of America. They knew time had come. Their patience, their discipline, and their understanding that these two qualities would win the White majority to their cause, were admirable. Mrs. Parks deserves a share of the credit for accomplishments in the decade following the famous bus boycott: passage of the landmark Civil Rights Act of 1964 and Voting Rights Act of 1965. These laws made illegal racial segregation in public accommodations, in housing, in education, and in the workforce. These and other civil rights laws have not eradicated bigotry. They have not gotten us all the way to a colorblind society yet. But they were huge strides toward making America live up to its founding doctrine that ``All men are created equal.'' Mrs. Parks took risks to vindicate ideas that transcend race, color, and religious creed. She said: ``To this day I believe we are here on the planet Earth to live, grow up and do what we can to make this world a better place for all people to enjoy freedom.'' She stood for what is universal. That is why interest in one seamstress' act on a December day long ago in Alabama has never flagged. There are books, songs, and television shows about the bus boycott and its humble heroine, proving that unassuming people can do great things when they are animated by the highest ideals. Rosa Parks, Godspeed.

Mr. KYL

Mr. KYL. Mr. President, if there is no one else who desires to speak at this time, I suggest the absence of a quorum.

Mr. KYL. Mr. President, I ask unanimous consent to add Senator Chambliss as an original cosponsor of the amendment.

Mr. KYL. Mr. President, I appreciate the comments of the Senator from Wisconsin. Senator Inhofe from Oklahoma wishes to speak in a moment. When he arrives, I will call upon him to speak. Let me make a couple of comments about the reasons for this amendment at this time. There have been times in the past when Members have allowed the cost-of-living adjustment to proceed. It is not technically a pay raise but rather a cost-of-living adjustment. That cost-of-living adjustment is provided for all Federal employees, including Members of Congress, although it is lower for Members of Congress than it is for other Federal employees by about half a percent. In the past, when we have been in good economic times and we have had either lowered deficits or even surplus conditions, Congress has allowed, most of the time, though not every year, that cost-of-living adjustment to go into effect. This year is a special circumstance. Especially since we are going to be asking our colleagues and people who are recipients of Federal program benefits potentially to make a sacrifice in order to help offset the spending that the Federal Government is going to commit to the rebuilding of the gulf coast area following Hurricane Katrina, it seemed to me and those of us who have cosponsored the amendment that if we are going to ask others to make a sacrifice so that not all of the spending for Katrina recovery is added to the Federal deficit and therefore the Federal debt but, rather, some of it is offset from programs that we have already decided to fund, that we could start by demonstrating a willingness to sacrifice a small measure ourselves. It is true the $2 million that this saves is hardly noticeable in the overall tens of billions of dollars that are going to be spent on the Katrina recovery. It is symbolic. I recognize that. But sometimes symbolism is important. For Members of Congress to be able to justify reductions in spending in other programs, where some of our constituents will push back and say, Wait a minute, why should I make a sacrifice to rebuild after Katrina, at least we have the ability to say: We all have to make a little sacrifice. Members of Congress are willing to make a sacrifice as well. While it is not much money to the overall Federal budget, some of our families certainly recognize it as being substantially helpful to offset the cost of inflation for families. It is important for us to do this. It won't always be appropriate, but it is clearly appropriate this year to make the point that we are ready to sacrifice, and clearly it is not something that we cannot afford. In areas that we are going to ask for reductions in spending, we will make the point that these are not areas that simply can't stand any kind of reduction. We are going to try to put forth maybe $50 billion in spending reductions from programs that can afford to be cut or spending deferred for a short period of time. That is a way to at least offset some of the spending that we are going to be doing for Katrina and yet not add further to the deficit or ultimately to our Federal debt. That is the reason for the amendment. I hope my colleagues will support it. If the Senator from Oklahoma is prepared, I certainly yield to him at this time.

Mr. KYL

Mr. KYL. Mr. President, I will simply describe the amendment's content. What this amendment does is provide that for this coming year--the fiscal year which began this October--the annual COLA for Members of Congress not go into effect. That pay increase, in effect, is estimated to be at about 1.9 percent for Members of Congress, and it actually takes effect in January or February. The amendment is projected to save about $2 million for the Federal Treasury. Mr. President, as you know, some years the COLA has gone into effect and other years Congress has not had the COLA go into effect for Members of Congress. The reason for not having it go into effect this year, frankly, is symbolic. We know we are going to be spending a lot of taxpayer dollars to help rebuild the gulf coast area following the hurricane and the related events to that. We also know that unless we find ways to offset that spending, we are going to go further into debt, that our deficit for this year will increase. So the leaders of both the House and the Senate have asked the various committees to find ways to reduce spending in other areas so we can offset some of the expense of this reconstruction with that reduced spending. It seemed to me and others--and I will ask unanimous consent in a moment to have some others added as original cosponsors--one way we might encourage others to come forth with potential savings is to demonstrate we ourselves are willing to forgo this COLA, this cost-of- living increase, for this coming year. As I said, while it is not a lot of money in the overall Federal budget, for each Member of the Senate, obviously, it represents an increase in salary that I am sure would be appreciated by all of our families. Nonetheless, it is a contribution we can make to these rebuilding efforts. I hope my colleagues will agree with me this would be an appropriate thing to do. Mr. President, I ask unanimous consent that Senators Santorum and Cornyn be added as original cosponsors of the amendment.

Mr. KYL. Mr. President, just one other point. The 2006 budget resolution instructions require savings of $34.7 billion. The House is expected to modify that resolution to increase the amount of savings to at least $50 billion for the expenditures I talked about earlier. We have approved already about $71 billion, approximately $20 billion of which has already been spent, as I am informed, for the Katrina- related relief spending. That is why it seems to me it would be useful to demonstrate our commitment to offsetting part of this spending so that the budget deficit for this year and eventually the debt of the United States would not be unduly increased as a result of our desire to rebuild part of the gulf coast following the hurricane. I hope at the appropriate time my colleagues will agree with me that this is a gesture the Members of the Senate ought to make and that we can make and that it will help us in the overall goal we have of trying to watch taxpayer dollars as much as we can and ensure we do not spend unnecessarily, notwithstanding our commitment to try to rebuild after that tragedy in the gulf coast. Mr. President, if there is no one else to speak, I suggest the absence of a quorum.

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

Mr. KYL. Mr. President, I send an amendment to the desk and ask for its consideration.

Mr. KYL. Mr. President, I ask unanimous consent that be done so I can offer an amendment.

Mr. KYL. Mr. President, I ask the Chair, do I need to ask unanimous consent to set aside the pending business to offer an amendment, or may I simply offer an amendment at this time?

Mr. KYL

Mr. KYL. Mr. President, let me speak briefly to a related subject dealing with relief for those adversely affected by hurricanes in the gulf region, the other side of the coin. We have a lot of programs we are going to have to fund for the relief of the people who suffered. A lot of us have felt we ought to be careful about how we spend that money and even make sure as much as possible we cut spending in other areas to pay for it. There are those who say the way to ensure we have enough money for these programs is to raise taxes. What I want to address is the fact that raising taxes, especially at this point, taxes that ironically would impact the very people who have suffered, would be absolutely the wrong thing for those people, for their communities, for the families of our country, for the economy, and for job creation. Raising taxes is not something you do when you want to help people, especially since we know the bulk of the growth that is going to occur in that region is going to come from the private sector. You don't make the private sector more healthy by extracting more money from it. Specifically, we are talking about a process in the Senate whereby we put real life into the budget we passed earlier this year through two bills we call the reconciliation bills, essentially reconciling income to our outgo. One of those bills deals with some of the tax policy we first effected in the year 2001 and then in the year 2003. Remember, the economy wasn't doing so well back then. When President Bush was elected in 2001, he said: We need to reduce taxes in some areas and thereby help the economy get back on its feet. In 2003, we brought that tax relief forward to that date and the economy took off. Marginal rates were reduced for all taxpayers. There were two taxes especially that helped with investment and job creation. We reduced substantially the tax on dividends issued by businesses, by corporations. We also reduced the taxes on capital gains. Capital gains are paid on virtually anything you sell and make a profit on. As a result of reducing those tax rates, did we have less money come into the Treasury? No. The reduction of the tax rates ironically caused all kinds of economic activity to occur because people weren't going to pay as much taxes on it, with the result that the taxes came rolling into the Federal Treasury. That is the situation we see today: Record- breaking revenues coming in from the payment of taxes because we reduced the tax rate. Were we to allow those tax rates to go back up again, we can fully expect the exact opposite effect: less economic activity to tax; therefore, less taxes collected. It doesn't make any difference if you raise the tax rate; if there is nothing to tax, then you are not going to bring more revenue into the Treasury. Both because it would hurt the people you are trying to help in the gulf and around the country, and because it would bring in less revenue to the Treasury, a tax increase at this time is exactly the wrong response. There is an interesting phenomenon--I know the Presiding Officer is aware of it because he takes a significant role in studying the economy and its effects--economists who look at this say we will be able to rebuild from the effects of the two hurricanes. Our economy is big and strong, and there won't be any lingering damage. There will be a blip in this third quarter. But by the fourth quarter, our economy will be strong again. What they are worried about is the signals coming out of Washington that maybe in this reconciliation bill, we won't continue to support the lower capital gains and dividends tax rates, that we will in effect allow those tax rates to increase by not doing anything. Those tax rates are scheduled to increase in the year 2008, if we don't stop it. We are going to have a tax increase then, if we don't say we are going to continue the 15-percent rate. We have the chance to do that this year. I will explain why it is important to do it this year. What we are asking for is the ability to continue the tax rate as it is on capital gains and dividends 2 more years, from 2008 to 2010. That is important for a reason I will discuss in a moment. Some people say: At a time that we have to pay for hurricane damage and reconstruction and rebuilding, we ought to raise taxes, not keep the same rate we have. The point is, the tax rate we have today extends on through the year 2008. We don't gain anything by raising that tax rate to so-called pay for the hurricane rebuilding. That doesn't happen until the beginning of the year 2009. We are not able to gain revenue by allowing that tax rate to go back up again, since it is not going to go back up again, if at all, until the year 2009. There is nothing to be gained by not acting and everything to be gained by sending a signal to the markets that we are serious about keeping these rates at the level they are. Why is this important? It is important because when people decide whether to invest, they foresee what the length of their investment will be, what they have to pay for it now, what they are going to make on it, and what kind of taxes they will have to pay. That is how they decide whether to invest. They capitalize their investment based upon the expectation of profit which is a condition of both what they will sell for and what the tax rate will be. We know what the tax rate will be through the year 2008. The question they ask is, what about the year 2009 and 2010? Most of the investments made today are investments that are going to play out over the next 3, 4, or 5 years. It doesn't do a lot of good to look at the tax rates tomorrow or the next day. We do want to look at the tax rates in the years 2008, 2009, and 2010. That is when the profits will be realized, the taxes will be paid. It is hugely important what the tax rate is going to be in the year 2009 and 2010. That is why we have to act this year to extend the current law to make sure those rates stay right where they are, that we don't have a rate increase. There are some interesting statistics which I know the Chair is aware of, but I want to remind my colleagues with respect to the state of the economy today and the impact of the hurricane damage on it. The Congressional Budget Office estimates the two hurricanes will have only minimal effect on economic growth. They project that GDP growth in the second half of 2005 could be one-half percent slower than was previously predicted, but that by the fourth quarter and beyond, economic growth will return to its normal levels. We do know the economy was firing on all cylinders before the hurricane. In August, the month of the hurricane, CBO forecast the economy would ``continue to expand at a healthy pace during the second half of 2005'', and CBO projected GDP growth would grow by 3.7 percent in 2005, by 3.4 percent in 2006. As I said, the economy is doing great, firing on all cylinders. In August, the unemployment rate dropped to 4.9 percent, one of the lowest percentages ever. In May 2003, when the tax cuts were enacted, the unemployment rate was 6.1 percent. So it went from 6.1 down to 4.9. Most economists believe the tax cuts had a lot to do with that. I might contrast to our European friends. Through the first half of 2005, the growth rate in the Euro area was 1.1 percent. The unemployment rate there stands at 8.6 percent. So we are doing very well in this country. Our economy is moving right along. It is not going to be adversely affected by the hurricane rebuilding. What we don't want to do is anything to slow that economic growth down, stop this engine of production. Tax increases would do exactly that. Since the year 2003, when the tax cuts were enacted into law, we have seen a sharp increase in revenues coming into the Treasury. While private economists expected that, it didn't show up in official Government estimates. In August, the CBO acknowledged that the revenues for 2005 will be $85 billion more than they were projected in March of this year. That is how wrong the Government was. It could even be more than that. So from March to now, we know we are going to have at least $85 billion more in Federal revenues than were projected. Here is the great statistic: CBO now projects the Treasury will collect $262 billion more in revenues in 2005 than in 2004, an unprecedented increase--$262 billion more. This is at lower tax rates. How can that be? When you have lower tax rates, it encourages people to invest more because they are not going to have to pay as much taxes. That investment produces economic growth which, in turn, is taxed, and that is why we are getting all the increased revenues to the Treasury. Interestingly, corporate income tax payments are up 42 percent this year. They were able to expand their operations because they have been able to attract additional investment. They are being attracted in part by the lower rates on dividends and capital gains. What would happen if we allowed those rates to increase? The nonwithheld income tax receipts are up 28 percent. What are these? These are the tax payments that don't come from employer withholding. In other words, they come from things such as capital gains and dividend income. Clearly, the 2003 reductions in the cap gains and dividends are having an impact there. We have to use the reconciliation bill this year to maintain the lower rates for capital gains and dividends and keep our economy growing. In summary, there is a strong economy that we don't want to hurt by raising taxes. Beyond being concerned about the tax dollars coming into the Treasury, we know the primary reason to keep the rates on dividends and capital gains relatively low is to give individuals and businesses the opportunity to invest, give businesses the capital they need to expand and create jobs. It expands the economic pie. It improves the standard of living for everyone. All Americans will benefit from keeping the 2003 tax rate on dividends and capital gains in place through the year 2010. I urge my colleagues not to respond to the siren song of raising money to rebuild from the hurricanes by raising taxes. It won't work. It will slow the economy down and that will hurt not only general revenues to the Treasury, but American families and individuals as well. I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. Mr. President, I am gratified that it was possible for the Senate to consent to the adoption of amendment No. 1903, offered by Senator Salazar of Colorado. I am grateful to Senator Salazar for introducing this amendment, which will ensure that students attending a number of schools receiving assistance through the Impact Aid program-- including the Window Rock Unified School District located on the Navajo Nation in Arizona--are not punished for administrative errors made by district personnel. I am also grateful to the chairman and ranking member of the Defense Appropriations Subcommittee and the Health, Education, Labor, and Pensions Committee for consenting to the inclusion of this amendment in this bill. The Window Rock district is known is a 100 percent impacted district. That is, because the land it encompasses is federally owned, it cannot rely on a local property tax base to fund school operations as most districts in our country can. It is important to note that the administrative error that triggered this penalty--the loss of $1.2 million--was a one-time occurrence, and that Senator Enzi, the chairman of the committee with jurisdiction over this matter plans to address that ongoing administrative problem that has occurred here the next time Impact Aid is reauthorized. Moreover, as Senator Salazar rightly emphasized, the money here is not new money but previously appropriated funds that had been withheld. There is no question that district must take pains to ensure that rules and procedures are adhered to but in this case I agree with Senator Salazar that the penalty here was disproportionate and that, in any case, punishing reservation schoolchildren is not a particularly well-targeted penalty. This amendment will rectify that, and I am pleased that it will be accepted.

Mr. KYL

Mr. KYL. I appreciate that. I appreciate the words of the ranking member and make this point that this will proceed in some way at some time when we find out who is making the objections, if anyone. It may simply be a procedural matter to preserve the committee's jurisdiction. We will proceed. It will become law at some point at some time. I ask my colleagues on both sides of the aisle, if you have problems with this legislation, please let me know so we can try to work on those problems. There should be no reason we cannot move forward. We will be back. The next time I am back, I hope there is no one who is interposing an objection. I appreciate the comments of the ranking member.

Mr. KYL. Madam President, let me briefly describe what this amendment does, and then I understand the representative of the minority will interpose an objection. This is an amendment that embodies a bill to prohibit Internet gambling and permit the enforcement of that prohibition. Most States, if not all States, already have laws on the books that prohibit Internet gambling. The problem is that those bills are difficult to enforce by the individual State attorneys general because the Internet is ubiquitous--it is across the State lines--and the attorney general in Arizona can't go to Montana and enforce such prohibition in that State. About 10 years ago, the State Attorneys General Association came before our subcommittee and asked for this Federal legislation so that there could be a national enforcement that would enable them to give force to all of the different States' laws prohibiting Internet gambling. We have worked on this now for a decade, and twice the legislation has passed the Senate. Twice the legislation has passed the House of Representatives, each time in somewhat different form. But we have never been able to get the two bodies to pass legislation in the same year in order to effectuate that. It is very troublesome because the process by which we have to consider legislation makes it very difficult for something like this to get floor time and have a week or several days on the floor to debate back and forth, get it passed, and do the same thing with the House and then work out a conference committee and the like. That is why we have had to resort to attaching amendments such as this to appropriations bills or other bills that are on the floor already and moving forward so that we can gain consideration of this issue. It is not particularly contentious. It is certainly not partisan. The legislation has enjoyed wide bipartisan support in both bodies. Let me briefly describe it. All it does is it allows banks and credit card companies to do what most of them are already doing voluntarily; that is, simply not honoring a credit card debt for Internet gambling. When some Internet gambling site in Aruba, for example, submits the bill to Master Charge or Bank of America and says, Joe Blow here gambled away $1,000 of his money, put it on the credit card, and you now owe that to our Internet gambling site in Aruba, the bank or credit card company says, No. That was against the law. You can't do that. We are not paying. It has had some effect on these operations. But to show you why it hasn't had enough, when we started a decade ago, there were 20-some sites. Today, there are over 2,000 sites. The amount of money was relatively insignificant back then. Now it is hundreds of billions of dollars. It is incredible. A Harvard law professor described this kind of Internet gambling with regard to kids doing it on the Internet. He said it is like the crack cocaine of gambling; it is so addictive; there is no supervision. We have gambling in Las Vegas, Atlantic City, and on Indian reservations, and it is tightly supervised and regulated. Even our subcommittee found testimony from the New Jersey Gambling Commission and said one reason we can do it is we highly regulate it. But there is no way to regulate these offshore sites. That is why it is against the law in every State. We have a Federal act called the Wire Act which prohibits horse gambling. That is now being done on the Internet. There is a means of enforcing existing law in a meaningful way and ensuring that all of the State laws can be enforced as well. I want to indicate who is in favor of this, and then I will allow the process here to occur. Obviously, sports groups are very concerned about the adulteration of sports. We have seen it in college sports. Even one of the universities in my State was involved in a point-shaving scandal not too long ago. Why did this young athlete involved have to shave points in the games in which he played? It was because he got into trouble with gambling debts. The NFL, Major League Baseball, the National Hockey League, National Baseball Association, National Collegiate Athletic Association, and the NCAA strongly support this legislation because they understand that if Internet gambling becomes part of their sports, nobody can count on those sports being pure. There is always the possibility that they have been adulterated by gambling. There are a lot of groups. The National Gambling Commission called for legislation such as this, and a lot of the groups that testified before that Commission are also strongly in support. The National Coalition Against Gambling Expansion and groups such as the Family Research Council, Focus on the Family, Concerned Women for America, the Christian Coalition, United Methodist Church, Southern Baptist Convention, together with their comembers of the National Council of Churches, and the National Coalition Against Gambling Expansion--it includes a whole host of organizations. Madam President, I ask unanimous consent to have this list printed in the Record.

Mr. KYL. With the Presiding Officer's indulgence, I ask a question, and I appreciate that the ranking member may not know the answer to this question. Can the ranking member advise me who it is that is requiring the imposition of this so I can speak to that Senator or those Senators to try to reach some kind of an accommodation so we can take this matter up in the future?

Mr. KYL. Madam President, I ask unanimous consent that the order for the quorum call be dispensed with.

Mr. KYL. Madam President, I ask unanimous consent that the pending amendments be set aside so I may call up amendment No. 1718.